Tax Questions From Readers
by Julie Jason on Apr 9, 2019
This week’s column is a series of tax questions. Here are some additional questions from readers and answers from TurboTax’s tax expert, Lisa Greene-Lewis, CPA, whom I quote below.
Q1: L.R. from Bridgeport, CT asks about unclaimed property funds: “In 2018 I received $3240.00 from CT Unclaimed Property, which was from 2 previous employers where I worked in the 1990's that have since folded, and I believe the money was originally contributed to stock options for a 401k. I apologize for not having more specific information; it was so long ago, and as the companies have folded, the money was attributed to a liquidation company (?) rather than the name of the company where I actually worked.”
A1: Lisa’s answer: In general, if the property represents an inactive bank balance or brokerage account that consist of money you contributed the funds were already your property and would not be considered income. If the company folded you may have worthless stock but you have to claim worthless stock only in the year it becomes completely worthless. This would be the time the company files for bankruptcy, stops doing business, and has no assets.
Q2: J.C. asks about stock loss reporting: “I will be selling stock in 2019 that I have held for several (between 5-10) years. The proceeds will be far less than what I paid - I estimate a $30,000 loss to be realized. This is the only stock transaction I plan for 2019. For tax purposes, my understanding is that I am limited to only $3,000 in reportable losses for 2019. Is that true? If so, how do I report the remaining loss in future periods? Am I really limited to reporting $3,000 in losses for (approx.) the next 10 years?”
A2: Lisa’s answer: Yes, [in your case, since this is your only transaction] the maximum that you can claim to lower your income is $3,000 in the tax year. You would carry forward the rest of the loss into later years. When you use TurboTax it will keep track of your losses to be carried forward so you don’t forget any of them.
Q3: M.D. from San Jose, CA asks about reporting sales tax paid: “This year, for the first time, I will do my taxes by TurboTax rather than hire an accountant. This has gone smoothly, except for two things--one of which I hope you can clarify. The State tax form asks if I've bought anything from out of state, and wants me to pay sales tax on anything I bought out of state. Is that correct?”
A3: Lisa’s response: Yes, in general you are required to pay sales tax on out of state sales.
M.D. Continues: “What if I have bought something from another state that charges sales tax? Will they charge me sales tax?”
Lisa Answers: Yes, if you purchase something and an online retailer and other out of state retailers are required to collect tax in that state regardless of physical presence in that state you have to pay state sales tax. States now have the right to require tax collection from online retailers and other out-of-state retailers with no physical presence in their state if they meet certain economic thresholds.
M.D. asks: “If so, then do I have to pay sales tax to that state AND to California [my home state]? Is sales tax meant to be charged only to residents? Does that mean if I visit another state that charges sales tax, they should not charge me (ie., on food, lodging, store purchases) because I am not a resident?”
Lisa Answers: When you visit another state you are required to pay taxes on certain purchases. For instance, you will be taxes on food when you purchase it but taxability of food can vary depending on if the food is heated or not and it can vary per state.
Thank you Lisa for your help.