[Tamara07]

My father just passed away on September 6th of this year. He was on social security disability when he passed away and had received his back lump sum payment. Between the payments he had begun to receive and the lump sum payment he has about $10,000 in his bank account, I think. And according to one of the letters he received from the IRS it shows about 10 or 11,000 due in back taxes.

Now, Im the only heir. Im an only child and my dad wasn't married when he passed. I will receive the death certificates some time this week and have to go close out his account. I need to know what to do with the money. Does the IRS get it back? If I close out the account am I now liable for the back taxes? Will they levy this money since every penny of it is social security disability money?

Can someone please give me some insight into this? I know my dad will be rolling over if I have to give this money back to the government or if they levy his money. They shouldn't have given him the money if they were going to turn around and take it from him, and now me.

[MukatA]

You must file all the unfiled tax returns of your father and the last tax return till the date of his death.
You should take help of some tax professional. You should first settle with IRS. You can always call IRS for help and directions.

[AtlantaTaxExpert]

Tamara07:

As your dather's only child and heir, you are by default the executor of his estate.

One of the duties of the executor is to pay all unpaid bills, file all required tax returns, and pay (from his estate assets) these bills and taxes. Once this is done, you can then get what is left.

The law is clear about who gets what in which priority. I suspect that payment of overdue federal income taxes is right near the top, if not #1, on the priority list.

MukatA's advice to get professional tax help is REAL good advice.

[Tamara07]

Ok neither one of you answered my questions. I already know what you have told me.

What I need to know is the IRS laws in reference to back taxes and social security disability? Ive read several different things on irs.com and ssd.com and am trying to clarify what the reality is going to be.

Part of the law states that the government wouldve never been able to take my dad's money to begin with if taking his money wouldve put him at or below the poverty line - which it wouldve. So why would they be able to take it now?

THE ONLY MONEY OR "ESTATE" that he has is what he got while he was on social security disability. Plain and simple. That's all the money that my dad had in the world. He didn't even have a refrigerator before he started getting these payments. The government should not have given him this money to begin with if they were going to take it back from him.

Please do not reply unless you actually know what you are talking about and can reference exactly what I am asking, otherwise its just too confusing and frustrating. Thank you. :) :confused:

[AtlantaTaxExpert]

Tamara:

The disability payments should have stopped when your father died. The payments he did get that are unspent in savings or checking accounts ARE his estate, which must be distributed to pay bills and/or taxes in the order of priority noted earlier.

As the executor, your first order of business is to determine WHO gets paid first! If you pay the medical bills first, then find out the taxes had a higher priority under the law, the IRS (and the state where he lived) CAN and WILL expect you to pay the taxes from your personal assets. Ignorance of the law will NOT be considered an acceptable excuse.

However, if you follow the correct procedures, then pay in order of priority until the money runs out, you will NOT be held responsible for any balances owed, be it to the hospital, the IRS or the state.

BOTTOM LINE: If you are not sure how to proceed, GO GET PROFESSIONAL LEGAL HELP! You can pay any legal fee using the estate money. It is EXTREMELY important that you do it right the first time.

[ScottGem]

First, I think your attitude here leaves a lot to be desired. Both Mukat and ATE are highly knowledgeable and respected experts on this site. While I understand why you think they didn't answer your question, there was no call to attack them the way you did. They were trying to help.

The problem here is I don't think they can give you a black and white answer without knowing many more details. The closest they can come is to state (as ATE did) that money owed the government generally is the #1 priority. And SSA would not be exempt from a tax lien.

As to why the money was paid if he owed it to the IRS, you have to understand they are two different departments. Unless the IRS had filed a tax lien, the SSA would pay out the money.

Now, if your father had no money as you claim, I don't see how he would owe taxes unless they are from a long time ago. If it was so long ago, then a lien would have been in place. So this is where Mukat's and ATE's advice come into play. You need to check his returns and file any outstanding ones. Only then, can you determine whether he does, in fact, owe that much in back taxes. Once you have determined that, you can see how to distribute his estate.