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Old 02-25-2012, 09:28 AM   #21
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Onward, thanks for that link to Pub 501. I had not been aware of that one.
Your conclusion may very well be correct. However, be aware, that you possibly may be taking something out of context. Looks to me like that definition of gross income is being used in a HOH test about maximum income allowed for a qualifying relative. Sometimes (often) IRS uses different definitions for the same word , depending on context....MAGI is one that comes to mind.

I would be more comfortable seeing something about rental income in the context of having to file. I've seen something in the thread about biz income
(where cost of goods sold can be deducted from the gross revenues to produce gross income) but nothing specifically about rental income.

so again, not disputing the conclusion, just questioning the process........
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Old 02-25-2012, 10:13 AM   #22
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Originally Posted by kaneohe View Post
Onward, thanks for that link to Pub 501. I had not been aware of that one.
Your conclusion may very well be correct. However, be aware, that you possibly may be taking something out of context. Looks to me like that definition of gross income is being used in a HOH test about maximum income allowed for a qualifying relative. Sometimes (often) IRS uses different definitions for the same word , depending on context....MAGI is one that comes to mind.

I would be more comfortable seeing something about rental income in the context of having to file. I've seen something in the thread about biz income
(where cost of goods sold can be deducted from the gross revenues to produce gross income) but nothing specifically about rental income.

so again, not disputing the conclusion, just questioning the process........
I had the same reservations, but ultimately decided that it was unlikely that they would use the term "gross income" in such different ways in the same publication.

The thing I am trying to get my head around is that the 1040 defines adjusted gross income as total income less certain adjustments. This suggests that total income and gross income are synonymous.

The income from a property included in total income (brought forward from Sch E to line 17 of Form 1040) is only the profit from the property (rent less expenses less depreciation).

Taken together, these suggest that only the profit from a property is included in total/gross income in the taxpayer's return.

But that is at odds with the previous post, which seemed pretty clear.
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Old 02-25-2012, 10:15 AM   #23
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...CPA's can still miss items
Yeah, we should get rid of all those human CPAs and replace them with robotic CPAs.
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Old 02-25-2012, 11:25 AM   #24
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pb4uski, agree it's confusing. Again, tho, I think you may be taking things out of context, not helped again by the fact that IRS using similar wording to mean different things. I think OP was discussing if he had to file so gross income is to be used in that context.

Citations in this thread have pointed clearly to Sch C using a particular line for the gross income test.......that line excludes many expenses that are used in the calculation of AGI........so in that case, gross income and AGI are clearly not synonymous. I haven't seen any specific links to a rental housing situtation to confirm what is in the gross income test.
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Old 02-25-2012, 12:08 PM   #25
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To be clear, I wasn't suggesting using AGI, I was suggesting that total income (Form 1040, line 22) might be gross income. But given it isn't clear, if I were the OP I would just file a return. You can't get in much trouble if you file a return but didn't need to.
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Old 02-25-2012, 12:21 PM   #26
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To be clear, I wasn't suggesting using AGI, I was suggesting that total income (Form 1040, line 22) might be gross income. But given it isn't clear, if I were the OP I would just file a return. You can't get in much trouble if you file a return but didn't need to.
Yes, I kind of misunderstood what you were saying......but that total income on line 22 of the 1040 uses the same definition of "income" as AGI for e.g.
Sch C......it takes the "net" income including expenses into account whereas
the test for filing clearly says not to take expenses into account. It would be nice if IRS would adopt nomenclature like MAGI1, MAGI2, MAGI3,etc and then
use them consistently w/ definitions so that nobody got confused. Same w/
income , total income, gross income, etc.

Agree w/your last sentence tho about filing if in doubt.
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Old 02-25-2012, 01:33 PM   #27
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Yeah, we should get rid of all those human CPAs and replace them with robotic CPAs.
There have been studies done in the past where reporters go to to many cpa's with tax returns, each with identical information, and get different answers.

This year, in December, I started doing the exercises that the IRS issue on their "Link and Learn" site, but when I came to check the answers, I couldn't find them, only to discover that the IRS had taken them down because there were errors in them. If the IRS can't even get the answers right on some basic tax returns that they issue themselves as examples, what chance do the rest of us have?
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Old 02-25-2012, 02:15 PM   #28
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then there's this little tidbit........apparently no penalty for failing to file IF no tax due so
if the net rental income after expenses is in fact low enough maybe you can get away with it IRS Failure to File Penalty: Penalties for Not Filing a Tax Return
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Old 02-26-2012, 03:27 PM   #29
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Yeah, we should get rid of all those human CPAs and replace them with robotic CPAs.
We call that "TurboTax".

It's the same thing that Intuit has done with their alleged "customer service center".
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Old 02-26-2012, 03:40 PM   #30
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Another item for the OP to consider.
You may not have to file THIS year but do you anticipate that it will always be like this? One could lose track of where you are with things like depreciation if you skipped a couple of years.
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Old 02-26-2012, 03:47 PM   #31
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Unearned income > than $950? Need to file.
Got this from the IRS link on this thread.
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Old 02-26-2012, 06:44 PM   #32
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Unearned income > than $950? Need to file.
Got this from the IRS link on this thread.
could you provide the link....there are a number in this thread.
Also are you missing a 0 in that number or are you talking about a dependent? All the numbers provided earlier were much larger....
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Old 02-26-2012, 07:10 PM   #33
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One could lose track of where you are with things like depreciation if you skipped a couple of years.
Yeah, luckily we can count on the IRS to keep track for us.

I'm still holding on to a home sale cap gains rollover tax form from 1989 in case we ever sell the rental property that we purchased with the profits... at this point the plan is to document it during probate.
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Old 02-27-2012, 08:23 PM   #34
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could you provide the link....there are a number in this thread.
Also are you missing a 0 in that number or are you talking about a dependent? All the numbers provided earlier were much larger....
See the IRS link at the bottom of post #3 in this thread.
At the bottom of the IRS page is this statement.

Do one or more of the preceding situations apply to your filing requirements?

Yes No

I clicked No and followed the questions to the unearned income question.

Was your unearned income over $950? Yes
You need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
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Old 02-27-2012, 08:57 PM   #35
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See the IRS link at the bottom of post #3 in this thread.
At the bottom of the IRS page is this statement.

Do one or more of the preceding situations apply to your filing requirements?

Yes No

I clicked No and followed the questions to the unearned income question.

Was your unearned income over $950? Yes
You need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
I followed the questions on the link as you suggested but the figure I came to was $9,500.

Quote:
Single and Younger Than 65
Is your gross income less than $9,500?
Yes | No
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Old 02-28-2012, 12:31 AM   #36
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See the IRS link at the bottom of post #3 in this thread.
At the bottom of the IRS page is this statement.

Do one or more of the preceding situations apply to your filing requirements?

Yes No

I clicked No and followed the questions to the unearned income question.

Was your unearned income over $950? Yes
You need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.
Thanks for the link....didn't know about that slick flow chart. I believe
you must have answered yes to the dependent question to get the $950?
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Old 02-28-2012, 08:42 AM   #37
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Thanks for the link....didn't know about that slick flow chart. I believe
you must have answered yes to the dependent question to get the $950?
Nice detective work. I assumed the OP, a retired disabled Vet, would not have said that he could be claimed as a dependent by someone else.
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Old 02-28-2012, 10:04 AM   #38
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Originally Posted by Free To Canoe View Post
See the IRS link at the bottom of post #3 in this thread.
At the bottom of the IRS page is this statement.

Do one or more of the preceding situations apply to your filing requirements?

Yes No

I clicked No and followed the questions to the unearned income question.

Was your unearned income over $950? Yes
You need to file a Federal Income Tax return. Even if you do not have to file a return, you should file one to get a refund of any Federal Income Tax withheld.

The problem is this:

"Single and Younger Than 65
Is your gross income less than $9,500?"

This is where the OP is having problems... from what I remember, he has a rental property that has a net loss... and he is saying his gross is a loss so he answers this 'NO' and does not have to file. I say he has to look at only his rental income to answer this question. It it is over $9,500 he has to answer this question "YES" and has to file...


I think that the problem people are having is the definition of income. One thing that most people do not consider is that you can not net your numbers to come up with income. IOW, you have income and expenses. The income is taxable... now you are claiming expenses that will reduce that income to a lowere level, but you have to actually claim those on a return. If you do not put them down on a return you are not claiming them.
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Old 02-28-2012, 11:11 AM   #39
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TP....you may very well be right about the rental situation but I have not seen an IRS link that says that. Here's a quote from Pub 4012 p. A1
about the gross income test:
************************************************** *****
Gross income includes gains, but not losses, reported on Form 8949. Gross income from a business means, for example, the amount on Schedule C, line 7, or
Schedule F, line 9. But, in figuring gross income, do not reduce your income by any losses, including any loss
on Schedule C, line 7, or Schedule F, line 9.
************************************************** ************
This quote seems to lean both ways:
1) for capital gains (F8949), it says to include gains but not losses. That suggests to me that if I sell A for 10K and B for 5K, I don't use 15K as a gross income test but I need to see the individual transactions. Suppose I bought
A for 1K and B for 10K. Then I have a gain of 9K for A and a loss of 5K for B. I then use 9K for the gross income test. Therefore I'm not doing
a "net net" of +9-5 = 4K but an intermediate "net" of 9K by not including the loss.

2) for business (sch C), however, it points to using line 7 on sch C (if a gain). Line 7 subtracts cost of goods sold from gross revenues but does
not subtract "expenses" so again it is not the "net net" but an intermediate
"net" that is used for the gross income test

3) rentals....I have not seen any explicit explanation of what is used for the gross income test so I am not sure what the right answer is. Find me a link and I will be a believer.
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Old 02-28-2012, 11:38 AM   #40
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Originally Posted by kaneohe View Post
TP....you may very well be right about the rental situation but I have not seen an IRS link that says that. Here's a quote from Pub 4012 p. A1
about the gross income test:
************************************************** *****
Gross income includes gains, but not losses, reported on Form 8949. Gross income from a business means, for example, the amount on Schedule C, line 7, or
Schedule F, line 9. But, in figuring gross income, do not reduce your income by any losses, including any loss
on Schedule C, line 7, or Schedule F, line 9.
************************************************** ************
This quote seems to lean both ways:
1) for capital gains (F8949), it says to include gains but not losses. That suggests to me that if I sell A for 10K and B for 5K, I don't use 15K as a gross income test but I need to see the individual transactions. Suppose I bought
A for 1K and B for 10K. Then I have a gain of 9K for A and a loss of 5K for B. I then use 9K for the gross income test. Therefore I'm not doing
a "net net" of +9-5 = 4K but an intermediate "net" of 9K by not including the loss.

2) for business (sch C), however, it points to using line 7 on sch C (if a gain). Line 7 subtracts cost of goods sold from gross revenues but does
not subtract "expenses" so again it is not the "net net" but an intermediate
"net" that is used for the gross income test

3) rentals....I have not seen any explicit explanation of what is used for the gross income test so I am not sure what the right answer is. Find me a link and I will be a believer.
You can believe what you want.... I have not dog in this hunt...

But look at Sch E.... your income is at the top and expenses below... if you compare to sch C or F, you would take line 4...

I will ask you... why would you think that you could take line 26 or even 41? You already know that looking at the first page of the 1040 is not correct per the quote you gave. So you have to go to the actual schedule. Comparing the places to look for the various schedules given indicates line 4...
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