AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size.
I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All other will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, Your Money.
Education/Credentials BBA, Baylor University.
Awards and Honors IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 1/23/2008 Subject: 1099 - But we never took the money.
Question Last year, my husband had surgery. He was scheduled to take short-term disability payments while he was out of work. Instead, his employer fired him before the surgery ever took place. They were supposed to contact the disability insurer and stop the claim. They didn't. We received a disability check for just under $600, but never cashed it because we don't believe he was entitled to take the money. Now, we have received a 1099 for that money. What do we do? Can we just ignore it? We still have the un-cashed check to prove that we never took the money. And we have been having difficulty getting the disability insurer to acknowledge that we never took the money, or send a letter stating that the 1099 was a mistake, etc. Please help. Thank you.
Answer You have constructive receipt of the money so under the law, it is income to you - even if you do not cash the check. My advice is to go ahead and cash it and pay the tax. If later it is determined the money should not have been paid to you, you can deduct any repayment in that year. But that is not likely to happen. It would cost them more than $600 to get it straightened out.
