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Archive for September, 2010

Tax Deadlines For Extensions

Question: Personal tax question…?

I received a tax extension because of various problems. I am in the process of paying my 2005 taxes and missed the deadline because of a lengthy hospital stay.
Last year I received a lump sum payment from Social Security disability for past payment and had to pay the full amount to a private disability insurance for payments I received from them in past years. This amount is not really income because I had to turn it all over to the private company. Can it be declared healthcare payments? Is there anyway I can declare this as a medical deduction of some kind? Is there some kind of deduction I can make? All I was paid this year was a small amount of SS disability because the private insurance company quit paying. I am in the process of a lawsuit with them. I have so many medical deductions I will probably still not have to pay any additional tax but I would like to get a bigger refund than I would receive if I have to use the $18,000.
Thanks for your help.

Answer: I’m sorry you’ve been ill.
When you do file, attach a letter stating you missed the deadline cause you were in the hospital and ask them to waive any penalties for filing late.
Is soc security reporting the disab as income?
If so then you can deduct the expense but each should have occurred in the same year. If you received the pymt in 2005 but didn’t pay till 2006, then you cant deduct the exp in 2005 only in 2006.
If soc security considers it a reimbursement and is not reporting it as income then you cant deduct it as expense.
It’s called the matching principle in that you can only deduct related expense from related income. If that is the case then its not income either. I don’t know details about soc security but the SSA can tell you how, if, where to report their pymt.
One more thing, as an individual you cant reduce your income to less than 0 so if you have no other income, additional expenses wont help unless your claiming the additional child tax credit or similar

How To Get an Extension on Your Tax Return