Why am I taxed on capital gains for home sale when I qualify for exclusion?

[kathomsen]

Bought a home in 2005 for $237K, sold it in 2022 for $385K. It was my primary home the whole time and I never rented it out or lived elsewhere. I should qualify for an exclusion, but Turbo Tax is adding it to my income and not exempting it. 

[TomD8]

If this was your primary home for at least 2 of the 5 years prior to the date of sale, and your gain from the sale was less than the exclusion amounts, then you do not even have to enter the sale on your tax return UNLESS you received a Form 1099-S for the sale.

[DoninGA]

If you are looking at a page Summary of your gross income that does not mean the gain on the sale of the home is on your federal tax return, Form 1040.

Look at your 1040 on Line 7.  Is there an amount entered on Line 7?

[kathomsen]

I can't see my 1040 yet to look at line 7. I'm going through the TurboTax wizard. I enter the sale cost and the adjusted cost basis of when I bought it and answer all the questions on if I qualify for exemption. Am I putting something wrong in the adjusted cost basis amount? 

[DoninGA]

The Adjusted Basis of the home is your original purchase price plus the cost of any improvements made to the home prior to the sale.

If you are using the TurboTax desktop CD/Download editions installed on your personal computer you can view all of the forms, schedules and worksheets included with your tax return at any time.

Click on Forms on the top right of the desktop program screen if using Windows and on the top left of the screen if using a Mac.

 When in forms mode the Form 1040 will be listed near the top of list on the left side of the page.  Click on Form 1040 to open.

[kathomsen]

I did receive a 1099-S, but it only lists the sale price. My net was less than $250K. So I shouldn't even have to list the sale? 

[DoninGA]

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@kathomsen wrote:

I did receive a 1099-S, but it only lists the sale price. My net was less than $250K. So I shouldn't even have to list the sale? 

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Since you did receive a Form 1099-S for the sale it has to be reported to the IRS even though there will be no capital gains taxes owed.  The IRS also has a copy of the 1099-S so it is looking for the sale to be reported.

[TomD8]

If you received a 1099-S, then you must enter the sale on your tax return.

Your cost basis is the original cost of the home, plus any capital improvements you made to the home during your period of ownership - such as a room addition, a new roof, a new HVAC system, etc.

[kathomsen]

I haven't filed yet, I'm still going through the wizard. Thank you for the help, but there is no command for Forms on the top right (PC). 

[kathomsen]

Yes, I entered that. My concern is that I'm getting taxed on the $100K+ of income for the sale of the home (according to what TT is saying is due) and TurboTax doesn't seem to be granting the exclusion. 

[DoninGA]

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@kathomsen wrote:

I haven't filed yet, I'm still going through the wizard. Thank you for the help, but there is no command for Forms on the top right (PC). 

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Screen grab from a 2022 TurboTax Premier desktop edition for Windows -

[kathomsen]

I'm using Premium 2022. My screen doesn't look like that. It only has Price Preview, Search, and Help. I've tried Search and Help. 

[DoninGA]

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@kathomsen wrote:

I'm using Premium 2022. My screen doesn't look like that. It only has Price Preview, Search, and Help. I've tried Search and Help. 

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If you are actually using the Premium edition and Not the Premier desktop edition, the Premium edition is a new Online web-based edition just released this year.

On your screen do you have a black column on the left side with a series of links similar to this screenshot -

If so, then you can view the Form 1040 by using this procedure -

Click on Tax Tools on the left side of the online program screen. Click on Tools. Click on View Tax Summary. Click on Preview my 1040 on the left side of the screen.