Sale of home

[Possi]

I have a client who is hoping to sell her home this year. She has owned it just a little over a year and will gain about 10,000, so she anticipates.

I know the cap gains laws are changing for 2010 tax year. I did a pro-forma as if the sale was in 2009, but with changes, I can't trust this figure. It is showing no capital gains tax at all.

She makes around 30k a year and has 2 children for EIC.

Can anyone help me figure this out?
THANKS!

[Davc]

Under current law the rates change in 2011, not 2010.

[Possi]

thanks

To estimate that they might owe next year on a sale like this, I usually pull down a 1040X and make the change. That lets me see how much difference it is and takes into account all the ordinary income, cap gains and ripple effects to the State.

When I added it to the return, there was only $45 difference. No cap gains. Looks good, but I'm suspicious.

[Lion]

Cg

Isn't 2009 the last year for the 0% long term capital gain rate? So, if you're doing a 2010 pro forma, you'll need to see what's been extended and what expires.

[Bees Knees]

Isn't 2009 the last year for the 0% long term capital gain rate? So, if you're doing a 2010 pro forma, you'll need to see what's been extended and what expires.

According to TTB, page 1-10, the zero % tax rate applies for tax years 2008 through 2010. In 2011, the capital gain rate jumps back to 8% or 10% for taxpayers in the 15% tax bracket.

[Possi]

thanks y'all

I see that she will need to pre-pay about $2400.

That should keep her out of the doghouse... if not in the black at the end of the year. I will probably have her send in a little more as a small cushion. I like to bring it in pretty close, but don't want her to owe.

Thanks so much, the references are always great.

Off to cooler temps! Back in a few weeks...

~possi