Taxpayers cannot deduct commuting expenses; they might have to pay taxes on any gains from the sale of inherited property, and they can amend filings by using Form 1040X.

Those are among the answers to reader's questions this week in our latest Q&A. Check back with our Tax Center page every Wednesday from now until the filing deadline, April 15, for more.

This week's answers come from tax professionals Mildred Carter, John W. Roth, and Mark Luscombe of CCH Inc. in Riverwoods, Ill., a tax- and business-law firm.

I need to know if I can deduct mileage on my vehicle if I live more than 30 miles one way from work. This would be all commuting mileage. I live 35 miles from my office and commute every day. - April S., Dora, Ala.

April,

Generally, you cannot deduct commuting expenses (the cost of transportation between your home and your main or regular place of work). You cannot deduct commuting expenses no matter how far your job is from your place of work. If you have an office in your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and another work location in the same trade or business. - Carter, CCH

I was laid off last spring and have been fortunate to find temp work since then. I qualified for 401(k) for approximately 1/3 of my income; however, I do not have 401(k) as an option through the temp agency I work for. Does this mean that all of my income for 2001 is counted against my opportunity to deduct IRA contributions even though more than half of the income was earned without being qualified for 401(k)? - Dale A., Glendale, Ariz.

Dale,

Yes, all of your income in 2001 will be used to determine the phase-out amount, based on your modified adjusted gross income. The deduction you can take for contributions made to your traditional IRA depends on whether you were (or if married, your spouse was) covered for any part of the year by an employer retirement plan. Your traditional IRA deduction for the year 2001 is reduced if your modified adjusted gross income is within the phase-out range that applies to your filing status. - Carter, CCH

My mother died leaving my brother and 3 sisters her house. We sold it in 2001 to a nephew for $30,000. We split the money between the five of us. Obviously, each sibling got $6,000 each. Mother paid $6,000 for the house upon purchase some 30 years ago. Do I file my portion on a capital gains form? Or is it considered an inheritance? Mother had put the house in our all our names in 1981. She continued to keep it up and pay all taxes. Thanks.

Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if you sell the property, you must pay tax on any gain on the sale. To determine if the sale of inherited property is taxable, you must first determine the basis (your cost) of the property. The basis of inherited property is generally the fair market value at the date of the decedent's death. The basis of property received by gift is generally the basis in the hands of the person who gave you the gift, adjusted for any gift tax paid. If you sell the property for more than your basis, you have a gain on the sale, which is reported on Form 1040, Schedule D Capital Gains and Losses. You may wish to consult with a tax professional to determine whether you received the interest in the home by gift or inheritance and what your basis in the property was at the time of sale to determine the amount of your gain, if any. - Carter, CCH

My son filed his taxes using H&R Block this month and was told that the advance check that his family received from the government during the summer was just a loan and had to be repaid. This was deducted from his amount that was to be refunded. Is this correct? - unnamed

This preparer must have slept through the class on the rate reduction credit and the advance tax rebate check because the explanation and handling of the amount is totally incorrect. The Economic Growth and Tax Relief Reconciliation Act of 2001 created a new 10-percent tax bracket. For taxpayers to receive the maximum benefit from this new lower tax bracket, Congress authorized the IRS to provide an advance refund of a portion of the 2001 income taxes that corresponded to the new tax bracket, the advance tax rebate checks. Your filing status and 2000 taxable income determined the amount of the check. The maximum amount for singles was $300, for head-of-household it was $500, and for joint filers it was $600. If your son received a check for the full amount, nothing had to be done on his 2001 tax return. The rate reduction credit is for those taxpayers that either did not receive a check or only received a partial check not offset by unpaid tax liabilities. I am not sure what the H&R Block preparer did on your son's return, but if they subtracted the amount of the advanced tax rebate check from his refund, he overpaid his tax obligations and is due an additional refund. The IRS is trying to catch as many of these mistakes as possible, but your son may have to wait until the IRS processes his return. I would have him return to H&R Block and speak with a manager to assist him in correcting this error. - Roth, CCH

While filing my year 2000 tax returns I was not aware of the wash-sale rule for the stocks. I sold stock X for claiming the investment losses and I bought it back within 30 days and I claimed the investment losses for stock X in my year 2000 tax returns. Now I realize this as a mistake and I should have not claimed the investment losses on stock X. Is there any way I can correct the above error? Thanks for your help. - Dave

Dave, Your can amend your return by filing a Form 1040X, which you can obtain from your tax professional or the IRS Web site at www.irs.gov. Your return can be amended for up to three years after it was filed. Since it is after the normal due date for the return, you will be charged some interest and penalties related to underpayment of the proper amount owed by the due date for the return, but by filing now you would cut off additional accrual of interest and penalties. Remember that, depending on the state in which you live, you may also be required to file an amended return if the tax paid on your state return is also incorrect. - Luscombe, CCH