topic On entering all the tax information, it seems we owe $6k, but neither of us take any exceptions in our tax withholding, and we made no money on our rental. Is this normal in Investors & landlords

On entering all the tax information, it seems we owe $6k, but neither of us take any exceptions in our tax withholding, and we made no money on our rental. Is this normal

tony-tman-moore — Fri, 31 Jan 2020 00:05:53 GMT

Re: On entering all the tax information, it seems we owe $6k, but neither of us take any exceptio...

GiseleD — Fri, 31 Jan 2020 02:10:57 GMT

Many factors could cause a smaller refund or an unexpected tax owed. Below are some common culprits:

Although tax law changes lowered the rates for multiple tax brackets, your refund may not be as big as you expected because less income tax was taken out of your paychecks throughout the year. If you didn't update your W-4 for 2019 for any life and/or income changes (many people didn't), it’s highly possible that this is why your refund isn’t as large as you expected.
Your income may have increased to where you were in a higher tax bracket. Even if you had more tax withheld, it may not have been enough to account for the extra income.
Another change may be due to ineligibility for certain credits in 2019. You may have been eligible for certain credits in prior years, but life changes in 2019 made you ineligible for these same credits.
Additionally, you may have mistyped a dollar amount somewhere or accidentally missed an important question during the interview process. A typo or an incorrectly answered question can have an obvious effect on your bottom line. You may want to review all of your entries.

To check for all of these potential factors and more, may I recommend reviewing your prior year return, line-by-line, and comparing it to this year's forms? This will help you determine the changes between 2018 and 2019.

Here's how to look at your current year return forms:

In the left-hand menu bar, click on Tax Tools, then click Tools.
Under Other helpful links, click View Tax Summary.
Your Tax Summary will be displayed. In the left-hand menu bar, you will see a new option: Preview My 1040. Click it, and this will allow you to see the forms. It is important to check your 1040 before you check your state return, as much of your entries on the 1040 will impact the state return.
If you want to view your state entries, Click on Tax Home in the left-hand menu bar. In the center of your screen, scroll down until you see State Taxes. Click on it to review your state entries.

Re: On entering all the tax information, it seems we owe $6k, but neither of us take any exceptions in our tax withholding, and we made no money on our rental. Is this normal

Carl — Fri, 31 Jan 2020 02:48:36 GMT

we made no money on our rental. Is this normal?

Perfectly normal. In fact, it is extremely rare for rental property to "ever" show a taxable profit on paper, when you complete your tax return. It's much more common for you to show a loss every single year, on rental property.

Now understand that rental income is passive, which means your rental expenses are considered passive expenses too. Your passive expenses can only be deducted from passive income. once those expenses get your passive "taxable" income to zero, (and they always will) thats it. Any excess passive expenses are just carried forward to the next year.

With rental property your passive carry over losses just continue to accumulate and grow. You can't actually "realize" those loseses against other "ordinary" income (such as your W-2 income) until the tax year you actually sell the property.