Got tax related questions? ASK AWAY!

usctrojancpa

usctrojancpa

Well-known member
As the title states, if anyone has any income tax related questions...feel free to ask.  I'll only be answer questions in general terms unless I know all the specifics of the underlying question so some answers may be very broad.  Ask away...
 
That is awesome Trojaman! I am suprised that not everyone on TI is jumping on this opportunity to ask you their tax questions! :)

Dudes! take advantage of this opportunity now!
 
Panda said:
That is awesome Trojaman! I am suprised that not everyone on TI is jumping on this opportunity to ask you their tax questions! :)

Dudes! take advantage of this opportunity now!
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It's all about giving to the forum/s that have given me so much...it's only fair.
 
Please explain the new method to calculate capital gains tax based on selling a residence with a definition of the rule for ownership of a primary residence (I asked this on the IHB but it was never fully answered).
 
irvinehomeowner said:
Please explain AMT and at what income range will it start rendering the mortgage/property tax writeoffs less effective.
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Ahhh AMT, the ultimate blackbox of the tax code which no one can really explain.  Basically AMT's main purpose was to eliminate tax shelters (primarily passive activities) that the rich used many, many years ago.  However, since the income and exemptions levels were not adjusted much over time by the IRS more and more middle class people are getting adversely effected by AMT.  The first deduction that most middle class people will lose is the property tax deduction.  I'm not sure what the exact number is that your property tax deduction begins to go away but I think it's around an AGI of over $250k for married folks (I'd have to research it).  Remember that you are only allowed to write-off interest on a mortgage of up to $1m so if you have a $2m loan then you should only deduct 1/2 of the interest expense on the 1098. 

However, most people don't know that there is a small reduction/phase-out of itemized deductions that begins at an AGI of over $166,800 (as of 2009) for married folks.  The formula for the reduction is the amount $166,800 above is multiplied by 3% and then reduced by 1/3 with a maximum deduction of 26.67%.  For example, let's say you guys have an AGI of $200,000...your itemized reduction would be $200,000 - $166,800 = $33,200 x 3% = $996/3 = $332.  So as you can see the reduction is minimal (1% of an AGI above $166,800).  However, the reduction is not applicable if you are subject to the AMT tax.
 
irvinehomeowner said:
Please explain the new method to calculate capital gains tax based on selling a residence with a definition of the rule for ownership of a primary residence (I asked this on the IHB but it was never fully answered).
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From my understanding, if you use a home as your primary residence for 2 out of the last 5 years you are allowed to exempt up to $250k of a gain ($500k if you are married).  The gain is calculated based upon the net sales proceeds before mortgage payoffs minus your cost basis.  Now if you have rented your primary residence and you still qualify for the gain exempt, you will need to pay the tax on the depreciation that you took on the home (called depreciation recapture tax).  If you own the home for less than a year and sell it than the gain will be treated like ordinary income at your marginal tax rate.  If you own the home for over 1 year and don't qualify for the gain exemption, then you long term capital gains tax will be based upon what your marginal tax rate is (I don't know the various %s off the top of my head).
 
Just wondering if you receive a gift of 200,000 for a down payment for a house from a foreign person for example an uncle. Is there any tax form you have to file? If so when and how to file this form? Do you need to pay taxes on that sum?
 
st_t1m317 said:
Just wondering if you receive a gift of 200,000 for a down payment for a house from a foreign person for example an uncle. Is there any tax form you have to file? If so when and how to file this form? Do you need to pay taxes on that sum?
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Typically it is the giver that would be liable for the gift tax (a way to prevent wealthy families to transfer their wealth and avoiding the death tax), not the receiver.  That being said, if the giver is a citizen of another country the IRS would have a hard time taxing that gift.  Thus, gifts received by an individual are never taxable whether they be from a US resident or non-US resident.
 
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