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I Would Have Never guessed?

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    #1

    I Would Have Never guessed?

    Had a client this morning who came in with his 96 year old moms tax stuff wondering if she had to file. She had a fair amount of tax exempt interest, 20K in SS, and just a little other interest and dividend income. I put things in and also read thru filing requirements. Based on the above she would not have to file.

    However the catch 22 appeared to be .... She sold her home in 2013 for a tidy profit, however under the threshold for having to report the sale. But reading Pub 17 under filing requirements and Gross income filing requirements it had a statement that said ... Gross income includes income from the sale of your main home even if you can exclude all of it.

    Son decided not to file inspite of above???? What do you think?
    Tags: None
    #2
    I'm wondering why he bothered to ask, since he apparently had no intention of filing.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

    Comment

      #3
      Originally posted by ddoshan View Post
      But reading Pub 17 under filing requirements and Gross income filing requirements it had a statement that said ... Gross income includes income from the sale of your main home even if you can exclude all of it.
      And Pub 523 says: Reporting the Sale

      Do not report the 2013 sale of your main home on your tax return unless:

      You have a gain and do not qualify to exclude all of it,

      You have a gain and choose not to exclude it, or

      You received Form 1099-S.

      I guess you would be required to file a return but not report the sale if excluding all the gain. Strange---

      Comment

        #4
        Getting all of the facts

        Things to consider:

        Don't know what you mean by "a tidy profit."

        If there was a Form 1099-S issued, it might be wise to ask further questions.

        ( The IRS may even want to sniff around "home sales" to look for past depreciation, past homebuyer's credits, ... who knows??? )

        Also, the amount/type of tax exempt interest received and reported on line 8b of Form 1040 can become a factor in the potential taxation of Soc Sec benefits? (See applicable worksheet for details.)

        JohnH may be closer to the truth...

        I would personally be very careful before I told them they do NOT have to file, however.

        FE

        Comment

          #5
          He probably decided not to file because there was no chance of a refund. (grin
          ChEAr$,
          Harlan Lunsford, EA n LA

          Comment

            #6
            Harlan: Obviously - why didn't I think of that?

            I agree with FE as well - no way I'd tell him she doesn't need to file, as long as there is any ambiguity.
            "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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