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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3161
Experience:  I've prepared all types of taxes since 1987.
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I have a tax question, and hope that its not too confusing.

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I have a tax question, and hope that it's not too confusing. I'm in the military, and recently got stationed in Vermont, from Florida. I own my home in Florida, and I am renting it out right now. I am still a Florida resident, with my vehicles registered there, and my license is still Florida. I got married after leaving Florida, to my fiancé that also owns a home in Florida. She stayed there with her kids, and I came to Vermont alone, since the kids are in high school--we didn't want to mess up their mojo, so to speak. She lives in her home. My question is taxes. Where do we even start? She works, I work, we live in different states. I did taxes earlier this year, and the online turbotax software said that I didn't have to claim the income that I'm getting from the renters? That didn't seem right, but it checked out at the end when reviewed by the software? What is the best way to file taxes? Do we file together? Separately? I don't ever want to be caught in a situation where I made a mistake on taxes, and end up owing taxes down the road. I'm always on top of my taxes, and never get behind in any tax situation. Her kids live at home with her, and my kids are grown and out of the home already. She does receive child support right now also.

Greetings,

 

There are several questions that you asked.

 

For federal income tax, it is generally better for spouses to use joint rather than separate status. For those cases where is it better to file separately the only real way to know is to prepare all three returns (one joint and two separate and compare the joint result to the total of the two separate results).

Federal income tax will use all of your income and deductions regardless of what state it is in. Child support is not income that is included for income tax.

 

Since Florida does not have a state income tax and you are still a resident (with your stationing in Vermont temporary) as a nonresident of Vermont you do not include your military pay for full-time active duty with the armed services and do not include your income earned in Florida on that state return. See http://www.state.vt.us/tax/individualmilitary.shtml

Since your spouse is not a resident and has no Vermont income, you can file a separate return in Vermont. If your only Vermont income is active duty military pay you will not have any Vermont income subject to Vermont income tax.

 

Not quite sure what you mean when you wrote " I did taxes earlier this year, and the online turbotax software said that I didn't have to claim the income that I'm getting from the renters? That didn't seem right, but it checked out at the end when reviewed by the software?"

Generally you will have to enter the income and expenses for the year and only if there is a net profit will that net income add to your other income for federal income tax. So, it may be you had more expenses than income for the rental which is why it did not add to your other income.

The rules for losses on rental are involved but when gross income is more than $150,000 the losses are usually not allowed and some can be when income is less.

 

There is an exception from including rental income if you only rented the property for fourteen days or less during the year. Nothing is reported for that short rental period.

 

From what you have described it seems that a separate Vermont return for you and a joint federal return is probably best in your circumstances.

 

Please ask if you need more discussion or information.

Thank you.

 

 

 

Customer: replied 3 years ago.

Sir, thank you for all your answers to my questions. I know it seemed a little confusing, since not too many people are in my same situation. As I went through turbotax, I did not have to do a Vermont state tax form, and neither did I have to do a Vermont one.


 


To answer your question about my statement: Not quite sure what you mean when you wrote " I did taxes earlier this year, and the online turbotax software said that I didn't have to claim the income that I'm getting from the renters? That didn't seem right, but it checked out at the end when reviewed by the software?"


 


I did my taxes at the beginning of the year on turbotax. As I was doing it, I thought for sure that my renters paying my rent, was actual income that I had to claim? But as I went through it and claimed that I got money for a rental property in FL, the software said that Florida does not have an income tax, and that I was good to go.


 


I'm just trying to figure out if I should do my taxes separately next time around, or if I should do it "joint", being that we live in different places, and I make more than double of what she makes. I think that she gets more taxes returned to her, as I would yearly. I guess what I'm trying to say here is, which way would be EASIER for the both of us for doing taxes? Just trying to not complicate things.

Hello again,

The easiest and most straight forward manner to file would be to file joint for federal purposes, no doubt.

That would be the least complicated (and likely is not more tax due).

Hope that clarifies for you.
Please do ask if you want more discussion.
Thank you.

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