10 Ways Selling Your Home Can Impact Your Taxes
9 Ways Identity Theft Can Affect Your Taxes
5 Tax Tips about Hobbies that Earn Income
10 Ways Selling Your Home Can
Impact Your Taxes
profits you earn are taxable. However, if you sell your home,
you may not have to pay taxes on the money you gain.
Here are ten tips to keep in mind if you sell your home this
Exclusion of Gain. You may be able to exclude part
or all of the gain from the sale of your home. This rule may
apply if you meet the eligibility test. Parts of the test
involve your ownership and use of the home. You must have
owned and used it as your main home for at least two out of
the five years before the date of sale.
Exceptions May Apply. There are exceptions to the
ownership, use and other rules. One exception applies to
persons with a disability. Another applies to certain members
of the military. That rule includes certain government and
Peace Corps workers. For more on this topic, see Publication
523, Selling Your Home.
Exclusion Limit. The most gain you can exclude from
tax is $250,000. This limit is $500,000 for joint returns. The
Net Investment Income Tax will not apply to the excluded gain.
May Not Need to Report Sale. If the gain is not
taxable, you may not need to report the sale to the IRS on
your tax return.
When You Must Report the Sale. You must report the
sale on your tax return if you can't exclude all or part of
the gain. You must report the sale if you choose not to claim
the exclusion. That's also true if you get Form 1099-S,
Proceeds From Real Estate Transactions. If you report the
sale, you should review the Questions and Answers on the Net
Investment Income Tax on IRS.gov.
Exclusion Frequency Limit. Generally, you may
exclude the gain from the sale of your main home only once
every two years. Some exceptions may apply to this rule.
Only a Main Home Qualifies. If you own more than
one home, you may only exclude the gain on the sale of your
main home. Your main home usually is the home that you live in
most of the time.
First-time Homebuyer Credit. If you claimed the
first-time homebuyer credit when you bought the home, special
rules apply to the sale. For more on those rules, see
Home Sold at a Loss. If you sell your main home at
a loss, you can't deduct the loss on your tax return.
Report Your Address Change. After you sell your
home and move, update your address with the IRS. To do this,
file Form 8822, Change of Address. Mail it to the address
listed on the form's instructions. If you purchase health
insurance through the Health Insurance Marketplace, you should
also notify the Marketplace when you move out of the area
covered by your current Marketplace plan.
9 Ways Identity
Theft Can Affect Your Taxes
identity theft normally occurs when someone uses your stolen
Social Security number to file a tax return claiming a
fraudulent refund. Many people first find out about it when
they do their taxes.
The IRS is working hard to stop
identity theft with a strategy of prevention, detection and
victim assistance. Here are nine key points:
Taxes. Security. Together. The IRS, the states and
the tax industry need your help. We can't fight identity theft
alone. The Taxes. Security. Together. awareness campaign is an
effort to better inform you about the need to protect your
personal, tax and financial data online and at home.
Protect your Records. Keep your Social Security
card at home and not in your wallet or purse. Only provide
your Social Security number if it's absolutely necessary.
Protect your personal information at home and protect your
computers with anti-spam and anti-virus software. Routinely
change passwords for internet accounts.
Don't Fall for Scams. Criminals often try to
impersonate your bank, your credit card company, even the IRS
in order to steal your personal data. Learn to recognize and
avoid those fake emails and texts. Also, the IRS will not call
you threatening a lawsuit, arrest or to demand an immediate
tax payment. Normal correspondence is a letter in the mail.
Beware of threatening phone calls from someone claiming to be
from the IRS.
Report Tax-Related ID Theft to the IRS. If you
cannot e-file your return because a tax return already was
filed using your SSN, consider the following steps: | File
your taxes by paper and pay any taxes owed. | File an IRS Form
14039 Identity Theft Affidavit. Print the form and mail or fax
it according to the instructions. You may include it with your
paper return. | File a report with the Federal Trade
Commission using the FTC Complaint Assistant; | Contact one of
the three credit bureaus so they can place a fraud alert or
credit freeze on your account;
IRS Letters. If the IRS identifies a suspicious tax
return with your SSN, it may send you a letter asking you to
verify your identity by calling a special number or visiting a
Taxpayer Assistance Center. This is to protect you from
tax-related identity theft.
IP PIN. If you are a confirmed ID theft victim, the
IRS may issue an IP PIN. The IP PIN is a unique six-digit
number that you will use to e-file your tax return. Each year,
you will receive an IRS letter with a new IP PIN.
Report Suspicious Activity. If you suspect or know
of an individual or business that is committing tax fraud, you
can visit IRS.gov and follow the chart on How to Report
Suspected Tax Fraud Activity.
Combating ID Theft. In 2015, the IRS stopped 1.4
million confirmed ID theft returns and protected $8.7 billion.
In the past couple of years, more than 2,000 people have been
convicted of filing fraudulent ID theft returns.
Service Options. Information about tax-related
identity theft is available online. We have a special section
on IRS.gov devoted to identity theft and a phone number
available for victims to obtain assistance.
For more on this Topic, see the Taxpayer Guide to Identity
Theft. IRS Tax Tips provide valuable information throughout
the year. IRS.gov offers tax help and info on various topics
including common tax scams, taxpayer rights and more.
5 Tax Tips about
Hobbies that Earn Income
of people enjoy hobbies. Hobbies can also be a source of
income. Some of these types of hobbies include stamp or coin
collecting, craft making and horse breeding. You must report
any income you get from a hobby on your tax return.
How you report the income from hobbies is different from how
you report income from a business. There are special rules and
limits for deductions you can claim for a hobby. Here are five
basic tax tips you should know if you get income from your
Business versus Hobby. There are nine factors to
consider to determine if you are conducting business or
participating in a hobby. Make sure to base your decision on
all the facts and circumstances of your situation. Refer to
Publication 535, Business Expenses, to learn more. You can
also visit IRS.gov and type "not-for-profit" in the search
Allowable Hobby Deductions. You may be able to
deduct ordinary and necessary hobby expenses. An ordinary
expense is one that is common and accepted for the activity. A
necessary expense is one that is helpful or appropriate. See
Publication 535 for more on these rules.
Limits on Expenses. As a general rule, you can only
deduct your hobby expenses up to the amount of your hobby
income. If your expenses are more than your income, you have a
loss from the activity. You can't deduct that loss from your
How to Deduct Expenses. You must itemize deductions
on your tax return in order to deduct hobby expenses. Your
costs may fall into three types of expenses. Special rules
apply to each type. See Publication 535 for how you should
report them on Schedule A, Itemized Deductions.
Use IRS Free File. Hobby rules can be complex. IRS
Free File can make filing your tax return easier. IRS Free
File is available until Oct. 17. If you make $62,000 or less,
you can use brand-name tax software. If you earn more, you can
use Free File Fillable Forms, an electronic version of IRS
paper forms. You can only access Free File through IRS.gov.
Don't hesitate to call us if you
need help or want to
get started on tax planning for 2016!
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