Q&A: Can I amend 2007 tax forms for court settlement I claimed as income?
Question by money4nuthin: Can I amend 2007 tax forms for court settlement I claimed as income?
The school was shutdown and sued. Settlement money went to students who took out loans to attend the school. Basically, it was a small return of the tuition I had paid. I want to amend my tax return since I filed this money as income. Would I get audited?
Best answer:
Answer by bostonianinmo
You may or may not get audited, but if the settlement only made you whole again, then it’s not taxable. If your settlement was for more than the tuition you had paid, the excess would be taxable.
Don’t fear an audit on this. If the IRS questions it, the only thing that will be audited is your claim that it’s not income. As long as you have documentation you’ll do fine at audit.
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An audit is nothing to be feared, so don’t let fear of one affect any decisions you ever make. You didn’t need to declare that income so I would definitely amend to “undeclare” it and get back the tax I paid on it.