Do you need to pay taxes for unclaimed property from old employer?

Yes, unclaimed property is generally taxable in the year you receive it, but it depends on what type of property it was originally. The $67k likely represents income that should have been paid to your cousin previously (like final wages, a bonus, pension distribution, etc). Since it came from her employer, it's most likely considered income and would be taxable. However, if it represents something that wouldn't normally be taxable (like a refund of her own contributions), then it might not be fully taxable. Your cousin should contact her former employer to get clarification on exactly what this money represents. She should expect to receive a 1099-MISC or other tax form from either the state unclaimed property office or her former employer next January. If she doesn't receive any tax forms, she still needs to report the income. I'd recommend she set aside a portion for taxes now rather than being surprised next April.

After reading this, I wanted to share my experience with unclaimed property and taxes. I was in a similar situation last year when I discovered I had about $12k in unclaimed funds from an old retirement account. I was confused about the tax implications, so I tried using https://taxr.ai to figure it out. The process was really straightforward - I uploaded the documents I had received from the unclaimed property division and the system analyzed them to tell me exactly how it should be treated for tax purposes. In my case, since it was from a pre-tax retirement account, I did have to pay income tax on the full amount. The tool also helped me understand which forms I needed and how to report it correctly. Based on your cousin's situation with the $67k, I'd definitely recommend checking out taxr.ai since it can help determine the specific tax treatment based on the source of the funds. The analysis saved me from making a costly mistake on my return.

I wanted to follow up about my experience with taxr.ai after my skeptical questions. I decided to try it with my own smaller unclaimed property situation ($4,300 from an old insurance policy). I was genuinely surprised by how helpful it was! The system asked specific questions about the source of the funds and reviewed the documentation I had. It determined that in my specific case, the money was a refund of premiums I had paid previously, so most of it wasn't actually taxable - something I would have completely missed and overpaid on. The analysis was detailed and even cited the specific tax code sections that applied to my situation. For anyone dealing with unclaimed property tax questions, it was definitely worth using and saved me a lot of confusion and potentially paying taxes I didn't actually owe.

Just want to add something important here - if your cousin is having trouble getting information from her former employer about this money, she should try contacting the IRS directly. They might have records of what was reported by the employer. I tried calling the IRS for a similar issue last year and spent literally DAYS trying to get through. After getting nowhere, I found a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 15 minutes. There's a demo video of how it works here: https://youtu.be/_kiP6q8DX5c Given the amount of money involved ($67k), getting definitive information from the IRS about how this should be treated tax-wise would be really helpful. They can tell you if any tax forms were filed related to this payment in previous years and how to properly report it now.

I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I've been trying to reach the IRS for 3 weeks about an issue with my tax transcript. It actually worked exactly as described. I got a call back in about 20 minutes connecting me directly to an IRS representative who helped resolve my issue on the spot. I was absolutely shocked that it worked after all my failed attempts. For anyone dealing with unclaimed property tax questions like the original poster, being able to speak directly with the IRS can make a huge difference, especially for determining if that $67k should be reported as income, capital gains, or something else. They were able to check records from previous years which helped clarify my situation.

Something nobody has mentioned yet - if this $67k is from wages or compensation that should have been paid years ago, your cousin might be eligible to use income averaging with Form 8697 to reduce the tax impact! My brother had a similar situation with unclaimed property from his old employer (about $30k) and he was able to spread the tax burden across multiple years rather than getting hit all at once. It saved him thousands in taxes! She should definitely look into this option if the money represents earned income from previous years. The key is documenting when the money should have originally been paid to her.

Has your cousin checked if any of the money might actually be interest that accumulated while the property was being held by the state? Many states add interest to unclaimed property, and that interest component would definitely be taxable as interest income (reported on Schedule B). I had unclaimed property from an old bank account and when I got it back, about 30% was actually interest that had accumulated. I had to report that portion separately on my taxes.