A new real estate investor has questions about the taxes they will be required to pay when flipping a property. If you are able to make a successful business out of buying, rehabbing and flipping properties, you may want to talk to your attorney and your tax preparer about whether it makes sense to start a company, which may help clarify your tax and any future liability issues.
Typically, you have to live in your home as a primary resident for two of the past five years in order to take a certain amount of profits capital gains tax-free. However, the IRS has recently loosened some of these restrictions for people who have to sell for medical reasons, divorce and other personal calamities. The IRS allows you to take a proportionate share of the sale tax free.
Considering taking a deduction for home office expenses? If so, this article on home office deductions is a must read.
When you win a contest, it's like winning the lottery. You get the goods but you have to pay tax on your winnings as personal income rather than capital gains. The difference can be pretty dramatic in terms of taxes owed. Many people choose to take a cash payment instead of the prize, because they will have the cash to pay any applicable taxes.
When it comes to stocks, inheritance and other assets that have appreciated over time, you inherit these assets at the value they had at the time of inheritance or acquisition. Unless one of these accounts was of a type that had designated you as a beneficiary and are taxable to you directly, you should not have to pay any tax on the amounts you received.
Tax time again! Whether you are using a paid tax preparer or filing solo, you'll need to stay on top of the tax laws. Using software and filing online helps keep track of the myriad of changes to the tax laws each year. If you don't know what deductions you can take, the IRS's website offers hundreds of publications that explain the deductions available for each profession.
A couple bought a home on a 2-acre lot. They lived in it while they built a second home, and then moved into the second home after it was completed. They now rent out the original home to another couple. If they sell the property and both homes, how will the transaction be treated at tax time?
Looking for last minute tax tips? For those of you who are still working on filing taxes, here are a few useful tax tips to keep in mind.
If you owe back taxes to the IRS, you may be able to work out a payment plan with the IRS. You may also be able to borrow against any property you own to pay the IRS. However, if you're credit is too low to take out a conventional loan, you could also talk to the better B/C lenders (also known as sub-prime lenders) that specialize in helping people borrow against their home equity even with a poor credit score.
The state of Illinois has several places for those who qualify to file their taxes for free. If you make $35,000 a year or less, you can file your taxes for free through a variety of programs coordinated by the City of Chicago’s Tax Assistance Center and the Center for Economic Progress. Check out the locations throughout Chicago and the state where you can file your taxes for free.
