A few questions...

[Jenn410]

Hi,

I had a few questions actually...

• Why is my refund different from last year?  Nothing has changed.  We actually made a little less.
• Why do I owe so much? Last year paid about 1k and received a 994 refund.  This year we have to pay almost 8K.
• My state allows us to add rent as a deduction.  Where do I put that on TurboTax?
• Do I include our timeshare canceled debt?  The form has the amount canceled in the Fair Market Value section.
• Besides it coming out of my paycheck, I have not contributed anything extra to my 401k.  Do I add what I currently have in my 401K and my husband's Traditional IRA?
• Are there other deductions I can add to lower what I owe?

[ThomasM125]

Often you owe more because you had less taxes withheld from your wages than in the previous year. You can compare your federal withholding this year to last year by looking at line 25 on your Form 1040. Otherwise, you will need to compare the line number amounts on your Form 1040 this year to last year to see what has changed.

To view your form 1040 and schedule 1 to 3:

1. Choose Tax Tools from your left menu bar in TurboTax Online while working in your program
2. Choose Tools
3. Choose View Tax Summary
4. See the Preview my 1040 option in the left menu bar and click on it
5. Choose the Back option in the left menu bar when you are done 

When you go through your state tax return, look for the rent deduction or credit in the deductions and credits section. I can't be more specific without knowing what state you are filing for.

You should enter your timeshare cancelled debt if reported on Form 1099-C. It may be taxable if it was a secured debt.

You don't make any entries for your 401-K outside of what is reported on your W-2 form, unless you took a distribution from it. That would be reported on Form 1099-R. If you or your spouse made an IRA contribution, you do need to add that in TurboTax.

The best thing you can do to lower your tax would be to make a traditional IRA contribution as is allowed based on your income. It may be limited since you have a 401-K plan with your employer.

[Jenn410]

For the rent reduction, I reside in New Jersey.  I didn't see anything like what you mentioned on the form.  I will look again.  I did the Standard Deduction instead of itemized, could that be why?

For the timeshare, I went on Google and one of the entries said that you don't have to include the canceled debt if there is a Fair Market Value.  On the 1099C that I received, there are 2 different amounts in Box 2 and Box 7.  If I have to include it, which amount do I include?  On TurboTax, it didn't allow me to add the amounts though.  It just directed me to the irs.gov website.  Should I upload it on the same page I uploaded my W2?

If my husband makes a contribution today to his IRA, would that lower the tax owed now or will it only count for next year?

[DawnC]

New Jersey offers two tax breaks for renters, letting you take advantage of whichever gives you the most money:

• A property tax deduction of 18% of your rent
• A property tax credit of $50

You can claim either the deduction or the credit when you file your state tax return.   It is in the Taxes and Credits section of the NJ return.   For more info, see NJ Division of Taxation

Your husband has until 04/15 to make an IRA contribution for tax year 2024, so if he contributes today, that contribution may lower your current tax bill.

Can I exclude my 1099-C from my taxable income?

How do I enter a 1099-C?  You will need to enter the amounts from Box 2 and Box 3 into TurboTax.

From the instructions on Form 1099-C (page 4) -  If a creditor has discharged a debt you owed, you are required to include the discharged amount in your income, even if it is less than $600, on the “Other income” line of your Form 1040 or 1040-SR.    However, you may not have to include all of the canceled debt in your income. There are exceptions and exclusions, such as bankruptcy and insolvency.  See Pub. 4681, available at www.irs.gov/Pub4681, for more details.

If you have received a Form 1099-C because a debt that you owed has been canceled most likely you will need to include this amount as other income on your return.  Some canceled debts are not included in your income. You can get the following forms and publications if you think that the following situations might apply to you:

- Debts canceled in bankruptcy, IRS Publication 908, Bankruptcy Tax Guide

- Insolvency, IRS Publication 525, Taxable and Nontaxable Income

- Foreclosure or abandonment of property, IRS Publication 525, Taxable and Nontaxable Income

If a foreclosure or abandonment of property occurred in connection with the cancellation of debt, you may receive a Form 1099-C, Cancellation of Debt or a Form 1099-A, Acquisition or Abandonment of Secured Property. 

If the debt canceled was acquisition debt secured by your principal residence (it is acquisition debt if you used the proceeds to buy, build, or substantially improve your main home) you may qualify for Home Mortgage Debt Forgiveness Relief . You must file Form 982, Reduction of Tax Attributes Due to Discharge of indebtedness.

You may also have income or loss because of the acquisition or abandonment. Get IRS Publication 544, Sales and Other Dispositions of Assets for additional information.

[Jenn410]

There are 2 options for canceled debt: main home and another type of debt.  I chose another type of debt because my canceled debt is for a timeshare not a main home.  Then I chose "I received a 1099C for non-personal debt" since it's a rental property. I am then directed to the irs website for publications 4681 and 544 (see photo).  I am unable to enter any numbers.

Thank you so much, you are being extremely helpful.

[ThomasM125]

Since your debt cancellation is associated with business real property, there are special rules that govern its taxability that TurboTax does not support. Specifically, if the debt is considered Qualified Real Property Business Indebtedness,  there may be an exception that would allow for it to not be taxable. You would have to research that further on your own or seek the advice of a professional. I suspect for legal reasons, it is beyond the scope of support offered by TurboTax.

[Jenn410]

Ok, thank you.  I'll figure it out. 

Thanks for your help.