Leaderboard

A key question to ask the question is: "Why did you sell the property?" Depending on the answer, you could use the exclusion partially or make the profit fully taxable depending on their income.

The reinvestment in a new home strategy died with The Taxpayer Relief Act of 1997.

Just found this FAQ. https://www.irs.gov/pub/newsroom/fs-2022-09.pdf?fbclid=IwAR36PKI8b58-pXS2L4B4asxNGUTLvbqM1-Tt6RFbzDodkxsWT7oYOm2m3aQ Q E15. Dependents: Can my 2021 Recovery Rebate Credit include an amount for a qualifying dependent if the dependent received the third Economic Impact Payment or someone else received the third Economic Impact Payment for the dependent? (added January 13, 2022) A15. Yes, if you meet the eligibility requirements to claim the 2021 Recovery Rebate Credit. The amount of your credit may include up to $1,400 for a qualifying dependent you are claiming on your 2021 return.

Unforseeable event: "The value of the house jumped 30% and we could make a killing!" See Pub. 523 page 6 for the actual allowed "unforseeable events" - having twins is one!!

Maybe. I don't pause, I continue with the return and let them double dip. After so many changes, I face a reality "I don't make the laws". We will have a lot of very-unhappy people when it is time to collect back all those goodies by raising taxes. Ironically, there people making just above the limit, so currently don't benefit with all of these or some people don't have any children BUT when the tax raises come in a year or two, they will be hit hard.

Just to clarify, they don't pay tax on the proceeds, but on any gain, and yes, report the sale on Form 8949. Correct, you can't reduce the gain by the other property he bought. They all think that; find an article or two that addresses that and print for him.

At least it's long-term capital gain. Is their income low enough that they could be in the 0% CG bracket? Otherwise, any chance for an unforeseen circumstance? An expensive lesson to call you BEFORE making any large financial moves.

Very true, but that is the reason I would want to know what it is because it is not being reported as simple dividends.

The software companies have to change their systems, BUT if they make errors, it could cause us more work, dealing with rejects.

I sure it is.

So is this an ngo militia?

That will make too much sense, something very hard to deal with for some people.

It depends on her income. If it's less than 40K, no payback. If between 40 and 80K, partial payback. Over 80K all needs to be paid back.

Is a K-1 expected? What does your client (or his broker) say that income is from? Did the account balance at any time during the year trigger any foreign income/assets filing?