We live in Arizona. We sold our house, which was fully paid for, last November 20, 2020 for $417,000. Then, in January 4, 2021 we purchased outright a new house for $380,000. After we paid all the closing fees the capital gains was about $8000.
When we filed our taxes via Turbo Tax application, it asked us if we moved in 2020. We answered that we did. it did not ask us to fill out any special information about the sale. So, we filed the returns automatically and were done with the tax filing.
We remain concerned that we have not paid the full taxes on the sale of our house. Should we be concerned? Will we have to pay them next year; or, are we OK?
If you received a 1099-S from your sale, you're going to get a letter from the IRS, demanding an enormous amount of money. If that happens, please contact TurboTax immediately for assistance. In the worst case scenario, you'll only owe a few thousand dollars in taxes. Whether you owe anything at all depends upon whether you are eligible for the capital gains exclusion, and actually choose to use it. Because of the small amount of capital gain, if you anticipate another qualified sale in the near future, you may wish to pay the tax this time, to preserve the exclusion for later. In any case, the tax is due for tax year 2020, because that's when you had the gain.
We didn't receive a 1099S for our sale. We didn't receive anything! Is this something that would have been sent in the mail? Shouldn't Turbo Tax have asked us about the gains on our house sale?
TurboTax has a series of questions about the sale of a home. It won't directly ask you what your gain was, but rather, asks you about details of the transaction so that it can calculate the gain for you. If you need help determining whether that information was present in your return, please contact TurboTax support for assistance.