3rd Annual AT Tax Time Thread

[edprush]

I have a much more 'complicated' tax situation this year so I will seek out a tax professional.

My question is, do I:
try to set up an appointment/consultation (or is there even such a thing) to discuss what records and receipts I will need to bring in at a later date
or do I just set up an appointment to 'have my taxes' done and try to bring everything I need to that one appointment.

Thank you.

 

[apinomus]

My father passed away within the last year. Thankfully he had Life Insurance. Does my mother count the life insurance check as a type of income or how would it be filed?

 

[CPA]

Originally posted by: apinomus
My father passed away within the last year. Thankfully he had Life Insurance. Does my mother count the life insurance check as a type of income or how would it be filed?

Only interest she received on the policy would be taxable. The proceeds themselves are not taxable and not reportable.

 

[CPA]

Originally posted by: edprush
I have a much more 'complicated' tax situation this year so I will seek out a tax professional.

My question is, do I:
try to set up an appointment/consultation (or is there even such a thing) to discuss what records and receipts I will need to bring in at a later date
or do I just set up an appointment to 'have my taxes' done and try to bring everything I need to that one appointment.

Thank you.

Call and ask. Most likely, you should be able to get a consultation either over the phone or face to face and the tax preparer will give you a list of things you need to bring.

 

[HomeAppraiser]

Originally posted by: CPA

Originally posted by: HomeAppraiser
IRS Form 2210 and Schedule AI are difficult to understand. Turbo Tax walks you through filling it out for LAST year, but I need to figure out how to correctly pay as I go. I don't want to do it wrong all year then get hit with a penalty in 2007. Quicken, Turbo Tax Quarterly Estimator, or any programs set up for this. Thanks for enduring my ignorance on the subject

From the Instructions to 2210:

Because Form 2210 is complicated, we strongly encourage you to let us figure the penalty. If you owe it, we will send you a bill. And as long as you file your return by April 15, 2005, we will not charge you interest on the penalty if by the date specified on the
bill.

Even the IRS admits it's tough to figure out. Let them do the work.

I am OK for tax year 2005 since I paid more than 100% of my 2004 tax liabilty. I want to know what is the proper way to annualize my quarterly tax payments. Turbo Tax will help me fill out a Form 2210 at the end of the year and IRS Publication 505 gives you a 21 page walk thru for annualizing income, but what I need is an automated spreadsheet or accounting software (Quicken, Peachtree, etc) that will help me properly figure what I owe every quarter in 2006. Turbo Tax Quarterly Estimator sounds good but I can only find it for last year, TY2005.

 

[CPA]

Originally posted by: HomeAppraiser

Originally posted by: CPA

Originally posted by: HomeAppraiser
IRS Form 2210 and Schedule AI are difficult to understand. Turbo Tax walks you through filling it out for LAST year, but I need to figure out how to correctly pay as I go. I don't want to do it wrong all year then get hit with a penalty in 2007. Quicken, Turbo Tax Quarterly Estimator, or any programs set up for this. Thanks for enduring my ignorance on the subject

From the Instructions to 2210:

Because Form 2210 is complicated, we strongly encourage you to let us figure the penalty. If you owe it, we will send you a bill. And as long as you file your return by April 15, 2005, we will not charge you interest on the penalty if by the date specified on the
bill.

Even the IRS admits it's tough to figure out. Let them do the work.

I am OK for tax year 2005 since I paid more than 100% of my 2004 tax liabilty. I want to know what is the proper way to annualize my quarterly tax payments. Turbo Tax will help me fill out a Form 2210 at the end of the year and IRS Publication 505 gives you a 21 page walk thru for annualizing income, but what I need is an automated spreadsheet or accounting software (Quicken, Peachtree, etc) that will help me properly figure what I owe every quarter in 2006. Turbo Tax Quarterly Estimator sounds good but I can only find it for last year, TY2005.

Yikes. Sorry, I don't think I will be able to help on this. I will take a look around, though, and let you know if I find anything.

 

[bmacd]

I've bought a lot of equipment that I'd consider necessary while on deployment with the US Army, however, it's not US Government issued. Am I able to get any compensation?

-=bmacd=-

 

[HomeAppraiser]

Originally posted by: CPA

Originally posted by: HomeAppraiser

Originally posted by: CPA

Originally posted by: HomeAppraiser
I am OK for tax year 2005 since I paid more than 100% of my 2004 tax liabilty. I want to know what is the proper way to annualize my quarterly tax payments. Turbo Tax will help me fill out a Form 2210 at the end of the year and IRS Publication 505 gives you a 21 page walk thru for annualizing income, but what I need is an automated spreadsheet or accounting software (Quicken, Peachtree, etc) that will help me properly figure what I owe every quarter in 2006. Turbo Tax Quarterly Estimator sounds good but I can only find it for last year, TY2005.

Yikes. Sorry, I don't think I will be able to help on this. I will take a look around, though, and let you know if I find anything.

FOUND a solution <a target=_blank class=ftalternatingbarlinklarge href="http://https://www.estimatedtaxes.com/Estimator/welcome.do;jsessionid=1009BA77BA55844ACC2F43BE855CB100">
TurboTax Estimated Taxes</a> an online product. Intuit should really advertise this more.

 

[LukFilm]

Originally posted by: CPA

Originally posted by: LukFilm
Have a Russian au-pair in the house solely for the reason so I can do business (self-employed) and don't have to watch my son. Is her weekly pay tax deductible?

This is not generally considered a business expense. Let's put it this way, if you took your kids to daycare, you would not write that off as a business expense.

That said, if you are expecting her to claim her wages (file), then you could use the Child Care Credit. Make sure she is filing though, otherwise you can get her into trouble, because you have to report her SSN number (or taxpayer ID number) on form 2441.

Now, here is the really bad part: because she is performing the service in your home and I assume you did not hire her through and agency, you are technically required to file a schedule H and will owe Social Security taxes on the wages you paid her. The reason is the IRS considers you her employer and her an employee. In fact, you are required to get and EIN and file quarterly 941s (Federal Withholding Tax) and annual 940 (Fed Unemployment Tax).

Thanks for the answer, I DID hire her through an official agency (they are not cheap), so I guess the last paragraph doesn't apply to me then. Also, I don't expect her to file, so I assume that means that I cannot write it off.

 

[CPA]

Originally posted by: LukFilm

Originally posted by: CPA

Originally posted by: LukFilm
Have a Russian au-pair in the house solely for the reason so I can do business (self-employed) and don't have to watch my son. Is her weekly pay tax deductible?

This is not generally considered a business expense. Let's put it this way, if you took your kids to daycare, you would not write that off as a business expense.

That said, if you are expecting her to claim her wages (file), then you could use the Child Care Credit. Make sure she is filing though, otherwise you can get her into trouble, because you have to report her SSN number (or taxpayer ID number) on form 2441.

Now, here is the really bad part: because she is performing the service in your home and I assume you did not hire her through and agency, you are technically required to file a schedule H and will owe Social Security taxes on the wages you paid her. The reason is the IRS considers you her employer and her an employee. In fact, you are required to get and EIN and file quarterly 941s (Federal Withholding Tax) and annual 940 (Fed Unemployment Tax).

Thanks for the answer, I DID hire her through an official agency (they are not cheap), so I guess the last paragraph doesn't apply to me then. Also, I don't expect her to file, so I assume that means that I cannot write it off.

I should clarify. Do you pay her or do you pay the agency? If you're paying the agency, then you would use them as the provider and you would file for the Child Care Credit.

 

[EagleKeeper]

Originally posted by: bmacd
I've bought a lot of equipment that I'd consider necessary while on deployment with the US Army, however, it's not US Government issued. Am I able to get any compensation?

-=bmacd=-

You would have to file a Schedule A and a Form 2106. Note that the 2106 will knock off 2% of the AGI from the deductible business expenses

 

[GTaudiophile]

Would a $425 expense towards a GMAT Preparation Course be tax deductible in 2006?

 

[EagleKeeper]

Originally posted by: GTaudiophile
Would a $425 expense towards a GMAT Preparation Course be tax deductible in 2006?

If you took the course in 2005, then it comes under the 2005 taxes.

You should be able to classify this as either a business expense (Schedule A/Form 2106)
or part of the Lifetime Learning Credit.

It would be best to look at both options.

The LLC will be worth $85 against the actual tax.

If you are already able to itemize and have business/educational expenses that will exceed the AGI 2% level; then the 2106 may provide a greater benefit.

 

[GTaudiophile]

Originally posted by: EagleKeeper

Originally posted by: GTaudiophile
Would a $425 expense towards a GMAT Preparation Course be tax deductible in 2006?

If you took the course in 2005, then it comes under the 2005 taxes.

You should be able to classify this as either a business expense (Schedule A/Form 2106)
or part of the Lifetime Learning Credit.

It would be best to look at both options.

The LLC will be worth $85 against the actual tax.

If you are already able to itemize and have business/educational expenses that will exceed the AGI 2% level; then the 2106 may provide a greater benefit.

Thanks. The expense has not been made yet, so it will be in 2006.

 

[sonoma1993]

i enrolled into my work 401k program back in the summer, so far I put in $278. Will I have to report that amount on my tax forms or what?

 

[Parkre]

Wow, ton of fun and useful info. One giant sized hug towards y'all for doing this.


This past year, I went to school full time in the spring in Missouri. Made around 1800 at FEDEX as a part-time job.
Started a Co-op in the summer (continued through the fall) in OK. Made 17k. I registered with the Career Center at school for full-time student status while I am on Co-op.

I know I will have file tax for both states since I am still a MO resident working in OK. I am 22yo and independent of my parents. I have no sholarships, just student loans. My student loans don't cover everything and I have to make up the diff by working.

I should get most of my taxes (minus SS and MC) back, right?
Also, the longer I am at my college, the less I trust it. The full-time status for my Co-op, will the feds acknowledge that or is it just a half-truth that my college told me to get more money out of me? ("You now have Full-time Student Status......in the eyes of UMR")

When you are a student, why aren't med bills deductible? Especially when I am the one paying for them?

 

[EagleKeeper]

Originally posted by: sonoma1993
i enrolled into my work 401k program back in the summer, so far I put in $278. Will I have to report that amount on my tax forms or what?

Your employer will have that showing as a line item on your W2.

Depending on how you file your taxes, you may have to enter the data.

 

[EagleKeeper]

Originally posted by: Parkre
Wow, ton of fun and useful info. One giant sized hug towards y'all for doing this.


This past year, I went to school full time in the spring in Missouri. Made around 1800 at FEDEX as a part-time job.
Started a Co-op in the summer (continued through the fall) in OK. Made 17k. I registered with the Career Center at school for full-time student status while I am on Co-op.

I know I will have file tax for both states since I am still a MO resident working in OK. I am 22yo and independent of my parents. I have no sholarships, just student loans. My student loans don't cover everything and I have to make up the diff by working.

I should get most of my taxes (minus SS and MC) back, right?
Also, the longer I am at my college, the less I trust it. The full-time status for my Co-op, will the feds acknowledge that or is it just a half-truth that my college told me to get more money out of me? ("You now have Full-time Student Status......in the eyes of UMR")

When you are a student, why aren't med bills deductible? Especially when I am the one paying for them?

the amount of taxes refunded itrelated to your filing status and amount of income.

As a student status; it is only a guideline for planning the W4 withholding.

Medical bills are deductible - as long as you file a Schedule A and meet the medical deduction requirements.

 

[jlbenedict]

Originally posted by: EagleKeeper

Originally posted by: Parkre
Wow, ton of fun and useful info. One giant sized hug towards y'all for doing this.


This past year, I went to school full time in the spring in Missouri. Made around 1800 at FEDEX as a part-time job.
Started a Co-op in the summer (continued through the fall) in OK. Made 17k. I registered with the Career Center at school for full-time student status while I am on Co-op.

I know I will have file tax for both states since I am still a MO resident working in OK. I am 22yo and independent of my parents. I have no sholarships, just student loans. My student loans don't cover everything and I have to make up the diff by working.

I should get most of my taxes (minus SS and MC) back, right?
Also, the longer I am at my college, the less I trust it. The full-time status for my Co-op, will the feds acknowledge that or is it just a half-truth that my college told me to get more money out of me? ("You now have Full-time Student Status......in the eyes of UMR")

When you are a student, why aren't med bills deductible? Especially when I am the one paying for them?

the amount of taxes refunded itrelated to your filing status and amount of income.

As a student status; it is only a guideline for planning the W4 withholding.

Medical bills are deductible - as long as you file a Schedule A and meet the medical deduction requirements.

Is the percentage required the same this year as last year (7.5% of AGI) ??

 

[CPA]

Originally posted by: jlbenedict

Originally posted by: EagleKeeper

Originally posted by: Parkre
Wow, ton of fun and useful info. One giant sized hug towards y'all for doing this.


This past year, I went to school full time in the spring in Missouri. Made around 1800 at FEDEX as a part-time job.
Started a Co-op in the summer (continued through the fall) in OK. Made 17k. I registered with the Career Center at school for full-time student status while I am on Co-op.

I know I will have file tax for both states since I am still a MO resident working in OK. I am 22yo and independent of my parents. I have no sholarships, just student loans. My student loans don't cover everything and I have to make up the diff by working.

I should get most of my taxes (minus SS and MC) back, right?
Also, the longer I am at my college, the less I trust it. The full-time status for my Co-op, will the feds acknowledge that or is it just a half-truth that my college told me to get more money out of me? ("You now have Full-time Student Status......in the eyes of UMR")

When you are a student, why aren't med bills deductible? Especially when I am the one paying for them?

the amount of taxes refunded itrelated to your filing status and amount of income.

As a student status; it is only a guideline for planning the W4 withholding.

Medical bills are deductible - as long as you file a Schedule A and meet the medical deduction requirements.

Is the percentage required the same this year as last year (7.5% of AGI) ??

yes.

 

[jlbenedict]

For instance.. this past year, I enrolled in my previous companys 401k and I believe had about $1200'somthin deducted before this company lost the defense contract... I had to switch employment to another company.

Since I only had a low amount invested, JP Morgan informed me I had to withdraw the funds. The new company I began employment with has crappy benefits, and I'm still no eligible for their 401k yet..
Of course, since I couldn't roll it over, I withdrew it. It was taxed. I opted to only have Federal taxes deducted, since it was such a low amount.

When I get my W2's, I should also get a 1099 correct? (for the 401k withdraw)

 

[CPA]

Originally posted by: jlbenedict
For instance.. this past year, I enrolled in my previous companys 401k and I believe had about $1200'somthin deducted before this company lost the defense contract... I had to switch employment to another company.

Since I only had a low amount invested, JP Morgan informed me I had to withdraw the funds. The new company I began employment with has crappy benefits, and I'm still no eligible for their 401k yet..
Of course, since I couldn't roll it over, I withdrew it. It was taxed. I opted to only have Federal taxes deducted, since it was such a low amount.

When I get my W2's, I should also get a 1099 correct? (for the 401k withdraw)

generally that is the case, but your "stub" may also serve as your 1099.

In either case, you will have to pay a 10% penalty for early withdrawal.

 

[EagleKeeper]

Originally posted by: jlbenedict
For instance.. this past year, I enrolled in my previous companys 401k and I believe had about $1200'somthin deducted before this company lost the defense contract... I had to switch employment to another company.

Since I only had a low amount invested, JP Morgan informed me I had to withdraw the funds. The new company I began employment with has crappy benefits, and I'm still no eligible for their 401k yet..
Of course, since I couldn't roll it over, I withdrew it. It was taxed. I opted to only have Federal taxes deducted, since it was such a low amount.

When I get my W2's, I should also get a 1099 correct? (for the 401k withdraw)

If possible setup an IRA and put the funds that you withdrew into it. That will allow you to avoid the Federal tax penalties (10% of the amount + normal taxes).
JP Morgan should have informed you of that possibility.

 

[AStar617]

A friend bought his home in April 2001. If he sells the home in 2006 after living there fulltime, will he end up having to pay capital gains for FY06 provided he hasn't accessed his equity?

And if he has taken out the entire equity, then what happens--is he still responsible for capital gains?

He is wondering about whether or not he'd be exempt from capital gains after owning the property for a certain amount of time, based on the following that he read:

Capital Gains Taxes on Real Estate. May 1st, 2002 By Scottie Johnson As you may know, profits made on the sale of property are subject to capital gains taxes. The current federal limit on how much profit you can make on the sale of your principal residence before being required to pay capital gains tax is $500,000 for a married couple and $250,000 for a single homeowner. This tax break applies if the owner has occupied the property as his/her primary residence for at least 2 of the past 5 years. If the property in question is used as an investment, capital gains taxes may be differed [sic] using a 1031 tax exchange.

Seems like he should be okay, but just checking anyway (considering the source didn't even know how to spell key terms right ). Thanks CPA, et al.! :beer:

 

[EagleKeeper]

Capital gains become taxed after a profit of $250K/person if one lives in there house for a minimal set period of time.

Your friend sounds safe.

Accessing the equity has no bearing on the tax situation.