Tax Question: Can you give back your salary...

[MotionMan]

Let's say you came into a lot of money (I wish). Can you give back to your employer the last few years in net salary and get a tax deduction or credit or something for the next year or maybe redo your prior years' taxes minus the "income"?

MotionMan

 

[Mday]

In general, no. But it is possible.

 

[SSSnail]

Why? You'd be losing money.

 

[spidey07]

No. The transactions are totally separate. There are means to handle such returns, SG&A is not one of them.

 

[Billb2]

What!

Wouldn't s donation to a charity accomplish the same thing?

 

[MotionMan]

Originally posted by: SSSnail
Why? You'd be losing money.

To be nice to your employer.

I was just wondering if you could get some of the taxes back, not to come out ahead necessarily.

MotionMan

 

[Evadman]

How much are we talking? I can set myself up as a charitable organization.

 

[MotionMan]

Originally posted by: Evadman
How much are we talking? I can set myself up as a charitable organization.

Like I said, "I wish".

motionMan

 

[Kev]

I don't understand the logic behind this idea whatsoever.

 

[mugs]

Originally posted by: Kev
I don't understand the logic behind this idea whatsoever.

I don't either...

 

[MotionMan]

Originally posted by: mugs

Originally posted by: Kev
I don't understand the logic behind this idea whatsoever.

I don't either...

To be nice to your employer.

I was just wondering if you could get some of the taxes back, not to come out ahead necessarily.

Assume there is no logic - just the question:

If you give your salary back, can you get a tax benefit.

MotionMan

 

[Skeeedunt]

To offset the tax liability of the initial gain? Or afterward through some accounting voodoo? It's an important distinction because I don't know the answer to either.

 

[MotionMan]

You win the lottery in 2009.
You decide that your employer was really nice to you, so you give back the last two years in salary.

So, the question is:

Not that you need it, but, can you get some tax benefit because, now, you retroactively had no income in 2007 and 2008.

MotionMan

 

[mugs]

Originally posted by: MotionMan
You win the lottery in 2009.
You decide that your employer was really nice to you, so you give back the last two years in salary.

So, the question is:

Not that you need it, but, can you get some tax benefit because, now, you retroactively had no income in 2007 and 2008.

MotionMan

I'm going to go with no... because you did have income in 2007 and 2008 even if you give it back in 2009.

 

[DaveSimmons]

If it's a small company, you could offer to invest a couple of years' salary for stock.

If it's a big company it might make more sense to make $12K gifts (= at the tax-free limit) to each of the people that made working there worthwhile.

Either way, no deduction for you. But what do you care if you're rich?

 

[compman25]

What kind of idiot works for free?

 

[dullard]

Originally posted by: compman25
What kind of idiot works for free?

Automobile CEOs and now possibly large bank CEOs.

Of course, it is just "free" for a short time, then they get massive bonuses in a few years to cover what they would have earned + bonuses they would have earned + bonuses to cover tax consequences + bonuses for staying + bonuses for their good work running the company into the ground for years. This is because no one else supposedly has the skills to make bad decisions.

 

[SunnyD]

Originally posted by: dullard

Originally posted by: compman25
What kind of idiot works for free?

Automobile CEOs and now possibly large bank CEOs.

Seriously? You think they're getting absolutely nothing? You're funny.

 

[sactoking]

No, you can't get a tax break for "giving back" your salary. Once you accept it, it's yours. They'd be two separate transactions. You also cannot avoid taxes by refusing to cash your paycheck. The IRS operates under the assumption that money you get is income 'when it becomes available to you', whether or not you actually make use of it. In this case, the minute your paychecks were signed, they became income and only those actions deemed 'adjustments to gross income' or 'itemized deductions' are going to change that, and the adjustment can only be claimed in the year the action took place (e.g., you earn $50,000 in 2006. In 2007, you give $10,000 to charity. The deduction can only be taken in 2007, not 2006).

 

[dullard]

Originally posted by: SunnyD
Seriously? You think they're getting absolutely nothing? You're funny.

Did you completely miss my much larger second paragraph?

 

[GasX]

So you want to give back $100k to save $30k in taxes.

If that were possible, it would be grossly retarded.

 

[MillionaireNextDoor]

let me guess, you own 100% of the company you work for and with your newfound wealth want to channel it back into equity to refund the double taxation?

 

[aigomorla]

its called 401k.

http://en.wikipedia.org/wiki/401(k)

Depending on your employers plan, he can put the offset into your 401k and your income tax wont go up.

Of course you pay tax when you collect it tho.

America Always gets there tax, either up front or when you collect, or when you die (estate / probate Tax).

Talk to a Financial Planner for more info.

 

[MotionMan]

Can you correct you taxes from a prior year if you find an error, either in your favor or against you?

MotionMan

 

[dullard]

Originally posted by: MotionMan
Can you correct you taxes from a prior year if you find an error, either in your favor or against you?

MotionMan

Yes, with this form. Politicians in the news seem to be doing it all the time right now.