NEW YORK – Two leading New York mayoral candidates, Andrew Yang and Eric Adams, have failed to properly disclose their income in recent tax returns and have said they will amend their returns to reflect the additional income.
Andrew Yang never reported the nearly $ 14,500 he paid himself in 2019 from his presidential campaign account, and over the course of three years Brooklyn Borough President Eric Adams left the money he had received from renting part of the house he occupies, POLITICO found when examining the candidates’ returns.
The revelations come as the two face off in an eight-party Democratic primary to succeed Mayor Bill de Blasio next year. The winner will have to manage the city’s finances, balancing a projected budget of $ 92 billion as residents and businesses extricate themselves from a fiscal slump.
When asked to explain the omissions, both candidates promised to update their tax returns with the Internal Revenue Service.
In 2019, Yang was pursuing a long-term offer for the White House and needed cash. He made a tax-free withdrawal of $ 40,000 from a retirement account to supplement the roughly $ 55,000 he earned from book royalties, investments and rent from a second home – income on which he did not. paid no federal income tax. His campaign said last week that a deduction for child care expenses was offsetting his income.
But his presidential campaign account registered with the Federal Election Commission shows that Yang took a cut of around $ 14,500 in the last two months of 2019.
When asked why this money was left on his 26-page tax return, which his team provided to POLITICO upon request, spokesman Jake Sporn said: “Andrew’s accountant is tabling an amendment to his 2019 return. All taxes were withheld by the campaign and all FEC filings correctly disclosed the payments. “
He said he doesn’t expect Yang to owe any additional taxes, since income taxes were withheld from campaign paychecks at the time they were issued, although that decision is being made. by the IRS.
Adams, who ranked second behind Yang in recent polls, also declined to reveal his full income table to the IRS, leaving any mention of rental income on his 2017, 2018 and 2019 tax returns provided to POLITICO.
The Borough President lives in a multi-unit semi-detached townhouse in the Bedford-Stuyvesant section of Brooklyn and, from 2017 to 2019, said he took up to $ 50,000 a year in rent on the property, according to the financial information kept by the city. Conflict of Interest Council.
But he didn’t mention it to the IRS. His team initially provided a letter from his accountant, Clarence Harley, who wrote in February: “The income from the residential rental business was offset by ordinary and necessary expenses, such as interest, property taxes, insurance, fuel consumption, depreciation, as well as other personal expenses [that] generated a loss. … As a result, real estate activity has not been declared. “
Several accountants disagreed with this reasoning.
“In my experience, anyone who has rental income or loss has to report it,” said Anil Melwani, Chartered Accountant at Tanton Grubman.
Adams may have stepped aside by omitting calculations from his returns – as a result, he would be unable to claim those losses if he sold his property.
“Most people take losses and they are very eager to report because it helps them most of the time,” said Melwani.
TurboTax rules designed for filers bypassing accountants reiterate these rules.
“If you earn rental income on a house or building that you own, receive royalties, or have income reported on a Schedule K-1 of a partnership or S corporation, then you need to prepare a Schedule E with your income tax return. You must report all income and losses related to these activities on Schedule E as well as in your personal income tax return, ”says the online preparer.
Presented with this information, Adams’ team said he would change his record.
“Eric’s taxes were prepared by his accountant, who will now update deposits to detail how costs exceeded property income as he made improvements without increasing tenant rents over the years. years, ”said spokesperson Evan Thies. “He was delighted to learn that it might actually save him taxes.”
Adams opened up about his experience as a homeowner during an appearance on Hot97 last year, in an interview in which he also shared that his accountant was going through rough times and was in a homeless shelter. .
“I am the owner. I have a 3-family house in Bedford-Stuyvesant. I bought it when it wasn’t worth much. Now it’s worth over a million dollars, ”Adams said. “I have three tenants – each of those tenants over there, when they moved in I had them sign a lease saying that as long as you are in my building, I will never increase your rent.” If there is enough for me to pay my mortgage, I have no reason to hit you over the head.