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What Trump tax returns may reveal following Supreme Court ruling

President Donald Trump speaks to supporters at Joint Base Andrews before boarding Air Force One for his last time as President on Jan. 20, 2021 in Joint Base Andrews, Maryland.

Pete Marovich | Pool | Getty Images

Former President Donald Trump’s tax returns are back in the news.

The Supreme Court rejected Trump’s efforts to shield financial records from New York prosecutors on Monday. The unsigned order requires Trump’s accountants to hand over tax and other documents.

The legal battle over eight years of records, dating to 2011, was in connection to an investigation by Manhattan District Attorney Cyrus Vance Jr. into potential tax violations involving the Trump Organization.

A spokesman for Vance said that the office would quickly move to enforce its subpoena on the president’s longtime accounting firm, Mazars USA.

It’s unclear when or if the tax documents will become public.

By itself, a tax return won’t tell you everything about an individual’s bottom line. However, if you combine it with other supporting documents, including a statement of net worth, you can gain some insight into a taxpayer’s finances.

“Taking a look at a tax return gives you a roadmap of the activities and the transactions any one individual had during the year,” said Edward Reitmeyer, regional tax partner-in-charge at Marcum LLP in Philadelphia.

“It’s the accumulation of the year’s transactions into one document,” he said.

The Form 1040 sums up a filer’s taxable income. However, the attached schedules are the meat and potatoes: They show the sources of a taxpayer’s income and deductions claimed.

Rent, partnerships and more

Whether your real estate empire is racking up losses or you’re getting income through a web of pass-through entities, Schedule E will have the details on residential, vacation and commercial property.

Trump himself uses many limited liability companies to manage different aspects of his businesses.

“If someone were to meet with a prospective client — and that client was a well-known international real estate developer — they would expect to see an expansive Schedule E,” Reitmeyer said.

Income from pass-through entities and partnerships would also show up on Schedule E. Rental income is on Line 3.

Keep a close eye on depreciation, which you can find on Line 18. Depreciation is a tax deduction you can take each year to recover the cost of your real estate as you use it.

Schedule E also might share the name of a pass-through entity that’s providing income to the taxpayer, but it may be difficult to learn the details of who ultimately owns it.

Itemizing deductions

Medical workers wearing masks walk past a ‘Thank You’ sign outside of Mount Sinai Hospital amid the coronavirus pandemic on May 3, 2020 in New York City.

Alexi Rosenfeld | Getty Images

Deductible medical expenses, state and local taxes paid and other itemized deductions would be explained on Schedule A.

Starting in the 2018 tax year, the deduction for state and local taxes paid was capped at $10,000 for individual filers, so there’s a limit to the extent anyone with a personal residence in a high-tax state like New York could write off those property and income taxes. Trump was a lifelong New York resident until officially declaring himself a resident of Florida in October 2019.

More from Personal Finance:
Most student loan borrowers won’t get a tax break this year
Still no stimulus check? What that means for your tax return
Many Americans, especially families, can’t live on a $15 minimum wage

Keep a close eye on the “gifts to charity” portion of Schedule A. Donations that are worth more than $500 must be spelled out on Form 8283, the non-cash charitable contribution form.

Taxpayers must describe the donated property and provide a summary of its appraised fair market value, including art, real estate and cars.

Side gigs, sole proprietorships

Read More:
What Trump tax returns may reveal following Supreme Court ruling

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