This was a great video, just so i am clear, I sold my moms house after she passed. Passed in June, appraisal in July, sold in September same year. Appraisal was 125,000 sold at 107,000. I can only claim $3000 a year for the 18k loss? And need to carry over $3000 for the next 5 years? Thanks again.
This is correct, but I'll add a little more information for context.The basis in your mother's house 'steps up' in value after her death, so you can treat the appraised price as your cost basis. Since you incurred an $18,000 loss on the sale of her home, you can only claim $3,000 per year as a deduction against *ordinary income.* However, if you have other capital assets, such as stocks or mutual funds, you can sell those at a capital gain, which you can offset with the capital loss. There is no limit on the amount of capital gain that you can offset with a capital loss.
I love your videos. In your case you use actual numbers and explain line by line, that makes me to understand tax concept easily. I appreciate your effort and works.
If I carry a loss of $10,000 over from 2022, and I have a capital gain of 1000 in 2023. Do I apply/use 4000 (1000 for capital gain, 3000 for ordinary incomes) in 2023, and carryover the remaining 6000 as "loss carryover" to 2024? Or the 3000 limit is for capgain and ordinary income COMBINED? Many examples on the internet, but nobody talked about this, clearly. Thanks in advance
What you outlined is correct. You would apply the loss against the $1,000 gain, $3,000 against ordinary income, then carry the unused $6,000 to the next year.
Thanks for the instructions. Couple of questions. I sold 1 long term property. I only have my closing documents. I've used those to fill in column (d) and have filled in column (e). I also had to pay for soil testing so do I apply that to column (g) in the positive $500 0r (500). I entered E into the code box. Also what about any property tax I've paid on the property since I've owned it (3yrs)? Is that also an adjustment? Maybe not important, but its just raw land..
Great instruction. 1 question. Is zero ( -0- ) considered a gain? This situation occurred because I had no Long Term gain, it was 0. Line 17 on Sched D asks are Lines 15 AND 16 BOTH gains? Is 0 a gain? Thank you.
If you have zero long-term gain, then you would default to the Line 16 instructions, based on what was in Line 7. If you had zero long-term gain and zero short-term gain, then you would follow these Line 16 instructions: -If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 22. If you had zero long-term gain and some short term gain, then you would follow these Line 16 instructions: -If line 16 is a gain, enter the amount from line 16 on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 17 below. If you had zero long-term gain and a short-term loss, then you would follow these Line 16 instructions: -If line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22.
@@teachmepersonalfinance2169 thanks for the quick response! I was referring to the forms used to pay taxes for the profit from the flip and any tax advice. 😅
@@AngelGarcia-et9db Got it. IRS Form 8824 is used to report like-kind exchanges, which is often the tactic for doing a Section 1031 exchange: IRS Form 8824, Like-Kind Exchanges Article: www.teachmepersonalfinance.com/irs-form-8824-instructions/ Video: ua-cam.com/video/YAIJnj64Tqw/v-deo.html Sometimes, real estate investors often structure sales in the form of installment sales, which would be reported on IRS Form 6252: IRS Form 6252, Installment Sale Income Article: www.teachmepersonalfinance.com/irs-form-6252-instructions/ Video: ua-cam.com/video/PAeflip0oFk/v-deo.html And you should probably be familiar with IRS Form 4797, when it comes to selling business property: IRS Form 4797, Sales of Business Property Article: www.teachmepersonalfinance.com/irs-form-4797-instructions/ Video: ua-cam.com/video/2eEaDPh97Zc/v-deo.html Finally, if you're reporting rental income, or pass-through income from a partnership or S-corporation, it should all flow through to Schedule E: IRS Schedule E, Supplemental Income Article: www.teachmepersonalfinance.com/irs-schedule-e-instructions/ Video: ua-cam.com/video/mHH-0QuB3EU/v-deo.html If there's another specific tax form you're thinking of, please let me know!
Thank you for the video! I have one question-at 4:19, you say that "Stocks and Trade" are not considered capital assets, but everything I've read says that the sale of stocks should be reported on a schedule D. Can you clarify that point?
Of course! I believe I had meant 'Stocks in Trade,' referring to stock in trade or other property included in inventory or held mainly for sale to customers in the ordinary course of your trade or business. A stock is considered a capital asset. But stock in trade, which refers to inventory held for sale (like in a clothing store) is not. I apologize for the misunderstanding.
@@teachmepersonalfinance2169Thank you for clarifying! Apparently I heard the words "stock and trade" and immediately interpreted that as "stock trading." Appreciate the clarification, and good to know the difference between that and "Stock in trade"!
If you only reported capital losses, then you would not have any taxable income to report. Without taxable income, you would owe zero tax. But if you have income from other sources (like a job or retirement income), then you probably would still file a tax return to see if you owe tax, or to see if you're eligible for refundable tax credits. If you think you might be entitled to refundable tax credits, then you may consider filing a tax return anyway to claim those credits.
Generally, long term capital gains are taxed at a preferred tax rate. Generally, this tax rate can range from 0% to 20%, although there are certain exceptions: -The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate. -Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate. -The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate. Also, very high earners can be subject to the Net Investment Income Tax (NIIT), which is an additional 3.8% on top of the 20% gains rate (resources at the bottom for reference). Conversely, short-term capital gains are taxed at ordinary income rates. Generally, long-term capital gains will be taxed at a lower rate than short-term gains at any income level. IRS Form 8960, Net Investment Income Tax Article: www.teachmepersonalfinance.com/irs-form-8960-instructions/ Video: ua-cam.com/video/4vNspFLDIM4/v-deo.html
@@teachmepersonalfinance2169 I have the same question once you add long and short capital gain then we put the amount in the line 7 on 1040. then it becomes income tax in 1040 form. I cant see what is the difference
@@carlosovalles7725 If you have gains on both Part I (short-term) and Part II (long-term), then you would need to complete Part III. As you go through Part III, you may need to complete one or more of the worksheets located in the Schedule D instructions. From there, you can report the correct amount of tax on your Form 1040. This playlist walks through each of these worksheets so you can better understand the tax impact, based on the type of asset that you sold. ua-cam.com/play/PLYHzJrFFCrpx8fntib5MeAQ7xMEfvPVHZ.html
@@teachmepersonalfinance2169 ok you said that the long term capital gain is in the 28% gain sheet or 8949 form? I did my taxes in a well known company and they put the number from the line 16 directly to the 1040. they didnt fill out the anything in the line18 (28 % gain sheet). it looks like they didnt care to adjust or discount due to the long tern capital gain
My mom passed in jan 2023. My brother and I inherited her house which appreciated a decent amount in the 10 months we owned it. I know the value when we inherited it and the value we sold it for, minus all expenses, fees, improvements, leave us with some capital gains; but I do not know how to fill out this form. do i need to do an form 8949? do i just write inherited house? What code do i put in "f and g" since we get cost basis adjustment to the date we inherited it. please help us.
You would report the sale on Form 8949, which will carry over to Schedule D. According to the Form 8949 instructions: For Column (b) Date Acquired: Inherited property. Generally, if you disposed of property that you acquired by inheritance, report the sale or exchange on a Part II (Long-Term) with the appropriate box checked (D, E, or F). Enter “INHERITED” in column (b). Unless you received Form 1099-S or Form 1099-B reporting this transaction, you should leave columns (f) and (g) blank. Instead enter the FMV on the date of death as the basis under column (e). IRS Form 8949, Sales and Dispositions of Capital Assets Article: www.teachmepersonalfinance.com/irs-form-8949-instructions/ Video: ua-cam.com/video/O5P_L9zdXME/v-deo.html
@@teachmepersonalfinance2169 Very helpful. Thank you. When I actually do my taxes next week, I think I now know what to do. inherited is always considered long term.
Thanks for the video. This is very helpful. I do have a question though. In my tax program, it imported my brokerage statement and listed all my options trades (mostly credit spreads and Iron Condors which are considered "Straddles" by the IRS I think), and it listed each of the legs of those option strategies (the buys and sells of the options) separately on Form 8949 and listed them on 1B of Schedule D. (In most cases I was selling credit spreads and Iron Condors - not buying them. But I did buy a few straight up calls or puts) My question is: Won't listing them on both line 1b and on line 4 result in either double taxation or double losses? In other words, if my tax software is importing the transactions and placing them all on line 1b, do I manually need to separate which options were straddles and which ones weren't and sum up the Straddles to put on line 4? Or has my tax program handled it correctly by putting everything on line 1b (and for 8949) and there is nothing left for me to do?
I’m not sure why your tax reporting software is reporting these trades on Form 8949…there are a lot of variables that I’m not sure are worth diving into. Functionally, you’re correct. Everything should be in either Line 1b or Line 4, but not both. If it’s already listed, I wouldn’t repeat it. To be ‘correct,’ you could go back manually and ‘fix’ the entries. However, since the net gains and losses get added anyway, I’m not sure that would really change the result that you come up with.
I haven't started working on state (or DC) tax forms yet, but I might be able to help research an answer. Is there a specific question that you're looking into?
This was a great video, just so i am clear, I sold my moms house after she passed. Passed in June, appraisal in July, sold in September same year. Appraisal was 125,000 sold at 107,000. I can only claim $3000 a year for the 18k loss? And need to carry over $3000 for the next 5 years? Thanks again.
This is correct, but I'll add a little more information for context.The basis in your mother's house 'steps up' in value after her death, so you can treat the appraised price as your cost basis.
Since you incurred an $18,000 loss on the sale of her home, you can only claim $3,000 per year as a deduction against *ordinary income.*
However, if you have other capital assets, such as stocks or mutual funds, you can sell those at a capital gain, which you can offset with the capital loss. There is no limit on the amount of capital gain that you can offset with a capital loss.
I love your videos. In your case you use actual numbers and explain line by line, that makes me to understand tax concept easily. I appreciate your effort and works.
If I carry a loss of $10,000 over from 2022, and I have a capital gain of 1000 in 2023. Do I apply/use 4000 (1000 for capital gain, 3000 for ordinary incomes) in 2023, and carryover the remaining 6000 as "loss carryover" to 2024?
Or the 3000 limit is for capgain and ordinary income COMBINED?
Many examples on the internet, but nobody talked about this, clearly.
Thanks in advance
What you outlined is correct. You would apply the loss against the $1,000 gain, $3,000 against ordinary income, then carry the unused $6,000 to the next year.
Thanks for the instructions. Couple of questions.
I sold 1 long term property. I only have my closing documents. I've used those to fill in column (d) and have filled in column (e). I also had to pay for soil testing so do I apply that to column (g) in the positive $500 0r (500). I entered E into the code box.
Also what about any property tax I've paid on the property since I've owned it (3yrs)? Is that also an adjustment?
Maybe not important, but its just raw land..
Great instruction. 1 question. Is zero ( -0- ) considered a gain? This situation occurred because I had no Long Term gain, it was 0. Line 17 on Sched D asks are Lines 15 AND 16 BOTH gains? Is 0 a gain? Thank you.
If you have zero long-term gain, then you would default to the Line 16 instructions, based on what was in Line 7.
If you had zero long-term gain and zero short-term gain, then you would follow these Line 16 instructions:
-If line 16 is zero, skip lines 17 through 21 below and enter -0- on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 22.
If you had zero long-term gain and some short term gain, then you would follow these Line 16 instructions:
-If line 16 is a gain, enter the amount from line 16 on Form 1040, 1040-SR, or 1040-NR, line 7. Then, go to line 17 below.
If you had zero long-term gain and a short-term loss, then you would follow these Line 16 instructions:
-If line 16 is a loss, skip lines 17 through 20 below. Then, go to line 21. Also be sure to complete line 22.
Thanks.. nice to have such a handle on this labyrinth tax filing code@@teachmepersonalfinance2169
Awesome videos! Do you have one for flipping a house? Also, where is your company located?
I'm sorry, but I don't have a video for house-flipping. My company is located in Florida.
@@teachmepersonalfinance2169 thanks for the quick response! I was referring to the forms used to pay taxes for the profit from the flip and any tax advice. 😅
@@AngelGarcia-et9db Got it. IRS Form 8824 is used to report like-kind exchanges, which is often the tactic for doing a Section 1031 exchange:
IRS Form 8824, Like-Kind Exchanges
Article: www.teachmepersonalfinance.com/irs-form-8824-instructions/
Video: ua-cam.com/video/YAIJnj64Tqw/v-deo.html
Sometimes, real estate investors often structure sales in the form of installment sales, which would be reported on IRS Form 6252:
IRS Form 6252, Installment Sale Income
Article: www.teachmepersonalfinance.com/irs-form-6252-instructions/
Video: ua-cam.com/video/PAeflip0oFk/v-deo.html
And you should probably be familiar with IRS Form 4797, when it comes to selling business property:
IRS Form 4797, Sales of Business Property
Article: www.teachmepersonalfinance.com/irs-form-4797-instructions/
Video: ua-cam.com/video/2eEaDPh97Zc/v-deo.html
Finally, if you're reporting rental income, or pass-through income from a partnership or S-corporation, it should all flow through to Schedule E:
IRS Schedule E, Supplemental Income
Article: www.teachmepersonalfinance.com/irs-schedule-e-instructions/
Video: ua-cam.com/video/mHH-0QuB3EU/v-deo.html
If there's another specific tax form you're thinking of, please let me know!
Thank you!
Thank you for the video! I have one question-at 4:19, you say that "Stocks and Trade" are not considered capital assets, but everything I've read says that the sale of stocks should be reported on a schedule D. Can you clarify that point?
Of course! I believe I had meant 'Stocks in Trade,' referring to stock in trade or other property included in inventory or held mainly for sale to customers in the ordinary course of your trade or business.
A stock is considered a capital asset. But stock in trade, which refers to inventory held for sale (like in a clothing store) is not.
I apologize for the misunderstanding.
@@teachmepersonalfinance2169Thank you for clarifying! Apparently I heard the words "stock and trade" and immediately interpreted that as "stock trading." Appreciate the clarification, and good to know the difference between that and "Stock in trade"!
If I was in loss in a year from my stocks/crypto sales, do I still owe tax to the IRS?
If you only reported capital losses, then you would not have any taxable income to report. Without taxable income, you would owe zero tax. But if you have income from other sources (like a job or retirement income), then you probably would still file a tax return to see if you owe tax, or to see if you're eligible for refundable tax credits.
If you think you might be entitled to refundable tax credits, then you may consider filing a tax return anyway to claim those credits.
If both long and short term gains are added together, then how is long term treated differently?
Generally, long term capital gains are taxed at a preferred tax rate. Generally, this tax rate can range from 0% to 20%, although there are certain exceptions:
-The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate.
-Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate.
-The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate.
Also, very high earners can be subject to the Net Investment Income Tax (NIIT), which is an additional 3.8% on top of the 20% gains rate (resources at the bottom for reference).
Conversely, short-term capital gains are taxed at ordinary income rates. Generally, long-term capital gains will be taxed at a lower rate than short-term gains at any income level.
IRS Form 8960, Net Investment Income Tax
Article: www.teachmepersonalfinance.com/irs-form-8960-instructions/
Video: ua-cam.com/video/4vNspFLDIM4/v-deo.html
@@teachmepersonalfinance2169 I have the same question once you add long and short capital gain then we put the amount in the line 7 on 1040. then it becomes income tax in 1040 form. I cant see what is the difference
@@carlosovalles7725 If you have gains on both Part I (short-term) and Part II (long-term), then you would need to complete Part III. As you go through Part III, you may need to complete one or more of the worksheets located in the Schedule D instructions. From there, you can report the correct amount of tax on your Form 1040.
This playlist walks through each of these worksheets so you can better understand the tax impact, based on the type of asset that you sold.
ua-cam.com/play/PLYHzJrFFCrpx8fntib5MeAQ7xMEfvPVHZ.html
@@teachmepersonalfinance2169 ok you said that the long term capital gain is in the 28% gain sheet or 8949 form? I did my taxes in a well known company and they put the number from the line 16 directly to the 1040. they didnt fill out the anything in the line18 (28 % gain sheet). it looks like they didnt care to adjust or discount due to the long tern capital gain
My mom passed in jan 2023. My brother and I inherited her house which appreciated a decent amount in the 10 months we owned it. I know the value when we inherited it and the value we sold it for, minus all expenses, fees, improvements, leave us with some capital gains; but I do not know how to fill out this form. do i need to do an form 8949?
do i just write inherited house? What code do i put in "f and g" since we get cost basis adjustment to the date we inherited it. please help us.
You would report the sale on Form 8949, which will carry over to Schedule D.
According to the Form 8949 instructions:
For Column (b) Date Acquired: Inherited property. Generally, if you disposed of property that you acquired by inheritance, report the sale or exchange on a Part II (Long-Term) with the appropriate box checked (D, E, or F). Enter “INHERITED” in column (b).
Unless you received Form 1099-S or Form 1099-B reporting this transaction, you should leave columns (f) and (g) blank. Instead enter the FMV on the date of death as the basis under column (e).
IRS Form 8949, Sales and Dispositions of Capital Assets
Article: www.teachmepersonalfinance.com/irs-form-8949-instructions/
Video: ua-cam.com/video/O5P_L9zdXME/v-deo.html
@@teachmepersonalfinance2169 Very helpful. Thank you. When I actually do my taxes next week, I think I now know what to do. inherited is always considered long term.
Thanks for the video. This is very helpful. I do have a question though. In my tax program, it imported my brokerage statement and listed all my options trades (mostly credit spreads and Iron Condors which are considered "Straddles" by the IRS I think), and it listed each of the legs of those option strategies (the buys and sells of the options) separately on Form 8949 and listed them on 1B of Schedule D. (In most cases I was selling credit spreads and Iron Condors - not buying them. But I did buy a few straight up calls or puts) My question is: Won't listing them on both line 1b and on line 4 result in either double taxation or double losses? In other words, if my tax software is importing the transactions and placing them all on line 1b, do I manually need to separate which options were straddles and which ones weren't and sum up the Straddles to put on line 4? Or has my tax program handled it correctly by putting everything on line 1b (and for 8949) and there is nothing left for me to do?
I’m not sure why your tax reporting software is reporting these trades on Form 8949…there are a lot of variables that I’m not sure are worth diving into.
Functionally, you’re correct. Everything should be in either Line 1b or Line 4, but not both. If it’s already listed, I wouldn’t repeat it. To be ‘correct,’ you could go back manually and ‘fix’ the entries. However, since the net gains and losses get added anyway, I’m not sure that would really change the result that you come up with.
Thank you! I really appreciate the video and the response.
Can you do a similar one for the D-30 form
Are you asking about the District of Columbia tax form, or is there another D-30 form that I'm not aware of?
Yes i am referring to the DC Tax form@@teachmepersonalfinance2169
I haven't started working on state (or DC) tax forms yet, but I might be able to help research an answer. Is there a specific question that you're looking into?