This tax season is already busy, and we are only a couple of weeks in already. One problem in California is health care coverage. Unlike the federal government, California still has a health care mandate. This means if you are young and healthy, and you are bringing in a decent living you can get fined. The problem is the fine can be in the thousands of dollars. If you are young and healthy get a high deductible health plan.
The number two problem is capital gains. Please track your basis, especially old stock purchases made before 2012. Since 2012 brokers have been required to provide basis, which makes it much easier for us schedule D preparers. If we cannot figure out the original price, the default price is zero. That means a higher tax bill.
Third shenanigans are using spare rooms as a rental loss. This area is full of creative accounting. Some people rent out rooms and do not claim the revenue on a schedule E.
This obviously wrong, then they decide to rent out the room at a loss. Really? how is that even possible. When it comes to rental property and side gigs, please try to make money to keep the taxing authorities off your back. The purpose of a business enterprise is to make a profit, if you do not care to make a profit maybe what you have is a hobby?
Should taxpayers subsidize your hobby, of course not.
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