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buymyflorida · Nov 17, 2007, 09:50 AM

Hello, This is my very first time on the ask me desk.

Here is my question-

Filing 1099's W/$0 income for the 2007 tax year.
Yes folks, 0 income stated on the 1099's

We are a family of 5, 2 adults, 3 children and we have almost completely depleted our savings.

We are both Realtors (don't laugh) in Florida (don't laugh again)

We've had tons of add'l medical billings because Our middle child had been stricken with serious medical problems and we had to hire private doctors and teachers.

We've paid out around 19k -22k in med care & meds, 3k in school supplies & 2.2k in office supplies.

Also, NAR, FAR & the local Realtor association/MLS fees $1800.

So all of you tax pros out there- Please let us know if we are able to take the child tax credit, are we eligible for a EIC? Can we get some kind of refund????

We are broke (1k left in savings) no one can seem to get a loan for our house (click here, its cute) because mortgages have gotten much harder to get (thats 40k below the house next door that closed on 10/31) and need to relocate ASAP to get close to my huge family to help us take care of our darling middle daughter and our 2 other precious girls.
Email me if you can tell us what to do, PLEASE

Mobea · Nov 17, 2007, 11:45 AM

What was your gross income before any deductions?

AtlantaTaxExpert · Nov 18, 2007, 09:23 AM

If you have no earned income, then, unfortunately, your are NOT eligible for any Earned Income Credit.

Recommend you both go out and get a part-time job under a W-2 to generate SOME earned income so that you can get the EIC.

Right now, you are out of luck.

s_cianci · Nov 18, 2007, 09:33 AM

I'm assuming that the $0 is your taxable income, not your gross income. If that's the case, then you'd be entitled to a refund of all taxes withheld during the year. If you don't have taxes withheld then you won't owe anything. You should still be able to take whatever credits, deductions. etc. you'd normally be entitled to. Of course, once your taxable income hits $0 then anything further would be redundant.

Mobea · Nov 18, 2007, 11:35 AM

Why would you be issued a 1099 with 0 income?

AtlantaTaxExpert · Nov 18, 2007, 06:10 PM

Mobea:

Sometimes, real estate companies issues Forms 1099 regardless of the amount due.

I know it makes no sense, but I have seen Forms 1099 with ZERO income.

buymyflorida · Nov 19, 2007, 06:31 AM

Originally Posted by Mobea

Why would you be issued a 1099 with 0 income?

Because we are self employed contractors. Each company (regardless of monies earned) must let the IRS know if we have made how much/if any monies. At least that is what the H&R Block guy said on the phone Friday! LOL :D

Mobea · Nov 19, 2007, 11:32 AM

If you did not have any taxes withheld or owe any taxes on a withdraw from a pension or such, and you did not have any earned, unearned or passive income over $250 then you are not required to even file a return. A lot of people file returns that are really not necessary according to the IRS.
Do You Need to File a Federal Income Tax Return?

AtlantaTaxExpert · Nov 20, 2007, 11:26 AM

I agree with Mobea. If you do not follow my suggestion to work part-time in order to generate SOME income for EIC purposes, you may not even be required to file a tax return.

However, if the cost is not too great, you may want to file, because it is POSSIBLE that you have Net Operating Loss (NOL), which is a complicated computation that allows you to carry back losses from this year to previous years in order to claim refunds of taxes paid in previous years.

The NOL is NOT for amateurs. In fact, there are a fair number of "tax professionals" who cannot do a NOL, because there is no real good tax software to support a NOL computation. It has to be done manually.

I recommend that you consult with a CPA or enrolled agent to see if you may qualify for a NOL submission. Do it sometime in the next five weeks, because most tax professionals will shy away from doing such a return during the busy tax season.

Mobea · Nov 20, 2007, 11:38 AM

ATE, don't you have to have gross income in order to qualify for NOL?

AtlantaTaxExpert · Nov 20, 2007, 11:44 AM

Negative.

Several years back, I did two NOL returns for a trucker who had TWO negative income years due to severe expenses associated wth his trucks and got him back about $7,000 total from returns in which he paid substantial taxes in the late 1990s.

I charged him $500 per NOL return, and, In my opinion, I did not charge him enough. Each NOL took me the better part of a day to complete.

Mobea · Nov 20, 2007, 04:35 PM

But did he have any income to begin with? Then expenses were deducted to reflect the loss?

Mobea · Nov 20, 2007, 07:49 PM

You're right, they are a PIB (Pain in butt) to do. I have several clients that I keep track of their NOL's and Capital loss carrybacks/forwards each year. That is an advantage to using the same professional tax preparer year after year. We keep track of things like that and also assist our clients in preparing for financial changes in the future.

AtlantaTaxExpert · Nov 21, 2007, 08:21 AM

He (the trucker) DID have some cash flow, but I do not think it makes a difference (for our real estate agent poster), as long as the real estate agent can show profit motive and a good faith effort to produce income.

The capital loss carry-forward is a piece of cake compared to NOL, because the software effectively does it for you (unless you decide to change software).

Mobea · Nov 21, 2007, 05:07 PM

I agree. I think that profit intent will be the determing factor with the IRS. Was this your first year of business? Did you work really hard all year and just not accomplish anything or did you take a break due to your family illness and just not work but the expenses were still coming in? How active were you in the day to day operations with the total intent to make money. These are the type of things that the IRS could make you verify. It is possible to have a net operating loss with no income, just rare. Be careful... definitely attach an explanation to the return if you file.

AtlantaTaxExpert · Nov 22, 2007, 10:29 AM

Mobea's post has some VERY GOOD POINTS. Heed them!

And DEFINITELY get professional tax help.