IRS Question

Okay, my roofing contractor ripped me off and now I have to pay an additional $1200 to fix what he didn't do (not counting the costs and labor I'll have to cover the water stains on the ceilings from him not tarping the roof correctly when he was fixing it.) I know that you can claim an uncollectible debt (up to $3,000 a year) on your federal taxes. Would the fact that I have done everything in my power to collect the additional money I need from him (including sending him a certified letter, notifying the BBB, etc) put this in that category? Any CPA's out there? Kirsten
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Well the BBB is a joke as you now see 1st hand, IRS ? Take the guy to small claims, file today yourself.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Some smart a** suggested sending a contractor a 1099 for income tax purposes. That might fix him....

labor
the
power
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Take pictures and make sure you document everything.
showerbeatle

on
a
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

Deduct that $1200 on your tax return, and it reduces your _taxable_income_, *not* your tax, by $1200. If you are in the 28% tax bracket, for example, the reduction in your tax owed will be 28% of $1200, or $336. You're still out $864.
Sue the contractor for damages and you may recover the whole $1200. Depending on the small-claims threshold in your state, you might not even need a lawyer. If you do hire a lawyer, you can sue for your legal fees in addition to actual damages.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
If this was for a commercial building then might be tax deductible but not for personal house. Might go into basis when he sells house. Not a bad debt because no formal loan agreement.
wrote:

labor
the
on
power
_taxable_income_,
the
Depending
lawyer.
actual
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
I'm not about to begin poking around Turbotax, but I'd swear I saw a question like "Did you incur any losses due to floods, hurricanes, chipmunk invasions...". Am I dreaming?
wrote:

tarping
a
example,
out
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Not dreaming, it's there. But there's a threshold, IIRC somewhere around 7% of adjusted gross income, and you can deduct only the portion of such losses that exceeds the threshold. It takes a *really* big loss to become deductible. Catastrophic losses are deductible, most losses short of catastrophe aren't. Short version: you're screwed either way.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

chipmunk
7% of

that
Translation: It's for rich people who insist on building houses too close to the beach. :-)
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Tue, 18 May 2004 15:00:14 GMT, "Doug Kanter"

They don't need it, as FEMA will come in and rebuild them. Take a trip to the Outer Banks of NC and look at the places that have been rebuilt 2 or 3 times over the past 20 years.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

around
losses
deductible.
to
I could be wrong, but my gut feeling says it's not FEMA's job to rebuild million dollar homes.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

close
They also like to replace the sand for the rich people. But that might stop because we need to fix the sand we messed up in Iraq.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

Maybe, maybe not, I'm not a tax accountant so I don't know. My point was that recovery of the amount, through civil processes, will yield much more money than deducting it on the tax return ever could. Too many people look at tax deductibility as though it were some sort of magic source of free money. While it's better to incur deductible expenses than non-deductible ones, it's always even better still to avoid incurring the expenses at all.

Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
Look for the tax newsgroup and ask -- I think it's misc.taxes.moderated, but just search for newsgroups that include the word "tax" and you'll find it.
--
Where no oxen are, the crib is clean,
But much benefit is derived from the labor of the ox.
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
On Tue, 18 May 2004 02:22:54 -0400, "k conover"

Normally you need a legal claim for collection, such as a judgement in small claims court.
Jeff
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

HomeOwnersHub.com is a website for homeowners and building and maintenance pros. It is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.