I need some more facts first, because if your purchase of the property wasn't done in accordance with state and other legal requirements, you may have a nightmare that requires professional help.  - Were loan papers generated showing that you were purchasing the property on installments?  - Was your name on the property deed as the owner, with the "lender" (person you were paying installments to) listed as a lienholder on that deed?  - Did the person you were paying installments to go through the formal and legal foreclosure process? Or did you execute a "quit claim deed" (or similar) in lieu of foreclosure?   ... View more

 I have a Revocable Trust (FBO) First, you have an LLC and it's never clarified if it's a single owner LLC, multi-member LLC, or an LLC that has filed form 8332 and elected to be "treated like an S-Corp" for tax purposes. But since you did ask about filing a 1065 I assumed it was a multi-member LLC. Apparently I'm wrong. Now it's a revocable trust.  You really need to read and understand the above, particular the part for Additional Information For Rental Property Owners It flat out does not matter what tax reporting form you are filing. The rental income/expenses is passive income and gets reported on SCH E. If property entered into the program, then it doesn't matter what version of TurboTax you're using, be it the business version or any flavor of the personal versions. If you're filing: 1040 - Individual tax return 1041 - Trusts/Estates tax return 1065 - Multi-member LLC/Partnership Return. 1120-S Corporate Return. 1120 Corporate Return (For a C-Corp) It doesn't matter. the rental property is reported on SCH E with whatever tax return you are filing. So if you've been reporting the property on the 1041 return for your trust, then it's still on SCH E as a physical part of the estate return. If you'll look at the K-1 you'll see the rental stuff reported in boxes 7 and/or 8  While I know box 7 is for rental real estate income, I think box 8 is for other types of rental income - such as if you had a rental equipment business that rented out equipment for short terms.   ... View more

This is my opinion, and my opinion only. I'm not saying it's best for you. I'm saying it's what I would do were I in your situation and decided at that point I wanted to get out of debt. (I've been debt free for about 10 years now.) Lets say your CU loans and medical bills are $25K just for the purposes of "my opinion". :) With $73K owed on the house, $40K in CC debt and $25K for the other stuff, that comes to $138K. I'd look at a few numbers first. Whats the total of all my payments each month, including the house? Y0u need that "magic number" which you can get quite easily. Once I've got that number then I'd want to look at doing a refi on the house for "no more" than $140K and I would require of myself that it be a 15 year mortgage at the absolute longest.  The shorter period on the mortgage will get me a lower rate than a 30 year mortgage will. Additionally, payments on a $140K mortgage at 15 years will be damn close to (maybe less? maybe a bit more?) than my current payments on the 30 year mortgage I now how. But I'm not looking at "just" the mortgage payment I'm making now. I'm looking at the total of all payments I make each month; mortgage, CC payments, CU loan payments, medical bill payments; the whole nine yards. Now I did a bit of work with the intrate excel program. If I refi the house for $140K for 15 years with a 4.5% fixed interest rate, my payments (not including escrow) will be $1,070.99 a month. When you figure in escrow for the property taxes and insurance, where I live that would be about another $200 a month, absolute tops. My last property tax bill was $1,100 and my last insurance bill for the year was $857. So that's roughly $2K for the year. Figure that into escrow for 12 equal payments a month and that comes to an additional $163.10 a month added to the payment for escrow. So I'd be looking at monthly mortgage payments of $1234.09 per month. I'll play it safe and round it up to $1300 a month, since my intrate excel spreadsheet isn't perfect with a margin of error of less than 1% (which adds up fast on longer loan terms). Then knowing that property taxes do get adjusted every year, I can pretty much figure I'll have the house paid off (or close to it) before the taxes and insurance would cause my escrow payments to rise above $200 a month. So I've got my figure of $1300 a month which is the "highest" I would expect to pay over the 15 year loan term. Now lets look at the total of all the payments I'm making now. If it's more than $1300 a month, I'm gonna do the refi with the intention of "never" getting myself into this kind of crap again. Not. Ever. Once the re-fi is done and all the debts are paid, I'm going to spend however long it takes to use my "savings" realized from lower payments on all that debt I paid off,  to build myself an emergency fund of no less than three months of living expenses. Generally though, I recommend anywhere between 3 and 6 months of living expenses. That way, if you lose your job or end up unable to work for "any" reason, you've got a bit of breathing room while you seek other sources of income. ... View more

Keep all paperwork supporting your claim, in case you're ever audited on it. Then enter the 1099-MISC following the below guidance on the tax return of the recipient designated on the 1099-MISC.  It's taxability will be offset later, based on the "qualified" education expenses the income was used to pay for. If your daughter is your dependent, then most likely she won't have any qualified education expenses, as you the parent claim all that. This stipend does not count as a scholarship or grant, so it's payment does not have the potential to make her 3rd party income exceed the qualified education expenses.   But she should still work through the education section anyway, because I've just got a funny feeling I'm missing something here that will probably jump out and bite your daughter when working through that section.   Reporting 1099-MISC (box 3 or box 7) that is not self-employment income Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC. Enter the 1099-MISC exactly as printed, and then Continue. Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue. Select None of these apply, then Continue. Select No, it didn’t involve work….. and Continue. Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue. Select No, it didn’t involve an intent to earn money, then Continue. Select NO, then Continue. Click the DONE button, and that does it. ... View more

and a stipend she earned through the State for student teaching for high needs children. Yes, that is considered self-employment income in her case because she actually went out and "did something" on a recurring basis to actually "earn" it. "The conditions of the stipend " Doesn't matter, because the conditions of the stipend was not a requirement of the college in order for her to obtain a degree or credentialed certification either. It also doesn't fall into any internship requirements necessary for the degree or credentialed certification she may be working towards. Basically, it is self-employment income. Since it was more than $400 she is required to file a tax return and report it on SCH C as a part of her personal 1040 tax return. "Turbo Tax is not taking this $4000 as part of her income which is used to figure her exemptions" Exemptions don't exist anymore. All she gets if filing single is the $12K standard deduction, and that's it. But she will still pay the 15.3% of self-employment on the amount of "taxable" business income over $400. No way around that. ... View more

Thanks for all the details. I've never really known what the merchant marines was and just figured it had something to do with the U.S. Marine Corps. I just read a synopsis on it on Wikipedia and see that its somewhat between the U.S. Coast Guard and the Navy, as a merchant marine can be commissioned into the navy as a navy officer. I found the reading interesting.   Basically, what you're seeking is clarity on just what qualifies as a qualified education expense. The IRS is quite clear on this really, defining qualified expenses as tuition, books, and lab fees. There are no exceptions to that either. While what qualifies as tuition and lab fees is pretty straightforward, the category of "lab fees" is rather broad. For example, in the last few years the IRS has updated lab fees to include the cost of a computer for the student provided two basic criteria are met, and the criteria are not really that clear. But here's how I interpret them.   Now, based on your explanation of the maintenance fee for the boat combined with my understanding of this "grey area" concerning unqualified but allowed expenses paid "in support" of the education, I would feel safe claiming that fee as a 529 expense, just as I would claim room and board. Here's my take on this. You say:  "We had to pay for something called a “Ship maintenance fee” as a part of his college fees." So if your son was living in the campus dormitory you'd be paying rent for that too, right? That rent would include the cost of keeping the common areas cleaned, bathrooms cleaned, etc. So I see that ship maintenance fee as a part of the "rent" being paid to live on the ship while deployed on the water for training. It does, without question, meet the IRS requirement of that payment being a "condition of enrollment" in order for him to "attend class" on the ship. Ya know, this is one of those that I would absolutely *LOVE* to see in federal tax court. But I would be to unsure of the outcome to bet any money on either side.  1) If any class requires the submission of class assignments (such as homework) electronically, and;  2) The school does not offer reasonable access to the resources necessary for the student to meet the requirement. I say the above is vague, because the IRS does not define "reasonable access". But most colleges have a 24/7 accessible lab or computer room that students can use at any time.  But if there's not enough computers, does that mean the school does not offer "reasonable access"? It's one of those grey areas.  Enough of this on the qualified education expenses. You mention that you have 529 funds in this game. So let me clarify a bit more on this deductible education expenses stuff. There are basically three categories or sources of income that are used to pay for one's education, and not just the "qualified" expenses either.  - Scholarships/Grants -- These income sources are applied  first by the IRS to qualified education expenses. Scholarships and grants can only be used to pay for tuition, books and lab fees. That's it with no exceptions. QTP/529/Coverdell Funds -- These income sources are applied second by the IRS for the qualified education expenses of tuition, books, and lab fees. Additionally, these funds can also be used to pay for the unqualified but allowed expenses of room and board, *provided* that room and board was paid for in direct support of the education. For example, say the student was living away from home in Maryland for the entire year, attending college in 2018.  They enrolled/attended classes for the  2018 Fall semester Jan - May, then remained in Maryland for the summer semester Jun-Aug but did NOT enroll in or attend any classes, then attended the spring semester Sept - Dec 2018. IN this scenario all room and board for the summer months would not be deductible because the student was not enrolled in/did not attend classes June through August. So room and board paid for those months was not in any way, "in direct support" of the education. Out of Pocket Expenses -- The only qualified out of pocket expenses are the same as they are for scholarships and grants. Tuition, books and lab fees. Room and Board is *not* a qualified out of pocket expense. ... View more

Hi Dyons,  We're probably going to be getting deep in this discussion so this will most likely be a long thread. Hopefully, we don't get to much "clutter" from others, since this is a public user-to-user forum. However, I don't want to discourage input from others that may be able to contribute useful (key word, "useful") information to the immediate subject being discussed at a specific point in time as this thread grows. First, neither you, I or the school gets to decide was is or is not a qualified education expense. The IRS has already clearly defined what a qualified eduction expense is, in IRS Publication 970. https://www.irs.gov/pub/irs-pdf/p970.pdf But first, I need to back up a bit before we get to the education stuff at all, since your son is attending a military academy. As a retired Air Force vet myself, I'm curious as to which one if you don't mind. Understand that for an undergraduate college student, there are actually two completely separate and unrelated determinations that need to be made. The first determination is if the student qualifies as your dependent. This has absolutely nothing what-so-ever to do with the education stuff, or IRS Publication 970. The dependency requirements are covered in IRS Publication 17 starting on page 24 of that document. https://www.irs.gov/pub/irs-pdf/p17.pdf  So for this post, that's all we're going to discuss. My intent @dyons is not only to educate and provide understanding to you, but to "the masses" that may read through this thread in the future. So please bear with me if I'm hashing through what you may already know. There are two types of dependents. Qualify Relative Dependent, and Qualifying Child Dependent. I am going on the assumption that your son was under the age of 24 on Dec 31 of the tax year. That means the qualifying child dependent rules "should" apply to him Here they are in a nutshell. If the student:  - Was under the age of 24 on Dec 31 of the tax year and;  - Was enrolled as a full time student for any one semester that started in the tax year and;  - Was enrolled in an accredited institution of higher learning and;  - Was enrolled in a course of study that will lead to a degree *OR* credentialed certificationand ;  - The *STUDENT* did *NOT* provide more than 50% of *THEIR OWN* support for the entire tax year, then: The parents qualify to claim the student as a dependent on the parent's tax return. Period. End of Story. Several things I want to point out concerning the above requirements which are not mentioned in those requirements, because they are "not" requirements. 1) The student's income doesn't matter. There is no limit. It's perfectly possible for the student to earn a million dollars, yet the parents still qualify to claim the student as a dependent on the parent's tax return. 2) The support requirement is on the student, and *ONLY* the student. There is absolutely no requirement for the parents to provide the student any support. *NOT* *ONE* *SINGLE* *PENNY*. 3) There are only two possible ways the student can provide more than 50% of their own support, and "ONLY" two ways.  A- The student has a W-2 job or is self-employed, and earned enough taxable income to justify paying more than half of their own support.  B - The student is the *PRIMARY* borrower on a *qualified* student loan *and* enough funds were distributed from that loan to the student in the tax year, to justify more than half of their own support. If the student is not the *Primary" borrower on the loan, then it's not considered and can't be considered as income used by the student to provide their own support. So any other monies received by the student, or received by the school on the student's behalf from any other source (including the parents) is considered to be third party support, and just flat out *does* *not* *count* for the student providing their own support.   Now, we need to define what the IRS considers to be "support". That is clearly defined by the IRS, but at the immediate moment I can't find it in IRS Publication 17 or any other place on the IRS website. But I have read it, and here it is; What is Support?  - Tution, books, lab fees  - Housing (including the cost of utilities)  - Food  - Clothing  - Transportation  - Entertainment Note that all expenses must be "reasonable" for a college student. For example, if the student spends spring break in Vegas and losses $5,000 at the casinos, that is "NOT" a "reasonable" entertainment expense for a college student by any stretch of the imagination. Paying $5000 a month rent to live off campus instead of in campus provided housing is also not a "reasonable" expense for a college student. So in other words, "keep it real" or the IRS will be on you like files on honey, generally about 24-36 months "after" you've filed a return with such unreasonable expenses claimed on it. When it comes to determining if the student provided more than 50% of their own support or not, the IRS will apply "all" third party source income to the support expenses first. Then if there are any expenses left, then they will apply the student's earned income and/or borrowed money to the remaining support expenses.  With this method, that means with a lot of 3rd party support, it is perfectly possible for the student to have earned or borrowed a million dollars, yet still not have provided more than 50% of their own support. That means the parents would still qualify to claim them. The key word in the last sentence above is "QUALIFY". Here's how this works. If the parents 'QUALIFY" to claim the student as their dependent, there is no requirement for them to do so. The parent's don't have to claim the student if they don't want to. So the parents have a choice here. However, the student does *not* have a choice. If the parents *qualify* to claim the student, then the student must indicate on the students tax return that "I can be claimed on someone else's return.". Period. It does not matter if the parents actually claim the student or not. The parents "QUALIFY" to claim the student. I'll wait for your response here @dyons in case there's any questions. If no questions, then we'll get into the actual education stuff and start getting into what your concerns are.       ... View more

We formed an LLC, requested S Corp treatment as of the date of formation THen you'll be filing an 1120-S Corporate tax return. Being that you freely admit that you are confused, I can not stress this enough on the tax front. GET PROFESSIONAL HELP NOW!. When you screw things up with a corporate return, the fines and penalties are considerably more expensive than they are for a personal return. Chances are high that the files and penalties WILL bankrupt your business before it even gets off the ground, and it makes the cost of professional help seem like a pittance in comparison. So avoid the "I coulda had a V-8" moment and get professional help immediately. If you need further convincing of your need for professional help, if your state taxes personal income, then you can double the already high fines/penalties. ... View more

Not just a fan, and not just a follower. I'm a doer. Been debt free for 10 years and loving every minute of it. ... View more

Here is the spreadsheet for anyone who needs it. It's also attached to this post. https://ttlc.intuit.com/community/s/dcgfr56345/attachments/dcgfr56345/other-finance-talk/389/1/intra...   Blocks in yellow can be changed. All others are locked to prevent accidents. However, if you want to unlock those locked cells, the password is "password" without the quotation marks.   ... View more