Personal Taxes
The most frequently asked tax questions related to Personal Taxes
Can I deduct all the fees I paid at my house closing as deductible points?
Asked Tuesday, September 26, 2000 by an anonymous userCPA Answer:
No. You should receive a Form 1098 slip from your bank that itemizes your deductible mortgage interest and deductible points on your tax return.
Service fees such as commissions, appraisal fees, notary fees, abstract fees, recording fees are not considered points and not deductible in the current year.
These costs are added to the purchase price of the house to increase your basis. The acquisition costs, non-deductible closing costs, plus improvements over the years will be the cost basis used to determine any gain on the eventual sale of the residence.
Service fees such as commissions, appraisal fees, notary fees, abstract fees, recording fees are not considered points and not deductible in the current year.
These costs are added to the purchase price of the house to increase your basis. The acquisition costs, non-deductible closing costs, plus improvements over the years will be the cost basis used to determine any gain on the eventual sale of the residence.
Can I claim my father-in-law who lives with me as a dependent?
Asked Monday, September 25, 2000 by an anonymous userCPA Answer:
There are five dependency tests that all must be met before you can claim a person as a dependent on your tax return.
The relationship, gross income, support, residence and joint return tests. Your father-in-law would qualify in the relationship test.
The relationship test includes child, adopted child, grandchild, stepchild, great-grandchild, brother or sister, son or daughter-in-law, father of mother-in-law, brother or sister-in-law, grand-parent, step-parent, stepbrother or stepsister, half-brother of half-sister, and blood relatives of uncle, aunt, niece or nephew.
Also included as a dependent is a foster child if he or she is a member of your household for the entire year except for temporary absence. Speak to your local CPA if you have a question about the relationship or the other four qualifying tests of claiming someone as a dependent on your tax return.
The relationship, gross income, support, residence and joint return tests. Your father-in-law would qualify in the relationship test.
The relationship test includes child, adopted child, grandchild, stepchild, great-grandchild, brother or sister, son or daughter-in-law, father of mother-in-law, brother or sister-in-law, grand-parent, step-parent, stepbrother or stepsister, half-brother of half-sister, and blood relatives of uncle, aunt, niece or nephew.
Also included as a dependent is a foster child if he or she is a member of your household for the entire year except for temporary absence. Speak to your local CPA if you have a question about the relationship or the other four qualifying tests of claiming someone as a dependent on your tax return.
Are the travel costs I incur to monitor my rental property deductible?
Asked Saturday, September 23, 2000 by an anonymous userCPA Answer:
Yes. Expenses incurred in managing investment property are deductible even if the property is not currently producing income. You will list this deduction on Schedule E, part I expense line for auto and travel.
Can I deduct the cost of my trip to look at a rental property upstate?
Asked Saturday, September 23, 2000 by an anonymous userCPA Answer:
No. House repairs and improvements on a personal residence are not deductible in the year paid.
While the repairs are not deductible, the improvements should be added to the residence basis to be used in the eventual gain or loss on the sale of the residence calculation.
Generally, residence basis would be the initial cost plus improvements from inception. Generally, Costs for improving and repairing your rental property are deductible in the year expensed.
While the repairs are not deductible, the improvements should be added to the residence basis to be used in the eventual gain or loss on the sale of the residence calculation.
Generally, residence basis would be the initial cost plus improvements from inception. Generally, Costs for improving and repairing your rental property are deductible in the year expensed.
Severance pay
Asked Friday, September 22, 2000 by an anonymous userCPA Answer:
Severance or dismissal pay received upon termination is taxable, even if a signed waiver releasing the employer from future damage claims was given to the employer.
Payments made for personal injury damages are non-taxable.
Payments made for personal injury damages are non-taxable.
Cash and Property received
Asked Friday, September 22, 2000 by an anonymous userCPA Answer:
The property is considered taxable wages and reportable at its fair market value. Generally receipt of company stock as payment for services is included in taxable wages in the year it is received by employee.
If restrictions apply to the stock, it is not includable.
If restrictions apply to the stock, it is not includable.
Sick pay
Asked Friday, September 22, 2000 by an anonymous userCPA Answer:
Sick pay is considered taxable wages.
Worker's Compensation
Asked Friday, September 22, 2000 by an anonymous userCPA Answer:
Worker's Compensation for job- related illness or injury is non-taxable.
The Worker's Compensation payments must be made under the authority of a law or regulation that provides compensation for on-the-job illness or injury.
Checks paid under a labor agreement do not qualify as non-taxable Worker's Compensation. If your employer continues to pay your wages while you receive Worker's Compensation and also requires that you turn over the Worker's Compensation payments, then you are taxed on the difference between what was paid to you and what was returned.
The Worker's Compensation payments must be made under the authority of a law or regulation that provides compensation for on-the-job illness or injury.
Checks paid under a labor agreement do not qualify as non-taxable Worker's Compensation. If your employer continues to pay your wages while you receive Worker's Compensation and also requires that you turn over the Worker's Compensation payments, then you are taxed on the difference between what was paid to you and what was returned.