My mom in Mississippi, who is 73, lives on Social Security, receives Medicare, and is unemployed, just sold her house. She invested the larger part of her money ($70,000) in a CD, and a small amount ($10,000) in a Money Market. It was her first home sale, she has no other money or property and is now living in a one bedroom apt. My question is at her age and income and tax bracket will she have to pay any taxes on the money she made from the sale of her home and/or will she be taxed in any way on the money she now has in her two types of savings accounts?
2007-06-19 04:46:51 · 5 answers · asked by Samantha N 2 in Business & Finance ➔ Taxes ➔ United States
She lived in the home for 42 years, and as far as her SS, she receives $800.00 a month for a total of a little over $10,000 in SS each year, that is her only income. She is receiving about $280.00 a month on her CD.
2007-06-19 05:09:24 · update #1
If she lived in the home as her principal residence for 2 of the 5 years immediately prior to the sale, the first $250k in gain is not subject to Federal tax. It looks as if her gain was less than that, so no tax would be due.
Any income she receives from investing the proceeds may be subject to income taxes. She'll likely have more than $850 in income from the investments so a return will be required. Whether or not any tax will be due will depend upon the numbers.
Additionally, if one half of her SS plus all other income exceeds $25,000 then part or all of her SS may be subject to Federal Income Tax.
MS levies state income tax at much lower levels than the Feds do so she'll likely owe at least some MS income tax on the income from the investments.
2007-06-19 04:54:20 · answer #1 · answered by Bostonian In MO 7 · 2⤊ 0⤋
Her age has nothing to do with it - whether she pays taxes depends on her income, not her age.
The gain from the house shouldn't be taxable since she owned it an lived in it as her main home for over two years of the last five, as long as the gain was under $250,000 and it sounds like it was. It doesn't have to be reported on her tax return.
If the social security and the interest you mention is her only income, then she wouldn't have to pay federal income tax.
2007-06-19 15:02:16 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
I assume she owned and lived in her home for at least two years before she sold it. I am also assuming no one claims her as a dependent.
She does not owe any tax on the sale of her home. The sale does not have to be reported to to the IRS.
She does not owe any income tax on interest income of $280 a month, since that is her only taxable income.
With her taxable income of $3,360 she will not be required to file a tax return and will not owe any income tax.
2007-06-20 00:30:57 · answer #3 · answered by ninasgramma 7 · 0⤊ 0⤋
No and no
She owned the house longer than 2 years so there are no capital gains taxes.
Both the CD and money market are savings programs. There is NO tax on those per say, but the interest must be declared as interest income. That income may be taxable, only if it reaches a high level.
2007-06-19 11:57:59 · answer #4 · answered by Enchanted 7 · 0⤊ 3⤋
You pay taxes no matter how old you are.
Her income may be low enough where she will not have any liability but you have to the run the numbers.
2007-06-19 11:50:39 · answer #5 · answered by Wayne Z 7 · 2⤊ 2⤋