Taxes 2024: 7 On Your Side, experts answer viewer questions
SAN FRANCISCO (KGO) -- Have a question about taxes or filing your tax returns? 7 On Your Side is here to help.
7 On Your Side and a team of tax experts from United Way Bay Area answered questions about changes to the tax law, new deductions, deadlines, and much more.
United Way Bay Area's Free Tax Help can get your taxes done right by one of their experts for free! You may qualify for more than $8,000 in refunds and earned income tax credits. Call 211 or visit UWBA.org/taxhelp to get started today.
Other experts who helped out during the tax chat are the IRS, California Society of CPAs, and Golden Gate Society of Enrolled Agents.
Viewer name: Patricia
Viewer question: For 2022 I did not have enough taxes withheld from my income. I then paid in installments with a penalty in 2023.. Can these payments be deducted on my 2023 taxes?
Volunteer name / organization: Laura Ross, CPA
Answer: If these were federal tax payments, they aren't deductible, and the payments were being applied to the 2022 tax year, so you would not be applying them to the 2023 tax year. If you are talking about state tax payments, then you would be doing that on a cash basis for deducting them on your federal return, however, you are limited to a $10,000 tax (both income and property) deduction on Schedule A on your personal return so extra payments in a given year generally don't help people.
Viewer name: Monica
Viewer question: My dependent passed away last May. Because I took care of her for less than 6 months, will I still be able to file as head of household and claim her?
Volunteer name / organization: Francis Sameon, CPA
Answer: I'm sorry for your loss. There are some general rules for dependents. You'll need to elaborate what type of dependent you had - whether it was a child or a specific type of relative. If your dependent was a child, a child who was born or died during the year is treated as having lived with you more than half the year if your home was the child's home more than half the time the child was alive during the year.
If your dependent was not a child, if they were a member of your household or a specific type of relative, I'd ask whether they received more than half of their financial support from you. If yes, you should be able to claim that dependent and file as Head of Household.
Viewer name: Jeanne
Viewer question: I received money from a trust of my deceased aunt. How do I claim this on my taxes. I file a short form
Volunteer name / organization: Laura Ross, CPA
Answer: If you were a beneficiary of the trust, it will issue you a Schedule K-1 which will give you the taxable information. If the money was the result of an inheritance, where your aunt died and left you a sum of money and the trust distributed this to you, then it is not taxable. You'll need to determine if you are a beneficiary of the trust or not before filing your taxes.
Viewer name: Darlene
Viewer question: I have a rental property and due to erosion, I recently had the backyard renovated. The work started in mid December 2023 and ended in late January of this year. Can I claim depreciation for the amount spent in 2023 or do I need to depreciate after the work was done in 2024?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: The tax law states that a taxpayer can claim depreciation when the work has been "Placed in Service" meaning when it is complete and ready for its intended purpose. From what you have said, it seems to me that depreciation should start in 2024 and not 2023.
Viewer name: Steve
Viewer question: I received a 1099-R, code K, for my IRA from a trust company, on a note they were holding on my behalf for a 30K total distribution, although I didn't receive one penny, for a bankrupt investment company shut down by the SEC for fraud. While the company declared bankruptcy and the court has appointed a receiver, there is no guarantee any funds will be located for distribution. Is there any way I can offset this 2023 "distribution" and pay the tax at some point in the future should funds be located and distributed?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: I'm a little unclear from the information you sent if the bankrupt investment inside the IRA or held in a regular investment account. Either way, the information from the Form 1099-R needs to be reported on your 2023 tax returns. If the bankrupt investment is inside you may not get any deduction until the IRA has been totally liquidated. If it is held outside the IRA, then you may claim a loss but you have to wait until it has be officially been declared "bankrupt".
Viewer name: Antonio
Viewer question: I have not received my W-2 tax statement from See's Candies company. I tried calling the company and I have even e-mail and no success.
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: I would do one of two things or even both. 1) Call the IRS at 800-829-1040 and inform them of your situation. Bear in mind that that number is the IRS' main telephone number and you may not speak with an expert. 2) See's in headquartered in South San Francisco. Their phone number is 650-583-7307. Ask them for a replacement immediately and if they don't you will call the IRS.
Viewer name: Kat
Viewer question: My husband and I both receive social security. Our other taxable income is less than the California standard deduction. Do we need to file state tax return?
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: If you are married filing joint and are over 65 years old, you are not required to file a California tax return if your income was below $28,700. (under 65 the threshold drops to $25,900). You may still want to file a return if your income is below that amount if you would be due a refund. Your Social Security benefits are not taxable income in California.
Viewer name: Cynthia
Viewer question: My mother has dementia, I'm trying to help with her taxes. I am not sure but I don't think she filed during the last few years. She is receiving SSI, pensions only. How do I begin to get her taxes on track? She has very little paperwork that I could locate!
Volunteer name / organization: Laura Ross, CPA
Answer: Most likely your mother did not have a filing requirement. If her pension income was less than $15,700 for the year then she most likely did not. If you find her income was more than that start by filing the current year. It's not unusual for older people to be under the filing requirement. The SSI comes into play if her pension goes over the $15,700.
Viewer name: cindy
Viewer question: my tax return 1040/2020 refund back to me $3027 but i have not received it. i called irs many times but can't get through live person. please can i get help from you. i checked my tax transcript and does should refund -$3027 sit there thank you so much
Volunteer name / organization: Amanda Boston, EA
Answer: Unfortunately we are unable to contact the IRS in your behalf without a Power of Attorney for you. You may want to call the IRS first thing in the morning and do expect to be on hold for several hours. Even us professionals are on hold for hours with a "direct" line. There is much delay in the refunds that were supposed to be issued during the pandemic.
Viewer name: DL
Viewer question: I have an HSA account. H&R software says in CA you have to report all dividends and unrealized gains and losses? Is that right? My HSA sent me all of 2023 monthly statements so I should have enough information to accurately fill out the IRS form that goes with it?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Yes, California does not recognize HSAs. Therefore, you cannot deduct your contributions to the HSA and have to report the income the HSA earns. On the positive side, if you are able to itemize your deductions, you can add the medical payments the HSA paid.
Viewer name: Miya
Viewer question: I would like to claim my mother as a dependent on my tax return. If she received the IRA required minimum distribution of $7800, does this count as her income? If that is the case, would I not be able to claim her as my dependent since the threshold for dependent income is $4700?
Volunteer name / organization: Laura Ross, CPA
Answer: The IRA distribution does count as taxable income, so that eliminates her as your dependent.
Viewer name: Bill
Viewer question: I began renting my vacation home in 2023, but only for a few peak months of the year. It was used personally the remainder of the year. I intend to continue to rent part time in 2024. Can any recurring or one-time expenses (utilities, mortgage, prop tax, etc.) be deducted to offset the rental income I received? How is this calculated?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: Yes, there is a calculation based on the number of days rented and the number of days personal use. This is calculated on the Schedule E, Rental Form. There is a place to enter the number of days personal use. If you let others use it for less than fair rental value, this also counts as personal use. You do not get 100% or the deductions, they are prorated.
Viewer name: Alana
Viewer question: Tax service that can process my taxes with form # 593. As of now no tax service has knowledge of how to process my taxes. Appreciate the help
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: Most tax professionals will be able to help you prepare the return to show the sold real estate. The Form 593 shows the amount of the sale withheld for taxes for California. If the preparer that you are speaking to is familiar with how to report the real estate sales on the tax return, they can incorporate the Form 593 information in the tax preparation..
Viewer name: Dario
Viewer question: My question is I think my wife and I are not having the correct amount of taxes withdrawn from our pay. Is there an accurate online tool we can use to calculate the taxes? Thank you.
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Go online to the IRS website (www.IRS.gov) and search for Form W-4 and the instructions.
Viewer name: JoAnn
Viewer question: I am going to have a penalty this year due to withdrawing extra IRA money. I know I will need to pay it first, but how can I appeal the penalty and maybe get some/all of it back? Thanks!
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: Please take a look at the instructions to Form 5329 because there is a long list of exceptions to the penalty for early withdrawal from an IRA. File Form 5329 with your tax return and input the appropriate code. The tax is still due on the IRA distribution since you took the money from the IRA. Examples of exceptions include purchasing a new home, paying for health insurance, paying for medical expenses, paying for college tuition, having a new child or adopting a child, etc. Read the instructions carefully to see if any of these exceptions apply to you.
Viewer name: Mary
Viewer question: My 105 year old mother died early last year. Her total income was $10,250.52, which included $5003.70 from Social Security. Do I have to file a "final" tax return?
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: It is a good idea to file the FINAL tax return to claim any refunds was due to your mother, also, this will close out your mother's tax account.
Viewer name: Shelley
Viewer question: I live in California and I bought a new car in 2023. How do I know how much of the registration fee I paid through the dealership at the time of purchase is deductible.
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: You can only deduct the tax amount. You should see this amount on the purchase agreement. Alternatively, you can go on the DMV website and search for the Vehicle Registration Fee (VLF) calculator. You will need the license plate number and the last 5 digits of the vehicle VIN. You can use this great calculator for any vehicle you own and not just a new car.
Viewer name: Lori
Viewer question: My elderly parents ( mid 90s) live in an independent living apartment. My mother has mid stage dementia and my father has chronic back problems. Both use walkers. They require outside caregivers for support with medications, bathing and dressing, food preparation, moving safely around the apartment and companionship . Their Caregivers are 100 % paid for by my parents, not through Medicare or any other insurance or public programs. Is any of this support tax deductible and if so what percentage?
Volunteer name / organization: Loreley Fernandez-Davila, EA California Society of Enrolled Agents
Answer: Your parents can report their unreimbursed out-of pocket medical expenses on Schedule A. The qualifying deduction is 7.5% of their AGI. The total deduction will be the greater of the standard deduction ($27,700 + $3,000) or their total itemized deductions from Schedule A.
Viewer name: John
Viewer question: I am retired and considering moving soon to Nevada to save on state taxes. My wife is still working in Silicon Valley for the next few years. We file Married Filing Separately. What does one need to do to convince Franchise Tax Board that I moved to Nevada but my wife is staying in California? Obviously my driver's license and car registration will be changed to Nevada and my permanent address will be Nevada. My financial institutions will be notified of my new Nevada address. Anything else?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: First question is where is your wife living? If you are living together in Nevada you are Nevada Residents. If she lives in CA, then you have to count the number of days that each of you spend in CA. Then half of your income could be considered her income based on community property rules for CA. You may want to talk with an attorney about a post nuptial agreement to separate your assets so that you can avoid community property issues, but you cannot live together for more than 6 months. CA will want to keep you as a resident as long as you can. You should register to Vote in NV and have healthcare providers in NV.
Viewer name: Anthony
Viewer question: Stock options purchased at $2 and sold at $20. The stock split 10 times. What purchase price do I enter. Does the purchase amount slip too? Or, do I just enter the original purchase price? Thank you
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: The per share price of the stock would be changed by the splits. Hopefully your 1099-B from the broker will show the adjusted cost basis for you. An example of how the per share cost basis changes is this: you own 100 shares of stock in a corporation with a $15 per share basis for a total basis of $1,500. In a 2-for-1 stock split, the corporation issues an additional share of stock to the shareholder for each share the shareholder owns. You now own 200 shares, but your total basis is still $1,500. Following the stock split, you must reallocate your basis between the original shares and the shares newly acquired in the stock split. Your basis per share is now $7.50 ($1,500 divided by 200) for each of the 200 shares.
Viewer name: Kathy
Viewer question: My parent passed away end of 2022 and filed his final tax return in 2023. He revived a 1099-R for a pension payment received beginnng January 2023. It's less than 2k but Turbo Tax won't let me file since he passed before current tax filing year. If I amend is 2022 return, Turbo Tax reflects him owing. Do I need to file a return for this 1099-R and if so, how?
Volunteer name / organization: Larry Pon, CPA/EA, Cal CPA & GGEA
Answer: Your parent would have filed his last tax return in 2022. Any income received after death will need to be reported on a Form 1041 for the Estate for 2023. Do not amend the 2022 tax return because the income was received in 2023.
Viewer name: Phyllis
Viewer question: Did the Fed Tax for my boyfriend for year 2022 but still haven't gotten a refund. No way to talk to a real person for the refund delay.
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Go to the IRS website (www.IRS.gov) on the main page you will see "Get your refund status. You will be able to check refund status for tax years 2021, 2022, and 2023.
Viewer name: Spencer
Viewer question: Am I able to claim a loss on a rental property if it is not my main business?
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: If you are not a real estate professional, the losses are considered passive activity loss. The passive activity loss from rental properties can be used against the income from other passive activities. Any losses not used in this year will be rolled forward to the next tax year. There are exceptions for active participants with low income, or being a real estate professional.
Viewer name: Debra
Viewer question: I was scamed last year for $400,000.00 dollares, I need help to what to do
Volunteer name / organization: Laura Ross, CPA
Answer: There are a few situations where losses from a "scam" are deductible. It's not a simple process to show this on a tax return with the proper documentation, so you would probably need the help of a professional to determine if your situation qualifies and how to present it.
Viewer name: Gail
Viewer question: Is there a list of possible tax deductions or categories for a widow who has returned to part time work after retirement?
Volunteer name / organization: Francis Sameon, CPA
Answer: To my knowledge, there is no specific category of deductions for widows. Available deductions are what you'd find on Form 1040 Schedule A and these include:
Medical and dental expenses (subject to a 7.5% of AGI hurdle)
State and local taxes which include:
Real property taxes
Personal property taxes (eg Vehicle license fees VLF on your CA DMV statement)
Mortgage interest and points (might be subject to limitations depending on your filing status and principal loan amount)
Gifts to charity (eg cash and non-cash donations to 501(c)3 organizations)
Casualty and theft losses
Viewer name: Dhananjay
Viewer question: I am filing as a single person, taking standard deductions, and have CoveredCA health coverage. Because of CoveredCA, I am owing over $4,500 in taxes due to the IRS! How can I reduce or get rid of this amount due? I use Turbo Tax to file my return every year. Thank you.
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: What happened here is that you told them your income was lower than it came out to be. You had qualified for a lower premium than you should have. Thus you owe the difference in premiums back. There is really nothing you can do. At least it is only $4500, I had to tell someone they owed $20k back due to the sale of their home bumping their income up so much.
Viewer name: Eva
Viewer question: I'm a senior, 71 years of age. I last did my taxes in 2019 because I had a part time job. I received some of the tax relief payments in 2020 due to the covid payouts but I have not filed any taxes since 2019. I don't know if I need to file at all. Maybe the state? Please advise. Thank you
Volunteer name / organization: Loreley Fernandez-Davila, EA California Society of Enrolled Agents
Answer: If you file Single and your only source of income is Social Security, then you do not need to file if you receive $25,000 or less ($32,000 MFJ). If you have other income plus the $25,000 of Social Security income, then you will most likely need to file.
Viewer name: Diego
Viewer question: What's the best way to take advantage of any tax breaks you may qualify for?
Volunteer name / organization: Laura Ross, CPA
Answer: Most tax breaks involve spending money, and tax deductions generally involve spending and/or losing money. There are vast assortment of credits available that also involve spending money on something in order to create a tax credit. Some investments have beneficial tax rates, but involve getting into an investment. The best one I can think of is if you invest in a small corporation and you are successful, and keep the investment for a number of years, you can get a great or non-existent tax rate on the sale - this one is designed to encourage people to invest in small business, thought he small business has to meet some requirements. Basically, if you aren't involved in investing or purchasing items that come with associated tax credits, there are some credits for having children and such, but those routinely appear on your tax return and you don't really need to seek them out. If you are worried you may be missing something, it's always good to have your return done by a professional who is up on current tax laws.
Viewer name: Katherine
Viewer question: What's the safest way to file taxes so I'm not handing my information over to someone i've never met?
Volunteer name / organization: Francis Sameon, CPA
Answer: Without handing your information over to someone you've never met - the safest way would be for you to self-prepare (you retain all your tax documents) and opt to eFile (electronically transmitted to the IRS and state tax agencies so no chance of getting lost in the mail or mis-delivered). Depending on your income level, there are free and low-cost software options available.
Viewer name: Nout
Viewer question: I got an HSA, what are recommended practices when filing taxes when having medical expenses and post taxes contributions?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Be aware that the tax laws regarding HSA's are totally different for federal and California purposes. HSAs are recognized for federal purposes but not for California. One cannot deduct medical expenses that are paid by the HSA on your federal return, but you may be able to deduct them on your California return.
Viewer name: Merryn
Viewer question: Why is it up to citizens to figure out how much taxes they have paid and owe ?
Volunteer name / organization: Francis Sameon, CPA
Answer: I may not have a philosophically satisfying answer for you given that the IRS receives copies of the tax forms that you also receive - so why double the work, right?
The way that I like to think about tax returns (at least here in the US) is that it's one big reconciliation exercise - the IRS knows a good amount of the income you've received from certain sources (eg wages, interest, dividends) but it's also missing a good amount of other items such as:
who you're claiming as dependents
medical expenses you've incurred during the tax year;
if you're self-employed (SE), they don't know what business expenses you may have incurred;
if you're an individual landlord, they may not have proper visibility on your rental activities.
Whether this is a fair trade for the trouble, time, and costs of self-preparing (eg software) or hiring someone, that's for you to decide but you still have to do it until the system we have is overhauled.
Viewer name: Diego
Viewer question: What's the difference between taxable income and gross income?
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: Gross income is all of the income that you receive, while taxable income is the amount that is subject to income tax. The taxable income is after deductions or exemptions are subtracted. As an example, if you sell stock at $100 that you bought at $60: the gross income is $100; while the taxable income would be the $40 profit.
Viewer name: Semra
Viewer question: What is the minimum income to earn before you have to file taxes?
Volunteer name / organization: Francis Sameon, CPA
Answer: It depends on your age, filing status, and income. A couple of examples for the 2023 tax year (for FED):
if you were under 65 years old, filing status is Single, the filing threshold is $13,850.
If you were 65 or older, filing status is Head of household, the filing threshold is $22,650.
Viewer name: Donna
Viewer question: What does it mean to add back IRA Contributions to calculate the MAGI amount from the AGI amount?...does that include the ROTH IRA amount you plan to put in for 2023? or does this mean the Traditional IRA contribution you have already contribute for 2023?
Volunteer name / organization: Loreley Fernandez-Davila, EA California Society of Enrolled Agents
Answer: If you need to add back your contributions to a retirement plan to calculate MAGI, then it would be the ones you get a tax benefit for. Therefore, you would only add the IRA contributions, not the ROTH IRA contributions. And, if you are calculating MAGI for 2023, then you would add back what you are reporting on your tax return as a 2023 contribution.
Viewer name: Anita
Viewer question: I am retired but started working part time in 1922. I started a 401k at that time. Since I started it at the age of 73 will I be penalized if I don't cash out on it due to my age?
Volunteer name / organization: Francis Sameon, CPA
Answer: Fortunately for you, there is an exemption for account owners in a workplace retirement plan. You can delay taking the required minimum distribution (RMD) until the year you retire (unless you're a 5% owner of the business sponsoring the plan).
Viewer name: Cheryl
Viewer question: Is it still true if you make below a certain amount you don't have to file?? If true what is that amount?? Thanks
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: Under 65 Single $13,850, MFJ $27,700
Over 65 Single $15,700, MFJ (1 spouse over 65) $29,700 (both over 65) $30,700
Under 65 Head of Household $20,800 Over 65 $22,650
If you have 1099 income from a business or a rental property you need to file. If you sell stocks you need to file to report basis.
Viewer name: Caprice
Viewer question: If my only income is social security and it is under $17,000 do I still have to file a california state tax and federal income tax?
Volunteer name / organization: Francis Sameon, CPA
Answer: The filing threshold for someone whose filing status is Single, for the 2023 tax year, is $13,850 if they were under 65 or $15,700 if they were 65 or older. It sounds like you may have a filing requirement if you've passed those gross income thresholds - however, if you derive most or all of your income from Social Security benefits only and your AGI is less than $25,000 then no portion of the benefits are taxable for FED. And California does not tax Social Security benefits.
Viewer name: Sara
Viewer question: I've been flagged the last 2 years for identity fraud prevention and had to contact them, causing delays in getting my refund; is there a way to prevent that from happening next year?
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: You can apply for an IRS Identity Protection PIN (IP PIN). Every January the IRS will send you an IP PIN for the year. You input this on the bottom of Page 2 of Form 1040. This will let the IRS know the tax return you are filing is coming from you. Here's the website to apply for an IP PIN:
https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin
Viewer name: Rick
Viewer question: 1). Tax Rates on Long-Term Capital Gains and Qualified Dividends Question: MARRIED FILING JOINTLY, if I make (wages and dividend) $89,250 or less the LTCG tax is 0% but if make one extra dollar ($89,250), everything is taxed at 15%? One dollar over and EVERYTHING is taxed? 2). If I make 4 quarterly taxes and on the 3rd quarter I sold my house, do I have to pay extra dollar on 3rd quarter to make up for the sale of my house? Or do I have till the 4th quarter to may the extra dollar for the sale? Thanks in advance.
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: 1) The 0% capital gains rate is on taxable income up to $89,250 for Married Filing Jointly and not on income before Itemized Deductions or the Standard 'Deduction.
2) Are you talking about 2024 estimates or 2023 estimates? If 2024, then it depends on how much is the gain on the sale of your residence and if you qualify for the up to $500,000 exclusion of gain under IRC 121.
Either way, it would be best to have your withholding and estimates based on 100% or 110% of your 2023 tax liability. This will keep you out of underpayment penalties.
Viewer name: Kimberly
Viewer question: My Wells Fargo 1099 form for my trust/retirement savings reflects "unknown term gains/losses, basis not reported to IRS". It is the sale of stock ($11,708.91) First Energy Corp. 300 shares. This dollar amount was immediately reinvested in other stocks, no payout was received. Per my advisor I inherited the stock upon my mother's death on 11/18/08 at value of $58.97 per share, sold at $39 per share with 4 splits. This means nothing to me and I don't know how to reflect on my tax return. We normally receive a return of 4k, I was informed by a friend we may now owe the IRS. I'm confused.
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: You will have to report this on Form 8949 and the result will flow up to Schedule D. Your sales proceeds are $11,709 so this will be reported in Column D of Form 8949 (Proceeds). Since you inherited the stock when your mother passed away, your cost basis is $17,691 ($58.97 X 300) which is reported in Column E. This means you will have a Long Term Capital Loss of $5,982. If this is your only trade, you will be able to claim $3,000 of this loss for 2023 and $2,982 will be carried over to 2024 and you will deduct that loss on your 2024 tax return. Since you have a loss, this will not increase your tax bill.
Viewer name: Elizabeth
Viewer question: Tax completed/filed by aarp. Owed taxes. Decided to recheck with TurboTax. Turbo result = less than $350 in owed tax. What can I do? Suck it up for being stupid with filing after completion with aarp tax assistance.
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: Go back to AARP and bring both tax returns for them to review. They can double check your tax returns to make sure they are correct. The results will depend upon the information you provide. If you provide erroneous information, you will get an erroneous result.
Viewer name: Nina
Viewer question: Received form 1099 C from a bank that wrote off a fraudulent credit card loan. The bank was informed several times that that this card and loan was fraudulent, and they are again looking into the matter. Should I include the amount reported on 1099 C in my current tax return (and file a 1040 X later), or ignore the amount till the bank fixes the problem?
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: If you believe that the bank might change their position and acknowledge you did not receive the benefit of the loan / credit card; you should file an extension of time to file. Filing the tax return without acknowledging the 1099-C would be flagged by the IRS computer for mismatched information and cause the IRS to send you a letter asserting the income and additional tax with penalty. If the matter is not resolved before October 15th, you should discuss with a tax professional the avenues available for filing the return to minimize the tax consequences,e and increase the likelihood of the IRS accepting the stance on the tax return.
Viewer name: Ginger
Viewer question: What is the tax base for a rental house? Market value or adjusted cost?
Volunteer name / organization: Francis Sameon, CPA
Answer: I presume you mean the depreciable basis for the rental property. If you acquired a rental property by purchase, then your depreciable basis is equal to:
the asset's purchase price,
minus any discounts, and
plus any sales taxes, delivery charges, and installation fees.
However, if you converted personal-use property to business use, then your depreciable basis will be the lower of:
the fair market value at the time of the conversion, or
the cost plus any additions or improvements, and minus and deducted casualty losses, up to the time of the conversion
Viewer name: Spencer
Viewer question: If I have losses at a rental property (not as a business), am I able to claim those losses regardless of my income?
Volunteer name / organization: Francis Sameon, CPA
Answer: It sounds to me like you are talking about passive losses. Passive losses can only be used to offset passive income. If your adjusted gross income (AGI) is less than $150,000, you can deduct up to $25,000 of those passive losses against your other sources of income - regardless of whether they're passive or non-passive.
If your AGI is greater than $150,000 then you are not permitted to report a loss from rental activities. You don't lose the tax benefit though - the losses will be carried forward and used against passive income in future tax years or when you dispose of the rental activity.
Viewer name: Frederic
Viewer question: I issued a 1099 forgiveness of debt Can I write off that loan and against what income
Volunteer name / organization: Francis Sameon, CPA
Answer: It sounds to me you're describing a nonbusiness bad debt. If so, nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt.
You can report a totally worthless nonbusiness bad debt as a short-term capital loss on Form 8949, Sales and Other Dispositions of Capital Assets. A deduction for a nonbusiness bad debt requires a separate detailed statement attached to your return. The statement must contain: a description of the debt, including the amount and the date it became due; the name of the debtor, and any business or family relationship between you and the debtor; the efforts you made to collect the debt; and why you decided the debt was worthless.
Viewer name: George
Viewer question: My daughter turned 24 in 2023. She attends college full time and has no W2 income. We provide over 50% of her support. Can we still claim her as a dependent on our 2023 return? If so how ? ie child, qualifying relative or other?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: If your daughter turned 24 in 2023 she doesn't qualify as a Qualifying Child unless she was permanently and totally disabled. She can be claimed as a Qualify Relative.
Viewer name: Sunny
Viewer question: I'm now 75 and doing very little work in my industry. I am a tour guide so I don't make a lot. But in the past, I had so many 1099s that I was doing deductions. The majority of my work now is 1099 and cash With a few W-2s. I've heard there's a short form for federal but I do not understand this at all so if there's a short form like there is for state, should I go in that direction. So basically I'm like a gig worker and I don't know what to do, but I am tired of paying so much to go to a tax person. Thank you.
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: The gig work that you are doing should be reported on a Schedule C, so you can reduce the taxable income by any regular and necessary expenses you spend for doing the tours. You then only pay taxes on the profit from the tours you do. There is a way to simply enter the income as "other income" on line 8, but then you are paying taxes on the full amount you receive, instead of only the profits. The Schedule C would make it where you also have a Schedule SE to report Self-Employed Income Tax (which is payment toward Social Security and FICA at both the employee and employer level, but only on the profit from the work).
Viewer name: Jeanne
Viewer question: I just inherited a inheritance IRA, can I use on my 2023 tax return?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: In the year that you take a distribution from the Inherited IRA you will receive a 1099-R form with the amount of distribution. This is taxable in the year of the distribution If you are a non-spouse beneficiary then you must fully distribute the account within 10 years per the recent provisions of the SECURE act.
Viewer name: Gary
Viewer question: We are wondering if when y0u a file joint/married tax rerurn if you use an IRS PIN number does each person need to have the PIN number or just the primary filer. Thanks
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: I have seen it where one spouse has a PIN or both spouses have PINS. You only report the PIN for the person who receives it. I have also seen dependents with IRS PINs. Apply it like a birthdate to the person it belongs to.
Viewer name: Sonja
Viewer question: I received a scholarship from my law school this year. Do I report this on my taxes? Is there a specific forum I should look for from my school to document the scholarship? Thank you for you help!
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Scholarships are only taxable if the amount you received it greater than your qualified educational expenses. Also, the amount of your educational expenses must be reduced by the amount of the scholarships in calculating an educational tax credit.
Viewer name: Maria
Viewer question: I filed a form to set up payments when I submitted the federal taxes last week. How long before I hear back from them and they take first payment?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: You do not have to make the first payment until April 15, 2024. This will take some time for them to process, but the first payment is not required until the deadline.
Viewer name: Kevin
Viewer question: I bought new more energy efficient windows last year. My neighbor mentioned that this may be tax deductible because of changes in the tax law. Are they and if so is their a limit?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: Yes, there is a credit and it is limited to $600 for Windows and $$500 for doors if more than one. If one $250. They must be energy star approved!
Viewer name: Mark
Viewer question: Cannot understand how to fill out IRS FORM W-4P
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: The IRS simplified it, only to make it one of the most complicated forms around. In order to answer your question I would need to see your tax return from 2022. Unfortunately this is how many tax provisions work these days. More and more complex under the guise of making it simpler...
I would just complete the top boxes and then sign it. Don't bother with the middle part. In my experience you will end up underwithheld.
Viewer name: Heidi
Viewer question: What are requirements or items you need to prove Primary residence?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: A primary residence is where one spends a majority of their time during the year. Factors to prove your primary residence - where are you registered to vote, utility bills, where is your address with DMV. These are the main factors, but everything else you have to support it will do.
Viewer name: Evangeline
Viewer question: I'm looking for help to file my taxes for 2022 and 2023. I am on disability, and have no money to pay for it. Your help is appreciated.
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: Look for a VITA tax help site in your area. https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers
uwva.org/freetaxhelp
Viewer name: Harriet
Viewer question: I replaced my gas heater with an energy efficient electric mini split. The city of Albany had a $1000 rebate which I qualified for. They just sent me a 1099 for the $1000 as other income. Do I have to pay Federal or State taxes on this? Is there any place I can deduct the cost of the energy efficient electric heater on my Federal and/or State return? Thank you!!
Volunteer name / organization: Amanda Boston, EA California Society Enrolled Agents
Answer: Yes, this is taxable income. Yes, there is an energy efficient credit for the heater. This is limited to $600.
Viewer name: Sharon
Viewer question: My mom is 86 years of age and sold her home 12/23/23 What kind of documents will she need to provide to the IRS..lastly will she have to pay taxes on the sale of her home
Volunteer name / organization: Loreley Fernandez-Davila, EA California Society of Enrolled Agents
Answer: She does not need to provide any records to the IRS unless she is audited. The sale is reported on her tax return on form 8949 and schedule D. She will report the sale price minus acquisition cost, any improvements made since purchase and additional expenditures to get the home ready for sale. She may qualify for the home exclusion of $250,000 capital gains. Something important to know is if she was married and they predeceased her. If so, she qualifies for step up in basis to the fair market value on the date of death for her spouse's half of the home,
Viewer name: Manya
Viewer question: If I'm a full time college student not making an income, should I still file taxes?
Volunteer name / organization: Laura Ross, CPA
Answer: If you have no income, there isn't a requirement, or a need, to file taxes.
Viewer name: Andrew
Viewer question: I did not work in 2023 and don't have a W2 form. I earned around $700 in interest from a bank account. I was wondering if I still have to file a tax return this year? And, if so, what forms do I need to fill out? Any advice would be greatly appreciated. Thank you for your help!
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: If you had no other income, the threshold of interest income that would require you filing a tax return is $1,250. If you had other income that is deemed earned income, you could qualify for the Earned Income Tax Credit that is refundable to you.
Viewer name: Joe
Viewer question: Will I have to report or is it's a taxable even if I buy, but haven't sold any of my cryptocurrency? Thanks!
Volunteer name / organization: Francis Sameon, CPA
Answer: You will have to answer - yes or no - on page 1 of Form 1040 whether you received, sold, exchanged, or otherwise disposed of a digital asset (eg cryptocurrency). However, buying a digital asset is not a taxable event so while you have to answer the question, you shouldn't have any income to recognize.
Viewer name: Terrianne
Viewer question: I am 77 years old. & live on my SSA of $1674 per month with a total of $21,502 last year. I live in a non profit government subsidized senior apartment with a section 8. I have maybe $1 a year in interest on my savings acct. I have an IRA that I took out 3% as required and was $1400. My SSA went up last year & would like to know if I have to file this year? Have not in the last few years. Thank you in advance, Terri
Volunteer name / organization: Laura Ross, CPA
Answer: If your taxable income was only $1400 you do not have a filing requirement, but if they did any withholding on your payout you might want to file to get it back. You would want to do it yourself or use a free low income service since the amount of the refund would be very low.
Viewer name: Debra
Viewer question: I was scamed last year for $400,000.00 from my Ira, who do you suggest for me to see for my taxes
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: One question is did you get a Form 1099R from the IRA for the $400,000?. No federal deduction. You may have a deduction on your California return.
Viewer name: Gloria
Viewer question: I work at a SF restaurant. Tips are reported via computer and divided among waiters. At the end of the year, I receive a 1099. Is there anything I should know about reporting tips? Am I required to report anything else? Very confusing, Thank you.
Volunteer name / organization: Loreley Fernandez-Davila, EA California Society of Enrolled Agents
Answer: Something important to know about tips is that they are subject to self-employment tax (social security and medicare) in addition to income tax. The S/E tax rate is 15.3% and you get a deduction of 7.65%. Since the tips are pooled, I recommend you make sure the 1099 reports what you actually received.
Viewer name: Kyle
Viewer question: I was unemployed much of last year and am worried about handling my taxes myself- do you recommend I hire an accountant or try to e-file myself?
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: You can check the United Way website for the nearest VITA site for your taxes to get done for free by trained volunteers and supervised by tax professionals.
Viewer name: Steve
Viewer question: Recommendations on free online tax filing sites?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: IRS free file is free and secure
Viewer name: Nick
Viewer question: I have a new Visa Credit card with my Credit Union and it gives cash back rewards into my savings Account at the Credit Union. Are these Cash Back Rewards considered income? I use to have a credit card that gave back "points" for travel which I never reported as income. Is this Cash Back Card taxable income?
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: The IRS says that credit card rewards are not taxable income. It is considered a rebate on your spending, so it is not income.
Viewer name: Ernest
Viewer question: I was not able to file 2022 taxes because the person who I send my documents didn't file them and never responded. Also that year where I work no taxes for federal and state were deducted. What are my options?
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: First, the tax preparer is obligated to return your documents per IRS Circular 230 (the federal ethics laws for tax preparers). Second, if you can't get the documents back, you can request from the IRS a Wage and Income transcript to see what information they received about you for the tax year in question. The FTB has similar information available through their MyFTB website.
If your employer did not withhold taxes from your paycheck, you are responsible for paying the taxes on that income. The taxes that are withheld from employee paychecks are to help pay toward the amount owed slowly throughout the year, instead of all at once.
Viewer name: Mel
Viewer question: Who is required to submit "Form FTB 5805 Underpayment of Estimated Tax by Individuals and Fiduciaries"? What is the purpose of this form?
Volunteer name / organization: Francis Sameon,CPA
Answer: The CA Form FTB 5805 is supposed to be included with your CA tax return (Form 540) if you have underpaid your estimated taxes for the taxable year (taxes are supposed to be paid over the course of the year - the FTB (and other tax agencies) don't like it when you try to lump your estimate tax payments for the very end only).
Underpayment means differently depending on your AGI - you are considered underpaid if you haven't met either:
90% of your tax for the current tax year OR
100% of your tax for the prior tax year (110% if your AGI >$150,000)
The purpose of the form is to show either you are not subject to the estimated tax underpayment penalty OR that you are and the calculation to arrive at said penalty.
Viewer name: Emmanuel
Viewer question: What is the difference between the child tax credit and earned income tax credit and is there an income limit to qualify for each?
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: Child tax credit is for having a dependent child under age 17 at the end of the year and income under $400k MFJ and $200k all other filing status. The Earned income tax credit is for low income earners with investment income under $11k. There are income limits based on if and how many dependents the taxpayer has. These can be found here: https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/earned-income-and-earned-income-tax-credit-eitc-tables
Yes - these are different credits and you can claim one or both.
Viewer name: Van
Viewer question: I owned a stock for long time that went bankrupt, and according to the 1099 Summary, the transaction was not reported on Form 1099-B or to the IRS, can I claim this lose? It was around $4,500. Would the entire amount be eligible for the write off or the max of $3k? If so, what additional forms will I need to do this? I use Turbo Tax, will I need to find a tax preparer?
Volunteer name / organization: Laura Ross, CPA
Answer: You can still claim the loss, it was not included on the 1099 because you acquired it before brokers were required to track the basis. Just show it on Form 8949 under the category F and put the full details on the form. You show the entire loss on this form, if your total net losses for the year exceed $3000 the remainder is carried over to next year.
Viewer name: Ron
Viewer question: Is it necessary and how to aggregate rental properties to qualify for real estate professional (750hrs/year, 50% time spent.
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: Tax Court cases have stated that if you do not elect to aggregate the rental properties together in a timely manner, you then are required to prove that you spend the necessary number of hours on each property in logs to get the desired treatment. The hours of activity have to be active participation (not supervising the workers), and there are plenty of Tax Court cases where the Judge and the IRS took the time to figure out how much time would be left to do other jobs, sleep, and/or have time to live if the claimant actually spent the time alleged. The best answer is to make the timely election to aggregate.
Viewer name: Karen
Viewer question: Can you file Head of Household for fed and single for State? I qualify that way. Or do they have to match?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: For Head of Household and Single, your federal and California filing status must be the same.
Viewer name: Robin
Viewer question: Gambling winnings are considered income. Is there a limit for entering losses. Turbo tax says your losses can't be equal to or more than your winnings.
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: You can claim gambling losses to the extent of your gambling winnings on Line 16 of Schedule A. You need to report your gambling winnings on Line 8b of Schedule 1. You should be getting Form W2G for your gambling winnings. Please make sure you have proof of your gambling losses since that gets audited quite often by the IRS and state.
Viewer name: Roy
Viewer question: Hi, My Mom passed away and we did a quick sale of her Mobile Home to a realitor. The Realitor said we dont need to claim anything on taxes because Escrow Company don't usually issue any tax forms for the sale. Is this right? Its only about $30K
Volunteer name / organization: Francis Sameon, CPA
Answer: I'm sorry to hear about your mom. Presuming your mom owned her mobile home, the basis (think cost) in the property would have 'stepped up' to the fair market value. I am working under the presumption that the sale price of $30,000 was the fair market value (FMV). $30K FMV less $30K stepped-up basis = $0 gain/income. Even if you don't receive a tax form or have income to recognize, there may be some value in including the disposition on the inheritor's tax return - to create a record
Viewer name: Bob G
Viewer question: I have income property to which I remodeled the kitchen . I spent $30,000 on new cabinet doors, counter and appliances. Can I expense it all this year? If I have to capitalize, how much is capitalized vs expensed? Thank you
Volunteer name / organization: Amanda Boston, EA California Society of Enrolled Agents
Answer: The cabinets and countertops are capitalized and depreciated over 27.5 years. The appliances are capitalized and depreciated at 5 years. With the 5 year property you can make an election to take federal bonus depreciation for 80% of the cost. This still belongs on the depreciation schedule and will flow thru to your Sch E rental form. CA does not conform to the special depreciation allowance for 5 year property. There is no expense for any of these improvements.
Viewer name: Pablo
Viewer question: Hello. I would like to know if there is any tax saving benefits to move money into a traditional IRA (I'd like to move the max allowed). Then convert that money into a Roth IRA. Would doing this lower my AGI for 2023? I currently max out my work sponsored 401k as well as my HSA account. Also I make more than the Roth IRA income requirement. So hoping to find out if doing this would help reduce my AGI for 2023.
Volunteer name / organization: Laura Ross, CPA
Answer: It won't help reduce your AGI. When you move money from a traditional IRA to a ROTH IRA, it's taxable income, so if you did this in the same year it would net to zero change. Make sure your income is low enough to allow a contribution to an IRA when you already have a 401k if you consider moving to an IRA anyway.
Viewer name: LaConnie
Viewer question: I haven't filed in 4 years. I still owe from previous years. I currently am getting garnished for back taxes from State. Why I never get garnished for Federal taxes that i owe ?How do i get help with back taxes and is there a way i can get the amount i owe decreased?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: For something like this, I highly recommend consulting with a tax professional. You are probably being garnished because you haven't negotiated a payment plan with the Franchise Tax Board.
Viewer name: Barbara
Viewer question: I was out of work all last year and received money from EDD. Is that taxable? Thank you
Volunteer name / organization: Chris Housh, Esq., E.A. Golden Gate Society of Enrolled Agents
Answer: State unemployment benefits are taxable income on the federal return. The state does not tax you on your state unemployment benefits. There is an adjustment form that the state return includes to remove it from your taxable income.
Viewer name: Ron
Viewer question: We had our first baby in 2023. What additional forms will I need to complete with my tax filing?
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: Congratulations! Make sure the name and social security number on the tax return matches the social security card. If you take your child to daycare, you may need Form 2441 for the dependent care credit. Check with your work if you have the pre-tax dependent care benefit.
Viewer name: Johann
Viewer question:I have filed all my taxes , but since 2017 I've owed and have not been able to pay it down. So it keeps growing. My question is where if anywhere can I turn for help?
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: Consult with a tax professional to negotiate a payment plan. For an Enrolled Agent, go to www.CSEA.org and click on "'Find an Enrolled Agent to enter your Zip Code and an IRS Representation.to get a number of agents in your area.
Viewer name: j l
Viewer question: My mom has dementia, lives in a sr facility in NJ and I take care of her finances. Unfortunately her pension thought she lives in CA, changed her address without permission and paid her pension taxes to CA. I corrected the pension company mistake, but how do I fix the CA tax error? I think I need an accountant now to fix the mess. Thx
Volunteer name / organization: Norman M. Golden, EA California Society of Enrolled Agents
Answer: You should file a California Non Resident tax return to report that this isn't California income. For an Enrolled Agent, go to www.CSEA.org and click on "'Find an Enrolled Agent to enter your Zip Code and and IRS Representation.to get a number of agents in your area.
Viewer name: Nicholas
Viewer question: What is the max deduction allowed on property tax and interest? I paid $11,000 in interest and $10,500 in property taxes on a $623,000 property.
Volunteer name / organization: Laura Ross, CPA
Answer: The maximum tax deduction right now is $10,000 and that includes both property and income taxes (and you have already hit that with your property taxes). Interest is based upon the value of the house - you can deduct the interest form a mortgage for up to $750,000 of your house, so it looks like you could take the full amount of interest on Schedule A.
Viewer name: Paul
Viewer question: I only have Social Security income. What forms do I need to file? Can I use free file? Thank you.
Volunteer name / organization: Laura Ross, CPA
Answer: If you only have social security income you do not have a filing requirement, so you are OK not filing.
Viewer name: Avi
Viewer question: My wife lost her job this year and registered an LLC company to initiate a consulting business as sole Proprietor. However she has not received any income for the same as a consultant. Does she need to file any special tax form? We file jointly.
Volunteer name / organization: Larry Pon, CPA/EA, CalCPA & GGEA
Answer: Even if the LLC did not earn any income, a Form 568 must be filed for her California taxes. There is an $800 minimum annual tax for an LLC. Also, please remember to file the Statement of Information with the Secretary of State and pay the annual fee.
Take a look at the questions and answers from last year's tax chat here.
Take a look at more stories by Michael Finney and 7 On Your Side.
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