Ask The Expert #1
Q. I’ve lost all my records. Can I still file my tax return?
A. You are still required to file your return. You aren’t the first person this has happened to. Many people lose their records due to fires, floods, and theft each year. The first step is to get your wage and income transcripts from the IRS. If you have a business, you can take deductions and file your return using the Cohan Rule. This allows you to estimate as long as they are reasonable and credible. You should thoroughly research the requirements to file a return using the Cohan Rule or contact a good tax pro.
Q. I won’t have the money to pay my taxes. Should I wait until I have the money before I file my taxes?
A. Many people make this mistake. You should file by the deadline even though you don’t have money to pay your taxes. The late filing penalty can be as much as 25% of your tax liability. You can pay later. Don’t make this mistake.
Q. I am getting older and was thinking of giving a property to my daughter, is this a good idea?
A. If your daughter inherits the property, her basis would be the value when she inherited it. So if she inherited it and its value was $125,000, and she sold it for $125,000, there would be no capital gain. However, if you gave it to her, the basis when she sold, it would be your basis. So if you bought a property 20 years ago for $75,000 and she sells it for $125,000 she would have a $50,000 capital gain.
Additionally, If you give anything of value to someone, you will have to file a gift tax return it exceeds the gift tax exclusion.
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