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In 2013 I claimed and received unclaimed property in the State of Colorado. This property is unclaimed wages from a company I used to work for in the mid 2000's. I received no documentation with this property regarding any withheld taxes (or anything else). I can find little or no guidance from the IRS site on how I might handle this.

My efforts to reach the company have resulted in no further information about the wages.

What is the appropriate way to handle this on my Federal return? As current year gross income?

Does anyone have any links, pointers, or guidance for handling these wages?

I earned these wages in a state other than that I currently live, might it be necessary to file for this income in the State of Colorado?

Thanks for any advice.

  • Removed the real-estate tag... Unless there's some real-estate question hiding in there? – littleadv Mar 29 '14 at 18:56
  • Do you not know the year of the income? If you do, then do you know how you reported it in that year? If you already claimed this as income in the year in which you were entitled to receive it, then this is moot (unless in the interim you amended it out or subsequently deducted it). – NL7 Mar 29 '14 at 19:05
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These unclaimed wages were presumably yours for the taking in Year X when employer paid your other wages. Maybe this is just about uncashed paychecks. In that case, they would have appeared on your W-2 for that year. If you filed your return including that W-2 income, then this is likely not new income.

This would be a constructive receipt evaluation. Income occurs when you have the right to income, whether or not you have actual receipt of it. For example, if you are paid via cash drops into a piggy bank but you wait a week (for the start of a new tax period) to withdraw your cash from the piggy bank, then the money was constructively received on the day it went into the piggy bank. This prevents taxpayers from structuring their actual receipt of income, for tax purposes or otherwise, in ways at odds with their true economic position. You can't delay taxable income that is legally yours simply by refusing to accept it when you have the right to it.

The wages were income at the time your employer proffered the paycheck. You did not cash it, but I suspect that you filed it on that year's taxes. There's a slight wrinkle that when the check went stale your ability to access the money was not so straightforward. However, you still had the legal right to the money, so my perspective is that the analysis did not change when the check went stale.

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You should probably talk to a professional tax adviser. This doesn't seem to be a common situation.

From the top of my head, without being a lawyer or a tax professional, I think of it like this:

  1. The income is for year 200..., and should have been taxed then. You constructively received it then, and not claimed it.

  2. You probably had withholding from this salary that should have been reported to you then on W2 (you can get a copy from the IRS).

  3. I'd say you're to amend the return for year 200... with the new income, if it wasn't reported then. Although if more than 3 years passed (6, if its 25% or more of your gross income for that year), its beyond statute.

However, as I said, I'm not a lawyer and not a professional tax adviser, so you cannot in any way rely on my opinion for anything that would result in not paying any taxes or penalties you should have. You should talk to a licensed tax professional (EA/CPA/Lawyer licensed in your State).

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