Planning your taxes properly can be the difference between achieving your goals and being on the street, as this taxpayer found out.

This taxpayer came to us with a $40,000 assessment and a house full of children. But the children weren’t hers. She had put together a home for orphan children so they would have a place to live and good support structure. She treated them as if they were hers.

She was assessed $40,000 of income as the state had associated her social security number with payments of state aid for the children. She used the money to take care of the kids. How was she getting taxed? It wasn’t her income!

At the Piedmont Tax Clinic, we took these lemons and made lemonade. After engaging a volunteer attorney, we helped her form a nonprofit for her work with the community, filed amended returns showing the income and expenses, and worked with the state to have all payments associated with the nonprofit’s tax ID, not the individual taxpayer.

The taxpayer ended up in a better situation, and those children continue to get the support they deserve.