Questions about filing requirements and oil and gas payments were among the calls fielded in the final Tax Call-In program on Saturday.
The program, co-sponsored by the Beacon Journal and the Ohio Society of CPAs, included three, free, call-in events and an online tax chat. The full transcript of the chat and all tax stories by the Beacon Journal, including the special tax section, can be found at www.ohio.com/taxes.
Saturday morning, eight volunteers from the Akron-area firm SS&G and Apple Growth Partners of Akron answered questions from 192 callers. In total, 318 callers phoned into the three-day program. Readers also participated in the online chat.
A caller phoned CPA John Valle of Apple Growth Partners to ask whether he should file a tax return. The man said he and his wife had Social Security income, as well as an IRA distribution, interest and dividend income. The man also told Valle that he called the IRS last year for the same situation and was told he did not need to file a return.
Valle told the man that while he might not owe taxes, he did need to file for this year and last. Usually, if Social Security is the only income, there is no requirement to file. However, because the man had the IRA distribution and interest and dividend income, that would trigger the filing requirement. The Social Security income is not taxable, if income from other sources and half of your Social Security benefits are less than $32,000 for joint and $25,000 for single.
Since the man did not file for his 2011 taxes and needs to, he should file, Valle said. If he doesn’t owe money, there will be no penalties. However, if there was money owed, the IRS could assess penalties and interest.
CPA Josh Edwards of SS&G took a call from a man who asked about his gambling losses.
“I’m not done losing yet,” he told Edwards.
The man had picked up $2,800 in gambling income, but said he had lost more than that amount.
Still, Edwards said he needed to claim his winnings, even if there was a loss.
“He’s allowed to deduct up to his gambling income as an itemized deduction, but he was not itemizing his deductions,” Edwards said. He should claim it as “other income” on Line 21 of the Form 1040.
CPA Dave McClain of SS&G took a call from a man who lived in Ohio, but worked occasionally on a privately owned yacht in international waters for a foreign company. The man wondered if his income was taxable. McClain said yes.
“The IRS taxes on worldwide income if you are a U.S. citizen. You have to report the income,” he said.
McClain also took a call from a reader who wondered whether his oil and gas lease payments were taxable.
Lease payments must be reported as rental income, McClain said. There is a difference between a lease payment and a royalty paid after the well is up and running. Generally, in this area, the companies are paying for the lease rights, McClain said. That would be reported on Schedule E.
If the well is producing and a royalty is paid, that is still reportable on Schedule E as royalty income. For a producing well, there is a depletion calculation to help reduce the royalty income, he said.
CPA Doug Klein of SS&G took a call from a woman who wanted to sell personal property on eBay after a recent divorce. She wondered if that was taxable.
“If you’re selling personal property at a loss, it’s not reportable and taxable. But it’s taxable if you are selling it at a gain,” Klein said.
The woman was also thinking about selling some collectibles on the Internet. In that case, if there is a profit made, it is taxable, he said.