Assignment of Income Lawyers

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Most Common Finance Law Issues:

Who Is Taxed on an Assigned Salary?

For income tax purposes, income is not taxed to the person who received the income, but the person who earned the income or who owns the property from which the income was generated. So, if you have arranged with your employer to pay all of your salary to your parents, you will still be liable for the taxes on your salary, even though you did not receive it.

Who Gets Taxed on an Assigned Stock Dividend?

Income is taxed to the person who owns the income-producing property. Thus, if you own the property that generated the income, you will be liable for the taxes on the resulting income. This concept applies also to rental income from rental properties.

In order to avoid paying taxes on the income, you must give away the underlying income-producing property. You will not be taxed on the income once you have surrendered you control over the income-producing property.

Is an Agent Taxed on Income He Received for a Principal?

When an agent receives income from a third party that is intended for the pricipal, the income is generally not taxable to the agent but to the principal. For example, if a salesman receives money from a customer in exchange for goods that he is selling on behalf of a company, the company would be the entity that would be taxed on that money. Even though the income may appear to have been earned by the agent, the resulting income is still taxed to the principal since the agent is simply collecting income for the principal. The agent will receive his/her income in the form of a salary.

How Else Can I Avoid Paying My Taxes?

A taxpayer may also sell the anticipated income that he/she will earn in the future in exchange for adequate consideration. However, this is not a complete avoidance of tax on the income since you will be taxed on the excess of the sales price of that anticipated income over your cost of acquiring that anticipated income, which is usually zero if you did not purchase it from someone else. Yet, it is possible to reduce the total income tax that you have to pay, since anticipated income often is sold at a discounted price.

Furthermore, the selling of anticipated income will not turn what would be ordinary income into capital gains income. A taxpayer will generally not enjoy the preferential capital gains rate on the anticipated income that he sells.

Can an Attorney Help Me with My Tax Problems?

Tax laws are complex and ever-changing. Although there are various tax preparation softwares on the market that may help you with your tax problems, they cannot provide the same level of service that a tax attorney can. If you are unsure about what constitutes your income or you need someone to represent you before the IRS, a tax attorney can help you.

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Last Modified: 10-08-2014 02:32 PM PDT

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