The IRS Deductions Blog

Posts Tagged ‘federal tax’

Question: Security Deposit Tax Deduction?

Just a quick question to anyone out there who knows a little about federal/state taxes. In 2009 I lost my security deposit for my apartment because the property was foreclosed and re-posessed by a local bank. I never got a statement back giving reasons why my security deposit was witheld. Is there any way to deduct this loss from taxes?

Answer: Yes, there is a way, but first you must make a reasonable effort to have your security deposit returned.

This is called a “nonbusiness bad debt.” A nonbusiness bad debt can only be deducted in the year it becomes worthless (there is no longer any chance that the amount owed will be paid).

To report a nonbusiness bad debt, deduct it as a short-term capital loss on Schedule D. On Schedule D, Part I, line 1, enter the name of the debtor and “statement attached” in column a. Enter the amount of the bad debt in parentheses in column f. Attach a statement that contains: 1) A description of the debt, including the amount, and the date it became due, 2) The name of the debtor and any business or family relationship between you and the debtor, 3) The efforts you made to collect the debt, and 4) Why you decided the debt was worthless.

Assuming you have nothing else on your Schedule D, you then put the amount of the bad debt in parentheses (as a subtraction) on Line 13 of your 1040.

If you made no efforts to collect the bad debt in 2009, or do not reasonably believe it could be considered worthless by the end of 2009, you can still claim this loss in a future tax year when you have made a reasonable effort and deem the debt to be worthless.

Items on Amazon Right Now for State Tax Deduction From Federal Tax:

Federal judge halts ban on payroll deduction to Alabama Education Association

U.S. District Judge Lynwood Smith issued the injunction against a law passed by the Alabama Legislature in December that bans school employees from having their AEA membership dues directly deducted from their paychecks. The law was to go into effect on Sunday.

Tax Refund Estimator for 2010, 2011

Question: my hubbie and i have filed married joint 3yrs but not legally married, can we file individually now?

For 2007 I worked as an independent contractor and paid no fed, med, ss taxes, and only made about 10k as a part timer. My hubbie did pay taxes. when we went to file the guy really scared us telling me i was in trouble and that we would end up owing alot even with the eic and claiming our 3 yr old. so my husband (not legally married) filed head of household alone, im yet to file my taxes, ive realized that i only have to pay about 400-700 but im concerned about what filing status to use since we do live together, he claimed my son and i would just be claiming home office deductions and so forth. should i do single and file with my mothers address even though my 1099 misc and one w2 would not have the same address. Or could file single with the same address as my hubbie since that is were i live , will that trigger an audit will we get in trouble for filling individually after filing married since we are not legally married, texas does recognize common legal marriage, thnks
a million

Answer: Whoa, what a mess. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife. Further,a person does not meet this test if at any time during the year the relationship between you and that person violates local law.
Has your State ruled you as common law married? If so, DON’T file amended as single for the prior 3 income tax years. You will owe a lot on the Federal, and, if your state has income tax, you may owe a lot on the state, also. If you were married in a foreign country, and OK via the INS, file as married. If your State says you are common law married, make sure your husband amends that head of household 2007 return. Click on Married Filing Jointly and Married Filing Separately in your software. Don’t know how much your husband made, but there is a shot from what you have said that Married Filing Separately would enable you to have a lower income tax liability, or, only slightly higher.

Texas has no income tax. What address did you put on your 2004-2006 returns with the IRS? If you put Texas, get married. Look in to further. Your attorney may have given you erroneous advice. I’m sure every State has common law marriage. It’ s to protect the children.

Items on Amazon Right Now for Federal Tax Home Office Deduction:

Mortgage Deduction Cut Draws Criticism

PHILADELPHIA | Long considered a key ingredient of American home ownership, the income-tax deduction for mortgage interest now is on the menu of the commission looking for ways to trim the federal deficit.

Bill Clinton Backs Obama’s Tax Cut Deal

Question: Can I put my property tax payment for 2009 on line 7 in schedule L ?

Don’t seem to get above the 11,400 standard deduction this year itemizing this year, so can I use line 7 on schedule L to put the property tax I paid last year, which is over the line 8 entry of 1,000 and add to my standard deduction to make it 12,400 and use on my federal return? Is real estate tax and the property tax I paid on my house last year the same> Thanks

Answer: yes

Items on Amazon Right Now for Standard Deduction Federal Tax 2009:

ABCs of Post-Storm Tax Recovery: Assess, Bounce Back, Continue

Tax, Financial Information Have a Place in Emergency Kits

Tax Tip: Addilional Standard Deduction