1040 Extensions Due Oct. 15
Reminder: If you filed a 6-month extension for your 1040/A/EZ, your deadline is next week, October 15, to file your 1040 return.
Reminder: If you filed a 6-month extension for your 1040/A/EZ, your deadline is next week, October 15, to file your 1040 return.
A vacation home can be a house, apartment, condominium, mobile home or boat. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return. But you may not have to report that income if the rental period is short.
In most cases, you can deduct expenses of renting your property. Your deduction may be limited if you also use the home as a residence.
Here are some tips from the IRS about this type of rental property.
? You usually report rental income and deductible rental expenses on Schedule E, Supplemental Income and Loss.
You may also be subject to paying Net Investment Income Tax on your rental income.
? If you personally use your property and sometimes rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. The number of days used for each purpose determines how to divide your costs.
Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
? If the property is ?used as a home,? your rental expense deduction is limited. This means your deduction for rental expenses can?t be more than the rent you received. For more about this rule, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
? If the property is ?used as a home? and you rent it out fewer than 15 days per year, you do not have to report the rental income.
For more details on this topic, check out IRS Publication 527. It is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
From IRS Tax Tips:
Late spring and early summer are popular times for weddings. Whatever the season, a change in your marital status can affect your taxes.? Here are several tips from the IRS for newlyweds.
For more information about these topics, visit IRS.gov. You can also get IRS forms and publications at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
I graduated from Wharton in 1987. For those of you keeping score at home, that means I’ve been working at my practice for a score and a quarter plus one.? Now that I’ve been practicing for twenty-six years, many of the clients I picked up earlier in my career have children in high school or college who have part-time jobs.
One thing I continually notice is that most of these kids who work are incorrectly having federal and state income taxes withheld from their wages.? Please note that a working child will generally owe no income taxes unless wages earned exceed $5,950 (in 2012) and/or investment income exceeds $300.? Needless to say, most of the kids are getting back all the federal and state income taxes withheld during the year.
The IRS wants to help parents of working children avoid the headaches and costs of preparing tax returns for their kids who won’t earn enough to be taxed.? All you need to do is have your child write the word “Exempt” in Box 7 of the Form W-4 that is generally completed the first day of employment.? If your child previously submitted an incorrect W-4, please have them file a corrected one with their employer as soon as they can.
Here is what the IRS says in their instructions to the Form W-4:
Exemption from withholding: If you are exempt, complete only lines 1, 2, 3, 4, and 7 and sign the form to validate it. Your exemption for 2013 expires February 17, 2014. See Pub. 505, Tax Withholding and Estimated Tax.
And here are the instructions on the W-4 for line 7:
I claim exemption from withholding for 2013, and I certify that I meet both of the following conditions for exemption.
? Last year I had a right to a refund of all federal income tax withheld because I had no tax liability, and
? This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
If you meet both conditions, write ?Exempt? here .
Do yourself and your kids a favor by having him or her write the word “Exempt” on Line 7 of the W-4 form. Your working child will have more money to spend sooner (and will hopefully ask you for less of your money during that time) since no federal and state income taxes will be withheld from their wages.? And you won’t get stuck preparing a 1040-EZ for your child or paying your CPA $125 or more so your kid can get back their tax refund.
From The IRS Tax Tips Mailing:
The IRS no longer mails reminder letters to taxpayers who have to repay the First-Time Homebuyer Credit. To help taxpayers who must repay the credit, the IRS website has a user-friendly look-up tool. Here are four reminders about repaying the credit and using the tool:
1.?Who needs to repay the credit?? If you bought a home in 2008 and claimed the First-Time Homebuyer Credit, the credit is similar to a no-interest loan. You normally must repay the credit in 15 equal annual installments. You should have started to repay the credit with your 2010 tax return.
You are usually not required to pay back the credit for a main home you bought after 2008. However, you may have to repay the entire credit if you sold the home or stopped using it as your main home within 36 months from the date of purchase. This rule also applies to homes bought in 2008.
2.?How to use the tool. You can find the First-Time Homebuyer Credit Lookup tool at IRS.gov under the ?Tools? menu. You will need your Social Security number, date of birth and complete address to use the tool. If you claimed the credit on a joint return, each spouse should use the tool to get their share of the account information. That?s because the law treats each spouse as having claimed half of the credit for repayment purposes.
3.?What the tool does. The tool provides important account information to help you report the repayment on your tax return. It shows the original amount of the credit, annual repayment amounts, total amount paid and the remaining balance. You can print your account page to share with your tax preparer and to keep for your records.
4.?How to repay the credit.? To repay the First-Time Homebuyer Credit, add the amount you have to repay to any other tax you owe on your federal tax return. This could result in additional tax owed or a reduced refund. You report the repayment on line 59b on Form 1040, U.S. Individual Income Tax Return. If you are repaying the credit because the home stopped being your main home, you must attach Form 5405, Repayment of the First-Time Homebuyer Credit, to your tax return.
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