10th Annual Tax Thread - 2012

[arrfep]

Technically, yes, you should file a Schedule C. I'll bet you have enough or close enough in deductions to offset most of that income.

CPA do you mean potential deductions directly related to the earning of that income? Or just deductions in general?

My only real deduction is student loan interest. Paid about $800 of it this year. Otherwise no house/wife/kids etc.

 

[EagleKeeper]

CPA do you mean potential deductions directly related to the earning of that income? Or just deductions in general?

My only real deduction is student loan interest. Paid about $800 of it this year. Otherwise no house/wife/kids etc.

Deductions in terms of items to offset the income reported on the Schedule C.

Things you use and/or purchase to enable that income. Directly or indirectly.

Many clues have been identified in previous threads.

Example, you posted the question here. Tax advice is deductible. How did you post, telepathy 😛 ?

Computer, internet.
What drives the computer, water power 🙂
Is the computer sitting outdoors?
Did the computer show up magically?

Above is just one small piece of a deduction puzzle.

Research@

 

[pmoa]

EagleKeeper or CPA,

I have a 1099-R form for my wife and she took out 15,100 of her 20,000 Roth IRA out to buy a house. But all of the 15,100 was contributions and and no interest was taken out and she has had this account for more than 5 years. The 1099-R has code J marked in box 7. is this a qualified distribution or do i have to check the box for the first time homebuyer?

Thanks.

 

[arrfep]

Deductions in terms of items to offset the income reported on the Schedule C.

Things you use and/or purchase to enable that income. Directly or indirectly.

Many clues have been identified in previous threads.

Example, you posted the question here. Tax advice is deductible. How did you post, telepathy 😛 ?

Computer, internet.
What drives the computer, water power 🙂
Is the computer sitting outdoors?
Did the computer show up magically?

Above is just one small piece of a deduction puzzle.

Research@

😀 Thanks EK. I have read more about this, and I think I was misunderstanding before. I always thought if you did not make a certain amount of income from your hobby, you could not deduct expenses related to it.

But from what I'm reading, I can actually deduct expenses up to the amount I made? So I made $1500. But my comptuer and camera together cost much more than that. So I can deduct a full $1500 worth of expenses. Correct?

 

[CPA]

Yes, that is correct. He got a full ride scholarship PLUS several others. I'm trying to work out were books included in this amount. I know they gave him vouchers to buy his books ahead of time, but I'm not certain if they were included in the 1098-T. Not sure if I can deduct the cost of his laptop or not (comp. sci. minor - math major).

Before I tell him to panic (which I don't know why he would panic, I'll be paying the tax bill) since the difference between his award's refund and the standard deduction for an individual (which I'm assuming he can take in this case) - his taxes owed would be 'not much' - correct? Or am I thinking all wrong. Also since adding him to my taxes does not result in 1$ more of a refund - am I even required to file him on them? If I'm not - I don't need to mention the 1098-T or anything on my taxes do I? (trying to simplify things here). I had a 600 dollar refund with him and a 600 dollar refund without him - so I'm seeing no advantage.

That is correct, he still gets the standard deduction.

You should still put through the expenses (1098-T) and matching income on your 1040, since you are claiming him, but the remaining scholarship income will be filed by him.

 

[CPA]

😀 Thanks EK. I have read more about this, and I think I was misunderstanding before. I always thought if you did not make a certain amount of income from your hobby, you could not deduct expenses related to it.

But from what I'm reading, I can actually deduct expenses up to the amount I made? So I made $1500. But my comptuer and camera together cost much more than that. So I can deduct a full $1500 worth of expenses. Correct?

When did you buy the computer and camera? If not 2012, then, no, you can't deduct them on Schedule C. If you did, then by all means do it.

 

[destrekor]

EITC - do I qualify for it if my Adjusted Income is below $13,980, even though my full income (before standard deductions and adjustments) is above that limit?

 

[CPA]

EagleKeeper or CPA,

I have a 1099-R form for my wife and she took out 15,100 of her 20,000 Roth IRA out to buy a house. But all of the 15,100 was contributions and and no interest was taken out and she has had this account for more than 5 years. The 1099-R has code J marked in box 7. is this a qualified distribution or do i have to check the box for the first time homebuyer?

Thanks.

If it was for first-time home purchase, then you will need to fill out Form 5329 since the 1099-R did not list an exception. Part I, particularly question 2, is the important section for you. Since you said this amount did not include interest or gains, then you shouldn't need to worry about the rest of the form.

 

[CPA]

EITC - do I qualify for it if my Adjusted Income is below $13,980, even though my full income (before standard deductions and adjustments) is above that limit?

It's based on Earned Income.

 

[destrekor]

It's based on Earned Income.

So, the raw number from combined W-2s, before delving into the deeper part of "you overtaxed me, you bastards" ?

dammit

 

[arrfep]

When did you buy the computer and camera? If not 2012, then, no, you can't deduct them on Schedule C. If you did, then by all means do it.

Ah, thank you. Was actually going to mention in my previous comment that I assumed items I've already owned weren't eligible. I did buy a new camera this year, though. Thanks CPA!

 

[pmoa]

If it was for first-time home purchase, then you will need to fill out Form 5329 since the 1099-R did not list an exception. Part I, particularly question 2, is the important section for you. Since you said this amount did not include interest or gains, then you shouldn't need to worry about the rest of the form.

Thanks! So I still need to fill out Form 5329? I really dont want to use the $10K first time home buyer if it was all contributions.

 

[rocadelpunk]

I'm using turbotax and I'm not quite sure where/what form to use for a particular income.

It was a one-time contract work and I just received a check ($500).

Thanks for your time

 

[EagleKeeper]

I'm using turbotax and I'm not quite sure where/what form to use for a particular income.

It was a one-time contract work and I just received a check ($500).

Thanks for your time

You have the option of classifying the payment as misc income on the 1040 and paying the FULL SS tax on the income.

Or you can look at the Schedule C (which has been discussed within this thread) to reduce the income being taxes on and potentially reduce the taxable W2 income also.

 

[CPA]

Thanks! So I still need to fill out Form 5329? I really dont want to use the $10K first time home buyer if it was all contributions.

If you don't, you'll get hit with the 10% early withdrawal penalty.

 

[sportage]

I've had more people mistakenly thinking they now have to report the amount in box 12b DD as income. Again folks, this is just an FYI figure. It shows how much your employer paid towards your health coverage. That is good to know because for most that will be quite a hefty figure and something YOU would have had to pay out of your OWN pocket for insurance, that is if you could find it in the first place. But don't freak. That figure is just for your own information. And just one of the benefits your employer pays. At least while they can still afford to. 😀

 

[brtspears2]

I got a 1099-C from a bank due to a foreclosure (yea, long story).

Box 5 is checked saying I am liable for the debt, but this was a purchase money loan. Loan was never refi'ed. It should be non-recourse. The lender disagrees with me and refuses to fix it.

Did I just lose thousands of bucks due to a bank error, causing me to pay taxes? Or could I still fall under the foreclosure relief act? Or since it was my primary residence and technically this is a sale and I lost money on the sale, do I still pay taxes on this "gain"?

 

[seepy83]

I usually get a 1099-INT from a couple of banks where I have accounts, but I have not received them yet his year. Is there any reason that I wouldn't receive them this year (maybe a change in the tax laws saying the banks don't need to issue them if the total interest was less than some amount)? How long should I wait before I just go ahead and file without the forms I usually have?

 

[EagleKeeper]

I usually get a 1099-INT from a couple of banks where I have accounts, but I have not received them yet his year. Is there any reason that I wouldn't receive them this year (maybe a change in the tax laws saying the banks don't need to issue them if the total interest was less than some amount)? How long should I wait before I just go ahead and file without the forms I usually have?

I believe that the banks do not need to send out a 1099 to you if the amount is less than $10.

You however, are responsible for interest reporting over $1.

 

[thestrangebrew1]

My wife is receiving a free trip to Washington DC/NY in May for being on the committee, organizing the trip and chaperoning while there. The parents and the committee came to the decision to allow the 4 committee members to use 2 of the six free trips received and donate 4 of the trips back to the students. 4 Committee members are splitting 2 free trips. Therefore receiving half a free trip and paid the other half to the students accounts to help with their trip. Are the payments paid to the account to be split among the students considered a donation?

 

[EagleKeeper]

My wife is receiving a free trip to Washington DC/NY in May for being on the committee, organizing the trip and chaperoning while there. The parents and the committee came to the decision to allow the 4 committee members to use 2 of the six free trips received and donate 4 of the trips back to the students. 4 Committee members are splitting 2 free trips. Therefore receiving half a free trip and paid the other half to the students accounts to help with their trip. Are the payments paid to the account to be split among the students considered a donation?

Yes

 

[thestrangebrew1]

OK thanks I'll let her know

 

[postmortemIA]

I got a 1099-C from a bank due to a foreclosure (yea, long story).

Box 5 is checked saying I am liable for the debt, but this was a purchase money loan. Loan was never refi'ed. It should be non-recourse. The lender disagrees with me and refuses to fix it.

Did I just lose thousands of bucks due to a bank error, causing me to pay taxes? Or could I still fall under the foreclosure relief act? Or since it was my primary residence and technically this is a sale and I lost money on the sale, do I still pay taxes on this "gain"?

My understanding is that you can exclude this from your income if it was your primary home and you had mortgage loan that was secured against the house.

 

[brtspears2]

My understanding is that you can exclude this from your income if it was your primary home and you had mortgage loan that was secured against the house.

And that is what my understanding is. The issue is Box 5 on the 1099-C. Suddenly having that box checked, I owe big bucks.

So looks like to see if I can cancel it, I pull out form 982. Sounds like since this was my primary home, I can check off box 1e (Discharge of qualified principal residence indebtedness).

Line 2, what do I put in (Total amount of canceled debt excluded from gross income🙂? The full amount of Box 2 on the 1099-C? This box here makes a huge difference.

 

[vshah]

so last year, i lived in NJ & worked in NY for the first 3 months. I then moved to living/working in PA

So i need to file federal return, PA part year return, NJ part year return, and NY nonresident return? ugh!