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Personal Taxes

Capital gains for forfeited security deposit

Asked Tuesday, March 24, 2026 by Bharadwaj

I listed a home for sale in California where I lived for the last 3 years. First buyer paid earnest deposit of 3% and decided to back out from the contract by forfeiting the security deposit. I received 100% of the deposit. Within a week, i got another offer and ended up selling the home. My total gain (home sale gain+ forfeited deposit) is less than $500k from this transaction. Can the forfeited deposit be considered as capital gain or should it be considered as an ordinary income?

Quick Answer:

The forfeited earnest money deposit, in this scenario, is considered additional proceeds from the sale of your home. Since the property was ultimately sold, the deposit is not treated as ordinary inco...
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Personal Taxes

HOH eligibility

Asked Friday, February 27, 2026 by Chengchou

I believe I qualify for Head of Household (HOH). Here is why I meet the criteria: Considered Unmarried: My spouse is a nonresident alien (NRA), and I am not choosing to treat her as a resident alien for tax purposes. According to the section "Nonresident alien spouse" in Publication 501, I am "considered unmarried" for HOH purposes. Qualifying Child: I have a daughter born in September 2025 abroad. Although she is an NRA and has never been to the U.S. (not met the dependent requirements,she has

Quick Answer:

You are correct that if your spouse was a nonresident alien and you do not elect to treat them as a resident, you can be considered unmarried for Head of Household purposes. However, for your daughte...
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Personal Taxes

Capital gains

Asked Sunday, January 25, 2026 by Scott

If I make $54000 in pension income and this is my only income, how much in long term capital gains from the sale of stock can I have and still be in a 0% capital gains bracket

Quick Answer:

Assuming you are a single filer for the 2023 tax year: 1. Your gross pension income is $54,000. 2. Subtracting the standard deduction for a single filer ($13,850), your taxable income from the pens...
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Personal Taxes

Tax Management and Options for Financial Hardship

Asked Friday, January 16, 2026 by Monserrat

I would like advice on strategies for managing federal tax payments and ensuring compliance while on an installment plan with the IRS. Additionally, what options are available for individuals facing financial hardship regarding their tax obligations?

Quick Answer:

For managing an IRS installment plan, critical strategies include making every payment on time to avoid default. It's also essential to file all future tax returns on schedule and pay any new tax liab...
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Personal Taxes

Retirement accounts

Asked Thursday, January 08, 2026 by Rick

Hi I have questions regarding distributions from an investment account. If I move to another financial institution what are the taxes? If any? Thanks

Quick Answer:

Moving an investment account to another financial institution generally does not trigger taxes, provided it's a direct transfer of assets (in-kind) between custodians. In this scenario, you aren't sel...
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Personal Taxes

Interest deductions

Asked Friday, December 26, 2025 by Frederick

I have paid off a portion of my reverse mortgage which includes a large amount of interest. Is that interest deductible and can I carry over any of it into the following year?

Quick Answer:

Interest paid on a reverse mortgage is generally not deductible. For mortgage interest to qualify as a deduction, the loan proceeds must have been used to buy, build, or substantially improve your hom...
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Personal Taxes

Inherited mineral rights

Asked Sunday, December 07, 2025 by Faith

I was contacted by a company to buy mineral rights that I was unaware of. My dad passed in 2009. I sold the rights to this company and had to probate the will this year. The mineral rights are in Wyoming and I live in California. Since we couldn't find a will, my stepsister inherited half the interest from her mom that passed in 2022 but she signed a quit claim deed to me. I'm having a valuation done. Do we need to value the rights in 2022 for her portion for tax purposes?

Quick Answer:

Yes, for the portion of the mineral rights the stepsister inherited from her mother, the fair market value (FMV) on the mother's date of death in 2022 is the relevant valuation for tax basis purposes....
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Personal Taxes

Receiving income as Contracted status

Asked Wednesday, August 27, 2025 by Chris

I have contracted with a company for services and am receiving an income. I need to find out my tax liability for this income. Does it become part of my other income and reported with my income taxes? Do I owe quarterly taxes on it? It is not my only source of income. I am over 72 years old.

Quick Answer:

Yes, your contract income is part of your overall income and must be reported on your income tax return. Since it's not your only source of income, whether you owe estimated quarterly taxes depends...
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Personal Taxes

Question about Filing Taxes with resell hobby

Asked Monday, February 05, 2024 by Amy

Hello! My husband and I both work full time regular jobs and receive w2s. On the side, we both have a resell hobby. He resells shoes on Stockx and I resell clothing on Poshmark. This past year we both sold more than we normally do. However, neither of us qualified for a 1099-k on each of the sites, meaning we did not exceed 20k in sales and/or over 200 transactions. That being said, how do we report the income we did make on our taxes? Since we did not meet the threshold and consider it a hobby, do we have to report the income? Thank you!

CPA Answer:

Amy, You will need to take a look at the Hobby Law Rules 1st.  If you reported losses for 3 out of the last 5 years for your businesses, the IRS will consider this a hobby and disallow any deductions.  They may send you correspondence regarding this as well.

Given the above information, you could report both of your incomes on a Schedule C and show a profit with each of your Schedule C's. 

I hope this helps,

Jeanne Adams CPA

Firestone, CO 80504


Answer Provided by: Jeanne Adams Jeanne Adams
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