Today TaxMama® hears from Don in the TaxQuips Forum with a little confusion. “My daughter is a widow with 3 children. The kids receive Social Security income from their deceased father’s account. My daughter’s 13-year-old son earned $700 with a paper route & received a 1099-MISC with the amount in box 7 - Nonemployee compensation. I do my daughter's taxes and would like to know how her son's income affects her taxes. Do I have to file my grandson's taxes separately? The fact that he's a dependent on her return has me confused.”
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And remember, you can find answers to all kinds of questions about children’s earned income and other tax issues, free. Where? Where else? At www.TaxMama.com.
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Today TaxMama® hears from Laura in the TaxQuips Forum, with a tough question. “In 2011 my Elderly client (78) pulled all the money out of a retirement account which his wife had set up for him some years back. My client learned about the account upon her passing and withdrew all the funds not knowing there would be tax implications.
The 1099R has the box checked (TAXABLE AMOUNT NOT DETERMINED with a DISTRIBUTION CODE 7). I am trying to figure out the client’s basis. The contact at the bank has no idea what I am talking about. What should I do? Is there anything I can do to reduce my client’s taxable income?”
Where do I get the information?
And remember, you can find answers to all kinds of questions about retirement accounts and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
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Today TaxMama® hears from G in the TaxQuips Forum, with a question that raises a common issue. Let me rephrase the issue. “I used a subcontractor (or paid for parts) on a job for a customer. I only got to keep a part of the income. The rest went to pay the sub or for the materials. Why does the 1099 show the full amount?”
Am I over-taxed?
Today TaxMama® hears from Jennie in the TaxQuips Forum, with a good question. “I took out a mortgage from a private party 4 years ago. They have never sent me a mortgage interest statement. Therefore, I have never included it on my taxes. I realized that is a HUGE mistake as I would most likely benefit financially from including this. I am wondering how many years I can go back to retroactively include the mortgage interest on my taxes?”
What’s the earliest year?
Today TaxMama® hears from Jeb in the TaxQuips Forum, with a long, complicated issue. Let me summarize. “We want to close down our 3-member LLC, but there are outstanding issues. The CPA says we all need to file extensions, but one member has a big refund and wants it now. What can we do?”
And remember, you can find answers to all kinds of questions about dissolving entities and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
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How can he file sooner?
Today TaxMama® hears from Ellen in the TaxQuips Forum, who is getting conflicting information. “I had no idea, when we decided to be responsible parents to my son and the son of a family friend, that we'd have such a headache at tax time when we decided to start charging "rent" after they graduated from college!
My question is this: You indicate in other posts that I can add a portion of the common areas square feet (bath, kitchen, laundry, living etc.) to the dedicated rental square feet (i.e. bedroom) - can you point me to the IRS documentation or other source that allows that? I think it is a very reasonable and logical approach (otherwise the rental would get no depreciation on the kitchen, bath, and laundry but they contribute to the wear and tear, significantly!). The reason I ask is I received an opinion from a CPA that the only "reasonable" method for our situation is to use the bedroom square feet only.”
What about common areas?
Today TaxMama® hears from Grandma in the TaxQuips Forum, who tells us. “We have a rental, which was left to us in a trust. It only brings in $500.00 a mo which is $6,000 a year. It is very old and has quite a few repairs each year. We have always filed under the trusts name. We got to thinking, maybe we are not required to file, since it generates so little?
And remember, you can find answers to all kinds of questions about trusts and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link - it's free!]
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How much is little enough?
Today TaxMama® hears from KH in the TaxQuips Forum, with this question. “My parents are willing to give me a rental property they own. The house is in their name and they currently claim it on their taxes. There is a mortgage on the property as well. We are currently trying to refi the house to get the interest rate down. Is there a way to do the refi, keep it in their name, but then allow me to claim it during tax time?
Without keeping the low basis?
Today TaxMama® hears from Janet in the TaxQuips Forum, with this question. “Is an LLC registered in NV and doing business in CA required to pay California’s $800 LLC taxes?”
Did I get it right?
Today TaxMama® hears from Kresha in the TaxQuips Forum, with this problem. “My friend received a 1099-Misc for money from a life insurance company. They said they overpaid her when her husband died, but didn’t supply any proof; nor did she send any money back to them. Now she has received a 1099-Misc - box 7 non-employee compensation for the overpaid amount. This would cause her to not only pay tax, but self-employment tax as well. Neither she nor her deceased husband did any sort of work for this money.”
How do we report this odd 1099-MISC?
Today TaxMama® hears from Michele in the TaxQuips Forum, with this question. “My client files MFJ with a son. The son made $1,237 on a W-2 and he received a K-1 with $137 in box one (business income) and $1,832 in the self-employment box. Does a K-1 qualify as investment income? Will the parents be able to claim him as a dependent?”
How does the family report the child’s K-1 income?
Today TaxMama® hears from Farmer in the TaxQuips Forum, with a reasonable question. “Can you take a deduction of Mutual Fund operating expenses (12b fees?) on Schedule A, subject to the two-percent floor?”
Are these fees deductible?
Today TaxMama® hears from Chell in the TaxQuips Forum, with an interesting question. “Can someone take an educational credit for books and Fees while they are taking a class in a foreign country? Plus without a proper address to fit into the tax software, the tax return will not be able to be efiled. It is for a 4 yr degree.”
learning and traveling
Today TaxMama® hears from Scarulli in the TaxQuips Forum, with a good question. “My husband was critically ill and hospitalized for a month in 2012. I visited him daily (sometimes more often) as that was the only way I could get information from his doctors relating to his condition. Can I deduct the mileage back and forth to the hospital?”
Lots of driving
Today TaxMama® hears from Yimmy in the TaxQuips Forum, who wants to know. “I moved into a newly constructed home in Oct. 2012. Are the sales taxes paid on the construction materials used in building the home tax deductible? The home is in Georgia.”
Lots of sales taxes paid
Today TaxMama® hears from Paul in the TaxQuips Forum, who says. “On my W-2 why does Code W say "Employer contribution to HSA" when it is the employee who made the contributions?”
Confusing Codes
Today TaxMama® hears from TaxSeason in the TaxQuips Forum, with this question. “Is there an easy or quick way to figure the commuting miles for people who file a Schedule C? (ie...5% of business miles)?”
Know any shortcuts?
Today TaxMama® hears from Joe in the TaxQuips Forum, with a reasonable question. “I am going after an ex client that owes me $11K. Once you get the judgment how do you go after their assets? Does a lawyer handle that?”
Do I need a PI, or what?
Today TaxMama® hears from TacoBrielle in the TaxQuips Forum, with a common misconception. “I can't seem to get a definitive answer about this, so I'm asking here. I filed my federal return with a refund amount of $1,132. This refund went to the IRS for previous tax debt that was still owed to them. However, I had to amend my return because I received a late W-2 that I had forgotten. With the addition of this W-2, my refund was changed to $840. So I technically 'owe' $292 with the amended return. Since the IRS received the $1,132, do I still owe the IRS this money with my amended return?”
Am I paying twice?
Today TaxMama® hears from tbachrodt in the TaxQuips Forum, with this question. “I recently filed my taxes. I am already receiving the American Opportunity Credit and Lifetime Credit. I just received an additional 1098T in the mail that I forgot was coming. Do I need to file an amended return, even though I am already eligible for the 2 education credits?”
Should I file again?
Today TaxMama® hears from Goran in the TaxQuips Forum, with this issue. “My client and his mom were on the mortgage together. That property went through foreclosure. Naturally, they file separate tax returns. Which one will report the 1099-C?”
Should Mom or son report the income?
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