The Tax Preparation Blog

Question: US tax question – married couple rent tax deduction?

Hi,

My wife and I got married in summer 2007. We both have a job in Southern California, but are about 100 miles apart. Therefore, we live separately during weekdays, but together only during weekends and holidays. She rents an apartment near her workplace, and I rent another one (our primary home) near my workplace. My question is, can I deduct my wife’s rent for this year tax return? I remember I saw something like this before, but I couldn’t find it anymore. Any help is greatly appreciated!

HM

Answer: no, that is not deductable. its one of those choices that may not be finacially worth it.

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Question: Can I buy my car road tax a few days late?

My road tax finishes today. I didnt get any reminders letter to tax the car so I just realised yesterday that it finishes after today.

My insurance also got renewed from today so am still waiting for the cover letter so I can get the car taxed. I dont have have a garage or driveway to leave my car at. I tried taxing the car online but it says they cant find my Insurance.

I tried calling DVLA but they are closed.

Would anything happen if i was to buy my car road tax few days late?

Answer: Nothing much, only you have to pay a small fine

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Question: Income Tax – I live in California & my wages are a little over $38500 a year (head of household 2 dependents)?

Doesn’t go a long way here, but I was left a property by my mother who passed away late last year, and I started renting it out this year. After HOA payments and payment for a realtor to handle it, it brings in additional income of just under $10000 a year. I look at my tax table for 2009, and it says if you make over $45,000 a yr, the income tax goes up from 15% (with an additional $1195) to 25% with an additional $6,227.50. Am I understanding this, because if I am, I will be making less than I was before? Am I right or wrong?
I think I understand now. But what is the plus $1195 for 15% and $6,227 for 25%? So somebody that is making over $45000 on adjustable income pays the same $6227 as someone making 117,000 adjustable income? (My youngest will be 17 this year, so no more child credits for me).

Thank you so much for this information.

Answer: If you file schedule E for your rental income, you must claim any expenses related to that income. Expenses such as Depreciation expenses on the property plus other deductible expenses. Your taxable income from rental is your net income, income after expenses.

Also the tax rate is applied to your taxable income, so if your total income $50,000 and you are HOHH with 2 dependents, then your taxable income is;

Taxable Income = AGI – (Std Deduction + Personal Exemptions)
Taxable Income = $50,000 – ($8,350 + $10,950) = $30,700

Since your taxable income is $30,700 then your tax is
$1195 + (15% X ($30,700 – $11950)) = $1195 + (15% X $18750) =
$1195 + $2813 = $4008 this is your tax liability

Since you qualify for the new 2009 Tax Credit called MAKE WORK PAY TAX CREDIT of $400 then your net tax liability is;
$4008 – $400 = $3608

If your children are under 17 yrs old, you may qualify for the Child Tax Credit of up to $1000 per child and that will reduce your tax liability.

AGI = Adjusted Gross Income

If you need more help e-mail me at
tax.eezi@gmail.com

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