- The Washington Times - Friday, July 27, 2001

There are some jobs I would never want, regardless of how much money is offered. Bungee cord tester, crime scene janitor and Internal Revenue Service employee would all rank right up there especially working for the IRS.
A recent Treasury Department report revealed that the information provided to taxpayers at the agency's walk-in centers around the country was wrong 73 percent of the time. While the number of erroneous answers was down from 81 percent last year, it's still a scary thought that the IRS could answer your question in one mailing, then call for an audit in the next.
Frankly, it's hard for me to criticize these folks. Living in the Washington area puts a human face on the term "bureaucrat." Some of these hardworking federal employees are my neighbors, and I'm not going to cast the first stone. Imagine having to process a bazillion tax forms every year, each with various deductions, credits, incomes, etc., and having to tell the difference from the real tax cheats and the right-brain filers (like me) who just aren't good with numbers.
Regardless of this most recent failing grade, I am one of the biggest proponents and users of the IRS' consumer-friendly Web site, Digital Daily (www.irs.ustreas.gov), which has plenty of self-help information, all online and all free.
The best section of this site for researching tax information as it relates to your home can be found at the Topical Index for Forms and Publications (www.irs.ustreas.gov/ forms_pubs/topic-index.html).
It's worth the hour or so of your time to click around the site and find all the publications and forms you'll need for getting the most tax benefit out of your home. I hope this list will save you some time (and tax dollars), especially for those who filed for extensions and are facing the Aug. 15 deadline for 2000 taxes.
Generally, this list of publications in numerical order is simply the name of the publication and a small explanation of why the homeowner needs it for filing. Depending on your filing status, most of the forms will be needed for homeowners every tax year, but check back before each tax season for updates and revisions from the IRS. The online list also provides downloads of the actual tax forms to be used during filing, and the latest service is the fillable form section.
521 Moving Expenses: This publication explains the deduction of certain expenses of moving to a new home because you changed job locations or started a new job. It explains who can deduct moving expenses, what moving expenses are and are not deductible, and how to report your moving expenses.
523 Selling Your Home: If you sold your primary residence, this is the publication you want to look over. Generally, your main home is the one in which you live most of the time. The publication also has work sheets to help you figure the adjusted basis of the home you sold, the gain or loss on the sale and the amount of the gain that you can exclude.
527 Residential Rental Property: Investors take note of this publication, which discusses rental income and expenses, including depreciation, and explains how to report them on your return. It also covers casualty losses on rental property and the passive activity and at-risk rules. Take note, this is for investment owners who just have a few properties. There's also information for those who sold a rental property. (For information on figuring gain or loss from the sale or other disposition of a rental property, see chapter 3 in Publication 544, Sales and Other Dispositions of Assets.)
530 Tax Information for First-time Homeowners: Your first home may be a mobile home, a single-family house, a town house, a condominium or a cooperative apartment. This is a great booklet that covers the following topics: How you treat items such as settlement and closing costs, real estate taxes, home mortgage interest, and repairs; what you can and cannot deduct on your tax return; the tax credit you can claim if you received a mortgage credit certificate (usually provided via your state or city) when you bought your home; why you should keep track of adjustments to the basis of your home; what records you should keep as proof of the basis and adjusted basis. (D.C. first-time home buyers may qualify for a first-time home buyer credit, which is a one-time tax credit of up to $5,000 if you buy a main home in the District. You must reduce the basis of your home by the amount of the credit you claimed. Only purchases after Aug. 4, 1997, and before Jan. 1, 2002, qualify for this credit.)
547 Casualties, Disasters and Thefts: Explains the tax treatment of casualties, thefts and losses on deposits. A casualty occurs when your property is damaged from a disaster such as a hurricane, fire, car accident, etc. A loss on deposits occurs when your financial institution becomes insolvent or bankrupt. Here, you'll find out definitions of a casualty, theft, and loss on deposits; how to figure the amount of your gain or loss; how to treat insurance and other reimbursements you receive; the deduction limits; when and how to report a casualty or theft; and the special rules for disaster area losses.
551 Basis of Assets: Once you sell your house and cash out, you'll need to determine the basis of your home. Basis is the amount of your investment in property for tax purposes. Basis is also necessary in the case of transferring property, such as in a divorce or estate settlement. Use the basis of property to figure depreciation, amortization, depletion and casualty losses. Also use it to figure gain or loss on the sale or other disposition of property. You must keep accurate records of all items that affect the basis of property such as permanent improvements to the property. This is one of those publications that you will hate to read but love what it does for you.
555 Community Property: Community property laws affect how filers figure income on their federal income tax returns if they are married, live in a community property state or country, and file separate returns. Although your tax may be less by filing a joint return if you are married, sometimes separate returns can work more to your advantage. If you and your spouse file separate returns, you have to determine your community income and your separate income.
556 Appeal Rights Primary Publication, Examination of Returns, Appeal Rights, and Claims for Refund Related Publications; Publication 1: Your Rights as a Taxpayer; Publication 5: Your Appeal Rights and How to Prepare a Protest If You Don't Agree: While these really don't have a lot to do with the tax benefits of your house, it's good to know they exist in case you come out on the short end of the stick with the IRS.
561 Determining the Value of Donated Property: If you decide to donate real property instead of sell it, this booklet helps donors and appraisers determine the value of the property that is given to qualified organizations. It also explains what supporting documentation you'll need to claim the charitable contribution on your return.
587 Business Use of Your Home (Including use by day care providers): If you have a home office, this publication is a must. It includes guidelines on figuring and claiming the deduction for business use of your home (which includes a house, apartment, condominium, mobile home or boat). This publication covers information on: The requirements for qualifying to deduct expenses for the business use of your home (including special rules for storing inventory or product samples; what types of expenses you can deduct; how to figure the deduction including depreciation of your home; special rules for day care providers; selling a home that was used partly for business; deducting expenses for furniture and equipment used in your business; what records you should keep; where to deduct your expenses.)
936 Home Mortgage Interest Deduction: Here's the publication all homeowners should read and digest rules for deducting home mortgage interest. Part I contains general information on home mortgage interest, including points. It also explains how to report deductible interest on your tax return. Part II explains any limits that you may face on your interest deduction. There's also a work sheet to help figure the limit on your deduction.
M. Anthony Carr has written about the real estate industry for 12 years. Send comments or questions by e-mail (manthonycarr@erols.com).

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