Very Confused and Needing Advice

I have a masters in accounting, so lots of tax classes, I have no idea what you are talking about.
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The problem is the terms you are using have no basis in tax reality. Nothing! Unreimbursed employee expense? What is that? Sorry but the numbers you are throwing out and what you are calling them makes no sense at all.

Someone on the ground needs to look at them because we are not going to understand what you are talking about.
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Sorry but getting back everything you withheld on 30,000 dollars income does not seem right at all.

Ask his employer for a copy of his 2011 w-2s and start matching everything up. Call the IRS they can help you. We cannot.

First of all, I'm not sure what a "transcript" is. I'm guessing you just mean the tax returns he sent in.

Secondly, I would RUN, not walk to the nearest CPA and get this looked at immediately. A bunch of red flags here and the sooner you get it straightened out, the less trouble your husband may be in and hopefully the lower the fines.

Thirdly, don't you have bank statements to see how much was deposited? I always hang on to mine for the seven years they recommend.

Bottom line, this sounds like a big mess and the sooner you go to a professional, the better.

Good luck!!!

I hear H&R Block with review your past tax returns to ensure that they were filed correctly. As you don't know what you're looking at, perhaps you should take ALL of your documents to them.

You need to find a forensic account to go through as many of his tax returns as you can find. Contact accounting firms in your area and ask for a consoltation. You may get bettter service at a small accounting and bookkeeping service than a large firm or national franchise.

You can amend your tax returns 3 yrs back and get any refunds you have coming. But if the IRS does an audit and finds mistakes and sees fraud they can go back as far as they want to, there is no statute of limitations. So get this mess cleaned up, it can effect not only student loans but any other kind of loan you and hubby apply for.

unless you know exactly what your doing, I suggest taking it to a CPA that has more access to past records and what was filed previous. You are going to need to request all filed tax returns from your FIL, and if you cant get them from him you may need to turn to the IRS themselves for documents and filed taxes. If you do that your likely to peak their interest and may cause them to take a look themselves. So be sure you want to do this! If you find out he is stealing from his kids, also think what this will do to the family, and why are adult children letting their drug addicted father do their taxes. I started doing mine at 18 when I had a full time job.

Usually, unreimbursed employee expenses are things like: if your husband pays for his own uniforms for work, or if he uses his car for work purposes and his workplace doesn't reimburse him for the mileage. Or if your husband sometimes works from home and he uses his personal computer to do the work.

I agree with the person below - if he claimed unreimbursed work expenses, there should be another page attached that details what those expenses are.

As for if your FIL did this correctly or not, I have no idea.

Is your husband an employee or an independent contractor? If he's an employee, he should receive a W-2 for his annual wages and withholding. If he's an independent contractor, he would receive 1099 forms.

I'm guessing from what you wrote that he is an employee. What kind of work does he do? Would he have incurred $25K in expenses while doing his job? In some lines of work, that is legitimate. For example, my husband is an insurance damage appraiser. In 2011 and 2012, he was an employee of a company, but he worked out of our home and spent all day on the road driving to see wrecked cars. He was able to claim all of his work mileage, plus a home office deduction and other deductions for work expenses (his phone, computer etc.) as unreimbursed work expenses, just like he would have claimed them as business expenses if he were an independent contractor on a 1099.

So knowing what your husband does for work and what those unreimbursed expenses are (there is a schedule that lists them) is important.

The $5000 isn't "extra dollars," that's what he was claiming was his taxable income for the year. He would have been responsible for paying income taxes on that amount (approximately - there are other deductions, etc. that can come into play). If what was witheld from his paychecks equalled more than the tax due on his adjusted gross income, then he was entitled to a refund. Without knowing how much was witheld, it's impossible to know whether or not that $1700 was correct.

The tax forms will list what the refund is and where it went. The IRS can't issue a refund without that information.

Basically...there's no way to tell from the info you gave whether or not anything shady is going on or if you just don't understand what you're looking at.

ETA: There is a schedule called 2106 that will list out the unreimbursed employee expenses. If business use of the home was part of this, there is a worksheet called Employee Home Office Worksheet that is used to calculate this.

Please stop trying to understand the figures -- It is long past time for your husband to take all his back tax filings to a professional and get this straightened out. He could be on the hook legally. But it is far better to have your husband say now that there is a problem, and to deal with it now even if that means paying fines etc., than to ignore it and rack up more and more years of penalties with the IRS (and possibly your state tax agency as well). Penalties, if there are any, will mount up with each passing year. It sounds as if dad might have been scamming the IRS and then skimming off the money somehow. But get a professional to figure that out.

Better to come forth, get professional help (yes, it's expensive) and start paying the piper now than letting it go and having the IRS assume your husband was a willing party to potential tax fraud.

Unfortunately, if things are shady, it's possible that your father-in-law might simply flat-out deny that he did these taxes at all. He could tell the IRS and the state that your husband is lying and that dad never helped prepare son's taxes. Your husband signed off on them as accurate and unless your father-in-law's name is actually listed on there as a "tax preparer" (which I doubt, unless dad is a CPA and does this in his official capacity), your FIL could just say he has never seen those documents. You might have to get an attorney if that happens, and from the sound of things -- it could indeed happen.

You need to ante up and hire a professional to straighten this out. NEVER let FIL do the taxes again.

It will probably cost you some $$ to get it right but you do NOT want the IRS after you.. That said, if you are filing jointly, not only can your husband get in trouble, YOU can too.

FIL sounds very fishy to me. Why on earth do his children allow him that kind of control over them?

I think you need to hire a tax professional and get this straightened out. Ultimately, your husbands signature is on the tax forms, so he has essentially approved however the taxes were filed. He will not be able to tell an auditor that "my father did it and I just signed it." It will be totally your husbands responsibility if it is ever questioned.

Your safe move is to get it straightened out immediately with a tax professional so you don't have bigger problems later.

Your FIL may have been stealing from your husband and his siblings for quite some time. Just stealing from your husband by having a portion of the return put into a personal account will be the good news. The bad news is if he defrauded the IRS, under your husbands signature, to get more returns.

Depending on what your tax professional says, you will need to notify his siblings of what was found so they can decide what to do themselves.

I think all your FIL's kids need to stop having their father do their taxes.
If they are adults, they need to get wise about doing it themselves (the software they have for it these days makes it easy to do your own) or go to H&R Block to get them done.
First job I ever had I had my Mom check over my tax return but after that (when I was out of college and starting my career) it was none of her business.
Ideally you want your deductions set up so that you break even or owe the government a very small amount.
If the government has to send you a refund check, that's your money that's been sitting there and you didn't collect interest on it while they had it.
Get your FIL out of your finances and make sure he has no access to your back accounts.

So you think (and it looks like) your DH's return was for around 5,000.00 and your FIL had 1700.00 sent to your DH's acct and the rest sent to his own acct? Wow!