3rd Annual AT Tax Time Thread

[amdhunter]

What is the minimum that you can make before you can file? I started working the last week of november and only made ~31-3200, yet they took nearly 900 in taxes.

Is that tax money going to be lost because I didn't make enough to file..?

 

[DVK916]

Originally posted by: amdhunter
What is the minimum that you can make before you can file? I started working the last week of november and only made ~31-3200, yet they took nearly 900 in taxes.

Is that tax money going to be lost because I didn't make enough to file..?

If that was for payroll tax (ss or medicare) then I think you can't get it back no mater what.

 

[Engineer]

Originally posted by: DVK916

Originally posted by: amdhunter
What is the minimum that you can make before you can file? I started working the last week of november and only made ~31-3200, yet they took nearly 900 in taxes.

Is that tax money going to be lost because I didn't make enough to file..?

If that was for payroll tax (ss or medicare) then I think you can't get it back no mater what.

No, he cannot get back SS or Medicare payroll taxes but he can file and get back any federal taxes he may have paid in. You can have a standard deduction even if someone else claims you and the $3,100-$3,200 falls under the standard deduction limit.

Yes, he can file and get back what he paid in federal taxes. Most likely, state taxes too.

 

[dumpydooby]

I earned a bunch of money from Dreamhost by referring a bunch of people to it (~$2800, to be more precise). I have to pay taxes on that, but I overpaid taxes on two of my other hourly paying jobs.

This may seem like a silly question, but does the IRS consolidate all earned income and then decide how much is owed and either refund or collect accordingly? Or are they going to give me a refund for the taxes that I overpaid, and I will be required to issue a seperate check for the money that's owed? I'm hoping and pretty sure it's the former. If it's the latter, then I'm in trouble. lol.

 

[Engineer]

Originally posted by: dumpydooby
I earned a bunch of money from Dreamhost by referring a bunch of people to it (~$2800, to be more precise). I have to pay taxes on that, but I overpaid taxes on two of my other hourly paying jobs.

This may seem like a silly question, but does the IRS consolidate all earned income and then decide how much is owed and either refund or collect accordingly? Or are they going to give me a refund for the taxes that I overpaid, and I will be required to issue a seperate check for the money that's owed? I'm hoping and pretty sure it's the former. If it's the latter, then I'm in trouble. lol.

You'll consolidate it all on one tax form (maybe a few separate sheets are needed). You'll get ONE refund or pay ONE bill.

 

[abc]

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

 

[HopJokey]

I want to file my income tax return as soon as possible. Is it possible for me to contribute to a ROTH IRA for the 2005 Tax Year before the april deadline but after I file my income tax?

Thanks,
Charlie

 

[EagleKeeper]

Originally posted by: HopJokey
I want to file my income tax return as soon as possible. Is it possible for me to contribute to a ROTH IRA for the 2005 Tax Year before the april deadline but after I file my income tax?

Thanks,
Charlie

Yes

 

[EagleKeeper]

Originally posted by: abc

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

They do have that power.

 

[abc]

Originally posted by: EagleKeeper

Originally posted by: abc

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

They do have that power.

interesting. not very likely they'd blow a day to travel to you unless they wager they got a big haul.

 

[dman]

We had damage to the house from Hurricane (wilma). Our insurance company cut us a check for repairs? Is that money considered income? What if we do the repairs ourselves?

 

[alm99]

My wife and I started out the year both being employed and I paid daycare expenses for half the year while we were both working. In June she quit her job to be a stay a home mom, we moved across the country, bought a house, and had another child.

My question is should I seek an accountant or would I be able to take advantage of all things like the child care credit, home interest, moving expenses etc through a tax software program?

 

[49erinnc]

In terms of closing costs, is refinancing the same as a new purchase in terms of what can be written off/deducted? If not, what exactly can I write off from a refinance if there is a difference from the answer you gave earlier about closing costs.

2nd: Can prescription drugs be deducted if they were all bought via insurance copays? If so, are certain drugs not allowed to be deducted?

Lastly: I was garnished for the majority of 2005 for my college loans. I was also heavily penalized with fees for this. Can any of the interest/fees be deducted?

Thanks a bunch!

 

[EagleKeeper]

Originally posted by: dman
We had damage to the house from Hurricane (wilma). Our insurance company cut us a check for repairs? Is that money considered income? What if we do the repairs ourselves?

Insurance settlements are not considered taxable income.

 

[EagleKeeper]

Originally posted by: abc

Originally posted by: EagleKeeper

Originally posted by: abc

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

They do have that power.

interesting. not very likely they'd blow a day to travel to you unless they wager they got a big haul.

Auditors do not have to delineate between big fish and small fish. Nor do they have to justifiy their costs.
If they feel that they can catch a theif; then they may chose to go after them.

Setting examples can work just as well for the minnow as well as a tuna.

 

[EagleKeeper]

Originally posted by: alm99
My wife and I started out the year both being employed and I paid daycare expenses for half the year while we were both working. In June she quit her job to be a stay a home mom, we moved across the country, bought a house, and had another child.

My question is should I seek an accountant or would I be able to take advantage of all things like the child care credit, home interest, moving expenses etc through a tax software program?

All of the tax S/W mentioned in the initial post have the capability to handle the Federal taxes with regards to your situation.

Most S/W packages will not handle multiple states for a single return; those you will have do do by hand.

However, you will have almost all the numbers required once you have completed the Federal return. Use a copy machine to make multiple copies of blank state forms; fire up an abaccus, sharpen the pencil and brew the coffee. After two cups you should have each state completed.

 

[EagleKeeper]

Originally posted by: 49erinnc
In terms of closing costs, is refinancing the same as a new purchase in terms of what can be written off/deducted? If not, what exactly can I write off from a refinance if there is a difference from the answer you gave earlier about closing costs.

2nd: Can prescription drugs be deducted if they were all bought via insurance copays? If so, are certain drugs not allowed to be deducted?

Lastly: I was garnished for the majority of 2005 for my college loans. I was also heavily penalized with fees for this. Can any of the interest/fees be deducted?

Thanks a bunch!

1) Refinance costs are written off the same as a new purchase - with the exception of points. Those are proportioned on a yearly basis.

2) The deductible & co-pays portions of medical insurance are deductible on the Schedule A. The cost of the insurance payments are also deductible. However, the total cost must exceed a set percentage of your AGI for it to have any impact. The percentage used to be 7%.

3) There is a line item for student loan interest. Penalty fees are not deductible.

 

[Ramma2]

Originally posted by: CPA

Originally posted by: Ramma2
Question

I've done quite a bit of selling on eBay this year, about $3000 worth. The majority of the items I sold were things I already owned, and sold them to get rid of it. About $700 of that money was from items that I bought with the sole purpose of selling for a profit.

What do I need to do for claiming this income? $2300 of the money I made was from selling stuff at a loss, does that somehow offset the items I sold for a profit?

And thank you so much for doing this thread every year, it is very useful!

you generally do not claim loss on sale of personal assets. And if you are not in the business, or show the intent of having a business to generate income on an ongoing basis, then you don't necessarily need to file for those that you sold and made a profit. In addition, you could argue that the profit you did make could be offset by the loss of the other products, if you were ever questioned.

Scroll about half way down this article for a discussion of intent.

After reading that article and others, I think that I will not claim my eBay earnings for these reasons:

1. It is not my intentions to run this as a business
2. I do not purchase quantities of items and sell them as a profit
3. I am not dependent on this income

Sound like a logical conclusion?

 

[Slvrtg277]

My girlfriend and her 6 year old live with me in my house. She made somewhere around 12k this year, with most all of it going towards car/cellphone/insurance payment and daycare. I provided everything else for the both of them all year long.

My question is since we're not married and he's not my son, I cannot claim head-of-household? I thought that was the case, but I've been told that I should be able to claim it. If not HOH, is there another benefit I can take advantage of, being that I did support the both of them all year?

And thanks for doing this year after year!

 

[CPA]

Originally posted by: abc

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

It could and does happen.

 

[CPA]

Originally posted by: abc

Originally posted by: EagleKeeper

Originally posted by: abc

Originally posted by: CPA

Originally posted by: HeroOfPellinor
Here's one I wonder about every year.

I'm not self-employed but I work from home 50% of the time from a home office, that's my official work schedule. I always see that blurb on TurboTax about a home office deduction and experimented with some numbers but it seemed to have no appreciable impact. Can I take advantage of that deduction somehow?

technically, you must use that portion of your home exclusively for business. It doesn't seem like that is the case.

i've always wondered about this. is a IRS auditor going to be able to come to your house with an warrant and inspect your house to find the room that you've designated for work use 24/7?

They do have that power.

interesting. not very likely they'd blow a day to travel to you unless they wager they got a big haul.

That's fair enough if you live in a small town, but all mid to large cities have one or more IRS offices with scores of field auditors.

I recently hired an accountant for my department who had several years as an IRS field auditor. The stories he has.......

 

[CPA]

Originally posted by: dman
We had damage to the house from Hurricane (wilma). Our insurance company cut us a check for repairs? Is that money considered income? What if we do the repairs ourselves?

No, but it will be considered in any calculation for casualty losses. You will file form 4684.

 

[CPA]

Originally posted by: Ramma2

Originally posted by: CPA

Originally posted by: Ramma2
Question

I've done quite a bit of selling on eBay this year, about $3000 worth. The majority of the items I sold were things I already owned, and sold them to get rid of it. About $700 of that money was from items that I bought with the sole purpose of selling for a profit.

What do I need to do for claiming this income? $2300 of the money I made was from selling stuff at a loss, does that somehow offset the items I sold for a profit?

And thank you so much for doing this thread every year, it is very useful!

you generally do not claim loss on sale of personal assets. And if you are not in the business, or show the intent of having a business to generate income on an ongoing basis, then you don't necessarily need to file for those that you sold and made a profit. In addition, you could argue that the profit you did make could be offset by the loss of the other products, if you were ever questioned.

Scroll about half way down this article for a discussion of intent.

After reading that article and others, I think that I will not claim my eBay earnings for these reasons:

1. It is not my intentions to run this as a business
2. I do not purchase quantities of items and sell them as a profit
3. I am not dependent on this income

Sound like a logical conclusion?

I believe it is a logical conclusion, but it is your decision.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: 49erinnc
In terms of closing costs, is refinancing the same as a new purchase in terms of what can be written off/deducted? If not, what exactly can I write off from a refinance if there is a difference from the answer you gave earlier about closing costs.

2nd: Can prescription drugs be deducted if they were all bought via insurance copays? If so, are certain drugs not allowed to be deducted?

Lastly: I was garnished for the majority of 2005 for my college loans. I was also heavily penalized with fees for this. Can any of the interest/fees be deducted?

Thanks a bunch!

1) Refinance costs are written off the same as a new purchase - with the exception of points. Those are proportioned on a yearly basis.

2) The deductible & co-pays portions of medical insurance are deductible on the Schedule A. The cost of the insurance payments are also deductible. However, the total cost must exceed a set percentage of your AGI for it to have any impact. The percentage used to be 7%.

3) There is a line item for student loan interest. Penalty fees are not deductible.

2) The rate is 7.5% of AGI. You can also deduct mileage to and from medical appointements, equipment for the house if purchased under doctor's orders. Premium payments are NOT deductible because they are reduce taxes at the paycheck.

 

[CPA]

Originally posted by: Slvrtg277
My girlfriend and her 6 year old live with me in my house. She made somewhere around 12k this year, with most all of it going towards car/cellphone/insurance payment and daycare. I provided everything else for the both of them all year long.

My question is since we're not married and he's not my son, I cannot claim head-of-household? I thought that was the case, but I've been told that I should be able to claim it. If not HOH, is there another benefit I can take advantage of, being that I did support the both of them all year?

And thanks for doing this year after year!

Unfortunately, you fail the dependent test.

Further reading

Since the child does not pass the dependency test (being a qualifying child), there is really nothing you can deduct.