Money from abusive parent, plus tax problems
April 13, 2021 11:29 PM Subscribe
My wealthy, abusive parent is trying to send me a lot of money. They told the IRS I got the money last year. I don't know what to do.
I have an abusive parent I haven't been in contact with for years. I have never regretted or had second thoughts going no-contact. They are irrational and prone to fits of rage, and not having to deal with random outbursts has made my life easier and improved my health thanks to the lack of stress. (When I moved out of my parents house I was literally able to go off prescription medication.)
Last week I received an email from a fund manager that an education fund had been cashed out in my name. They asked me for wiring instructions and told me that the IRS was told I got this money *last year* and so I need to file taxes on it right away. I think the money was supposed to be distributed to me, but it was sent to my parent using an address like "anon poster c/o parent".
I was able to confirm this is real by talking to a relative still in mutual contact. I've been automatically deleting mails from my parent for years, but apparently my parent mailed me about this last year and CC'd the relative. In the mail my parent talked about how they saved for my college costs and provided an account of the total cost of my education since grade school. This is painful, since before going to college I was told not to worry about cost, and then had the dollar cost of my school screamed at me in regular fits of rage for a long time.
I think I want to refuse the money. It is a lot of money, about as much as my annual salary a few years ago. But I have significant savings and a high paying job now, so while it is still a lot of money, I will be fine without it. I am very concerned that if I accept the money my parent will expect something or that it will provoke them somehow. On the other hand I am also concerned that refusing it will provoke them. On top of that I don't know what will happen with the IRS if I refuse the money, and I am still trying to figure that out. I think the best I can do is pay the taxes now, and if I don't take the money file an amended return for a refund next year.
My parent is very wealthy and the money won't affect their lifestyle in any way.
If I could, I would accept the money and hold it untouched for a while to see what happens. Unfortunately due to the amount involved, just accepting it will create a lot of taxes, and paying back the original amount if anything goes wrong would be costly.
As to what advice I could use... I saw other old threads about taking money from estranged relatives, but none of them involved so much money that just accepting it is complicated. I am also going to contact a tax professional anyway, but if anyone has knowledge about what to do when the IRS has been told you already have money you don't have, that would be helpful. The short timeline before the filing deadline has made this very stressful.
I have an abusive parent I haven't been in contact with for years. I have never regretted or had second thoughts going no-contact. They are irrational and prone to fits of rage, and not having to deal with random outbursts has made my life easier and improved my health thanks to the lack of stress. (When I moved out of my parents house I was literally able to go off prescription medication.)
Last week I received an email from a fund manager that an education fund had been cashed out in my name. They asked me for wiring instructions and told me that the IRS was told I got this money *last year* and so I need to file taxes on it right away. I think the money was supposed to be distributed to me, but it was sent to my parent using an address like "anon poster c/o parent".
I was able to confirm this is real by talking to a relative still in mutual contact. I've been automatically deleting mails from my parent for years, but apparently my parent mailed me about this last year and CC'd the relative. In the mail my parent talked about how they saved for my college costs and provided an account of the total cost of my education since grade school. This is painful, since before going to college I was told not to worry about cost, and then had the dollar cost of my school screamed at me in regular fits of rage for a long time.
I think I want to refuse the money. It is a lot of money, about as much as my annual salary a few years ago. But I have significant savings and a high paying job now, so while it is still a lot of money, I will be fine without it. I am very concerned that if I accept the money my parent will expect something or that it will provoke them somehow. On the other hand I am also concerned that refusing it will provoke them. On top of that I don't know what will happen with the IRS if I refuse the money, and I am still trying to figure that out. I think the best I can do is pay the taxes now, and if I don't take the money file an amended return for a refund next year.
My parent is very wealthy and the money won't affect their lifestyle in any way.
If I could, I would accept the money and hold it untouched for a while to see what happens. Unfortunately due to the amount involved, just accepting it will create a lot of taxes, and paying back the original amount if anything goes wrong would be costly.
As to what advice I could use... I saw other old threads about taking money from estranged relatives, but none of them involved so much money that just accepting it is complicated. I am also going to contact a tax professional anyway, but if anyone has knowledge about what to do when the IRS has been told you already have money you don't have, that would be helpful. The short timeline before the filing deadline has made this very stressful.
Get a CPA involved. You can stick it in a trust or whatever that holds no tax implications to you.
FWIW, IRS tax deadline 2021 is May 17th, not April 15th. IRS knows COVID wrecked our lives and has extended it 1 month.
https://www.irs.gov/newsroom/irs-extends-additional-tax-deadlines-for-individuals-to-may-17#:~:text=This%20follows%20a%20previous%20announcement,%2C%20to%20May%2017%2C%202021.
posted by kschang at 12:46 AM on April 14, 2021
FWIW, IRS tax deadline 2021 is May 17th, not April 15th. IRS knows COVID wrecked our lives and has extended it 1 month.
https://www.irs.gov/newsroom/irs-extends-additional-tax-deadlines-for-individuals-to-may-17#:~:text=This%20follows%20a%20previous%20announcement,%2C%20to%20May%2017%2C%202021.
posted by kschang at 12:46 AM on April 14, 2021
I'm not a CPA, but typically the recipient of a gift doesn't pay taxes on it. It's the donor (your parent) who pays if it's over 15k in cash /cash equivalent.
If this is about a 529 plan there may be other rules, or a penalty if it's been used for non educational expenses. But talk with a CPA.
Personally, I'd want to see a copy of whatever they sent to the IRS (a 1099??) and which they were also supposed to have sent you, before sending any bank wire info. The "here's a lot of cash! that the IRS knows about! File taxes immediately!" smells fishy to me, but I also went down the rabbit hole of troll-the-scammer videos over the weekend.
posted by basalganglia at 3:48 AM on April 14, 2021 [21 favorites]
If this is about a 529 plan there may be other rules, or a penalty if it's been used for non educational expenses. But talk with a CPA.
Personally, I'd want to see a copy of whatever they sent to the IRS (a 1099??) and which they were also supposed to have sent you, before sending any bank wire info. The "here's a lot of cash! that the IRS knows about! File taxes immediately!" smells fishy to me, but I also went down the rabbit hole of troll-the-scammer videos over the weekend.
posted by basalganglia at 3:48 AM on April 14, 2021 [21 favorites]
What happened to this money? If you truly never received it it makes zero sense for you to pay tax or penalty on it, but the IRS may not see it this way. I would try to ascertain what the trail is from the 529 to a person's bank account. You may need to engage a tax attorney to deal with the IRS if you refuse to (logically) pay tax on money you never received. This attorney can also be a neutral professional who follows up with your parents for the needed documentation.
If you do somehow receive this money, is there a charity to which you would be happy to donate a largish sum? This may also come with deserved and welcome tax deductions next year. This is a strategy a good tax attorney can help you with, and if he or she is sympathetic to your plight I can easily imagine a reasonable fee, rather than a professionally enormous fee. Best of luck.
posted by citygirl at 5:20 AM on April 14, 2021 [3 favorites]
If you do somehow receive this money, is there a charity to which you would be happy to donate a largish sum? This may also come with deserved and welcome tax deductions next year. This is a strategy a good tax attorney can help you with, and if he or she is sympathetic to your plight I can easily imagine a reasonable fee, rather than a professionally enormous fee. Best of luck.
posted by citygirl at 5:20 AM on April 14, 2021 [3 favorites]
I think you should contact an accountant - also there's really not enough info here to give any useful advice. What kind of account was "cashed out," why was it cashed out and on whose authority, were you the owner of this account or just the beneficiary or was it a gift, etc. etc. etc.
Talk to an accountant to find out your legal tax obligations (if any) and then decide what you want to do.
posted by mskyle at 5:37 AM on April 14, 2021 [5 favorites]
Talk to an accountant to find out your legal tax obligations (if any) and then decide what you want to do.
posted by mskyle at 5:37 AM on April 14, 2021 [5 favorites]
Following what everyone else has said, pay the taxes, pay the accountant or whoever you hire to deal with the paperwork, and donate the rest to Black Lives Matter or LGBTQ mental health services or something. And if your mutual-contact relative asks about it, tell them.
posted by heatherlogan at 6:32 AM on April 14, 2021
posted by heatherlogan at 6:32 AM on April 14, 2021
This sounds like tax fraud to me. A 529 has to be used for qualified educational expenses, and it sounds like you graduated more than one year ago. I'd need way more information before I accepted this money. The account owner can take as much out as they wish for non-educational expenses, but will owe regular income taxes on it.
It doesn't sound like the 529 plan is in your name though, so you don't owe taxes on it. The account holder would, and like mentioned above, you wouldn't pay gift tax.
BTW, I'm assuming its a 529 because you call it an educational fund.
I would not help this relative commit tax fraud.
posted by The_Vegetables at 7:46 AM on April 14, 2021 [12 favorites]
It doesn't sound like the 529 plan is in your name though, so you don't owe taxes on it. The account holder would, and like mentioned above, you wouldn't pay gift tax.
BTW, I'm assuming its a 529 because you call it an educational fund.
I would not help this relative commit tax fraud.
posted by The_Vegetables at 7:46 AM on April 14, 2021 [12 favorites]
I would ask an accountant, then if there were no strings attached I would take the money and run. The parent might expect something, but who cares? You don't need to take anyone else's expectations seriously particularly if you were supposed to be due the money anyway.
posted by Patapsco Mike at 7:49 AM on April 14, 2021 [4 favorites]
posted by Patapsco Mike at 7:49 AM on April 14, 2021 [4 favorites]
Long-time lurker here. MeFi folks tend to respond rapidly with much more eloquent responses than I could muster, but in this case I wanted to add another vote for not accepting the money.
When I read your description of family dynamics and this “gift”, my immediate gut reaction was “It’s a trap!”. Half of my family is deeply messed up with issues around money and control, and I am low-contact with the parent from that side. Like you, my (non-wealthy) parents assured me that money would be no object when going to school, but I knew that if I accepted financial support for college that I could expect the same screaming/controlling behavior that you describe. I left the house at seventeen and accepted a full scholarship at a state school to completely divorce myself from that dynamic, and I’ve been financially independent ever since.
Given your estrangement situation, I have the strong impression that this offer is a lure to draw you back into a controlling parent’s sphere of influence, opening you up to further guilt and manipulation. It’s not outside the realm of possibility that this is (also?) tax fraud. I am not a tax specialist, but if you just learned about this money and you haven’t received it, I cannot fathom why you would be required to pay taxes on it.
It sounds like you’re in a pretty good place emotionally and financially right now. Extra money is always welcome, but if I were in your shoes, the peace of mind that comes with not having to deal with manipulative relatives is infinitely more valuable than cash with strings attached.
posted by table of malcontents at 8:40 AM on April 14, 2021 [5 favorites]
When I read your description of family dynamics and this “gift”, my immediate gut reaction was “It’s a trap!”. Half of my family is deeply messed up with issues around money and control, and I am low-contact with the parent from that side. Like you, my (non-wealthy) parents assured me that money would be no object when going to school, but I knew that if I accepted financial support for college that I could expect the same screaming/controlling behavior that you describe. I left the house at seventeen and accepted a full scholarship at a state school to completely divorce myself from that dynamic, and I’ve been financially independent ever since.
Given your estrangement situation, I have the strong impression that this offer is a lure to draw you back into a controlling parent’s sphere of influence, opening you up to further guilt and manipulation. It’s not outside the realm of possibility that this is (also?) tax fraud. I am not a tax specialist, but if you just learned about this money and you haven’t received it, I cannot fathom why you would be required to pay taxes on it.
It sounds like you’re in a pretty good place emotionally and financially right now. Extra money is always welcome, but if I were in your shoes, the peace of mind that comes with not having to deal with manipulative relatives is infinitely more valuable than cash with strings attached.
posted by table of malcontents at 8:40 AM on April 14, 2021 [5 favorites]
> Personally, I'd want to see a copy of whatever they sent to the IRS (a 1099??) and which they were also supposed to have sent you, before sending any bank wire info. The "here's a lot of cash! that the IRS knows about! File taxes immediately!" smells fishy to me,
I agree that this sounds fishy and that you need more information from this fund manager about the terms of this alleged education account, why there would be any tax liability for you, what the IRS "was told" and whether it's relevant to your life, etc. Certainly do not provide any wire instructions at this point.
Ideally, an accountant could make these inquiries for you, or at least tell you what to ask.
Now that you have confirmation through this relative that there is something to this business, I also wouldn't involve that relative any further, either. No need to provide any fuel to the family drama machine, just handle this as a strictly business situation. I hope that it goes without saying that there is definitely no reason for you to contact your parents directly.
/I am also not an accountant, but I do have parents who have tried to get manipulative with their "generosity," though they are not abusive, and I was able to set boundaries.
posted by desuetude at 8:42 AM on April 14, 2021 [2 favorites]
I agree that this sounds fishy and that you need more information from this fund manager about the terms of this alleged education account, why there would be any tax liability for you, what the IRS "was told" and whether it's relevant to your life, etc. Certainly do not provide any wire instructions at this point.
Ideally, an accountant could make these inquiries for you, or at least tell you what to ask.
Now that you have confirmation through this relative that there is something to this business, I also wouldn't involve that relative any further, either. No need to provide any fuel to the family drama machine, just handle this as a strictly business situation. I hope that it goes without saying that there is definitely no reason for you to contact your parents directly.
/I am also not an accountant, but I do have parents who have tried to get manipulative with their "generosity," though they are not abusive, and I was able to set boundaries.
posted by desuetude at 8:42 AM on April 14, 2021 [2 favorites]
I think holding the money in a separate account for a while is a good idea. Or you could just gift it to an organization or charity of your choice. I encourage you to try to separate the money from your feelings about Parent, and make a decision that is right for you. So, not giving it to the ACLU to spite parent, but giving it the ACLU because they do important work. Receive the money, if you can, in detachment, give it in charity, or use it when and as needed. An extension is reasonable, and, you have not received the money, so I'd be surprised if it can be counted in 2020 income.
I do not question your decision to be estranged, but it's possible that Parent is having a moment of love, as they experience it, and you might at some point feel better for having accepted it. You have shown that they cannot manipulate you any more, even if they try. It's not easy to be where you are, but you've grown, built your life, and this is an event, but you get to decide about it and frame it for yourself.
posted by theora55 at 8:43 AM on April 14, 2021
I do not question your decision to be estranged, but it's possible that Parent is having a moment of love, as they experience it, and you might at some point feel better for having accepted it. You have shown that they cannot manipulate you any more, even if they try. It's not easy to be where you are, but you've grown, built your life, and this is an event, but you get to decide about it and frame it for yourself.
posted by theora55 at 8:43 AM on April 14, 2021
I agree with the recommendation to consult an accountant. The parent may have intended to make a gift, and anything above the $15,000 annual limit is reported to the IRS on a gift tax return, but (1) you don't pay any taxes on it at all and (2) the parent does not, either, until he reaches his lifetime limit, currently well over $11 million.
If this was in a 529 plan you did not know about, the CPA may recommend it be returned.
posted by yclipse at 8:51 AM on April 14, 2021 [2 favorites]
If this was in a 529 plan you did not know about, the CPA may recommend it be returned.
posted by yclipse at 8:51 AM on April 14, 2021 [2 favorites]
Hmm I’m less on team “this is a shitty gift” and more on team “someone is committing tax fraud in your name.” There’s not enough info in your post to tell.
If the fund was a 529 plan, the money can be invested like any brokerage account, but is not subject to tax, as long as the money is used for education costs subject to the rules.
Now plans change, and you can take the money out and spend it on non education purposes, but at that point you owe all back taxes on the earnings plus a 10% penalty. It’s like you went back in time and invested in a standard brokerage account where you owe capital gains tax on the income each year. The penalty is a policy to discourage misuse of these accounts. But taxes and penalty only apply to the income gains, not the original amount of money invested.
Example: you invest $10 in a 529 plan. Ten years later, it has earned another $10 in gains and dividends, so you have $20. You spend it all on college tuition and the fund is done, you pay no tax.
Alternately, you choose to not go to college and use the money to buy a car. You keep your $10 investment, but have to pay income tax on the $10 of gains, plus a penalty. $1 for penalty, $2 for taxes, you get $17 out. (I’m making up all these numbers).
The fraud could happen if the parent has taken and spent the $20, and you are charged with the bill for the $3. The gift happens if you get possession of the $20 but also the liability of the $3. Scale this up to tuition numbers and amounts will get big.
The minimum I would do is talk to the fund manager and get account access, online or by mail, and ask for all statements and tax forms. That should cost you no money if it is your name on the account. I would not answer anything about what you are going to do with the funds or tax liability.
Next step, costing some money, is hire a tax accountant in your state to review the statements. That will cost some $$$ but maybe not as much as you think. Be clear you do not want them to file taxes, but to review your tax position looking at past returns and this new fund information. Bonus - if they are good hire them to do your taxes.
Next step is to hire a trust and estates attorney to see what the heck is going on and if you are a victim of fraud (parent takes the cash, leaves you with the bill for tax and penalty, committing fraud and theft) or just very screwed up generosity (parent is trying to gift you the money, but didn’t use it the right way at the right time, if you take the money and pay the tax bill you still have a lot of money left over). This will be more $$$$. They should know all the options related to multi-generational finance. Bonus if you get someone with Family Law experience. I would not count the money as mine, even if I can withdraw it, without something in writing signed stating no other parties have claim on those funds, and an attorney can get that for you and can talk to parent on your behalf. Ask around for recommendations then ask the attorney for a consultation an estimate for fee.
If all of this was done without your knowledge and you have none of the cash and all of the tax billl, the Last step (no not a good one) would be to call law enforcement and ask about reporting a financial crime, and/or hire an attorney to make a demand for payment from your parent, or to file a civil suit against them for the financial loss related to this mess. Once you start this processes through the court system, you will have limited control of how it goes, even if eventually you get a good outcome.
I’m sorry you have to deal with this. These systems - IRS, legal system, 529 funds etc. cannot be safely ignored and will force you to interact with this family member, even if at remove. It sounds like you have done an outstanding job providing for yourself and positioning your finances to handle some stress. I would also consider paying others to handle this if you can, and/or getting added support for the yourself generally if this ends up taking time and emotional energy.
If it is messy seek out an attorney ASAP. Family lawyers deal with divorce matters 10x worse than this every day before lunch. It is a wonderful thing to have an attorney as intermediary between you and someone who cannot respect your boundaries.
posted by sol at 8:56 AM on April 14, 2021 [4 favorites]
If the fund was a 529 plan, the money can be invested like any brokerage account, but is not subject to tax, as long as the money is used for education costs subject to the rules.
Now plans change, and you can take the money out and spend it on non education purposes, but at that point you owe all back taxes on the earnings plus a 10% penalty. It’s like you went back in time and invested in a standard brokerage account where you owe capital gains tax on the income each year. The penalty is a policy to discourage misuse of these accounts. But taxes and penalty only apply to the income gains, not the original amount of money invested.
Example: you invest $10 in a 529 plan. Ten years later, it has earned another $10 in gains and dividends, so you have $20. You spend it all on college tuition and the fund is done, you pay no tax.
Alternately, you choose to not go to college and use the money to buy a car. You keep your $10 investment, but have to pay income tax on the $10 of gains, plus a penalty. $1 for penalty, $2 for taxes, you get $17 out. (I’m making up all these numbers).
The fraud could happen if the parent has taken and spent the $20, and you are charged with the bill for the $3. The gift happens if you get possession of the $20 but also the liability of the $3. Scale this up to tuition numbers and amounts will get big.
The minimum I would do is talk to the fund manager and get account access, online or by mail, and ask for all statements and tax forms. That should cost you no money if it is your name on the account. I would not answer anything about what you are going to do with the funds or tax liability.
Next step, costing some money, is hire a tax accountant in your state to review the statements. That will cost some $$$ but maybe not as much as you think. Be clear you do not want them to file taxes, but to review your tax position looking at past returns and this new fund information. Bonus - if they are good hire them to do your taxes.
Next step is to hire a trust and estates attorney to see what the heck is going on and if you are a victim of fraud (parent takes the cash, leaves you with the bill for tax and penalty, committing fraud and theft) or just very screwed up generosity (parent is trying to gift you the money, but didn’t use it the right way at the right time, if you take the money and pay the tax bill you still have a lot of money left over). This will be more $$$$. They should know all the options related to multi-generational finance. Bonus if you get someone with Family Law experience. I would not count the money as mine, even if I can withdraw it, without something in writing signed stating no other parties have claim on those funds, and an attorney can get that for you and can talk to parent on your behalf. Ask around for recommendations then ask the attorney for a consultation an estimate for fee.
If all of this was done without your knowledge and you have none of the cash and all of the tax billl, the Last step (no not a good one) would be to call law enforcement and ask about reporting a financial crime, and/or hire an attorney to make a demand for payment from your parent, or to file a civil suit against them for the financial loss related to this mess. Once you start this processes through the court system, you will have limited control of how it goes, even if eventually you get a good outcome.
I’m sorry you have to deal with this. These systems - IRS, legal system, 529 funds etc. cannot be safely ignored and will force you to interact with this family member, even if at remove. It sounds like you have done an outstanding job providing for yourself and positioning your finances to handle some stress. I would also consider paying others to handle this if you can, and/or getting added support for the yourself generally if this ends up taking time and emotional energy.
If it is messy seek out an attorney ASAP. Family lawyers deal with divorce matters 10x worse than this every day before lunch. It is a wonderful thing to have an attorney as intermediary between you and someone who cannot respect your boundaries.
posted by sol at 8:56 AM on April 14, 2021 [4 favorites]
I will add to the chorus that you should not provide wiring instructions to this person. Ask for a full transaction statement showing the names on the account - ie, if this was a 529 plan, you will need to see the account owner name as well as the beneficiary name (ostensibly you). You will also need to see the transactions involved and, preferably, the canceled check of the distribution showing who it was made out to and who cashed or deposited it.
This feels like a tax fraud burrito wrapped in a toxic parental tortilla and anything beyond receiving the statement above requires advice from a tax accountant and/or attorney.
posted by bedhead at 9:03 AM on April 14, 2021 [10 favorites]
This feels like a tax fraud burrito wrapped in a toxic parental tortilla and anything beyond receiving the statement above requires advice from a tax accountant and/or attorney.
posted by bedhead at 9:03 AM on April 14, 2021 [10 favorites]
I agree with everyone saying to not touch this with a ten-foot-pole until you have all the pertinent information. And, even then, I would consult with a CPA before acting on anything. A good CPA will be able to recognize a fraud being perpetrated. It really smells like you're being set-up.
posted by Thorzdad at 9:50 AM on April 14, 2021
posted by Thorzdad at 9:50 AM on April 14, 2021
It's not necessarily a 529. There are a wide variety of education savings plans, including plans favored under tax law (e.g. Coverdell savings accounts) and plans marketed by financial institutions without any particular government oversight (various "education savings" mutual funds, e.g.). The fact that you were contacted by a "fund manager" suggests that you might be dealing with one of these relatively unregulated privately-created plans. It's possible that this fund had an expiration date that resulted in an automatic dispersal of the assets.
In most cases, the assets in these accounts can be owned by either the child or the parent. If your name was on the account, it's always been your money. Whatever happened to disperse the money from the account (apparently in 2020) created a taxable event that you're responsible for. There could be all sorts of things happening here. You definitely need an accountant.
As for the filing deadline, you should just file for an extension. The downside is minimal.
posted by mr_roboto at 10:18 AM on April 14, 2021 [1 favorite]
In most cases, the assets in these accounts can be owned by either the child or the parent. If your name was on the account, it's always been your money. Whatever happened to disperse the money from the account (apparently in 2020) created a taxable event that you're responsible for. There could be all sorts of things happening here. You definitely need an accountant.
As for the filing deadline, you should just file for an extension. The downside is minimal.
posted by mr_roboto at 10:18 AM on April 14, 2021 [1 favorite]
An extension is reasonable, and, you have not received the money, so I'd be surprised if it can be counted in 2020 income.
If invested assets owned by the Asker were liquidated in 2020, they almost certainly have 2020 capital gains that they will owe taxes on.
posted by mr_roboto at 10:27 AM on April 14, 2021 [1 favorite]
If invested assets owned by the Asker were liquidated in 2020, they almost certainly have 2020 capital gains that they will owe taxes on.
posted by mr_roboto at 10:27 AM on April 14, 2021 [1 favorite]
I would create an account at IRS.gov and then ask for (I think it is called) a 'Transcript' for 2020. The IRS will tell you exactly what documentation they have received such as w-2 or 1099s with your SSN. Your CPA can do this too.
Personally, if you can and do remain no contact, I would not refuse the money. I would deposit it and see if I could put it in trust or in an IRA or create an account for a future kid, etc. I might even accept the money and buy a car or some other big ticket item. They are sending it to you because they have to based on the way the account it is coming from was set up many years ago. While there may be strings attached in their mind, legally there are none.
Talk to an accountant and talk to a therapist and take your parent's money and do something good for yourself, something you cannot imagine your parents doing for you willingly.
posted by AugustWest at 10:58 AM on April 14, 2021 [4 favorites]
Personally, if you can and do remain no contact, I would not refuse the money. I would deposit it and see if I could put it in trust or in an IRA or create an account for a future kid, etc. I might even accept the money and buy a car or some other big ticket item. They are sending it to you because they have to based on the way the account it is coming from was set up many years ago. While there may be strings attached in their mind, legally there are none.
Talk to an accountant and talk to a therapist and take your parent's money and do something good for yourself, something you cannot imagine your parents doing for you willingly.
posted by AugustWest at 10:58 AM on April 14, 2021 [4 favorites]
I'm confused about a few things. First, did your parent actually set up and fund this account? You only say they received funds at Anon c/o Parents. The person who set up and funded the account (grandparent?) may be the person who owes a tax penalty. Or not, it could be you.
Second, did your parents actually pay for your college? You say they yelled at you about it, and that the email you didn't read listed an accounting of the costs. I'm interpreting this as: your parents paid your tuition, and now they have kept this money as repayment for their expenditure ... (but want to stick you with the tax bill)?
I would, as AugustWest says, get transcript for 2020. That will tell you if you've been identified to the IRS as the recipient of the funds (and may then owe taxes), which, if you don't have the funds, would be one flavor of tax fraud. If not, you can wash your hands of the whole thing.
I would, and it sounds like you would, only keep the money that would cover a tax burden.
And I nth the advice to engage a CPA if you do have to get involved.
posted by Dashy at 2:37 PM on April 14, 2021
Second, did your parents actually pay for your college? You say they yelled at you about it, and that the email you didn't read listed an accounting of the costs. I'm interpreting this as: your parents paid your tuition, and now they have kept this money as repayment for their expenditure ... (but want to stick you with the tax bill)?
I would, as AugustWest says, get transcript for 2020. That will tell you if you've been identified to the IRS as the recipient of the funds (and may then owe taxes), which, if you don't have the funds, would be one flavor of tax fraud. If not, you can wash your hands of the whole thing.
I would, and it sounds like you would, only keep the money that would cover a tax burden.
And I nth the advice to engage a CPA if you do have to get involved.
posted by Dashy at 2:37 PM on April 14, 2021
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As for the money- Can you offer a no-contact (because of work/studies/concerns) statement/mandate through the relative, with a word of thanks, and keep it? I don't think it's cheeky.
I think a lot of people simply don't contact estranged parents. I did something similar for a few years, and the relationship later turned into a healthy connection (with like.. five years of time and 2000k miles of separation)
posted by firstdaffodils at 11:35 PM on April 13, 2021