Do I have to file an amended return if I forgot to report a small amount of compensation for conducting a funeral?

by Judith Herron, CPA | Jun 03, 2019

askacpaiconLast year, an individual asked me to conduct a funeral, and they paid me $250. I forgot to report it when I filed my taxes. Must I file an amended tax form, or can I donate that exact amount to some charity and just be clear with it? I don't mind filing an amended return, but it sure seems like a lot of work. I want to do the right thing. Can you advise?

An amended return should be filed to change income, deductions, or credits that were reported differently on your filed tax return. If you incurred expenses associated with this income-producing activity, you would include those in the amended return as well. You can only deduct items in the amended return that were incurred during the tax year, so a current donation or expenses cannot be included.   

One possible consideration is that the $250 was meant as a gift, not as compensation for services. You can receive cash gifts without reporting them on your tax return. If you know it was meant as compensation, or if conducting funerals is part of the duties associated with your occupation, then it’s income. If you’re not sure, you should talk with a CPA who can provide more specific detail for your circumstances.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Judith Herron, CPA, is with Markovitz Dugan & Associates in Pittsburgh, Pa.  

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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