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Old 08-16-2015, 12:59 AM
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Questions about taxes pertaining to home ownership

My question is a little unusual; but I want to get a general idea of what people know about my question so I can have a better idea of what I need to be asking a tax person (or CPA, etc) pertaining to owning a home or several homes, etc.

I have income that was judicially awarded to me in court; this income is tax sheltered to me, meaning I bear no responsibility to file taxes on this income nor do I ever have to report it to anyone if I choose not to. Here's the cool thing, the IRS already knows about this income that I receive monthly because the insurance company most likely pays the taxes on it (or maybe not, I don't really know, I am not privy to that info).

It was my understanding that I do NOT have to have any taxable income to claim deductions on property taxes and loan payment interest; I have heard it from someone in my family and from a sales person whom sells RVs (because I am looking into getting an RV)

So... I don't understand how you can get money without actually owing anything to the government in the first place; so am I understanding this correctly that I CAN claim a deduction on interest paid on my mortgage on my primary residence and second home? (I know there's rules about rental property and the rules change when one of the homes is used as a rental property instead of personal).

All I want to know is this even possible and if it is; is it even acceptable by the IRS?



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Old 08-16-2015, 01:31 PM
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Quote:
Originally Posted by mynetdude View Post
My question is a little unusual; but I want to get a general idea of what people know about my question so I can have a better idea of what I need to be asking a tax person (or CPA, etc) pertaining to owning a home or several homes, etc.

I have income that was judicially awarded to me in court; this income is tax sheltered to me, meaning I bear no responsibility to file taxes on this income nor do I ever have to report it to anyone if I choose not to. Here's the cool thing, the IRS already knows about this income that I receive monthly because the insurance company most likely pays the taxes on it (or maybe not, I don't really know, I am not privy to that info).

It was my understanding that I do NOT have to have any taxable income to claim deductions on property taxes and loan payment interest; I have heard it from someone in my family and from a sales person whom sells RVs (because I am looking into getting an RV)

So... I don't understand how you can get money without actually owing anything to the government in the first place; so am I understanding this correctly that I CAN claim a deduction on interest paid on my mortgage on my primary residence and second home? (I know there's rules about rental property and the rules change when one of the homes is used as a rental property instead of personal).

All I want to know is this even possible and if it is; is it even acceptable by the IRS?
I have income that was judicially awarded to me in court; this income is tax sheltered to me, meaning I bear no responsibility to file taxes on this income nor do I ever have to report it to anyone if I choose not to. Here's the cool thing, the IRS already knows about this income that I receive monthly because the insurance company most likely pays the taxes on it (or maybe not, I don't really know, I am not privy to that info). =======>>Basically, the reason for the compensation you receive in your settlement determines whether it is taxable.The only damages you can enjoy tax-free are those that compensate you for physical injury or physical sickness; regardless of whether the compensation was received via a court-ordered award or a settlement that was negotiated out of court. It makes no difference if the compensation is in a lump sum or spread out through multiple installments. However, if you,as the victim, claim a medical expense deduction for medical costs that are later reimbursed in a personal injury award, then the deducted amount must be reported as income on your tax return.Also, compensation for lost wages, interestingly enough, is also considered non-taxable, despite the fact that those wages would have been subject to income tax if they had been earned through the course of employment. But if any of the compensation is considered interest for the delay between the victim’s injuries and the time that they receive compensation, then that portion is considered taxable. Since many lawsuit settlements compensate you for more than one reason, part of your settlement might be taxable income and the other part not taxable.So, I guess you might also owe additional employment taxes for wages or business income. You must examine each component of your settlement individually to determine what kind and how much tax you owe.

It was my understanding that I do NOT have to have any taxable income to claim deductions on property taxes and loan payment interest; I have heard it from someone in my family and from a sales person whom sells RVs (because I am looking into getting an RV) ====>>In general, tax deductions reduce your taxable income. Less income means a smaller tax bill. under the tax rule, aslongas you ITEMIZE your deductions on federal Form of Sch A of 1040, then, you 추 deduct those expenses, So UNLESS you itemize deductions on Sch A of 1040, you CAN NOT deduct those expenses;
when filing your federal income tax return, you can choose to either take the standard deduction or to itemize their deductions, whichever is larger. You may be able to reduce your taxable inceom/ tax by itemizing deductions on Form 1040, Sch A . Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses. You may also include gifts to charity and part of the amount you paid for medical and dental expenses.Your standard deduction amount varies depending on your income, age and filing status,i.e., MFJ or MFS or HOH or etc, and changes each year;the irs says most taxpayers use the standard deduction. You can choose either one of them , whichever is larger.

So... I don't understand how you can get money without actually owing anything to the government in the first place; so am I understanding this correctly that I CAN claim a deduction on interest paid on my mortgage on my primary residence and second home? (I know there's rules about rental property and the rules change when one of the homes is used as a rental property instead of personal).

All I want to know is this even possible and if it is; is it even acceptable by the IRS?===========>>As mentioned above, to deduct your mortgage on your primary residence and second home, you MUST itemize your deductions on Sch A of 1040, if not( I mean aslongas you take your standard deductions), you CAN NOT deduct any cent of it.



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Old 08-16-2015, 01:57 PM
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Wnhough;

I had trouble finding your reply but I found it

Here's the thing that most people miss; I have no taxable income, but the income has already been taxed beforehand through a different responsible party therefore I pay nothing on income tax so logically or legally could I do itemized or standard deductions if I have no income to report even though I might pay sales tax, property tax, etc? (I don't own a business, so no business/self employment income either).

That is really the question I am trying to ask ^^ I am being told YES



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Old 08-16-2015, 03:49 PM
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Here's the thing that most people miss; I have no taxable income, but the income has already been taxed beforehand through a different responsible party therefore I pay nothing on income tax so logically or legally could I do itemized or standard deductions if I have no income to report even though I might pay sales tax, property tax, etc? (I don't own a business, so no business/self employment income either). ========>>UNLESS you have taxable income to report to IRS/state, you do NOT need to file your return with the irs/ your state and then, you can neither itemize deductions on Sch A of 1040 nor take std deductions as you do not need to file return; however, in common sense, as you CAN see, aslongas your income, AGI or whatever, is low enough, you may not need to file a tax return. However, even if you do not have to file, you NEED file a federal income tax return if you are getting a refund from the IRS/state. If you had income tax withheld from your income previously, you qualify for the earned income credit, or you qualify for the additional child tax credit or other credits in your state etc, then, you should file a return to get your refund. However, when you have expenses to itemize on Sch A, but the total is less than the standard deduction you can take or other circumstances prevent you from itemizing, know that most expenses can't be carried forward to a future tax year.Also, your taxable income is lower than itemized deductions or std deduction , you can claim neither itemized deductions not std deduction; So you can claim neither std deduction nor itemized deductions, whichever is larger UNLESS your AGI reported on 1040 line 38 income is larger either the amount on line 40 , whichever is larger.

That is really the question I am trying to ask ^^ I am being told YES===. As mentioned above



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