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Don't forget to check if you're still taking the standard deduction versus itemizing. With the higher standard deduction amounts in recent years, many people who used to itemize now take the standard deduction, which can affect your refund amount from year to year. Also, small changes in your income can sometimes push you over thresholds for certain credits or deductions, causing them to phase out. This happens to a lot of people and explains why refunds can vary widely between years even when it seems like not much has changed in your financial situation.
Do you know what the standard deduction amount is for 2025? I can never keep track of these numbers since they seem to change every year with inflation adjustments.
For 2025, the standard deduction for single filers is $14,600, and for married filing jointly it's $29,200. These amounts increased from the previous year due to inflation adjustments. The IRS adjusts these and many other figures annually, which is another reason why your tax situation can change even when your life circumstances remain the same. Even tax bracket thresholds shift each year with inflation.
I've had this same issue! What worked for me was going through the detailed tax summary section in TurboTax. If you look at the actual forms and compare last year to this year, you can usually spot where the big differences are. In my case, I realized I had received a $1,500 tax credit last year for energy efficient home improvements that obviously didn't apply this year. Also check your effective tax rate for both years. Mine actually went down slightly, but my refund was smaller because my withholding wasn't proportional to my income increase.
Did you file with a tax preparer or software? Sometimes they deduct their fees from your refund rather than charging you upfront, which could explain some of the missing money. When I used [popular tax software] last year, they took $139 for federal filing, state filing, and processing fees directly from my refund. Check your tax prep agreement to see if that might be part of what happened.
I used TurboTax but I paid for it with my credit card during filing, so the fees definitely weren't taken from the refund. The weird thing is that the IRS "Where's My Refund" tool shows the full amount, but what's pending in my bank is less. That's what has me so confused.
In that case, it's almost certainly an adjustment or offset of some kind. One thing to check - did you receive all of your stimulus payments during COVID? Some people who claimed the Recovery Rebate Credit had it adjusted by the IRS if their records showed the stimulus was already paid. Also worth checking if your bank might have put a temporary hold on part of the deposit, though that's less common.
Has anyone checked if their refund is getting split into multiple deposits? My sister thought her refund was short last year but it turned out the IRS sent it in two separate transactions about 3 days apart. No explanation why but both eventually showed up.
This happened to me too! I had a partial deposit and freaked out, then 4 days later the rest showed up. The IRS never explained why they split it. Something about fraud prevention maybe?
One thing no one's mentioned yet - if the land you sold was held for LESS than a year, you'll pay short-term capital gains rates, which are the same as ordinary income rates. Those can be much higher than the 15% long-term rate. Also, depending on your income level, you might also have to pay the 3.8% Net Investment Income Tax on top of your capital gains tax if your modified adjusted gross income exceeds certain thresholds ($200,000 for single, $250,000 for married filing jointly). Make sure you're accounting for all of this in your tax planning!
What if you sell land that was gifted to you? My parents gave me some property a few years back and I'm thinking about selling. Would I use their purchase price as my basis or something else?
With gifted property, you generally take the donor's basis (what your parents paid originally) as your basis. This is different from inherited property, which gets a stepped-up basis to fair market value at the time of death. However, there's a special rule if the fair market value at the time of the gift was LESS than the donor's basis and you sell at a loss. In that case, you use the fair market value at time of gift to calculate the loss. It's a bit complicated, but Publication 551 from the IRS explains this in detail. Also keep in mind that if your parents paid gift tax when they gave you the property, you might be able to add some of that gift tax to your basis, potentially reducing your gain when you sell.
Dont forget to check if your state has different capital gains rates than federal! I got burned on this last year - my state treats all capital gains as ordinary income so I ended up paying a higher rate than I expected.
Just want to add something that nobody's mentioned yet - you might qualify for the home sale exclusion depending on your situation. If your mom lived in the house as her primary residence for at least 2 of the 5 years before selling, and you inherited her interest, you might be able to exclude up to $250,000 of the gain attributable to her portion. It gets complicated with the partial gift/partial inheritance situation, but it's worth looking into since it could save you a significant amount on taxes. IRS Publication 523 has more details on this.
Wait that would be amazing if it applied here! But I thought the home sale exclusion only works if I personally lived in the house as my primary residence? I never actually lived there - it was just my mom's house until she passed.
Unfortunately in your specific case, you're right - you wouldn't qualify for the full exclusion since you didn't live in the house yourself. The primary residence exclusion typically requires you to have owned and lived in the home for at least 2 of the 5 years before the sale. However, there is a special rule for inherited properties that might partially apply to the portion you inherited (not the gifted portion). If you sold the property within 2 years of your mother's death, you might be able to count her ownership period and use toward the exclusion for her portion only. It's a partial step-in-the-shoes rule for inherited property. This is definitely worth discussing with a tax professional who specializes in estate matters since the partial gift/partial inheritance complicates things.
Has anyone ever tried figuring out the original basis by looking up the county property appraiser's website? My uncle's original purchase documents were destroyed in a flood, but I was able to find his original purchase price by searching the county records online. Many counties have this info digitized now and searchable by address.
I tried this for my grandmother's house and it worked! Our county had records going back to 1986. Found the original sale price when she bought it, plus records of permits for major renovations that I could add to the basis. Definitely worth checking your local county assessor or property tax website.
Marilyn Dixon
I'd be more worried about the 90% revenue from one client (your cousin's company) than the salary issue. The IRS could potentially reclassify your business as an employee of your cousin's company if they determine you don't have true independence. This would be catastrophic tax-wise. Make sure you have: 1) Written contracts 2) Control over how/when you work 3) Multiple clients (try to grow the other 10%) 4) No exclusivity agreements 5) Your own business premises 6) Your own tools/equipment
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Louisa Ramirez
β’This! I had a friend with a similar setup who got reclassified and ended up owing hundreds of thousands in back taxes and penalties. The family connection makes it even riskier.
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TommyKapitz
For the actual numbers - I have a service business in a different field (legal consulting) that's about your size. My CPA had me do a compensation study showing average salaries for people in our field. Based on my study, I pay myself $700k salary on about $3.5M net. My wife is officially our CFO with a $250k salary for 30 hours/week. We documented both with formal job descriptions, board minutes approving the compensation, and market research showing comparable positions. Haven't had any issues with IRS in 6 years.
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