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Old 04-26-2015, 08:23 PM
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Taxedtodeath

I sold my principal residence on an installment sale in 2011 and final payment in 2014. i am single and recceived the $250 K exclusion. I received a large capital gain cause I owned the property forever. This year (2014) my tax is much more than it was in 2011, because the itemized deductions are almost null , because the capital gains approx. $450K put me into the highest earnings bracket. In 2014 I paid the tax for the 2011 installment sale (I couldn't afford to pay it in 2011). When I did my 2014 tax return I put on schedule A line 5 the $40K plus I paid in 2014 for 2011 state taxes less penalties and interest. and because of the phasing out of itemized deductions for high income earners an the AMT tax that $40k deduction was reduced to only $3K. Due to the fact that the high earnings were from the sale of my house (I gave up my house to get that money), and it would cost that kind of money to buy another one in the same area, I don't see why I don't get the tax break for the state tax I paid. iS THERE ANYWAY TO GET THOSE NEEDED DEDUCTIONS?



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Old 04-27-2015, 03:35 AM
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I sold my principal residence on an installment sale in 2011 and final payment in 2014. i am single and recceived the $250 K exclusion. I received a large capital gain cause I owned the property forever.=======>>>>>>>>>>>>>Not really; you can exclude up to $250K in profit from the sale of a main home as long as you have owned the home and lived in the home for a minimum of 2 years. Those two years do not need to be consecutive; In other words, the home must have been your principal residence. You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home. Generally, you can claim the exclusion only once every two years.

This year (2014) my tax is much more than it was in 2011, because the itemized deductions are almost null , because the capital gains approx. $450K put me into the highest earnings bracket. In 2014 I paid the tax for the 2011 installment sale (I couldn't afford to pay it in 2011). When I did my 2014 tax return I put on schedule A line 5 the $40K plus I paid in 2014 for 2011 state taxes less penalties and interest. and because of the phasing out of itemized deductions for high income earners an the AMT tax that $40k deduction was reduced to only $3K. Due to the fact that the high earnings were from the sale of my house (I gave up my house to get that money), and it would cost that kind of money to buy another one in the same area, I don't see why I don't get the tax break for the state tax I paid.========>>>>>> In general, you need to declare the gain each year as being either long or short term depending upon whether the gain was long or short term in the year of the home sale in 2011. Long-term gains are taxed at a lower rate,0~15% or 20$ if your tax bracket is 39.6% for 2014 I guess while short-term gains are taxed as ordinary income at your marginal tax rate.In my opinion, there can be many reasons; one of them is your AGI/MAGI is too high(as you pay them in lump sum as in 2014 you paid the tax for the 2011 installment sale) to claim tax deductions on your state return to cut your state tax liability.Or your state’s capital gains tax may be too high; you owe high AMT as you could not claim your itemized deductions on Form 1040 due to high AGI. This is because your standard deduction/exemption is not allowed for the AMT and, if you claim the standard deduction on Form 1040, you cannot claim itemized deductions for the AMT. So as your TMT is larger than your regular tax liability ( I guess the reduced AMT exemption amount‘d ,due to high AGI ,be one of the reasons to increase your TMT), you had to pay more AMT.Also, In calculating the AMT, you cannot take itemized deductions for state and local income tax, real estate
Even if you itemize deductions instead of your std deduction.

Note;actually there is no AGI threshold amount that automatically qualifies you for the AMT.In general , you may qualify for the AMT if your TMT would be higher using the AMT's system than it is using the regular IRS system. This happens because many deductions and exemptions are not allowed in the AMT. However, the AMT does include higher income deductions to make up for inflation. For example, under the AMT, single filers get a $50,600 exemption and married filing jointly get a $78,750 exemption. However, if you make more than $75K and have personal exemptions, state tax deductions or home-equity loan interest, or if you used stock options, you may still qualify for the AMT. If you make more than $100K, your chances of qualifying for the AMT are high.


iS THERE ANYWAY TO GET THOSE NEEDED DEDUCTIONS?=========>>I guess you need to contact the Dept of Rev of your home state for more accurate info/advice to see if you’d be able to get more needed deductions on your state return.



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