Good morning Monica. If I have less than $1500 in interest income even though some of it was from U.S. Savings Bonds am I correct to assume that none of it is taxable? Thanks,
Mark

Mark - Interest income will be taxable regardless of the amount. The savings bond interest will not be taxable to Missouri. If you have more details as to why you think it's not taxable I would be happy to explain more.

Kalen, if you have enough expenditures to itemize (real estate & personal property taxes, mortgage interest, state taxes, charitable contributions, etc) it will almost always be a benefit to itemize as opposed to taking the standard deduction. The standard deductions for 2012 are Single - $5,950 & Married - $11,900. If you do not have more than the standard, then you should stick with the EZ form.

Kalen - it depends on which way will cause you to pay the least tax. Itemized deductions are great if you have enough of them to use it. That dollar amount depends upon your filing status, your age and if you are blind.

The experts gave good answers. I will add that most commonly, home-ownership with the typical corresponding mortgage interest and my TOO HIGH real estate tax (sorry) puts one in the realm of itemizing.

Isn't pretty much all tax law alien? Or at least of alien origin?
Try the veal. I'll be here all week. :-)

Butch - If the home was sold for a loss you would owe no taxes on the sale.

Keith - you will probably not owe taxes on the sale. Inherited property, assuming that you did not have any ownership before your mother's death, is not taxable. When you sell the inherited property, you would only pay taxes on the difference between the value of the property at the time you inherited it and the amount for which you sold the property. Usually, because you end up paying real estate agent's fee at the sale, you would have a loss for tax purposes. That is a good thing because you get the deduct that loss on your tax return. You will probably need to fill out a form 8949 and a Schedule D to claim the loss.. It sounds worse than it is.

Keith, that is a yes and a no. You add the cost of improvements to the value of the house on the day of your mother's death before determining your amount of loss. The new walk, the new furnace, new roof, tuckpointing and refinishing the floors are improvements. The painting and termite treatment are repairs and maintenance and cannot be added onto the cost of improvement. Don't forget to add the real estate agent's commission to the cost of the sale. I hope this helps.

Keith mentioned he inherited the property when his mother passed -Keith's basis/cost will typically be the fair market value of the property at her time of death - plus all the improvements etc that put in afterwards.

The likely scenario is that Keith should have to report the sale on Sch D with no gain or loss - proceeds will equal cost. Even if you have a loss under the cost basis computation - it is typically not deductible/personal - unless the property was converted to rental.

As you can see, taxation can be tricky business. That's why my son Paulie and I just go bonkers over it .... oh well, at least I still claim him as dependent for taxes since he doesn't work and lives in my basement.

Actually if you have a loss due to the sale of inherited property which you did not use personally, you can claim a capital loss.

And Keith - if you are charged real estate tax on the closing stmt, you can typically add that to your itemized deductions basket if applicable.

Sylvianne, respectfully "can" depends on the circumstances - which is why I equivocated in my answer. There are loads of contradictory cases and discussion on this topic a google search away giving yes and no and maybes. Which are all pretty accurate.

If you wish to claim a loss, be prepared to well-establish your basis figure, and also be prepared to convince the IRS that is become for-profit investment property at some juncture.

I hate to interfere with such an AWESOME RANT, by such a STRONG forceful BEING....but I would like to point out the 16th Amendment. Apologies for not checking out your youtube video, I am sure it would be enlightening - but I can't watch it now since Paulie is DOWNSTAIRS hogging all OUR BANDWIDTH.

Anyway, prior to 16th amendment, under Abraham Lincoln the first US income TAX was instituted to help pay for THE WAR, which was fought primarily over the issue of SLAVERY!!!!

...whew - PAUULLLIEEE, I neeed another pina colada!

Oh MY!. All those capital LETTERS turn me on!!!!

Yes, the United States is NOT a Democracy, it's a Constitutional Republic. I'm proud to teach all three of my daughters the difference between the two. Democracy is mob rule. In fact, if people would rise-up against local school boards to prevent teachers at all levels from referring to the US as a Democracy, that would be a great start.

I would love a national sales tax. If wealthy people wish to purchase big ticket items, then let them pay for it through a national sales tax.

Essential items such as food should NEVER be taxed. Texas doesn't tax food items and that state is doing well.

People living below the poverty level, should not have to pay income tax. A national sales tax would close all consumer loop-holes because the taxes are collected at point of purchase.

The corporate tax rate needs to be lowered to 17%. This will attract US companies that left our country to return. American workers don't want to live overseas. They have family and relative here in the states and would love come home.

There should also be a program that if a person buys American, they get a discount. States could even make it that if a person buys local, they get a discount.

Hmmm, let's see a national sales tax. Sounds a lot like EUROPE! Europe!...europe!
EUROPE!

Agreed, but those behind the federal reserve must be eliminated before you can have fairness. Icelanders Didn’t Bail Out The Bankers – They Prosecuted Them And Created Something New.

http://beforeitsnews.com/survival/2012/04/icelanders-didnt-bail-out-the-bankers-they-prosecuted-them-and-created-something-new-2019906.html

Yessiireee...THE FLAT TAX! That'll fix it! A SAVVY tax lady like me can drive a MACK TRUCK thru the loopholes of a flat tax for my wealthy clients. IF I had any!....
...whew - the forgoing commentor has me a bit WORKED UP. Paulie, come upstair and fix me a pina colada!

By the lack of response, you can tell that is is a tough one to answer on an internet forum. More facts would be needed before you address it through your tax return -such as was it a 1099-C with code A in box 6? In the end, even if a gain was deemed -this will most likely not cause you taxes - because of the bankruptcy/insolvency exclusion.

However, as this was undoubtedly reported on a 1099 - you will have to report it properly on your return, even if to zero out the income or exclude it. I'm sure I've confused you enough. Your bankruptcy attorney may be able to help some with your question. If there is a year you should take your taxes to be done by a professional -this would probably be one.

Beverly - this is a tough one because we need more information. What kind of form did you receive? What boxes were marked? I also recommend that you might check with IRS publication 908, especially the part on debt cancellation. The language is a little strange but the example is helpful. You will probably need to attach a form 982 to your form 1040.

Beverly - discharge of debt on your personal residence is excluded from taxable income. You should have no tax affect.

Generally agree that your going to not have tax on this, one way or another. Do make sure you report it. And like all tax rules, there are nuances and exceptions -such as not all residence secured debt is considered qualified residence debt -such as when you refinance a home to payoff non-home debts or for non-home expenditures.

From IRS website:
"Does the Mortgage Forgiveness Debt Relief Act apply to all forgiven or cancelled debts?
No. The Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes."

More info here:
http://www.irs.gov/Individuals/The-Mortgage-Forgiveness-Debt-Relief-Act-and-Debt-Cancellation-

Come on PAULLIEE. Get off that INTERNET SO I CAN WATCH JOHN's video. What in the world is Paul downloading down there?

John, in the MEANTIME - can you TELL ME how much for the PAY NO taxes EVER kit costs? Is this the SAME tax SCAM gimmick that cost that RADIO guy on KTRS a bunch of HASSLE.

No doubt Elizabeth, way way too confusing. And this is not just PaulRevere's Mom pulling your chain here. Seriously! It does need REFORM. Just don't put TOO MUCH TRUST in the REFORMERS. Making taxes SIMPLER will NOT fix goverment or PAY FOR WARS. It will JUST shift who PAYS FOR THEM and HOW MUCH.

ANd I am NOT kidding. Most FLAT tax proposals have been RIFE WITH LOOPHOLES for people that deduct every thing under the sun to arrive at the figure upon which the FLAT TAX IS DETERMined. THE flat TAX would just stick it to WAGE EARNERS, because their income is readily determinable and their taxes are basically FLAT ALREADY.

If a DECENT consortium of intellectuals comes TOGETHER TO figure reasonable and EQUITABLE manner to simplify taxes, then I WILL applaud them. However, most politicians would not be considered DECENT, intellECTUAL, REasonable, or INTELLECTUAL. After all, they created the mess in the first place. Both parties. But go ahead, and trust them and their motives for flat tax AT YOUR PERIL! Yeah republicans!

Since we're on the subject of tax reform, how about treating ALL income as ... wait for it ... income. If you want to give a break for "investment" or "unearned" income, then fine, but do it as a *deduction*. For that 's what it is. An *entitlement* program for the wealthy to shift their income from taxed wages to lesser-taxed "investment" income.

Then let the AMT rules fall where they will, since it was specifically designed to prevent people from doing exactly what the unearned income entitlement tax break has done.

Then we won't see folks like Romney paying 12% income tax (except when he doesn't take a deduction for charitable "donations" to his family charity that would have pushed him below the 14% he claimed for the double-win of PR + charitable "giver") because he sheltered over $10 Million in investment income while taking home a "paycheck" of "only" $2 Million at a job he didn't even have to show up for.

I'd be just FINE with a National Sales tax missy. Only thing is, it will never happen. But that is the joy of employing fantasy solutions - we can wash our hands of the problem and pretend that our GRANDIOSE ideas would have fixed it. Yes Maam.

What a fanciful notion -adding another 15% tax (or higher) onto every purchase? Hah! I will come out like a BANDITO, because Paulie has our cupboards stocked with lifetime supply of Chicken of the Sea Tuna, doritos, and Pina Colada fixings. And that good ole Dodge Reliant keeps rolling along..... MADE IN THE USA!

Ah yes, Paulie and I will kick back as the nation plummets into another depression. Hoover and Bush all over again. But we Patriots are from hardy stock and SHALL PERSERVERE.

To bad he was ignored. Look at what has become of us. But then again, if we really hated it, we would move to a different country. Do not know about you, but I will not. Like it here way to much.

Agreed, but not always so simple. IRS publications are not tax code or regulation. Yes, courts have been more favorable in this arena in recent years - allowing a loss. Still - Keith has to establish that the FMV at DOD plus the cost of improvements and sale costs exceed what it was sold for. If there was not taxable estate or appraisal - how is this done. Combine this hurdle with the bit of gray area on whether it is a personal loss - and you will often see that most just report sales price equal to cost.

Unless the value decline after death was precipitous - which is highly possible in today's market. Best of luck Keith.

hey Paulie!

Richie, another great idea is the bank of Cousin Eddie. Bury your gold and silver and greenbacks in cans on your property. Helps to live out a ways for this method. Then you don't HAVE PRYING NEIGHBORS and PUBLIC SCHOOL kids digging them up.

Great idea, this money stashing notion. I am using it already. Since Paulie doesn't have an outside job, his official job is guarding our money in the safe in the basement. You see, that is how he earns his allowance - other than making me pina coladas. Oh he puts on the tri-corned hat and likes to call himself a self-employed entrepenuer because of this.

Thus Paulie says he needs to be online all day to watch out and combat the public school teachers and their SOCIALIST MARXIST plan to TAKE IT AWAY! !!!

Ah the Patch, bringing so many great minds together for Noble Righteous Causes of Liberty and Freedom.

Sir, it would be difficult to talk man to man, with a Woman. My cartoon character does not want to meet yours. But thanks for the offer anyway....someone who proudly teaches the difference between a constitutional republic and a democracy sounds like a bore. Besides, I am in total agreement with you, so not much else to discuss. Sorry for calling you Richie. Have a nice day!

Apologies to the Patch Pro experts. Your skills are wasted on fools, much as mine are.

Oh Paul, don't get nervous. I'm a real, flesh and blood person known in the community. A lot of things can get accomplished with a face to fact discussion. It's very difficult to gauge a person's body language or facial expressions through text. But I'm sure you know the. It's also difficult to understand that it's impossible to hide behind a screen name. With today's technology, finding the originator of a post is a fairly simple things to do. And once you've got a name, you can get and address etc...So my offer was genuine. Meeting at iHop, or Bob Evans to hear your point of view still stands. And please, since I didn't make myself clear the last time, my name is Rich not Richie.

Again, no thanks. Try PaulRevere, mike k, etc etc, they may take you up on the offer.