Unanswered Tax Questions

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 home. Reverse

As a nonresident alien, your gift of cash, whether from a U.S. bank account or wired, is generally not subject to U.S. gift tax. Cash is considered intangible property and is

For businesses with less than $10,000 in annual revenue, tax preparation primarily involves reporting your business income and deductible expenses. If operating as a sole proprietorship, this is typically done on Schedule C (Profit or Loss From Business) which is filed with your personal income tax return (Form 1040). Key aspects include diligently tracking all business income and expenses throughout the year. Deductible expenses can encompass various costs, such as supplies, advertising, home office expenses, and professional fees. Accurate record-keeping is vital to substantiate these deductions and ensure compliance. As a business owner, you will also be responsible for self-employment taxes, covering Social Security and Medicare contributions. Depending on your projected profit, you may need to make estimated tax payments quarterly to avoid underpayment penalties. Understanding what constitutes taxable income and allowable deductions is crucial. Proper organization of your financial records will significantly streamline the tax preparation process.

Withdrawing funds from a 529 account for non-qualified expenses involves specific tax implications. If the account has *earnings* (i.e., the current value exceeds your total contributions

For purchasing wholesale products from the USA directly from suppliers, an Employer Identification Number (EIN) is generally not required for your UK LTD. Your UK EORI/TAX number is relevant for UK customs and tax purposes. However, US platforms like Amazon often require an EIN to open a business or seller account. This is for identification and potential US tax reporting purposes. Yes, your UK-based company can obtain an EIN from the US tax system (IRS). This is done by filing Form SS-4, "Application for Employer Identification Number," which allows foreign entities without a US office or employees to get an EIN. This process formally identifies your company within the US tax system for these specific

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. When assets are inherited, their basis is generally stepped up (or down) to the FMV on the decedent's date of death. Since the stepsister inherited her interest from her mother who passed in 2022, her basis in that portion would be its FMV as of that date. When she then transferred this interest to you via a quitclaim deed, you generally receive her basis in that specific portion. Therefore, a valuation of that portion as of the mother's date of death in 2022 is necessary to establish the correct tax basis for that part of the mineral rights.

Investing in rental properties through platforms like Arrived.com will introduce new elements to your tax return. You'll report your share of rental income and deductible expenses, typically detailed on a Schedule K-1 you receive from the investment entity. Key deductions often include property taxes, insurance, management fees, and importantly, depreciation. Depreciation is a non-cash expense that can significantly reduce your taxable rental income, potentially even creating a tax loss on paper. However, rental real estate is generally considered a passive activity. Losses from passive activities can usually only offset passive income. There's an exception allowing taxpayers who "actively participate" and meet certain income thresholds to deduct up to $25,000 of passive losses against non-passive income (like wages). Whether you qualify for this "active participation" exception depends on your specific involvement and Adjusted Gross Income. If your deductions, especially depreciation, exceed your rental income and you can utilize the passive loss exception, it could reduce your overall taxable income, potentially leading to a larger refund or lower tax liability. However, if losses are limited by passive activity rules, they are generally carried forward to future years.

Investing in rental properties through platforms like arrived.com means you'll report your share of rental income and can claim corresponding deductions. Common deductions include depreciation, property taxes, mortgage interest, insurance, and operating expenses such as management fees. Depreciation, a non-cash deduction, can be substantial. These deductions can reduce your taxable rental income. However, rental real estate is generally considered a passive activity. This means any losses generated from these investments can typically only offset income from other passive activities. They generally cannot offset "active" income like wages or portfolio income (e.g., stock dividends). While the deductions can significantly lower your taxable rental income, the ability to use losses to reduce *other* types of income is often restricted, especially for hands-off, fractional investments where you are unlikely to materially participate. So, while the properties generate deductions, their immediate impact on reducing your overall taxable income from non-passive sources may be limited.

Yes, you must amend your Form 1120 tax returns for 2020 and 2021. The Employee Retention Credit (ERC) is treated as a reduction of your deductible wage expense. For income tax purposes, this reduction must be applied in the tax year the wages were paid or incurred, not in the year the credit is received. Since you claimed the ERC for wages paid in 2020 and 2021, your deductible wage expense for those years is reduced by the amount of the credit. This means your taxable income for 2020 and 2021 was understated on your original Form 1120 filings. You will need to file Form 1120-X, Amended U.S. Corporation Income Tax Return, for both 2020 and 2021 to reflect the decrease in your wage deduction. The receipt of the refund checks in 2

It's unusual to have no federal income tax withheld. Several factors could cause this: * **Incorrect W-4:** Your new employer may have incorrectly processed your W-4 form. Double-check that the allowances and other information are accurate. An incorrect W-4 may result in too little or too much being withheld. * **Low Income:** If your income is very low, your tax liability might be zero. * **New Tax Laws:** While unlikely to cause a complete absence of withholding, recent tax law changes could affect your withholding. Review your W-4 with your employer's payroll department. If the issue persists after correction, consult a tax professional or the IRS for further guidance. I cannot provide specific tax advice without reviewing your complete tax situation.