Search found 2983 matches
- Sun Mar 17, 2024 8:02 pm
- Forum: Personal Finance (Not Investing)
- Topic: Amended 1099s from many years ago; can I amend return?
- Replies: 16
- Views: 1724
Re: Amended 1099s from many years ago; can I amend return?
I remember something about the 3 year limitation applying to getting a refund from the IRS. In other words, you can't ask for a refund on a return more than 3 years ago. As this story is unfolding, apparently the decedent didn't pay enough in taxes while alive and an IRS collection agent has been assigned to collect those taxes from the estate. So the estate is not actually looking for a refund but a correction to the amount of taxes owed by the estate. For that, maybe the 3 year limitation does not apply. Just speculation on my part. Interesting situation. I think your speculation is likely correct. The fact that the tax remains unpaid may be the key factor. IRC 6511 imposes a 3-year limit on claiming a refund or credit of overpaid tax. B...
- Sat Mar 16, 2024 12:16 pm
- Forum: Personal Finance (Not Investing)
- Topic: Amended 1099s from many years ago; can I amend return?
- Replies: 16
- Views: 1724
Re: Amended 1099s from many years ago; can I amend return?
I'm not aware of anything in the law that would permit the filing of an amended return beyond the 3-year statute in order to claim a refund or credit for tax withholding that was omitted from the original return.
- Thu Mar 14, 2024 10:01 pm
- Forum: Personal Finance (Not Investing)
- Topic: How best to make up for the failure to file a tax return
- Replies: 38
- Views: 2636
Re: What free tax filing software allows one to attach a statement when e-filing?
The penalties might be more than you think. The late filing penalty is likely to be 100% of the tax or $435, whichever is less. And there might be an additional late payment penalty of 0.5% per month. And there will be interest.
After any late penalties are assessed, there is a good chance they can be cancelled by requesting a waiver based on the IRS First Time Abatement policy. Can be requested by phone or letter.
- Mon Mar 11, 2024 12:33 pm
- Forum: Personal Finance (Not Investing)
- Topic: 1099 Received Many Years After Death
- Replies: 8
- Views: 1665
- Mon Mar 11, 2024 12:30 pm
- Forum: Personal Finance (Not Investing)
- Topic: Wage allocation for part-year NY/NJ resident working in NJ
- Replies: 1
- Views: 261
Re: Wage allocation for part-year NY/NJ resident working in NJ
Yes, wages should be $5,000 for NYC on Form IT-360.1
The NY IT-203 should show a credit for tax paid to NJ for wages taxed to NJ during NY residency period. There should be no credit on the NJ-1040 because no tax was paid to NY during the NJ residency period.
With the NJ W-2, both wages and NJ tax withholding need to be split between the NJ-1040NR and the NJ-1040.
The NY IT-203 should show a credit for tax paid to NJ for wages taxed to NJ during NY residency period. There should be no credit on the NJ-1040 because no tax was paid to NY during the NJ residency period.
With the NJ W-2, both wages and NJ tax withholding need to be split between the NJ-1040NR and the NJ-1040.
- Sat Mar 09, 2024 10:22 am
- Forum: Personal Finance (Not Investing)
- Topic: 1099 Received Many Years After Death
- Replies: 8
- Views: 1665
Re: 1099 Received Many Years After Death
The proper procedure would be to file a 2023 estate income t/r to show the $9k received and then distributed to you. This can be done even though the 2021 1041 was marked as a "final" return.
- Fri Mar 08, 2024 8:44 pm
- Forum: Personal Finance (Not Investing)
- Topic: 1099 Received Many Years After Death
- Replies: 8
- Views: 1665
Re: 1099 Received Many Years After Death
A few questions:
1. What is the year-end date of the final estate income tax return 1041 that was filed?
2. How many 2023 1099s were issued in the name of the estate, and for how much total income?
3. Were the 1099 distributions in the name of the estate deposited into an estate account, or directly into your personal account?
1. What is the year-end date of the final estate income tax return 1041 that was filed?
2. How many 2023 1099s were issued in the name of the estate, and for how much total income?
3. Were the 1099 distributions in the name of the estate deposited into an estate account, or directly into your personal account?
- Fri Mar 08, 2024 11:19 am
- Forum: Personal Finance (Not Investing)
- Topic: Has Anyone Had This Scenario/Situation With The IRS
- Replies: 21
- Views: 2971
Re: Has Anyone Had This Scenario/Situation With The IRS
I don't think the financial institution will provide a copy of the cancelled check unless the customer requests it.muddlehead wrote: ↑Fri Mar 08, 2024 9:28 am I'm not sure if "the back of a cancelled check" is a thing anymore in our digital age
Wouldn't the financial institution my check was drawn/cleared from provide that instantly if it was?
- Thu Mar 07, 2024 7:09 pm
- Forum: Personal Finance (Not Investing)
- Topic: Has Anyone Had This Scenario/Situation With The IRS
- Replies: 21
- Views: 2971
Re: Has Anyone Had This Scenario/Situation With The IRS
It's difficult to know what actually happened, but I can think of 3 possibilities: 1. Proper tax information (SSN, tax form, tax year) was not written on the check 2. SSN was written on the check but was not legible 3. SSN was on the check and legible but the IRS erroneously credited the payment to some other taxpayer Any of the 3 could cause the IRS to cash the check but not properly credit your account. You said you told the IRS (and provided evidence) that the IRS cashed your check for full payment. But you did not say whether the IRS requested, and you submitted to them, a copy (front and back) of the cancelled check. The back of the cancelled check would contain an IRS Document Locater Number and/or other information that the IRS can u...
- Wed Mar 06, 2024 9:31 pm
- Forum: Personal Finance (Not Investing)
- Topic: Filing a deceased parent's 1099
- Replies: 8
- Views: 961
Re: Filing a deceased parent's 1099
I agree with the comments above that the income belongs on Mom's 2023 tax return. The penalties were for years when Dad and Mom filed jointly, so the IRS payments for the penalty abatements and associated $1,200 interest were issued jointly to: "Dad (decd) & Mom". Mom received all the funds so the full $1,200 interest income should be reported on her 2023 income tax return filing single. No special notation is needed on her Schedule B. The fact that the joint 2023 Form 1099-INT was issued in Dad's SSN (3 years after his death) can safely be ignored.
- Mon Mar 04, 2024 6:29 pm
- Forum: Personal Finance (Not Investing)
- Topic: Help with Form 1041 Reporting of Real Property Sale by Estate
- Replies: 6
- Views: 484
Re: Help with Form 1041 Reporting of Real Property Sale by Estate
Having $35 remaining in the estate account after 9/30/23 does not prevent the estate from filing a final income tax return fye 9/30/23. Using a 9/30/23 year-end might result in the estate income tax return being filed late, but as you stated, with no tax on the estate income tax return there should be no late penalties.
- Mon Mar 04, 2024 6:03 pm
- Forum: Personal Finance (Not Investing)
- Topic: Possible Roth IRA over-contribution 14 years ago - cause for concern?
- Replies: 24
- Views: 3216
Re: Possible Roth IRA over-contribution 14 years ago - cause for concern?
The tax court has now ruled that the Form 1040 SOL for excess contributions is not retroactive to years prior to 2022. It is expected that this decision would also carry over to missed RMDs excise taxes. https://www.irahelp.com/slottreport/tax-court-rules-new-secure-20-statute-limitations-excess-contribution-penalty-not As stated, this decision could be appealed, but at least we know how much of an excess contribution actually receives IRS attention- 26mm! :P Unfortunately, the Secure Act legislation itself was not conclusive regarding retroactivity. I briefly reviewed a summary of the tax court case ( Couturier v Commissioner .) In that that case, the taxpayer made a large rollover IRA contribution in 2004 that was deemed an excess contri...
- Mon Mar 04, 2024 2:43 pm
- Forum: Personal Finance (Not Investing)
- Topic: Help with Form 1041 Reporting of Real Property Sale by Estate
- Replies: 6
- Views: 484
Re: Help with Form 1041 Reporting of Real Property Sale by Estate
Assuming no one lived in the house after the date of the owner's death, I agree there should be a capital loss allowed as a pass-through to the beneficiaries. Without any unusual local circumstances, a sale that close to date of death should not require an appraisal. Even if the attorney/accountant incorrectly assumed no deductible loss on the sale, what is their explanation for omitting the sale from the tax return in the presence of Form 1099-S? The capital loss may be used against the ordinary income such that the loss passing to the beneficiaries is less than $19K. And why no deduction on the tax return for attorney or accountant fees? Thank you, MarkNYC. The estate was opened in Nov. 2022. The estate paid an attorney fee of $2k in 202...
- Mon Mar 04, 2024 2:39 pm
- Forum: Personal Finance (Not Investing)
- Topic: Taxes 2022: Better to claim a college kid as a dependent? Or should the kid file their own return?
- Replies: 24
- Views: 5275
Re: Taxes 2022: Better to claim a college kid as a dependent? Or should the kid file their own return?
That's not quite accurate. If a child is under age 19 or under age 24 and a full-time student, then the child's income (up to a maximum of $12,500) can be included on the parents' tax return on Form 8814 - but only if the child's income is limited to interest, dividends, and capital gain distributions.White Coat Investor wrote: ↑Sun Mar 03, 2024 11:38 am You can't put the kid's income on your return because he or she isn't a minor any more. Adults file their own returns.
In the OP's case, it's not the child's age that prohibits including the child's income on the parents' return. It's because the 18-year old child (1) had wage income and (2) had income tax withholding during the year.
- Mon Mar 04, 2024 2:18 pm
- Forum: Personal Finance (Not Investing)
- Topic: Help with Form 1041 Reporting of Real Property Sale by Estate
- Replies: 6
- Views: 484
Re: Help with Form 1041 Reporting of Real Property Sale by Estate
Assuming no one lived in the house after the date of the owner's death, I agree there should be a capital loss allowed as a pass-through to the beneficiaries. Without any unusual local circumstances, a sale that close to date of death should not require an appraisal. Even if the attorney/accountant incorrectly assumed no deductible loss on the sale, what is their explanation for omitting the sale from the tax return in the presence of Form 1099-S?
The capital loss may be used against the ordinary income such that the loss passing to the beneficiaries is less than $19K.
And why no deduction on the tax return for attorney or accountant fees?
The capital loss may be used against the ordinary income such that the loss passing to the beneficiaries is less than $19K.
And why no deduction on the tax return for attorney or accountant fees?
- Mon Mar 04, 2024 11:27 am
- Forum: Personal Finance (Not Investing)
- Topic: Under-Withholding. Requested Waiver. Awaiting Response from IRS.
- Replies: 5
- Views: 713
Re: Under-Withholding. Requested Waiver. Awaiting Response from IRS.
With unexpected late-year income, you could have reduced or eliminated the penalty by making a 4th quarter estimated tax payment by Jan 15th to cover that unexpected income. Since you chose not to make that payment, why should the IRS agree to waive the penalty? I don't like your chances, but maybe you'll get lucky.
- Thu Feb 29, 2024 9:40 pm
- Forum: Personal Finance (Not Investing)
- Topic: Charitable contribution carryover when taking standard deduction
- Replies: 2
- Views: 741
Re: Charitable contribution carryover when taking standard deduction
If you have a charitable contribution carryover and claim the standard deduction in any of the carryover years, the carryover going forward gets reduced by the amount of the contribution that would have been deductible if you had used itemized deductions instead of the standard deduction.
- Thu Feb 29, 2024 9:28 pm
- Forum: Personal Finance (Not Investing)
- Topic: Selling my previous house
- Replies: 3
- Views: 687
Re: Selling my previous house
I bought my current home on sept 2021, i lived in my previous house (the one i'm selling) from 2016 to sept 2021 and had a tenant up until November 2023. i've reviewed the rules multiple times (https://www.irs.gov/pub/irs-pdf/p523.pdf) and I believe i will be able to claim the tax exclusion up to 500k because i file married filling jointly. In order to claim the exclusion, the previous house must be sold no later than 3 years after moving out - thus Sept 2024. The portion of the gain on the sale attributable to depreciation actually claimed during the rental period is not eligible for the principal residence exclusion and will be taxed at a maximum rate of 25%. You say you "lived in my previous house from 2016 to Sept 2021" but d...
- Wed Feb 28, 2024 8:46 pm
- Forum: Personal Finance (Not Investing)
- Topic: NY State tax treatment of Accrued Market Discount for US Treasury Note
- Replies: 66
- Views: 5134
Re: NY State tax treatment of Accrued Market Discount for US Treasury Note
AMD does not come from the Treasury security or as a result of the obligation. The government is not a party to that gain, it is the result of private market pricing. It differs from interest which is paid by the US government to the holder of the bond, which all agree is state tax exempt. I think this is the crux of the argument as to why the interest may not be excluded from NY tax. This is precisely the realization that prompted me to raise the question in the first place. So I have come full circle but alas still no definitive real world answer. Sometimes gray areas in taxes have to be dealt with. You did not indicate how much dollars are involved, but you basically have two choices with your tax return. Either play it safe and include...
- Wed Feb 28, 2024 8:26 pm
- Forum: Personal Finance (Not Investing)
- Topic: NY State tax treatment of Accrued Market Discount for US Treasury Note
- Replies: 66
- Views: 5134
Re: NY State tax treatment of Accrued Market Discount for US Treasury Note
NY law explicitly excludes that from NY taxation when it comes from US government obligations. I think somewhere in here may be the assumption that is in question in the chain of reasoning. AMD does not come from the Treasury security or as a result of the obligation. The government is not a party to that gain, it is the result of private market pricing. It differs from interest which is paid by the US government to the holder of the bond, which all agree is state tax exempt. I think this is the crux of the argument as to why the interest may not be excluded from NY tax. Upon maturity, the AMD gain is federally taxable as ordinary income in the form of interest. This applies not just to market discount Treasury bonds to also to market disc...
- Tue Feb 27, 2024 4:50 pm
- Forum: Personal Finance (Not Investing)
- Topic: Tax return - Grantor irrevocable trust
- Replies: 21
- Views: 2165
Re: Tax return - Grantor irrevocable trust
I started doing 1041s (trust returns) a couple years ago and found you will need the business version of TurboTax to do a 1041. Can't get it on MacOS so went with TaxAct online. You can play around with it online and see how it works as they don't charge until you actually file. The only thing I don't like is they can't import data from Schwab and it has to be entered. Import works from some firms ... they have a list someplace. In general, I would say that if you can file returns, you can file a 1041. It will generate the K-1 you need to file your individual returns. The two things different for me were the 643(e)(3) election (treating capital gains as income and not trust principal) and 663(b) election (treating income distributed in the...
- Mon Feb 26, 2024 8:58 pm
- Forum: Personal Finance (Not Investing)
- Topic: 1041, Form 706, and Estate Atty questions
- Replies: 6
- Views: 781
Re: 1041, Form 706, and Estate Atty questions
I am back again after following thru with the good advice provided earlier. Reading thru Pub. 559 and 1041 instructions, I was able to identify which income is to be reported in the 1040 and which belongs to the 1041 and filled out the 1041 accordingly. My late father always had the habit (deliberate) of overpaying on his taxes. This year's refund will be even greater since a portion of the income is now reported on the 1041. The 1041 reflects an owed tax payment, as this is a first-time submission of a 1041 with no prior 1041 ES payments made (of course) I am concerned a penalty may be owed as it is a $1000 threshold. The instructions say estimated tax payments paid by an individual before death must remain on their final tax return and n...
- Mon Feb 26, 2024 10:56 am
- Forum: Personal Finance (Not Investing)
- Topic: Question on Mechanics of Roth IRA Rollover/Conversion
- Replies: 14
- Views: 1156
Re: Question on Mechanics of Roth IRA Rollover/Conversion
And what is the distribution code(s) in Box 7 of the 1099-R (see comments by MarkNYC above)? Distribution code "G" is on the actual 1099-R. Should I change that to a "2" based on what MarkNYC said above? Or should I leave it as "G" and just be ready to show the IRS proof of the rollover to Roth IRA if I ever get audited? I've been expecting someone to eventually be confronted with this problem. I think code G (direct rollover) is the correct code, although code 2 would be more practical and descriptive for tax reporting. Code G is almost always seen with a tax-free rollover of a 401K to an IRA. But code G is not automatically a tax-free transaction. My guess is the employer tax program or person using it to ge...
- Sun Feb 25, 2024 12:49 pm
- Forum: Personal Finance (Not Investing)
- Topic: Federal Tax correction window
- Replies: 2
- Views: 324
Re: Federal Tax correction window
The SECURE Act 2.0 reduced the penalty (aka "excess accumulation tax") from 50% to 25% for the failure to take an RMD , starting with tax year 2023. In addition, if the omission is corrected within a 2-year "correction window" then the penalty is further reduced to 10%. I think most taxpayers who realize the error and quickly take the late RMD would request a reasonable cause waiver of the penalty on Form 5329 rather than agree upfront to pay the reduced 10% penalty. In the past the IRS has granted the waiver to essentially everyone who requested it. But the new reduced 10% penalty based on a quick correction might indicate that the IRS going forward might not be so gracious in granting full penalty waivers. We'll have t...
- Sat Feb 24, 2024 9:41 pm
- Forum: Personal Finance (Not Investing)
- Topic: Traditional to Roth IRA recharacterization - amended tax return?
- Replies: 4
- Views: 673
Re: Traditional to Roth IRA recharacterization - amended tax return?
...isn't the purpose of the recharacterization to treat my original $6K contribution as if I had made it on a Roth basis? In which case, wouldn't the $577 earnings be tax free? You're correct. The recharacterized contribution is deemed to have been made to the second IRA on the original contribution date, and the transfer of the contribution and associated earnings from the traditional IRA to the Roth IRA does not generate any taxable income. Since you recharacterized the 2022 traditional IRA contribution in March 2023, Turbo Tax for some reason assumes you filed your 2022 tax return prior to the recharacterization. If that had happened, a 2022 amended return would be needed to either remove the 2022 IRA deduction or remove the nondeductib...
- Wed Feb 21, 2024 4:40 pm
- Forum: Personal Investments
- Topic: Inherited IRA account requirement?
- Replies: 14
- Views: 848
Re: Inherited IRA account requirement?
Leaving aside any IRS requirements, consider the practicalities. The new, receiving custodian (in this case Vanguard) cannot open a new IRA account in the name of an individual who is deceased. And only the old custodian has direct knowledge of the identity of the beneficiary(s) of the decedent's IRA. The existing process makes sense.
- Wed Feb 21, 2024 12:37 pm
- Forum: Personal Finance (Not Investing)
- Topic: Sched A - TT reducing state income tax by refund???
- Replies: 5
- Views: 656
Re: Sched A - TT reducing state income tax by refund???
We usually take the standard deduction (MFJ) but are able to itemize in 2023. I am trying to understand why TurboTax is adjusting the state income tax payments we made in 2023 by the refund we received in 2023 for overpaying 2022 taxes... I understand the math to get to $327. But I don't understand why TT is bothering to do any of this when the instructions for Sched A line 5a explicitly say NOT to reduce it by the prior year refund.... What am I missing? Or is this a bug with TT? I searched this forum and have been googling for hours but can't figure it out. Any help is appreciated. This comes under the category of a "Recovery." On page 25 of IRS Publication 525 there is a section " Recovery for 2 or more years ". With...
- Mon Feb 19, 2024 9:44 pm
- Forum: Personal Finance (Not Investing)
- Topic: Trust distributions from principal?
- Replies: 40
- Views: 2909
Re: Trust distributions from principal?
The trustee does not have to know in advance. In general terms, any distributions on behalf of the beneficiary will be taxable income to the beneficiary to the extent of the trust's net income after expenses. Any amounts beyond that will come out of trust principal.
- Mon Feb 19, 2024 9:14 pm
- Forum: Personal Finance (Not Investing)
- Topic: Trust distributions from principal?
- Replies: 40
- Views: 2909
Re: Trust distributions from principal?
For the tax issues, I would suggest a CPA or other tax professional with sufficient knowledge and experience in the area of fiduciary income tax.startabatha wrote: ↑Mon Feb 19, 2024 8:59 pm Thank you. Well this and other answers to my questions from corporate trustees adds to my growing list of oncerns that many corporate trustees do not know what they are doing.
At this point, I think I need a family member to take care of distribution decisions for my disabled child once I die and tryst is funded. But who would be the best choice for selecting someone for handling trust tax issues?
- Mon Feb 19, 2024 8:37 pm
- Forum: Personal Finance (Not Investing)
- Topic: Trust distributions from principal?
- Replies: 40
- Views: 2909
Re: Trust distributions from principal?
For income tax purposes, a trustee cannot arbitrarily "code" a distribution as coming from income or coming from principal, regardless of trust provisions. I think the trustee may not have a clear understanding of fiduciary income taxation.startabatha wrote: ↑Mon Feb 19, 2024 6:22 pm I heard back from said corporate trustee who clarified things saying:
When we are paying directly to a vendor the payment is typically coded as a non-deductible expense from principal, not income. If the payment is coming from income then it is reportable as income to the beneficiary.
- Mon Feb 19, 2024 6:24 pm
- Forum: Personal Finance (Not Investing)
- Topic: How to deal with excess 401k contribution/distribution
- Replies: 5
- Views: 375
Re: How to deal with excess 401k contribution/distribution
Dear all, I am a little confused with all the guidance out there, so thought of seeking clarity. Heres the situation: 1. I had an excess contribution of $ 8937.14 for 2023. Confusion due to job change :annoyed 2. When I contacted the 401k provider, they distributed $9,978.76 back to me (before April 15th). I am assuming the $9978.76-$8937.14= $1041.62 is earnings 2. The 1099-R will be provided in 2025. What do I do now: 1. Report the excess $8937.14 distribution for my 2023 tax return- HOW? 2. File the 1099-R next year (2025) for my earnings of 1041.62? Any ideas/suggestions are welcome. The IRS link posted above appears to be outdated. Starting with tax year 2022, both excess deferrals and excess contributions get reported as income on li...
- Mon Feb 19, 2024 12:00 pm
- Forum: Personal Finance (Not Investing)
- Topic: Trust distributions from principal?
- Replies: 40
- Views: 2909
Re: Trust distributions from principal?
... local bank corporate trustee ... answered me by saying he's never had to defend a distribution and further he looked back at all the special needs trusts he made distributions from last year and all the distributions were coded as from principal. This doesn't sound right. If the special needs trust is not taxed as a grantor trust, it likely is taxed as a complex trust, where all amounts distributed to (or on behalf of) a beneficiary are included in the beneficiary's income to the extent of the trust's Distributable Net Income. (Sec 662(a) It does not matter how the trustee "codes" it. An exception could apply if the amount distributed is properly deemed a "gift" to the beneficiary, but this would require the specifi...
- Sun Feb 18, 2024 6:47 pm
- Forum: Personal Finance (Not Investing)
- Topic: When to report an IRA 60-day rollover
- Replies: 10
- Views: 588
Re: When to report an IRA 60-day rollover
Since 20% tax was withheld, which you did not want, this suggests that the funds were distributed from an employer retirement plan rather than from an IRA. The rules, procedures and tax reporting can be different depending on whether the funds went from IRA to IRA or from employer plan to IRA. Can you clarify this?
And was the check made out to you or to Fidelity in a manner such as "Fidelity, FBO Old Guy IRA"?
- Sat Feb 17, 2024 1:53 pm
- Forum: Personal Finance (Not Investing)
- Topic: 1099-R Refund of Excess Roth 401k - Distribution Code
- Replies: 7
- Views: 655
Re: 1099-R Refund of Excess Roth 401k - Distribution Code
I think the improper Code 1 on the 1099-R is a potential problem. It suggests an early distribution from a traditional 401K, not from a Roth 401K, which suggests a taxable distribution and possible 10% penalty. The Box 2b (taxable amount) is blank - it is not "zero." There is a difference. Blank suggests a possible taxable amount.
I would push hard for a corrected 1099-R with the proper code: B8. If you cannot obtain a corrected 1099-R, you should retain all documentation which helps explain the nature of the distribution, because you might receive some future IRS correspondence regarding this distribution.
I would push hard for a corrected 1099-R with the proper code: B8. If you cannot obtain a corrected 1099-R, you should retain all documentation which helps explain the nature of the distribution, because you might receive some future IRS correspondence regarding this distribution.
- Sat Feb 17, 2024 1:25 pm
- Forum: Personal Finance (Not Investing)
- Topic: Tax treatment of real estate loss
- Replies: 11
- Views: 1259
Re: Tax treatment of real estate loss
Your last paragraph makes a case that, since items were stored in the property, it became personal property, and that no loss would be deductible. I see your point here, but that would be a hard pill for the owners (or for me if this was my property and loss) to swallow, especially because no one could now know what, if anything, was stored there. It's not just that the property was used personally for storage, but perhaps more importantly, it was not used as a rental property for the last 10 years prior to sale, and apparently there was no attempt to rent it during those 10 years. See Treas Reg. 1.165-9(b)(1) below. " (b) Property converted from personal use. (1) If property purchased or constructed by the taxpayer for use as his per...
- Fri Feb 16, 2024 1:06 pm
- Forum: Personal Finance (Not Investing)
- Topic: Tax treatment of real estate loss
- Replies: 11
- Views: 1259
Re: Tax treatment of real estate loss
I think there are 2 relevant issues. The first is, how much is the loss, if any, if it was a sale of rental property. When a personal residence in converted to rental, the basis for depreciation and calculating a loss (upon sale) starts with the lesser of (1) adjusted basis or (2) FMV on the date converted to rental. If the $550K of the "grossly overspent" amount for "improvements" only raised the FMV by, say, $250K, then the basis for depreciation and any loss calculation would start at $610K not $901K. The result might be little to zero loss upon sale. This scenario seems more plausible than claiming the property lost 30% of its value over the course of 12 years. An appraisal should have been done at the time of conver...
- Fri Feb 16, 2024 12:05 pm
- Forum: Personal Finance (Not Investing)
- Topic: Mortgage interest cap??? [MFS tax filing status at risk]
- Replies: 32
- Views: 2527
Re: Mortgage interest cap??? [MFS tax filing status at risk]
That's not correct. When spouses file separate returns, there are rules and limitations as to what deductions each spouse can take. In the IRS FAQ link below, see the 3rd question, which deals with itemized deductions for MFS filers.
https://www.irs.gov/faqs/itemized-deduc ... -deduction
- Fri Feb 16, 2024 8:48 am
- Forum: Personal Finance (Not Investing)
- Topic: Paying Taxes for an Irrevocable Trust
- Replies: 6
- Views: 565
Re: Paying Taxes for an Irrevocable Trust
If substantially all of the trust assets are distributed to the trust beneficiaries during 2024, then the 2024 trust tax return will be a final-year return and there will be no tax liability for the trust to pay because all trust income and capital gains will pass-through to the beneficiaries and the associated tax will be paid on the individuals' 2024 income tax returns.
- Mon Feb 12, 2024 6:44 pm
- Forum: Personal Finance (Not Investing)
- Topic: Practicalities of switching to married filing separately from married filing jointly.
- Replies: 4
- Views: 878
Re: Practicalities of switching to married filing separately from married filing jointly.
If you file a joint federal return for 2023 and file separately for 2024, your required estimated payments for 2024 are based on your share of the tax on the 2023 joint return. To figure your share of the 2023 joint tax, you should re-figure your 2023 taxes as if you filed MFS. If your 2023 tax MFS would have been $15K and your spouse's 2023 tax MFS would have been $10K, then 60% of the actual tax on your jointly filed 2023 tax return belongs to you, and 40% belongs to your spouse..
- Sun Feb 11, 2024 8:26 pm
- Forum: Personal Finance (Not Investing)
- Topic: 1099R code P - Excess contribution, now what?
- Replies: 8
- Views: 898
Re: 1099R code P - Excess contribution, now what?
Hello Alan! This was excess deferral. We also filled a 402(g) excess deferral (return if excess contribution) form with fidelity when we identified this in March 2023 and this was returned to us in March 2023. Sorry for the dumb question - I do not understand what I should check when you say “ check your 2022 return to see if the wages line exceeds your Box 1 W-2 income by this amount”. We have 2 W2 from the same employer and I am unclear what numbers I should compare in my w2 with what number in our tax return. Add up the Box 1 totals for both your W-2 forms and compare it to the figure on line 1a of your 2022 Form 1040. Is line 1a the same or is it higher by around 161? Thanks! It is the same (not higher by 161). You should also check to...
- Sat Feb 10, 2024 2:46 pm
- Forum: Personal Finance (Not Investing)
- Topic: Do tax Payments Count as Trust Distribution
- Replies: 10
- Views: 926
Re: Do tax Payments Count as Trust Distribution
If a trust sends a tax payment to the IRS, it will be treated as a trust estimated tax payment to be applied against any trust tax liability as shown on the trust tax return. Instead, the trust can elect to have the estimated tax payment allocated to the trust beneficiary(s) by properly completing and timely filing Form 1041-T. A trust estimated tax payment that is allocated to the beneficiary should be treated as a distribution to the beneficiary, and the income and estimated tax payment should be reported on the beneficiary's K-1.
- Sat Feb 10, 2024 1:25 pm
- Forum: Personal Finance (Not Investing)
- Topic: RMD Question?
- Replies: 46
- Views: 4273
Re: RMD Question?
.. there is not, in fact, any RMD first rule. I think people misunderstand the regulations. When I read the rules, my understanding was that the RMD must be satisfied each year, and any distributions in a year are deemed by the IRS to apply to the RMD first. If the RMD is not satisfied, then there are tax consequences to that including the excess accumulation penalties and possibly excess Roth IRA contribution penalties. But if the RMD is eventually satisfied in the year (as in the $60K Roth then $20K RMD example), then the IRS doesn't care about the order. .. I believe the rules say that *as long as you satisfy the RMD*, the order doesn't matter. I believe you're mistaken. The RMD amount must be taken first, before any amount is distribut...
- Fri Feb 09, 2024 2:09 pm
- Forum: Personal Investments
- Topic: Contributing to 2023 Roth IRA with no 2023 income
- Replies: 35
- Views: 2936
Re: Contributing to 2023 Roth IRA with no 2023 income
Employers provide the same information that is printed on W-2s to the IRS. Or you need to show self-employment income, e.g., via 1099s. Brokerages also provide information (5498s) to the IRS. It's not hard for the IRS to match this information to figure out who's eligible to contribute and who's not . Historically it's apparently been very difficult for the IRS to figure this out. There have been countless stories on this forum and elsewhere of taxpayers who've made Roth IRA contributions for multiple prior years and never heard from the IRS, and only later realize they were ineligible to make the contributions due either to lack of taxable compensation, or more commonly, due to modified AGI being too high. I've never seen or heard of the ...
- Thu Feb 08, 2024 9:04 am
- Forum: Personal Investments
- Topic: Reporting capital gain on sale of home
- Replies: 11
- Views: 1676
Re: Reporting capital gain on sale of home
Per my comments above, you must report the sale on your tax return.
- Tue Feb 06, 2024 3:21 pm
- Forum: Personal Finance (Not Investing)
- Topic: Tax topic: NIIT tax handling of foreign income/ credit
- Replies: 9
- Views: 1444
Re: Tax topic: NIIT tax handling of foreign income/ credit
So, basically, if you take foreign tax as credit, it stops right there (as you believe should be the right approach), but if you take the foreign tax as a deduction, it lets you apply it again for NIIT. How can that be consistent :confused Sec. 164(a)(3) allows, in general, a federal income tax deduction for "State and local, and foreign, income, war profits, and excess profits taxes." The Net Investment Income regulation 1.1411-4(f)(3)(iii) states: " Taxes described in section 164(a)(3). State, local, and foreign income, war profits, and excess profit taxes described in section 164(a)(3) that are allocable to net investment income pursuant to paragraph (g)(1) of this section. Except to the extent specifically expected from ...
- Mon Feb 05, 2024 6:26 pm
- Forum: Personal Investments
- Topic: 1099r distribution less than rollover check
- Replies: 25
- Views: 1875
Re: 1099r distribution less than rollover check
I called Empower and they said that the shipping fee had to be deducted after the gross distribution because it was not a plan fee. So they cannot change the 1099R box 1. I asked if the fee then is considered taxable because that $30 was not rolled over and they said it is not taxable either because box 7 shows code G for a direct rollover. When I asked about the discrepancy then between my 1099R and my 5498 and about that raising a red flag with the IRS they didn't have a good answer. Since they aren't the ones who will have to deal with the IRS if this becomes a problem, they didn't really address it. With a qualified plan distribution to a plan participant, if part of it is directly rolled over and part is not, two Forms 1099-R should b...
- Mon Feb 05, 2024 10:48 am
- Forum: Personal Finance (Not Investing)
- Topic: Distributing income from a trust
- Replies: 8
- Views: 913
Re: Distributing income from a trust
I'm just wondering if the IRS has any limitations on how income is distributed and if there are any particular reporting requirements beyond Schedule K-1? Thank you for any insight. The regulation above states that the character of a beneficiary's income retains the same character, in the same proportion, as the Distributable Net Income of the estate/trust. So if 40% of the trust's DNI is qualified dividends, then each beneficiary's income received should be 40% qualified dividends. Two exceptions: if the trust document specifically allocates distributed income differently, or local law requires it. IRS phone agents are generally not well-trained on technical aspects of the law. If you arbitrarily allocate the character of income different...
- Sun Feb 04, 2024 5:41 pm
- Forum: Personal Finance (Not Investing)
- Topic: Taxable state tax refund and going from single to MFJ
- Replies: 1
- Views: 271
Re: Taxable state tax refund and going from single to MFJ
No, it does not. Regardless of your spouse's filing status for 2023, your spouse's state tax refund is taxable in 2023 to the extent that the amount of the refund deducted in 2022 provided a tax benefit.ducksauce9 wrote: ↑Sat Feb 03, 2024 10:12 am Ordinarily, my spouse's state tax refund would be taxable additional income on Schedule 1 Line 1. However, since we are now filing joint taxes, does the fact that my state taxes were well over $10k last year mean that my spouse's refund is not taxable?
- Fri Feb 02, 2024 3:11 pm
- Forum: Personal Finance (Not Investing)
- Topic: Complex situation with 401k 1099-R that I received
- Replies: 14
- Views: 1033
Re: Complex situation with 401k 1099-R that I received
The OP should first understand the difference between excess deferrals, which did not happen, and excess contributions, which apparently did. There are several methods of correcting excess contributions. One method is to recharacterize the excess as employee after-tax contributions. Another method is to return to the employee the excess contributions plus earnings with a corrective distribution. If the employee's entire account balance is distributed during the year that the excess contribution took place, the distribution is considered to contain the excess contribution (plus earnings). Thus no recharacterization as after-tax would be allowed. Since excess contributions cannot be rolled over, there is an excess rollover contribution to the...
- Fri Feb 02, 2024 1:17 pm
- Forum: Personal Finance (Not Investing)
- Topic: No way to stop estimated tax penalties from accruing if you pay after January?
- Replies: 31
- Views: 3489
Re: No way to stop estimated tax penalties from accruing if you pay after January?
No, I am not hung up on the terminology. The instructions for form 2210 state the following: Table 1—List your estimated tax payments for 2023. Before completing line 11, enter in Table 1 the payments you made for 2023. Include the following payments. • Any overpayment from your 2022 return applied to your 2023 estimated tax payments. Generally, treat the payment as made on April 15, 2023. • Estimated tax payments you made for the 2023 tax year, plus any federal income tax and excess social security and RRTA tax withheld. • Any payment made on your balance due return for 2023. Use the date you filed (or will file) your return or April 15, 2024, whichever is earlier, as the payment date for these purposes. Please see the third bullet point....