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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA |
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Volume 2, Issue #71, July 7, 2000 Please, if you like this publication, invite at least a half a dozen friends to subscribe ... Give them our Subscription Page ( Ask Taxmama) Ask TaxMama is sent to you for FREE every Friday (And subscribers get it earlier than websurfers.) ------------------------------------------------ Dear Family, The 4th of July has come and gone ... this is such a short week! Coming deadlines ... partnerships and trust returns are due on July 15th - if you haven't gotten your material to your tax pro - do it NOW. Or call them for a second extension. TaxMama is busy looking for a new office. After 5 years cramped in a stuffy penthouse suite with a stunning view, she wants the fresh air back, a pool and a garden. TaxMama's should work in homes - so she's looking for a cozy apartment hideaway. If she's hard to find these days, that will be cured soon. Keep your fingers crossed for me. Best wishes, Eva Rosenberg, EA Your TaxMama is watching ... out for you. <NOTE TO TAX PROFESSIONALS - Join a weekly discussion list just for tax professionals, please read and sign up at our Submission Guidelines page> Filing status "S" & "M" ----------------------------- Dear TaxMama: If you get married late in the year can you keep your filing status for that year as Single? Is there a cut off date to where you have to change your filing status to Married? Nicole <TaxMama Replies> Dear Nicole It's you're filing status on the last day of the year that counts. When people, romantically, get married on December 31st, they file as married for the whole year. And that's why we got married at dawn on January 1st - to preserve my husband's substantial refund - and to get it sooner. Same with babies - if your baby is born at 11:39 pm on December 13st, you get the exemption for the whole year. Congratulations. Eva Rosenberg What Color are His Eyes? ------------------------------------- I have a question that I hope you can help me with. It's regarding capital gains tax. I currently live in Jacksonville Florida and am renting a home. I've been in this rental house for 5 years. I have a home in Savannah Georgia that I purchased in 1991 that I just recently sold. The house was not used for rental property, but as a place for us to stay at while visiting in Savannah. I sold my house in Savannah for $97,000, less the Realtor fee of $4,850.00 and $1,000 in repairs netted approximately $91,150.00. I had a mortgage for about $62,500.00. At closing I was given a check for approximately $28,500.00. Do I have to pay capital gains on this money? Thanks, Timothy C. T <TaxMama Replies> Hi Timothy, This question reminds me of the riddle about the bus - it is going southbound on Park avenue, 12 many people get on at the first stop, 3 get off. 4 people get on at the next stop and 2 people get off. 6 folks get on and 4 off at the next stop. Got it all? Now, the question is, "What color is the bus driver's eyes?" My answer to you - is I haven't a clue! If the home was not your principal residence (was it?), you are not eligible for the $250,000 exclusion on the sale. If it was an 'investment' property, the amount of cash you received from the net sale doesn't matter. The main numbers you left out were in the first part of the equation - Purchase cost and costs of improvements. Subtract those from the sales price, less selling costs and you have your taxable profit - or loss. The second piece of missing information is your tax bracket. The capital gains rates change depending on your income level (10% - 25%) Publication 544 has lots of information on the subject Publication 544 - Sales and Other Dispositions of Assets Best wishes, TaxMama ---------- advertisement ----------- Bottom Line/Personal - the semi-monthly newsletter that brings you bargains, investment tips, travel ideas, and other ideas to make your money grow - and make it stretch and stretch Because We Care -------------------------- Please remember to protest Governor Gray Davis' sneak attack on the "Americans With Disabilities Act" You may use the well- worded letter to Governor Davis located at Send a Letter to Governor Gray Davis ------ AccountingWEB will be celebrating its one-year anniversary. By encouraging the accounting community to join us in the fight against Diabetes, a disease affecting over 15 million Americans and a leading killer among many segments of our population. You are encouraged to join our campaign to help fight Diabetes. Simply Clean ----------------------------- Dear TaxMama, Two women are doing business as "Simply Clean", not incorporated, just two ladies cleaning houses. If I pay for part- time services, $35.00/week, what do I have to withhold, and how? If my check is payable to "Simply Clean", whose taxes am I withholding? Laura <TaxMama Replies> Dear Laura, If they have a legitimate business, I don't think that they fall under the household employee category. (I can't promise that ... the laws tend to be iffy.) Here are guidelines (vague) on who is a household employee. Publication 926, Household Employer's Tax Guide; Do You Have a Household Employee? However, here's what I recommend so you can protect yourself: Get a copy of their business license Get their federal ID # With their name, address and phone number If you are using your home for business, you may want to send them a 1099 at the end of the year. It really surprises me sometimes how people have someone come in to clean their home or care for their babies and don't even know the address of the caretaker. This should take care of your issue, though. Now, if you do really want to take withholding ... Publication 926, Household Employer's Tax Guide; Do You Need To Pay Employment Taxes? May you never need to deal with this! Best wishes, Eva MONEY FUNNIES ----------------------- Submitted by Lander Warren, my favorite administrator IRS NEWS -------------- > From IRS notice to practitioners Small Noncash Bank Premiums Nontaxable The IRS has provided guidance to depositors and financial institutions regarding the proper treatment of certain premiums given as inducements to open or add to an account. Revenue Procedure (Rev. Proc.) 2000-30 states that "de minimis" noncash premiums are not taxable to the recipient or reportable as interest by the payor. The definition of a "de minimis" premium is a noncash inducement which is not worth more than $10 for a deposit of less than $5,000, or $20 for a deposit of $5,000 or more. This rule is effective for de minimis premiums provided after December 31, 1999. Tooting Her Own Horn --------------------- TaxMama's goal is to help you break the code that is the U.S. Income Tax System. We will gladly entertain your questions. Please feel free to submit them to Now`s Your Chance to Ask TaxMama There's no guarantee that we'll have room for all your questions, so we'll try to address those issues that will help the most people. Some of your questions may have already been answered in the past year or so. There are a wealth of articles already in place at The Directory of TaxMama's Articles After flirting outrageously at the Abraham-Netrageous Summit, TaxMama joined forces with Dr. Website to create Outrageous Flirt a safe, fun and friendly way to communicate with those you love - even your own spouse! Drop by for Valentine's Day Outrageous Flirt - all year round! After spending years looking for the perfect gift idea, I found it. And I've just opened a new website to introduce it to you: PhotoMasterPieces If you are looking for a clever and inexpensive way to decorate your home or office - what a great treat for Valentine's Day! If you are thinking about using a car donation, last year, my favorite Los Angeles Times business reporter, Liz Pulliam, wrote an article about donating your car to charity. It is linked from my article written this time last year, To Give Or To Get, That Is The Question! or - read it directly at Car Donations Not Charitable at Tax Time TaxMama On the WWW --------------------- You can find weekly tax tips at: Robert Sullivan's Small Business Advisor Visit Deb Nyberg's Women in Business - Cyberspace Field of Dreams, BizWomen And for all you ExPats out there ... there's Iain William's site for overseas investing. Overseas Investing Critical Dates: For more deadlines Tax Calendar ____________________________________________________ If you are interested in TaxMama's Weekly Tax Tips on your site ... please read about our Syndication Option --- Click here for our Legalese & Disclaimer --- Got questions, click on our Ask Questions Form This publication is ONLY sent via voluntary subscription. If you wish to subscribe/unsubscribe at any time - click here to Subscribe - click here to Unsubscribe. |
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