reentering system

In theory your income is below the need to file threshold but there are situations where you have to produce copies of past returns and it easier to produce rather that argue that you didn't have to file. (whether you actually filed is another story). Every year when I do Tax Counseling for the elderly I get a few self-employed people who are below the filing threshold who request filing so that they can have a piece of paper to show to justify their subsidized rent

1040ez can not be used for rental income. You need a 1040 (long form) and a Schedule E. Having said that did you have any expenses? Are you going to depreciate?

Exactly! I've long missed out on affordable health care, benefits etc, due to no provable poverty. But I have not cared because I'm intentionally poor and don't feel entitled to anything. But now, I want to bring my foreign wife to the US and need to show returns. Possibly 3 years past. And later on, I'll likely inherit money and properties and will need to be engaged with the system then. Seems best to start now and keep it going, just for the forms.

OK. Gotcha. 1040 plus E.. And no, I have no intention of getting into expenses and depreciation. I want the freedom of simplicity. That's worth something to me. Thanks for your input. It's nice to get some orientation with an "expert". I still have a couple questions though -

1) Any problem filing for 2006 or further back now, in Oct-November 2007 ? 2) Where to get past forms?

Cheers, Steve

There shouldn't be.

click on "More Forms and Publications"then "Previous years" then the appropriate year. Seth

1. no problem in filing past returns, even if not required.
2. go to IRS.gov and check around. If not directly downloadable, you may call 18008293676.

BTW, simplicity is a virtue and we need more of it, however you do need record deprecation each year, for when you sell the property, you will have to pay tax on all that depreciation you took in previous years, whether or not it benefited you. I'm assuming you'll sell the property in the future for more than you paid for it (your basis in the property.) ChEAr$, Harlan Lunsford, EA n LA

OK. Good points. Got my attention. How does depreciation work? I bought the house for nothing ($6K), wrecked. Over ten years, I rebuilt it myself and now it's worth probably

10-15x that. Steve

Here is a simplistic answer. You bought the house for $6K. That was your original basis. You put on a new roof etc for say $10K. Your basis is now $16K. You begin to rent and so you depreciate based on $16K and eventually the book value becomes say $14K. Now you fix up the kitchen for $5K. Basis becomes $19K and you begin to depreciate again. Just a lay person, you may have to depreciate the $14K and the $5K separately. Come to sell. The book value is now say $16K. You get $176K. You have a capital gain of $150K. Pay the tax before the Dems eliminate the 15% rate. You need to line up your improvements, etc and either study the tax code or see a professional.

Briefly, take purchase price, subtract value of land at that time. Now add to this cost, we call it basis, costs of improvements that you paid for, materials and labor, but NOT supposed value of your time. Even is house is now worth

60,000$, that's not the real basis of it for depreciation purposes as you can readily tell. Then, starting with the month you started renting it out, divide basis by 27.5 years which gives you annual depreciation, but adjust for partial year in first year if necessary, pro rata. ChEAr$, Harlan Lunsford, EA n LA

And if I have no reciepts and did all the work myself?

Steve

If he lived in it for those 10 years, does the value when it was converted from residence to rental matter? Seth

Only what you spent for materials; nails, glues, boards, plywood, etc etc..... You might try to reconstruct records by contacting suppliers for duplicate invoices; depending on the lapsed time of course. If not, sit down now and to the best of your memory, write down what and how much and for what did you spend money. That record is better than nothing, and MAY; I repeat MAY, hold up under audit, IF you get audited. Yes, IRS does sometimes accept your word.

ChEAr$, Harlan Lunsford, EA n LA

Not unless that fair market value at that time was less than the accrued basis.

Which could happen of course. Good point, Seth.

ChEAr$, Harlan Lunsford, EA n LA