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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience:  15years with H & R Block. Divisional leader, Instructor
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My mother-in-law sold her house in 2009 for $105,000. She

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My mother-in-law sold her house in 2009 for $105,000. She is 85 and has $14,000 in annual income, and had about $1000 in an IRA withdrawel last year. She moved from Tennessee to Virginia this past year, and hasn't had to file taxes in many years. She just received a tax form for the proceeds of her IRA. Given this, and the fact that she sold her house, does she need to file this year (I'm sure she won't actually owe taxes, but will she need to file)? Thanks.
Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

HelloCustomer

Thank you for using Just Answer.

Tell your mother-in-law to not report the sale of her main home on a tax return unless she had a gain and at least part of it is taxable. Report any taxable gain on Schedule D (Form 1040).

 

If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income.

In short your mother-in-law can exclude the money she received for her home as long as she

  • Owned the home for at least two years (the ownership test)
  • Lived in the home as your main home for at least two years (the use test)

As far as the IRA that was distributed, you do not mention the source of her income. If it is social security then she is not required to file but would wan to file if any withholding were shown against the IRA.

 

I sincerely XXXXX XXXXX information is helpful,

Customer: replied 4 years ago.
She made $40,000 gains from the sale of the house, but she meets the exclusions you mention. So, she won't have to pay income tax on it but does she still need to file a 1040 form? She hasn't had to file taxes in years and is nervous about having to file.
Expert:  Robin D. replied 4 years ago.

Hello again,

If her income is coming from the same sources as before and she was not required to file then her status is the same.

I mentioned in my prior message that if her $14000 comes from SSA then that amount will not make her need to file. If any taxes have been withheld then she should file to get them back as a refund.

Tell me the sources of her income and the exact amounts and I will use an estimator to advise.

Thanks again,

Customer: replied 4 years ago.

Social security: $13,992

deceased husband's pension: $2,293

Pension: $541

proceeds from sale of house: $41,000

IRA RMD disbursement(not sure the exact nature of the IRA): $1147

Interest from CD: $1400

 

Thanks.

Expert:  Robin D. replied 4 years ago.

Based on the information you have supplied she would have no tax liability and would not be required to file.

Again I stress, if any of the pension information shows withholding, then she would want to file to get that money refunded to her.

Just make sure she keeps all her information for 2009 ( all the 1099Rs and SSA form) in an envelope so if questioned later the facts would show this.

 

Thanks again,

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience: 15years with H & R Block. Divisional leader, Instructor
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