Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I purchased a house in Pennsylvania for my mother several years

ago for which she pays...
I purchased a house in Pennsylvania for my mother several years ago for which she pays me what is essentially "rent" (slightly less than the monthly mortgage of the house) and I make the house payments from a bank near my home in Mississippi. The house prevented her from living in an apartment or senior home after my parents sold their house. I've never considered the home a rental property for tax purposes given that I didn't purchase it for the intent of obtaining income, just to provide her a decent place to live outside of an apartment or senior home. She called to tell me that she's eligible for some sort of "rental rebate" in the amount of $600 and mailed me a document to sign/notarize. Now I'm questioning whether I've been in error not treating the money she sends me each month as "rental income" for tax purposes. Have I set myself up for a problem with the IRS?
Show More
Show Less
Ask Your Own Tax Question
Answered in 11 minutes by:
6/24/2010
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
Verified

While your original intent was not to obtain an income - the fact of receiving an income is a taxable event.

 

If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

Where to report. Report your not-for-profit rental income on Form 1040 line 21. For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A if you itemize your deductions.

Claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535 - www.irs.gov/pub/irs-pdf/p535.pdf , as miscellaneous itemized deductions on Schedule A (Form 1040), line 23. You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income.

 

Information about Pennsylvania Property Tax/Rent Rebate may be found here - http://www.revenue.state.pa.us/portal/server.pt/community/property_tax_rent_rebate_program/11410

The deadline to apply for a rebate on property taxes or rent paid in 2009 is Dec. 31, 2010.

 

Let me know if you need any help.

 

Ask Your Own Tax Question
Customer reply replied 7 years ago
One more quick question, will it be necessary for me to amend prior years' tax submissions to correct my error?

Well...

According to the tax law - yes - you should amend all past returns - add all missing income and deductions, and pay any additional taxes.

Please consider that you will be liable for penalties and for interest because of late payments.

 

As a practical matter - please be aware that there is a general three year statute of limitation for the IRS to assess additional tax liability if you failed to report any taxable income.

I might suggest to discuss the issue with your tax prepare and estimate possible tax liability before stepping forward.

 

Let me know if you need any help.

 

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
Verified
Lev and 87 other Tax Specialists are ready to help you
Ask your own question now
Customer reply replied 7 years ago
Thank you for your assistance, I appreciate it. I will consult with a local tax preparer (I've simply utilized TurboTax for my tax preparations for years) and determine the best course of action. Have a pleasant evening.
Ask Lev Your Own Question
Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
30,132 Satisfied Customers
Experience: Taxes, Immigration, Labor Relations

Lev is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,310 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Form 886-A Deductible Home Mortgage Interest Taxpayer has
Form 886-A Deductible Home Mortgage Interest Taxpayer has $1,000,000 in Grandfathered debt. Line 9 Form 886-A - is this line amount after deducting the garandfathered debt… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Lev, I am preparing federal unfiled tax returns for a client
Good morning Lev, I am preparing federal unfiled tax returns for a client of mine. I am also ready to finalize the 2014 tax return and there is an NOL created on his return. The client has already fil… read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
Lane, I've read that taxes need to be prepared in the basis
Hi Lane, I've read that taxes need to be prepared in the basis they're kept. I have a client that is a cash basis tax payer for the IRS, but an accrual basis tax payer for Florida sales tax. I also he… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Is a tax return less likely to be audited if it's prepared
Is a tax return less likely to be audited if it's prepared by a CPA or simply a tax person? Secondly, our Rotary Club is a 401 C for we have a 401 c 3 Foundation the question is can individual members… read more
socrateaser
socrateaser
1,031 satisfied customers
If my Schedule E loss is disallowed for a rental property
If my Schedule E loss is disallowed for a rental property (due to income level), can I take the mortgage interest and real estate taxes paid on Schedule A instead of on Schedule E?The entire expense a… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
What are the benefits of getting an accountant vs. preparing
What are the benefits of getting an accountant vs. preparing your taxes through TurboTax? In the past year we got married and bought a house.… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
I need to prepare a non- withholding or reduce withholding
I need to prepare a non- withholding or reduce withholding certificate so my client can sign before transferring the tax to the IRS under FIRPA.My client and his brother owns an apartment for 500k 50%… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
I need help with preparing a tax return and I may need to
Hi I need help with preparing a tax return and I may need to file form 3520 as well. Please let me know if you can assist.… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
I filed my Form 1040, prepared on TurboTax and filed
I filed my Form 1040, prepared on TurboTax and filed electronically via TurboTax. I got nothing back and was told by the IRS that the refund was sent to a different bank transit number than the one sh… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,458 satisfied customers
My tax preparer is with Liberty Tax, and filed incorrect
Hi. My tax preparer is with Liberty Tax, and filed incorrect returns without my knowledge or significantly … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I have a NJ estate tax return to prepare for a decedent in
I have a NJ estate tax return to prepare for a decedent in NJ. The brokerage statement has an account with the decedent and a trustee set up for her grandson under a U/W/O . Are these assets included … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
723 satisfied customers
I am preparing a corporate tax return. The company is a
I am preparing a corporate tax return. The company is a payroll company based in NJ but almost all of the clients are in NYC. Is the income generated from NY clients require a NY S corporate tax retur… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Regarding the 'capitalize the mortgage interest'. I was a
Regarding the 'capitalize the mortgage interest'. I was a partner in a rehabbing/flipping real estate business. We rehabbed two properties in 2016 and sold them in 2017. According to the first propert… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
A Form 1065 partnership return is being prepared for a
A Form 1065 partnership return is being prepared for a partnership whose General Partner is a single member LLC. In the Analysis of Net Income (Loss) section at the top of page 5, is the LLC's portion… read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
Second opinion] I used an on line tax preparer, and they
Second opinion] I used an on line tax preparer, and they sent me my tax return. The tax return had an error now the IRS wants me to pay for that error when it's the pa … read more
taxmanrog
taxmanrog
Master\u0027s Degree
698 satisfied customers
I am preparing a partnership tax return for 2016. The
I am preparing a partnership tax return for 2016. The partnership holds commercial rental property. one of the partners, 50%owner, passed away in April 2016 and left his interest to his spouse. i woul… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
If our tax preparer files for an extension, will we get
If our tax preparer files for an extension, will we get charged with interest and penalies … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Can you still deduct mortgage interest and real estate taxes
Can you still deduct mortgage interest and real estate taxes payments? … read more
Lev
Lev
Tax Advisor
30,132 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x