Hello,
I am assisting my 88-year-old mother-in-law with filing her taxes this year.
Here is the situation: She jointly owned a primary home in the State of New Jersey for 50+ years with her now ex-husband (divorced 11/2017). After having to work through issues on the division of real property for 5 years, the house finally sold in December 2022 and she received her share of the home.
Leading up to the divorce back in 2016, she moved in with her son in Arizona. Because she couldn't legally state that she was a resident of NJ at the time of sale, they had to withhold $4,500 in state tax in which her lawyer said she would get back once she files her taxes.
So, I am working through the interview questions in Turbotax and it asks us to count how many months she resided in the home and to start counting from December 2017. Technically, the answer is zero, she lived with her son in AZ because the marriage was failing and they couldn't be under the same roof anymore.
I believe these questions are trying to determine if the house was a rental, second home, etc. The answer is no it was not an investment property. Can I just answer 60 months? Her profits were under the $250k for a single person and if she answers 0 then the Feds want a piece of the pie.
I have a copy of her divorce decree and all the legal paperwork we had to file over 5 years battling for her share of the house.
One last thing to mention is that her son claimed her as a dependent on his Federal and Arizona return for 3 or 4 years. Before the sale her only source of funds was her Social Security (like $700 a month). He will not claim her this year.
We are just afraid that the IRS will see her information on his return from prior years (2017-2021) but then she is claiming to have lived in NJ for those 60 months (2017-2022) and there is a conflict of dates here. So either one or both of them will face an audit down the road.
I hope I explained the situation well enough. Please let me know if you have any questions.
Thank you.
Kevin
