I have a client who receives a disability check that comes in for her grandson, on which she is the payee. Does she need to declare this income for a short sale?
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Scott,
A better question is what if I don’t report it?
You have to list all bank accounts and provide 6o days statements, if the check goes into an account you’re going to have to explain it.
If he has special needs that requiring you to make regular payments their going to show up.
Do his expenses show on your tax returns?
If you don’t report it you’re going to have to explain it anyway or have any cost held against you!
Another question is the income on going? Unless it’s a mental problem what happens when he turns 18?
Like receiving alimony and child support you probably don’t have to report it, but in the end you’re going to have to explain it.
Why create questions? You’re just going to create more work than you’re avoiding!
Bill
This is definitely an IRS question, but you stand a better chance of getting a decent answer here! I'm not an accountant, but my question to you is, "Whose social security # is on the account"? More than likely, it is the grandson. If that is so, then the grandmother would not have to claim it! At least, that is my opinion!
As a short sale paralegal for a law firm my answer to you would be ask an attorney. Making this determination as a realtor puts you in a situation where one could argue you are practicing law by making legal decisions. If short sale gets denied and seller sues you, guess what - you may be held accountable. In Florida UPL is a felony. I would always make the seller make the decision to either include it on the RMA or 710 or not - don't get caught up wanting to help your seller. It would be the same as filling out their disclosure form. Later someone sues seller for failing to disclose material fact and guess what - they will blame you did it and they are off the hook. I have seen it all and we regularly defend realtors who have done this.
I will tell you that a law firm would NOT include this as income as it cannot be argued that it is reimbursement for care, which it is NOT. Social Security is super strict about this money and a payee must provide an accounting once a year what they did with the money - it may only be used for the benefit of the person for which it is paid, the rest must be saved. It really needs to go into a special account, i.e. to Jane Smith, Payee for John Smith. This is not her account and therefor this money need not be disclosed. Any realtor telling you different or even hiking up this number is practicing law without a license first and second don't seem to know much about this type of benefit or how to account for it legally. Good luck.