John Smith (not me) earns a living with two part-time jobs. He also has been receiving rental income of $500 per month in cash each month for the past three years.he in more trouble? Thanks.
He has never reported the rental income on his federal or state tax returns. He wants to make things right. What is his best course of action here? Should he fill out 1040X forms? See a tax attorney? In addition to the penalties, fines and interest, is
John Smith (not me) earns a living with two part-time jobs. He also has been receiving rental income of $500 per month in cash each month for the past three years.he in more trouble? Thanks.
He has never reported the rental income on his federal or state tax returns. He wants to make things right. What is his best course of action here? Should he fill out 1040X forms? See a tax attorney? In addition to the penalties, fines and interest, is
--
John Smith (not me) earns a living with two part-time jobs. He also has
been receiving rental income of $500 per month in cash each month for the >past three years.
He has never reported the rental income on his federal or state tax
returns. He wants to make things right. What is his best course of action >here? Should he fill out 1040X forms? See a tax attorney? In addition to
the penalties, fines and interest, is he in more trouble? Thanks.
John Smith (not me) earns a living with two part-time jobs. He also
has been receiving rental income of $500 per month in cash each month
for the past three years.
He has never reported the rental income on his federal or state tax
returns. He wants to make things right. What is his best course of
action here? Should he fill out 1040X forms? See a tax attorney? In
addition to the penalties, fines and interest, is he in more trouble?
Thanks.
On Thursday, July 8, 2021 at 6:07:07 PM UTC-4, Patrick Cogan wrote:is he in more trouble? Thanks.
John Smith (not me) earns a living with two part-time jobs. He also has been receiving rental income of $500 per month in cash each month for the past three years.
He has never reported the rental income on his federal or state tax returns. He wants to make things right. What is his best course of action here? Should he fill out 1040X forms? See a tax attorney? In addition to the penalties, fines and interest,
should be filed, the final decision is up to the taxpayer.--I'm assuming that $500/month is what he receives. There should be expenses as well. It's not obvious whether the rental is a net profit or loss each year. While the correct response from a credentialed tax professional would be that amended returns
At $6000/year of unreported gross receipts, there is no need to see a tax attorney. If he chooses to file the amended returns, the penalties and interest won't be exorbitant.Thank you for your responses. I could have been clearer. The roommate rents the room in the owner's home. Thanks.
Ira Smilovitz, EA
Leonia, NJ
Thank you for your responses. I could have been clearer. The roommate rents the room in the owner's home. Thanks.
On Thursday, July 8, 2021 at 11:52:32 PM UTC-5, ira.sm...@gmail.com wrote:
On Thursday, July 8, 2021 at 6:07:07 PM UTC-4, Patrick Cogan wrote:Thank you for your responses. I could have been clearer. The roommate rents >the room in the owner's home. Thanks.
John Smith (not me) earns a living with two part-time jobs. He also hasI'm assuming that $500/month is what he receives. There should be
been receiving rental income of $500 per month in cash each month for
the past three years.
He has never reported the rental income on his federal or state tax
returns. He wants to make things right. What is his best course of
action here? Should he fill out 1040X forms? See a tax attorney? In
addition to the penalties, fines and interest, is he in more trouble?
Thanks.
--
expenses as well. It's not obvious whether the rental is a net profit or
loss each year. While the correct response from a credentialed tax
professional would be that amended returns should be filed, the final
decision is up to the taxpayer.
At $6000/year of unreported gross receipts, there is no need to see a tax
attorney. If he chooses to file the amended returns, the penalties and
interest won't be exorbitant.
Ira Smilovitz, EA
Leonia, NJ
On 09/07/2021 19:58, Patrick Cogan wrote:
Thank you for your responses. I could have been clearer. The
roommate rents the room in the owner's home. Thanks.
Do you guys have "The Rent a Room Scheme" like we have in the
UK? We don't have to do anything if the total rent received in a
year is less than or equal to £7,500.
<https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme>
Don't forget that whether or not he takes depreciation expense and
benefits from its deduction, it (either way) reduces his basis in
the house for the depreciation "allowed or allowable", so you
better amend the returns to take this deduction, as you'll be
recapturing it anyway as part of your taxable gain (@ 25%) when
you sell the house eventually (if it's not sold at a loss).
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