6th Annual Anandtech Tax Time Thread

[EagleKeeper]

Originally posted by: Raduque

Originally posted by: Orsorum

Biggest one for individuals that I know of is the Recovery Rebate Credit, essentially a stimulus payment for tax year 2008 that's reduced (but not below zero) by any stimulus payment that you received in tax year 2008. Eaglekeeper alluded to this in his first post.

I'm not sure I understand this. Could you or Eaglekeeper clarify this a little more?

And a related question:
If I received the stimulus payment, but did not pay as much taxes as the stimulus payment, do I owe the difference? ex: Say I got back $500, but on my w2, my taxes paid is only $450. Do I owe the $50?

Details have not been made available by the IRS on how this will be handled
IRS Link

 

[BlackOmen]

I bought my house in 2005 and had to take PMI as part of the loan. My interpretation is that I cannot deduct this amount. Do you agree?

Thanks!

 

[Drakkon]

I received pay as a consultant for a research project at a Canadian University. I was paid in US funds from a Canadian bank.

Do I declare this on a Schedule-C as "other income"? or how would I go about declaring this income?

 

[alkemyst]

Originally posted by: BlackOmen
I bought my house in 2005 and had to take PMI as part of the loan. My interpretation is that I cannot deduct this amount. Do you agree?

Thanks!

AFAIK this was only for 2007...it was not renewed. Also even when it was in effect it was only good on loans that actually closed between 1/1/2007 and 12/31/2007.

I am not sure if this topic was in last years Tax Thread, but there was a lot of misunderstanding from our customers (I work for a mortgage company).

 

[alkemyst]

I am studying for Cisco Certifications which do help my job functions...it's mostly book based with 3 tests I took for $125 each. Would this be Lifetime Learning or all Form 2106? The books probably add up to $400-600.

Also my wife was out of work for one month with only 2 weeks of her income lost. Is there anything we can claim? Even with the income loss it doesn't qualify for the medical deduction threshhold, but I am not sure if there is another section I can utilize.

Some of the biggest expenses we had this year were my books, her surgery, and a car accident which required two weeks of rental car @ ~$300-400.

 

[EagleKeeper]

Originally posted by: Drakkon
I received pay as a consultant for a research project at a Canadian University. I was paid in US funds from a Canadian bank.

Do I declare this on a Schedule-C as "other income"? or how would I go about declaring this income?

Using the Schedule C allows you to the expense off costs associated with the income.
Direct or indirect (percentage)

Using the "other Income" does not.

The Schedule C is more work, but is a benefit to reducing the taxable income that is referencing.

Tax S/W will handle the Schedule C entries nicely for you.

 

[EagleKeeper]

Originally posted by: alkemyst
I am studying for Cisco Certifications which do help my job functions...it's mostly book based with 3 tests I took for $125 each. Would this be Lifetime Learning or all Form 2106? The books probably add up to $400-600.

Also my wife was out of work for one month with only 2 weeks of her income lost. Is there anything we can claim? Even with the income loss it doesn't qualify for the medical deduction threshhold, but I am not sure if there is another section I can utilize.

Some of the biggest expenses we had this year were my books, her surgery, and a car accident which required two weeks of rental car @ ~$300-400.

The LLC will provide a 20% of cost credit for the tests and books - Est Total $200 credit
If you are using the Schedule A, then using the 2106. Est Deduction $1000 - 2% taxable income.

If taxable income in under $40K then the 2106 will benefit you - otherwise, the LLC would be best.

Lost income is not a tax benefit/break. If she claimed unemployment, then taxes will be due on that income.

 

[DaWhim]

I have some questions about tax on dividends (different kind of dividends).

I have some stock in a publicly traded partnership, they pay me dividends every quarter. Is dividends from publicly traded partnership consider ordinary income and tax at my own income level?

Another question is I get dividends from an index fund, they paid me dividend as in the form of short term cap gain and long term cap gain. I own the stock less than 1 year, so does this dividend for LTCG consider to be the actual LTCG and tax at 15% instead of my ordinary income tax level?

TIA

 

[CPA]

Originally posted by: DaWhim
I have some questions about tax on dividends (different kind of dividends).

I have some stock in a publicly traded partnership, they pay me dividends every quarter. Is dividends from publicly traded partnership consider ordinary income and tax at my own income level?

Another question is I get dividends from an index fund, they paid me dividend as in the form of short term cap gain and long term cap gain. I own the stock less than 1 year, so does this dividend for LTCG consider to be the actual LTCG and tax at 15% instead of my ordinary income tax level?

TIA

1) My understanding as that Master Limited Partnership's (assuming that is what you have) dividends taxed as ordinary income because the partnership does not pay income taxes. The burden is on the unitholder.

2) Since the dividends are paid within the mutual fund, you would claim as reported by the fund to you. Show the STCG and the LTCG respectively on schedule D.

 

[EKKC]

Originally posted by: EagleKeeper

Originally posted by: her209
Capital loss: What dollar amount can someone deduct from their income? Does the ability to deduct change based on income, e.g.., say someone making $40K may be able to deduct 100% of losses up to X amount while someone making $100K may be able to deduct only 50% of losses up to X amount?

Simple answer

Total loss up to $3K can be written off against income. Anything else must be rolled over to the following year. the amount of income does not come into the equation.
IRS Link

I want to add to this question.
I just sold some shares that I don't think will recover shortly, so my total loss for the year is now $3200.

But I do have some substantial gains from my bank account accumulating interests, which will surely nullify that amount. Say my taxable interest gain is $5000. would I be able to offset that by selling additional stocks that would lose me an additional $5000? Or are interests gains and capital gains completely different categories?

Thanks for all your help guys.

 

[DaWhim]

Originally posted by: CPA

1) My understanding as that Master Limited Partnership's (assuming that is what you have) dividends taxed as ordinary income because the partnership does not pay income taxes. The burden is on the unitholder.

2) Since the dividends are paid within the mutual fund, you would claim as reported by the fund to you. Show the STCG and the LTCG respectively on schedule D.

Mine is not a mutual fund but a ETF, is it still the same?

 

[EagleKeeper]

Originally posted by: DaWhim

Originally posted by: CPA

1) My understanding as that Master Limited Partnership's (assuming that is what you have) dividends taxed as ordinary income because the partnership does not pay income taxes. The burden is on the unitholder.

2) Since the dividends are paid within the mutual fund, you would claim as reported by the fund to you. Show the STCG and the LTCG respectively on schedule D.

Mine is not a mutual fund but a ETF, is it still the same?

Uncle should not care. It is a dividend - return on investment.

 

[EagleKeeper]

Originally posted by: EKKC

Originally posted by: EagleKeeper

Originally posted by: her209
Capital loss: What dollar amount can someone deduct from their income? Does the ability to deduct change based on income, e.g.., say someone making $40K may be able to deduct 100% of losses up to X amount while someone making $100K may be able to deduct only 50% of losses up to X amount?

Simple answer

Total loss up to $3K can be written off against income. Anything else must be rolled over to the following year. the amount of income does not come into the equation.
IRS Link

I want to add to this question.
I just sold some shares that I don't think will recover shortly, so my total loss for the year is now $3200.

But I do have some substantial gains from my bank account accumulating interests, which will surely nullify that amount. Say my taxable interest gain is $5000. would I be able to offset that by selling additional stocks that would lose me an additional $5000? Or are interests gains and capital gains completely different categories?

Thanks for all your help guys.

Interest is entirely different that capital gains.

You can not offset interest.
Capital gains can be offset by capital losses. However it may not be prudent to generate loses that you would not normally have just to offset a gain.

If you choose to sell with the intention of a buy back, you need to wait 30 days before a repurchase. Otherwise there will be penalties.


/edit - Wash sale is 30 days time limit from post below

 

[EKKC]

Originally posted by: EagleKeeper

Originally posted by: EKKC

Originally posted by: EagleKeeper

Originally posted by: her209
Capital loss: What dollar amount can someone deduct from their income? Does the ability to deduct change based on income, e.g.., say someone making $40K may be able to deduct 100% of losses up to X amount while someone making $100K may be able to deduct only 50% of losses up to X amount?

Simple answer

Total loss up to $3K can be written off against income. Anything else must be rolled over to the following year. the amount of income does not come into the equation.
IRS Link

I want to add to this question.
I just sold some shares that I don't think will recover shortly, so my total loss for the year is now $3200.

But I do have some substantial gains from my bank account accumulating interests, which will surely nullify that amount. Say my taxable interest gain is $5000. would I be able to offset that by selling additional stocks that would lose me an additional $5000? Or are interests gains and capital gains completely different categories?

Thanks for all your help guys.

Interest is entirely different that capital gains.

You can not offset interest.
Capital gains can be offset by capital losses. However it may not be prudent to generate loses that you would not normally have just to offset a gain.

If you choose to sell with the intention of a buy back, you need to waitt 3 months (I think) before a repurchase. Otherwise there will be penalties.

thanks for the confirmation. i guess I don't need to sell anymore since I can't offset the interest gains.

were you referring to wash sale? if so the rule is to wait 30 days.
http://en.wikipedia.org/wiki/Wash_sale

I also find that rule weird. say I have 50 shares of Stock A. and I sell the 50 shares to claim a loss. What's to stop me from acquiring the 50 shares back in an IRA account? or, for argument's sake, at another brokerage account within the before/after period of 30 days?

note: i'm not trying to say there are ways around the IRS code, I'm just saying I'm confused by how they would identify this possible loophole, if it is even a loophole

 

[TUKIN18S]

question: I filed Chapter 7 this past year (2008). Is there anything I have to worry about differently on my tax forms?

Thanks

 

[EagleKeeper]

Originally posted by: EKKC

Originally posted by: EagleKeeper

Originally posted by: EKKC

...

I want to add to this question.
I just sold some shares that I don't think will recover shortly, so my total loss for the year is now $3200.

But I do have some substantial gains from my bank account accumulating interests, which will surely nullify that amount. Say my taxable interest gain is $5000. would I be able to offset that by selling additional stocks that would lose me an additional $5000? Or are interests gains and capital gains completely different categories?

Thanks for all your help guys.

Interest is entirely different that capital gains.

You can not offset interest.
Capital gains can be offset by capital losses. However it may not be prudent to generate loses that you would not normally have just to offset a gain.

If you choose to sell with the intention of a buy back, you need to wait 30 days before a repurchase. Otherwise there will be penalties.

thanks for the confirmation. i guess I don't need to sell anymore since I can't offset the interest gains.

were you referring to wash sale? if so the rule is to wait 30 days.
http://en.wikipedia.org/wiki/Wash_sale

I also find that rule weird. say I have 50 shares of Stock A. and I sell the 50 shares to claim a loss. What's to stop me from acquiring the 50 shares back in an IRA account? or, for argument's sake, at another brokerage account within the before/after period of 30 days?

note: i'm not trying to say there are ways around the IRS code, I'm just saying I'm confused by how they would identify this possible loophole, if it is even a loophole

The wash rules may have been instituted before there were IRAs.
Having an account at another brokerage to handle the drying of the wash is not a loophole.
Purchases/Sales are based on tax ID # of the owner.

 

[EagleKeeper]

Originally posted by: TUKIN18S
question: I filed Chapter 7 this past year (2008). Is there anything I have to worry about differently on my tax forms?

Thanks

I have not researched such an issue on the IRS site.

I would suspect that if you use Tax S/W, that the package will walk you through anything that is needed.

 

[Oyeve]

Last year, due to an incorrect SN input on the form for my son, I didnt receive a stim check for him, just for me. I rectified the issue but the IRS said it was too late (took 4 months to straigten it all out) but they said that I can get it this year. Is this true or is the IRS blowing smoke up my butt?

 

[EagleKeeper]

Originally posted by: Oyeve
Last year, due to an incorrect SN input on the form for my son, I didnt receive a stim check for him, just for me. I rectified the issue but the IRS said it was too late (took 4 months to straigten it all out) but they said that I can get it this year. Is this true or is the IRS blowing smoke up my butt?

You should be able to get the stimulus funds that were not recieved in '08 as a credit on your taxes IF you qualify.

 

[TangoJuliet]

Hello. I had a quick question. I currently live in NY and switched jobs a year ago. With my old job the company paid all health benefits. Now with my new job I have to pay for my own health benefits - will I be able to claim those expenses when I file? I will be filing with deductions.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: Oyeve
Last year, due to an incorrect SN input on the form for my son, I didnt receive a stim check for him, just for me. I rectified the issue but the IRS said it was too late (took 4 months to straigten it all out) but they said that I can get it this year. Is this true or is the IRS blowing smoke up my butt?

You should be able to get the stimulus funds that were not recieved in '08 as a credit on your taxes IF you qualify.

I had almost the same exact situation happen to me. Unfortunately, the only resolve is to calculate the stimulus based on 2008 income rather than 2007. So, if you made more money in 2008 then your chances increase that you won't get it or get something less. There is a worksheet call Federal Form 1040 Recovery Rebate Credit that you will use to calculate any difference.

 

[CPA]

Originally posted by: TangoJuliet
Hello. I had a quick question. I currently live in NY and switched jobs a year ago. With my old job the company paid all health benefits. Now with my new job I have to pay for my own health benefits - will I be able to claim those expenses when I file? I will be filing with deductions.

Only those medical expenses that exceed 7.5% of your AGI can be claimed as an itemized deduction. So, if you had AGI of $100K, then all medical expenses (including travel, tolls, etc.) above $7.5K would be allowed.

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: TangoJuliet
Hello. I had a quick question. I currently live in NY and switched jobs a year ago. With my old job the company paid all health benefits. Now with my new job I have to pay for my own health benefits - will I be able to claim those expenses when I file? I will be filing with deductions.

Only those medical expenses that exceed 7.5% of your AGI can be claimed as an itemized deduction. So, if you had AGI of $100K, then all medical expenses (including travel, tolls, etc.) above $7.5K would be allowed.

Your medical insurance premiums will also be used to reach this 7.5% limit.

 

[TangoJuliet]

Originally posted by: EagleKeeper

Originally posted by: CPA

Originally posted by: TangoJuliet
Hello. I had a quick question. I currently live in NY and switched jobs a year ago. With my old job the company paid all health benefits. Now with my new job I have to pay for my own health benefits - will I be able to claim those expenses when I file? I will be filing with deductions.

Only those medical expenses that exceed 7.5% of your AGI can be claimed as an itemized deduction. So, if you had AGI of $100K, then all medical expenses (including travel, tolls, etc.) above $7.5K would be allowed.

Your medical insurance premiums will also be used to reach this 7.5% limit.

hmm interesting. since i will be filing jointly with my wife I doubt my expenses will be that high. combined we made around $75,000 and paid out around $3000 in medical expenses.

 

[IronWing]

Are the home energy tax credits gone this year? In 06-07 we could take credits for energy efficient improvements such as new windows and skylights.