Today TaxMama hears from Peg in the Tax Parlor, who tells us: “In the past, I had been declaring rental income from our timeshare, and deducting the maintenance fee. For the last 2 years, I have NOT done this. But I’m a little concerned, because I always get a 1099-Misc form from the timeshare. I assume that the timeshare sends this to the IRS. Is there a chance that the IRS might penalize me for not reporting this income?”
Of course there’s a chance. Mostly, though, if you don’t open your mail.
You’re right. IRS does get this information when a 1099 is issued. They send out notices to you telling you that you forgot to include this income. The letter includes proposed taxes, but rarely any penalties. (Except late payment penalties.)
If you REPLY, telling them the income is not subject to tax because this was a rental of your vacation home for two weeks or less, the tax will go away.
Not replying WILL cost you time and money.
See how easy it is?
And remember, you’ll find answers to lots of questions about time shares and other tax information, free. Where? At TaxMama.com[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]
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