# limiting a state tax liability (legal answers only!!)

**URL:** <https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996>\
**Category:** In My Humble Opinion\
**Created:** [December 4, 2012, 8:45pm UTC](https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996 "2012-12-04T20:45:30Z")\
**Posts on this page:** 4\
**Page:** 1

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**Author:** ![Sigene](https://avatars.discourse-cdn.com/v4/letter/s/df788c/32.png) [@Sigene](https://boards.straightdope.com/u/Sigene)\
**Post date:** [December 4, 2012, 8:45pm UTC](https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996/1 "2012-12-04T20:45:30Z")

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This won’t affect me this year, but probably will next year. I am set up to be getting a small amount of income (\<$5000) from Missouri based rental and think I might have to submit a Missouri income tax statement. I don’t mind getting the income and really don’t mind paying the taxes; but I really would rather not complicate my income tax forms if there is a good and legal way to do that.

Is there a method I can NOT take the money as income so I don’t have to fill out a new state form? I was thinking the renter could take the amount owed to me and upgrade the property with it? Or maybe something else?

I likely will just take it as cash and muddle through trying to fill out two state forms, but I’m not looking forward to it…complications make the IRS and me nervous.

I was just hoping someone would have a suggestion of a factual and LEGAL way to take the added value without having to fill out a new state form.

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**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\
**Post date:** [December 4, 2012, 10:27pm UTC](https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996/2 "2012-12-04T22:27:28Z")

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I assume costs can offset income for the same business; so likely you can apply any costs to deduct from the income so the business itself does not show a profit. Not sure how mortgage figures into this - whether you could take out a mortgage (or a bigger morgage) on the property and deduct the interest payments from the income. For that detail, consult a real accountant who knows the local laws. Otherwise, what improvements can you make - i.e. upgrade the property, install central air, add a deck, etc. etc. each year.

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**Author:** ![samclem](https://avatars.discourse-cdn.com/v4/letter/s/a9a28c/32.png) [@samclem](https://boards.straightdope.com/u/samclem)\
**Post date:** [December 5, 2012, 12:28am UTC](https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996/3 "2012-12-05T00:28:14Z")

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Legal advice belongs in IMHO. MOved from General Questions.

**samclem** , moderator

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**Author:** ![Kaio](https://avatars.discourse-cdn.com/v4/letter/k/c68b51/32.png) [@Kaio](https://boards.straightdope.com/u/Kaio)\
**Post date:** [December 5, 2012, 3:24am UTC](https://boards.straightdope.com/t/limiting-a-state-tax-liability-legal-answers-only/642996/4 "2012-12-05T03:24:04Z")

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I’d think you’d still need to file a Schedule C, showing income (rent) vs. deductions (cost of property improvements). I can’t imagine there’s a way that the state wouldn’t want to know what the money trail is, even if you don’t put cash in the bank at the end of the day.