Ten Key Tax Facts about Home Sales

In most cases, gains from sales are taxable. But did you know that if you sell
your home, you may not have to pay taxes? Here are ten facts to keep in mind if
you sell your home this year.

1.  Exclusion of Gain. You may be able to exclude part or all of the gain from
the sale of your home. This rule may apply if you meet the eligibility test. Parts
of the test involve your ownership and use of the home. You must have owned
and used it as your main home for at least two out of the five years before the
date of sale.

2. Exceptions May Apply. There are exceptions to the ownership, use and
other rules. One exception applies to persons with a disability. Another applies
to certain members of the military. That rule includes certain government and
Peace Corps workers. For more on this topic, see Publication 523, Selling Your
Home.

3. Exclusion Limit. The most gain you can exclude from tax is $250,000. This
limit is $500,000 for joint returns. The Net Investment Income Tax will not apply
to the excluded gain.

4. May Not Need to Report Sale. If the gain is not taxable, you may not
need to report the sale to the IRS on your tax return.

5. When You Must Report the Sale. You must report the sale on your tax
return if you can’t exclude all or part of the gain. You must report the sale if you
choose not to claim the exclusion. That’s also true if you get Form 1099-S,
Proceeds From Real Estate Transactions. If you report the sale, you should
review the Questions and Answers on the Net Investment Income Tax on
IRS.gov.

6.Exclusion Frequency Limit. Generally, you may exclude the gain from the
sale of your main home only once every two years. Some exceptions may apply
to this rule.

7. Only a Main Home Qualifies. If you own more than one home, you may
only exclude the gain on the sale of your main home. Your main home usually is
the home that you live in most of the time.

8. First-time Homebuyer Credit. If you claimed the first-time homebuyer
credit when you bought the home, special rules apply to the sale. For more on
those rules, see Publication 523.

9.Home Sold at a Loss. If you sell your main home at a loss, you can’t
deduct the loss on your tax return.

10. Report Your Address Change. After you sell your home and move, update
your address with the IRS. To do this, file Form 8822, Change of Address. You
can find the address to send it to in the form’s instructions on page two. If you
purchase health insurance through the Health Insurance Marketplace, you
should also notify the Marketplace when you move out of the area covered by
your current Marketplace plan.

WE ARE HERE TO HELP----CALL FOR A
FREE CONSULTATION

Terence Talks: Princes' Will and Estate in Question

With the untimely death of Prince, came a slew of individuals coming forth looking for ways to capitalize on their interests. This happens to many celebrities who are in the public eye. Terence E. Smolev of Smolev Law said "It is not uncommon when someone of wealth passes away that people appear and claim that they are rightful heirs entitled to all or part of that dead persons assets. We have seen that with the James Brown estate and now with the Prince estate.  Years ago without DNA testing the unraveling of heirship was more difficult, but not impossible. In fact, not that long ago it was determined that many people claiming to be descendants of Thomas Jefferson was found to be true. DNA played a part in those determinations. You may even see women and men appearing to claim spousal rights. DNA does not play a role in those claims. Marital certificates and/or common law marriage rights become in issue. Let the circus begin!" To read more about living wills and estates you can see Terence's website at http://smolevlaw.com/

Did you know about these 9 deductions?

Few realizations are more painful to a taxpayer who's just filed a tax return than realizing that you forgot to include a deduction that would have lowered your tax bill or increased your tax refund. In the rush to get your tax return completed by the deadline, it's all too easy to miss avenues that might lower your taxable income. Here are some of the deductions that many overlook.

1. Sales Taxes

You have the option of deducting sales taxes or state taxes off your federal income tax. In a state that doesn’t have its own income tax, this can be a big money saver. Even if you paid state taxes, the sales tax break might be a better deal if you made a big purchase like an engagement ring or a car. You have to itemize to take the deduction, but the IRS provides tables to use as a guide.

2. Health Insurance Premiums

Medical expenses can blow any budget, and the IRS is sympathetic to the cost of insurance premiums – at least in some cases. For most taxpayers, medical expenses have to exceed 7.5 percent of your adjusted gross income to be deducted. However, if you’re self-employed and responsible for your own health insurance coverage, you can deduct 100 percent of your premium cost. That gets taken off your adjusted gross income rather than as an itemized deduction.

3. Tax Savings for Teacher

It’s the rare teacher who doesn’t have to reach into her own pocket every now and then to purchase items needed for the classroom. While it may sometimes seem like nobody appreciates that largesse, the IRS does. It allows qualified K-12 educators to deduct up to $250 for materials. That gets subtracted from your income, so you can take advantage of it even if you don’t itemize.

4. Charitable Gifts

Most taxpayers know they can deduct money or goods given to charitable organizations – but are you making the most of this benefit? Out-of-pocket expenses for charitable work also qualify. For example, if you make cupcakes for a charity fundraiser, you can deduct the cost of the ingredients you used to bake them. It helps to save the receipts or itemize the costs in case of an audit.

5. Paying the Babysitter

You might be able to deduct the cost of a babysitter if you’re paying her to watch the kids while you volunteer to work for no pay for a recognized charity. The federal Tax Court has ruled that it’s OK to list the cost of a babysitter as a charitable contribution on your return, if you can document that while she was performing her duties, you were volunteering.

6. Lifetime Learning

The tax code offers a number of deductions geared toward college students, but that doesn’t mean those who have already graduated, don’t get a tax break as well. The Lifetime Learning credit can provide up to $2,000 per year, taking off 20 percent of the first $10,000 you spend for education after high school in an effort to give you new or improved job skills. This phases out at higher income levels, but doesn’t discriminate based on age.

7. Unusual Business Expenses

If something is used to benefit your business and you can document the reasons for it, you generally can deduct it off your business income. A junkyard owner, for example, might be able to deduct the cost of cat food that encourages stray cats to hang around and keep the mice and rats away. A bodybuilder got approved to deduct the body oil he used in competition.

8. Looking for Work

Losing your job is traumatic, and the cost of finding a new one can be high. But if you’re looking for a job in the same field, you itemize your deductions and these expenses exceed 2 percent of your gross income, any expenses over that threshold can be deducted. It may seem like a high bar, but those costs add up quickly – consider deducting the mileage you put on your car driving to interviews and the cost of printing resumes.

9. Self-employed Social Security

The bad news about being self-employed: You have to pay 15.3 percent of your income for social security taxes, the portions ordinarily paid by both employee and employer. But there's one small consolation – you do get to deduct the 7.65 percent employer portion off your income taxes.

source: https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Deductions-and-Credits/9-Things-You-Didn-t-Know-Were-Tax-Deductions/INF26934.html