My previous employer failed to pay me over $5K for salary, which was awarded to me in small claims court. However, it was still never paid by him or his company. Can I claim this on my taxes?

I could tell you different but this loss is not likely to be deductible.  It would only be deductible if your previous employer gave you a W-2 that included the amount he didn’t pay you.  However if you don’t report the income, you don’t get to deduct the loss.  This is always hard to understand so here is an example.  You work for this sleeze bag and earn $100.  Sleeze bag only pays you $50 so you report the $50 income.  Now you think wait a minute I lost $50 I want to deduct that so now you are reporting no income?  That doesn’t work because you really made $50.  Of course, if you report the $100 for some reason you get the deduction.  Not such good news I am sure. 

Here’s something better I hope and I hope it is not too late.  Looks like you are in CA so I would call and talk to the Employment Development Department.  Going to small claims was a good idea but EDD has more teeth when it comes to collecting.  Don’t know when this happened and if they have time limits but I do know that if you were an employee and they accept your case they will squeeze that SB hard to get your $$.   At least when I was young and not so smart I represented a client at a hearing with EDD.  The SB I was representing was willing to pay the past employee but got it in her head she didn’t want to waste pennies on a stamp.  The EDD slapped me good for being so dumb as to waste their time and the client got the worst of it.  I would check with them.  If you were an employee that is.  If not you probably have done all you can do.

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on thisinformation to make important financial and tax decisions.  The advice presented here is presented to give examples of the type ofinformation you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

Advertisements

About taxdude8422

Basically I am just a tax nerd, have been all my life. However I have found the more open you are to opportunities the better off you will be in this world. That makes my what is know as an open networker on Linkedin, I will connect with anyone. I am not an expert on Linkedin by any means but one day when I was asking someone to connect I mentioned that I had just been refilled on invites. My new connect asked how I did that. I used that same line for the next month and got asked the same question four times. I started thinking there was a lot of little things it took my sometime to learn. Through this blog I plan to share some of those "Linked Secrets"
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s