Burbank Real Estate & Homes for Sale (818)968-3718, Lupe Soto, Realtor & REO Specialist
You've always followed the sage advice of the late singer-songwriter Jim Croce: You don't tug on Superman's cape, spit into the wind or try to pull a fast one on the IRS.
OK, maybe that last one wasn't one of Jim's lyrics, but the sentiment -- know the consequences before you act -- still applies.
Unfortunately, that's not always easy to do when it comes to Uncle Sam's tax collectors.
The tax law is complex and difficult for even experts to negotiate. Just when you think you've followed all the rules and researched all the angles, a tax regulation blindsides you.
SURPRISING TAX LAWS: There are many arcane and infuriating tax laws that cause filers problems. Here are five that many people might run afoul of during tax season.
- Unemployment benefits
- Alimony payments
- Forgiven debt
- Prize winnings
- Social Security retirement payments
Unemployment benefits: Yes, it's true. Your unemployment benefits are taxable. Under tax law, unemployment is considered wage income and the IRS wants a cut of every type of income you collect.
Alimony received: You survived the divorce. Now you've got the IRS to deal with if you're getting alimony. Ending a marriage is never a happy event. But at least you got a good settlement and those regular checks from your (insert your own description here) ex-spouse are completely warranted. They also are completely taxable.
Forgiven debt: Not every debt settlement, however, has to pad Uncle Sam's pocket. Under the Mortgage Debt Relief Act that became law in late 2007, for example, some homeowners who are granted forgiveness of mortgage debt won't have to pay taxes on that amount. There are some restrictions. The forgiven debt amount is limited to up to $2 million or $1 million for a married person filing a separate return. The tax relief only applies to mortgage debt discharged by a lender in 2007, 2008 or 2009. And the must have been taken out to buy or build a primary residence, not a second or vacation home.
Prize winnings: Think you're pretty lucky because you won $1,000 in a radio contest? Uncle Sam is even luckier. He's due part of your winnings. Prize winnings are included in the long list of "other" income that the tax law says is taxable. And it's not just limited to cash awards. You've got to pay taxes on the fair market value of any property you win. So get ready to come up with some cash for Uncle Sam to cover that new Corvette the local Chevrolet dealership presented to you as part of its latest promotional contest.
Some Social Security benefits: Generally, if Social Security benefits are your only income, your benefits are not taxable. From the IRS's standpoint, Social Security benefits include monthly survivor and disability benefits; supplemental security income payments are not taxable.
But if you collect Social Security plus other income, as much as 85 percent of what Uncle Sam pays you could be subject to tax. To figure out just how much in taxes your Social Security might cost you, you'll have to do some calculating using the work sheet found in your 1040 or 1040A tax package
Source: BankRate 03/14/08
Forgive but collect is the IRS motto when it comes to canceled debt.
TAX FILING DEADLINE - APRIL 15, 2008 (TUESDAY)
April 15, 2008
Tax return due. Your 2007 income tax return is due, unless you file for an extension until Oct. 15, 2008.
File for extension. If you want an automatic extension of time to file your 2007 tax return, file Form 4868. Filing the form gives you until Oct. 15, 2008 to file your return. To avoid a penalty, however, be sure to pay any tax that was due on April 15.
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Contact Lupe Soto, Licensed Realtor® in California is a member California Assoc of Realtors CAR, National Association of Realtors NAR, Bilingual Realtor & Member of NAHREP (National Assoc Hispanic RE Professionals, Feng Shui Lover & Follower, I am available to help you list your property for sale, to purchase a property or to help you relocate to Burbank CA, San Fernando Valley, Santa Clarita Valley, Antelope Valley or any area in Los Angeles County in California , whether you are considering to buy a small condominium, a horse property in Burbank Equestrian District, new construction home/condo , Burbank Estates, Pool Homes, Leasing Services, Land Agent. I thank you and welcome your referrals!
Visit my profile to find out more about my services. Call me today at 818-968-3718 or contact me by email if you prefer to: sotolupe@charter.net
I know Burbank CA, San Fernando Valley, Santa Clarita Valley & Antelope Valley very well and will help determine a realistic sales price & get your home sold in 60 days or less.
P.S. If you are listing your home as a short sale in Los Angeles County, make sure you hire an agent who knows how to do short sales and has the experience to get the job done. I am doing successful short sale packages. Call me at 818-968-3718 to find out more
Disclaimer: The information provided herein is supplied by several sources and is subject to change without notice. Burbank Real Estate Blog does not guarantee or is any way responsible for its accuracy, and provides said information without warranties of any kind, either express or implied. Entries on Burbank Real Estate Blog represent the opinions and ideas of the author(s). Burbank Real Estate Blog does not express the views of Burbank in Action Realty or those of the broker.
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