Need Tax Class Homework Help - 1040 & Schedule E Form Review

Thank you so much for offering to help! I'm definitely confused about the repairs vs. improvements distinction. In my scenario, the fictional taxpayer replaced some windows ($3,200) and fixed a leaking pipe ($450). Which would be which? And for depreciation, I'm using the straight-line method over 27.5 years for the residential property, is that correct?

The window replacement for $3,200 would typically be considered an improvement since it's enhancing the property's value and has a useful life of more than one year. Improvements need to be depreciated rather than deducted as an expense. The leaking pipe repair for $450 would be considered a repair because it's simply maintaining the property in its normal operating condition. You can deduct repairs as expenses in the current year. Yes, you're correct about using straight-line depreciation over 27.5 years for residential rental property. That's the standard method required by the IRS. Make sure you're only depreciating the building value though, not the land, as land cannot be depreciated.

Does it work with older tax forms like from 2017? Most of the software I've tried only handles current year or maybe 1-2 years back. Also, can it handle fictional scenarios or does it try to validate against real SSNs and EINs?

I'm a bit skeptical about these online tools... don't most of them just try to upsell you to their paid version after giving you limited feedback? My finance professor warned us about relying too much on these automated checkers instead of really learning the concepts.

Yes, it actually does work with older forms! I used it for some 2018 practice scenarios, so 2017 should be fine too. It's designed for educational purposes, so it doesn't validate against real SSNs or EINs - perfect for practice scenarios. It doesn't try to upsell you at all. It's actually designed specifically for educational purposes. What I liked most is that it explains the concepts behind the corrections rather than just pointing out errors. My professor actually recommended it because it reinforces learning rather than just giving answers.

Wait, you can actually talk to a real IRS person? I thought that was like a myth or something lol. How long did it take? When I tried calling the IRS last year I gave up after being on hold for like 2 hours.

This sounds like a scam. Why would anyone pay a service to call the IRS when you can just do it yourself? And I doubt IRS agents are allowed to help with homework assignments. They probably just connect you to the same wait line you'd get by calling yourself.

Yes, you actually talk to a real IRS representative! The wait time varies depending on the time of year, but what's nice is you don't waste your own time waiting. Their system holds your place in line, and when an agent is available, they call you. My call was during tax season and it took about 3 hours total, but I only had to be on the phone for the actual 20-minute conversation. They don't just connect you to the same wait line - that's what makes it different. Their system navigates the IRS phone tree and waits on hold for you. When it comes to homework, the IRS won't complete assignments, but they're actually quite helpful explaining how to interpret tax laws and forms correctly, which is valuable for educational purposes.

Thank you for mentioning this! My fictional taxpayer has an AGI of $123,000, so they'd be in that phaseout range. How exactly do I calculate the deductible portion of the $7,500 rental loss in this case? Is there a specific worksheet in the instructions?

For an AGI of $123,000, you're right in the middle of the phaseout range. The calculation is pretty straightforward: you lose $0.50 of the $25,000 maximum deduction for every $1 over $100,000. So take $123,000 - $100,000 = $23,000 over the threshold. Multiply that by 0.5 = $11,500 reduction. This means your maximum deduction would be $25,000 - $11,500 = $13,500. Since your loss is only $7,500, you can deduct the entire amount because it's less than your modified maximum. Form 8582 is where you'd calculate this for a real return, but for your assignment, just showing this calculation should be sufficient unless your professor specifically required Form 8582 as part of the project.

Our professor had us use the free fillable PDFs from the IRS website for older tax years. Way less headache than dealing with outdated software! You can still download the 2017 forms and instructions directly from irs.gov/prior-year