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Husband was in hospital most of 2020 and passed away in Aug. The couple has $22,000 in IRS Debt. Her only income now is $663/mo SSA (death benefit), $150/mo from a network marketing company, and $1200/mo in unemployment. I assume the IRS would use her future income potential. (We don’t need to consider the unemployment, right? Her 2019 W2 income was $30,000 ($2500/mo).
Note: She called IRS back in Aug, just before husband passed and they put the account in CNC. (Lots of time still on CSED)
1. Less than $1000 in the bank.
2. She owes the hospital about $5500.
3. No house, no other assets.
4. Question about the deceased husband’s truck. Based on circumstances, the bank wrote off the loan (Cancellation of debt) – Before he passed, he asked his wife to give the truck to the son which she has done. The title is still in her name. I told her to transfer it right away. She has another car valued at about $2000. The truck was worth about $10,000. Any problem here with dissipated asset?
5. She owes $2700 to Virginia and has an installment agreement for $75/mo
Possible candidate for OIC? If we do not need to count the truck?
6. Taxpayer plans to move to New Hampshire in April, 2021. I think she is moving to live with family. If I go with OIC, would I use housing and vehicle operating expense for NH, assuming that by the time IRS processes the OIC she will be in NH. Could be a problem if she moves in with family rent free? No housing expense?Hello
1. I disagree re dissipated asset, I believe there is a 3yr look back, and IRS would include the value of the truck minus exemption or $6,500 approx
2. The one thing I am not sure about is if you transfer the truck out of TP name, and IRS claims dissipated asset, would they allow the $3450 exemption if truck not in TP name.Marvin
Do you agree that the IRS will likely use average of prior 3 years of income? As of now, she has only SSA income from deceased spouse and her unemployment.
Taxpayer lives with her son and son’s girlfriend. The lease is in the taxpayer’s name. Rent is $1200/month. Son and girlfriend pay $800. How is best to list this on the 433? Use $1200 as the rental expense and list $800 as rental income?
Hello
I will take a swing.
1. I am not sure why IRS will look at income for past 3 years, 433 doesn’t ask anything about income for past 3 years. 433 OIC does say if employed in business you can use a 6-12 month average. Eric has mentioned submitting information for the past 3 months. So, list her present income, submitting 3 months of bank statements. I would want to submit her present low income so she could stay in CNC.
2. I don’t think I would want her to have any more income than necessary, keeping her in CNC. Eric has mentioned income expense allocation if sharing a living space with non liable tax person. Of course you would have to run the figures both ways, rent from co tenant vs allocation of income.
3. I think my end game would be to keep her in CNC as long as possible, to see if 3 years from when tax return was due (assuming no late filing). If IRS comes after before 3 years are up because of change of her circumstance, then OIC is in the bullpen. IF more than 3 years has expired, then you have 2 options, OIC or bankruptcy.
Marvin
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