The ever-loving state of California (remember when it was a fun place to be?) has placed a levy on my bank account over taxes - without bothering to ask for the money.
Aside from the obvious of closing that account and moving it elsewhere:
This is a issue of cap gains on sale (by a 59-year old) of his primary (and sole) residence.
The money they took came from Social Security Disability (NOT SSDI).
2 things:
I thought over-55 sale of primary residence was a one-time tax exempt matter - they obviously disagree (the sale was in 2008)
I thought the Soc Sec Disability money was untouchable.
I’d love for the ultimate authority on these issues would cruise in, but don’t really expect her/him to do so.
Short of that, to whom do I turn? I was planning to do a Reverse Mortgage in August, which would free up enough money that I could to buy real food, re-carpet the house, etc. That is, to say the least, in jeopardy.
I cannot afford either, but which do I need more - a lawyer to protect my equity/ block their levies, or an accountant to negotiated the maze of tax law (I did a ton of work on the house (it was a 3/1, virtually no kitchen, it is now a 3/2 (with impressive kitchen) upstairs, and a studio with a new kitchen and bath down) - and have few, if any receipts from 20 -30 years ago.
And, cannot anyone tell me how I got the idea of over-55 exclusion or that the SS payment were untouchable? I used to be able to trust my mind, but even that seems to have been taken from me.
The hourly rate for a CPA is lower than the hourly rate for a tax lawyer.
Call a local CPA. Sounds like you’ve got some questions for a CPA to answer.
Even if you do eventually wind up getting referred to a lawyer, you can pay the CPA to answer your initial questions rather than the lawyer.
Start with a CPA or other tax expert (an EA might help) to get some of the tax issues addressed. If you can reduce the taxable gain, then you eliminate the levy and solve all the problems. My guess is that amending your taxes would solve the entire problem right there.
There are also payment plans and other options to keep a tax levy from being a burden to you. Anyone familiar with CA taxes and the Board of Equalization can help you - a lawyer should only be brought in when the tax expert decides its time.
I don’t know why you think house sales are taxed differently based on age. I find a lot of people assume that because they’re older they aren’t subject to tax, but they’re wrong on almost every account. I do not know of any provision that ever exempted capital gains based on age.
SSDI has some protections, such as from bankruptcy. But once the money is sitting in a bank account, it’s no longer SSDI - it’s just money in a bank account. Also, I think that tax authorities can even start garnishing Social Security, but I’m not positive of that.
Prior to 1997, captial gains on the sale of a home could be deferred if those gains were rolled over into a new house. Those over the age of 55 could take a one-time exclusion of $125,000 on their gains without rolling them over into a new house.
usedtobe, how much gain did you have when you sold your house? The current law excludes $250K in gain for a single ($500K if married) if you have lived there for 2 out of the past 5 years. Did you file your own return in 2008? If so, perhaps you botched it, thus causing the state to think you owed money. I would consult a CPA if you filed your return to make sure you didn’t screw things up.
I have not had any income since 1/13/2001, except:
Soc Sec Disability (first payment in late 2007
Sale of house
I have not filed any tax return since 2001
The house is in San Francisco (which also used to be a fun place) - bought 120K, sold 780K
We are not talking trivial amounts, and CA is bankrupt, and is going after every cent it can get.
To answer the obvious: I cashed out almost all of my equity (was expecting to get $875K) in a pathetic attempt to hold on to the place.
I am now in Sacramento - anybody know a good tax accountant around here? I know nobody here.
Turns out I was right about Soc Sec being exempt - the released the levy (but will not re-imburse me for the $140 in bank fees incurred). I had to fax two statements showing nothig but SS funds deposited.
Now, I get to explain that a person $1k behind on utilities, with 8 teeth rotted off, and needing 3 (and counting) orthopeadic surguries will probably not be coming up with much in the line of surplus funds…
Is there a defined procedure for getting a hardship exemption from the FTB in such cases?
I get to choose between paying tax or having a roof over my head - not exactly a tough decision - they can balance the budget on some other poor slob’s back.