Tax Question

[freshpairs]

i hear people not getting a higher tax return because of H&R block *kanye shrug*

 

[myselfonline]

Since other people are asking questions.

My parents have/had a house they used for rent. But at the end of 2011, they transferred it over to a realty trust, but they are not the trustees. So should the trustees report the rental income on their own tax return, or should the trust itself file its own tax return using its tax ID?

edit: Also, do the beneficiaries have to do anything?

 

[villansfinest]

are you a cpa?

No I am not a cpa, and just to be clear I am not giving specific advice or suggestions. I just really like to help people learn about taxes. We all participate in the system some how, and the more we understand it, the better off we'll all be. I like to focus on educating people on how to answer their own questions. I learned a lot of great information from some very helpful people in my life, and I like to contribute where I can.

Like this question from myselfonline:

Since other people are asking questions.

My parents have/had a house they used for rent. But at the end of 2011, they transferred it over to a realty trust, but they are not the trustees. So should the trustees report the rental income on their own tax return, or should the trust itself file its own tax return using its tax ID?

edit: Also, do the beneficiaries have to do anything?

I have NO IDEA what the answer to this is. But, in order to educate myself, i'm going to go do some research based on information I find and see if any of it is helpful or relevant to myselfonline.

 

[penalize]

No I am not a cpa, and just to be clear I am not giving specific advice or suggestions. I just really like to help people learn about taxes. We all participate in the system some how, and the more we understand it, the better off we'll all be. I like to focus on educating people on how to answer their own questions. I learned a lot of great information from some very helpful people in my life, and I like to contribute where I can.

Like this question from myselfonline:
I have NO IDEA what the answer to this is. But, in order to educate myself, i'm going to go do some research based on information I find and see if any of it is helpful or relevant to myselfonline.

wow..im impressed...i am a c.p.a. and villansfinest knows more than me! much respect

to answer your question about the rental income -

(professionally)unfortunately your parents are not supposed to be able to claim the rental income.
(reality) unless its a HUGE deduction, it wont matter. its one of those things that cost the irs more to prove wrong than to pay for.

 

[villansfinest]

Since other people are asking questions.

My parents have/had a house they used for rent. But at the end of 2011, they transferred it over to a realty trust, but they are not the trustees. So should the trustees report the rental income on their own tax return, or should the trust itself file its own tax return using its tax ID?

edit: Also, do the beneficiaries have to do anything?

good stuff penalize.

in response to myselfonline, the best thing i can think of is to refer the person in charge of the trust to a tax preparer for professional advice. there's a few too many variables and specific details. i feel comfortable saying that if your parents no longer own the home, and were not involved at all in the transfer of the rental money from the tenants to the trust, and did not receive money from the trust, then they should not have to report the rental income on their tax return. anybody that is a trustee should be checking with the administrator of the trust to see if there will be any documentation like a 1041-K1: (this is from turbotax, http://turbotax.intuit.com/tax-tool...-Form-1041--Estates-and-Trusts-/INF20134.html )

"An estate or trust can generate income that must be reported on Form 1041, United States Income Tax Return for Estates and Trusts. However, if trust and estate beneficiaries are entitled to receive the income, the beneficiaries must pay the income tax rather than the trust or estate. At the end of the year, all income distributions made to beneficiaries must be reported on a Schedule K-1."

so if the beneficiaries receive the k1 or some other document, it is possible that they would have to report that on their own individual tax return forms. The best person to clarify whether or not there will be a k1 is the administrator of the trust (and if the administrator doesn't know, then that's when it's a great idea to have a professional get involved.)

Like penalize said, if an individual does not properly report their information, the IRS does have a modelling system in place to determine how "cost effective" it is to pursue an individual that's underreporting their income. But you don't really want to press your luck with the IRS, riiiiiiight?

I hope that was helpful for you.

 

[royalty d]

I just filed my taxes, i made 70k and paid 13k in taxes
My preparer of the past 3 years told me that i should max out my 403b and also withhold about 400 a month for 2013 since my income will increase about 20-30k
I did some google research and the preparer also explained the benefits but i was kinda lost

I pay rent, car note, and other misc bills...utlities, internet, cable, gas, phone etc.
Tax experts chime in with suggestions and opinions?

 

[mr jordan04]

I'm gettin close to 2k back but I thought I was getting more