[Inquirer54]

My wife and I live in the USA. Her relatives have discovered some buried treasure in her home country. If we are given a share of this money, do we report it as income?
Thanks for any help.

[MukatA]

Yes, this is self employed income. It is also subject to SE tax at 15.3%.

[Inquirer54]

Thanks for the response. However, since the money is from overseas and a gift how is it considered "self employed" What is SE tax.
Thanks,

[Inquirer54]

Actually if the money is received in a foreign country as a gift and is given in the form of a check, it can then be deposited in a bank in that country in the donee's account. There will be no tax liability when the money is transferred to the US. One must file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, (http://www.irs.gov/pub/irs-pdf/f3520.pdf) if the gift you receive during the year is in excess of $100,000. This is just an information return and no payment is due.

[chernyl56]

I watched the show Susie Orman, that great tax/money advice show. My husband and I are filing taxes, and we have a daughter going off to college. On her show she said "if you have a child starting college, then you should buy as many things that she'll need for freshman college year. We would then get these expenses as deductions for us. My husband and I bought her a car, a digital camera, a laptop, a phone, other supplies, etc. Is this true? I've searched, and haven't this info. Can you tell me specifically about this? Especially the car and laptop. She is going to a school where she needs a car. Also, can you tell me if you know any other deductions to make me aware of regarding this?

[ebaines]

Chernyl - I think what Ms. Orman may have been talking about is that you may qualify for either the Hope Credit or the Lifetime Learning credit. The amount you can deduct is based on the amounts of "qualified" tuition and expenses and is subject to limits based your adjusted gross income (AGI). From: Tax Topics - Topic 605 Education Credits

Qualified expenses do not include room and board, insurance, transportation, or other similar personal, living, or family expenses. Qualified expenses may include fees for books, supplies, and equipment only if the fees must be paid to the school for the student's enrollment or attendance. In addition, qualified expenses may include student activity fees if the fee must be paid to the school for the student's enrollment or attendance.

You claim the credits on form 8663.

The types of expenses you listed do not qualify for either of these credits.

One other option is that if your daughter has taken out a student loan the interest is deductible if used for tuition and qualified expenses, which can include equipment and necessary expenses such as transportation. So I think you can make the case that if you took out a loan to buy the laptop for school purposes, the interest on the loan is deductible.

You may also want to review IRS pub 970: Publication 970 (2007), Tax Benefits for Education