- On Monday, a federal judge dismissed President Trump’s suit to block the release of his personal and corporate tax returns to the Manhattan district attorney.
- The U.S. Court of Appeals for the Second Circuit granted a temporary stay of decision, meaning for now the president won’t have to submit them.
- Tax returns, both personal and corporate, provide insight into a filer’s income and sources. They won’t necessarily tell the whole story of a person’s wealth.
President Donald Trump's personal and corporate tax returns could give the public an inside look at his finances — depending on which forms are released.
A federal judge on Monday dismissed Trump's lawsuit to block the release of his tax returns to Manhattan District Attorney Cyrus Vance Jr.
The DA is investigating the Trump Organization and had served a subpoena seeking eight years of tax returns.
The U.S. Court of Appeals for the 2nd Circuit granted a temporary stay of enforcement of the subpoena, giving the president a reprieve.
If those documents are made public, they could provide insight into the sources of Trump's income — depending on which forms are released.
Just be warned, the tax forms themselves won't tell you everything about a filer's finances.
Think of the Form 1040 as an important piece of the puzzle in a taxpayer's financial condition. Combined with other documents, including a statement of net worth, it can provide a more complete picture of that person's bottom line.
"What you can see from the individual Form 1040 are the types and sources of income, including whether the taxpayer has capital gains or dividend income," said Joshua D. Blank, professor of law at the University of California, Irvine.
"What you can't see is wealth," he said. "We tax people based on annual income and not total wealth."
The first two pages of a Form 1040 are a summary of the taxable sources of income a filer is required to report.
The attached schedules are what can shed light on the sources of income and the deductions a taxpayer takes.
Deductions reduce taxable income based on your federal income tax bracket.
Schedule A is the document taxpayers must fill out to calculate their itemized deductions, including any deductible medical expenses and state and local taxes paid.
Take note: 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 Trump — or anyone with a personal residence in a high-tax state like New York — could write off those property and income taxes.
Keep a close eye on the "gifts to charity" portion of Schedule A. Donations that are more than $500 must be spelled out on Form 8283, the noncash charitable contribution form.
Taxpayers must describe the donated property and provide a summary of its appraised fair market value, including art, real estate, cars 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.
Line 3 spells out rents received for the property.
"You can get an idea of business income, as you'd see that coming in through companies and pass-through entities, partnerships and LLCs," said Jeffrey Levine, CPA and CEO of BluePrint Wealth Alliance.
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.
While Schedule E might share the name of a pass-through entity that's providing income to the taxpayer, it may be difficult to learn the details of who ultimately owns it, said Christy Bastian, CPA and president of FVL Consultants.
"You can sometimes follow through and trace entities," Bastian said. "You're looking for clues, but it doesn't mean that every return will have it."
Similarly, members of a partnership aren't always easy to identify, Blank said.
Taxpayers who are running a side hustle or operating as a sole proprietor from home are responsible for reporting the income to the IRS.
Form 1040 no longer breaks out gains or losses related to businesses, so you'll have to find Schedule C to collect the data.
This form spells out the income or loss from that small business. It also details the expenses related to running that enterprise.
Whether you're tracking down someone's interest received from a bank account or ordinary dividends paid, you'll need to find Schedule B.
On this form, you'll see where some of these interest- and dividend-paying investments are held, but you won't get any details on what exactly the taxpayer has invested in.
What if you sold an asset? Schedule D will tell you more about the gains and losses stemming from the sale.
Filers would fill out Form 8948, and make note of their purchase and sales dates, as well as the cost basis, to correctly fill out this schedule. It can act as a window into the taxpayer's trading activity.
"You can see if there are a lot of stock transactions," said Bastian.