Variety of issues covered by CPAs in answers to tax questions [The Akron Beacon Journal :: ]
(Akron Beacon Journal (OH) Via Acquire Media NewsEdge) Feb. 19--Questions ranging from life insurance proceeds to whether personal items sold are taxable were highlights of the first of four information programs this week sponsored by the Akron Beacon Journal and the Ohio Society of CPAs.
Tax professionals from Fairlawn accounting firm Bober Markey Fedorovich & Co. fielded 78 calls Monday night during the first of three call-in programs.
Separately, experts from Fairlawn firm Cohen & Co. fielded questions during an online chat during the lunch hour on Tuesday.
More than 63 page views were logged during the online chat. The full transcript is available for viewing at www.ohio.com/taxes.
The call-in program continues from 6 to 8 tonight, with the final session from 9 a.m. to noon Saturday. Readers are invited to call 330-996-3644 with questions.
On Monday, Bober Markey staff accountant Olga Lozovyy took a question from a man who had purchased a mobile home that he was turning into a rental property. He wanted to know whether he could write off the mortgage interest and other deductions.
Lozovyy told him that as long as the mobile home or RV has kitchen and bathroom facilities, he can take the mortgage interest.
Bober Markey CPA Mike Hydell took a call from a woman helping a neighbor who lost her home to foreclosure. The bank sold it in a short sale and the caller wondered if the forgiveness of debt income could be excluded from her yearly income. Hydell said as long as the debt is forgiven and the fair market value is less than the debt, it can be excluded. It must have been a person's principal residence and the forgiven debt was less than $1 million for singles or $2 million for marrieds filing jointly.
Bober Markey CPA Cindy Mitchell took a call from a senior citizen from England. She said she was downsizing and selling household items. Are the sale proceeds taxable?
Mitchell told the woman that as long as the items are her personal things and she is not making a profit, she did not need to report it as income. The woman said most of the things she was selling were for less than what she originally paid.
Mitchell said if the woman was selling collectibles, which increase in value, she would have to report that income.
On Tuesday during the online chat, CPAs Robert Venables and Adam Fink and staff accountant Robert Towne from Cohen & Co. fielded questions. They also answered some questions that had been submitted to the Beacon Journal.
A woman said that her 94-year-old mother died last year and her 99-year-old father received $25,000 in life insurance policy payments. She wondered whether he had to pay tax on the money.
The experts told her that life insurance proceeds are not taxable.
In a related question, a reader said his wife died in January. He knew he could file for 2013 as married filing jointly, but wondered if he could file next year for 2014 taxes as married filing jointly since she lived 10 days in 2014.
He can file a married filing joint return for 2014 and 2013. IRS Publication 501 provides: "If your spouse died during the year, you are considered married for the whole year for filing status purposes."
A reader asked whether she and others who suffered storm damage to their homes in 2013 could claim some of the losses since she did not have flood insurance. The senior citizen said she and her husband had more than $15,000 in expenses, including replacing a foundation wall. They received $500 in reimbursement for loss of food in their freezer from insurance.
The experts told her that "casualty losses are calculated on Form 4684. The amount calculated on that form then carries to 1040 Schedule A as an itemized deduction. Depending on the specific taxpayer they may or may not get a deduction for this as you have to itemize in order to get the deduction (not taking the standard deduction)."
Also, most casualty losses have to get over a threshold of 10 percent plus $100 of Adjusted Gross Income (AGI) to qualify for a deduction.
Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org. Follow her on Twitter at www.twitter.com/blinfisherABJ and see all her stories at www.ohio.com/betty.
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