6th Annual Anandtech Tax Time Thread

[Electric Amish]

Originally posted by: EagleKeeper

Originally posted by: Electric Amish
I purchased two brand-new cars in 2008. Is there anything in those purchases that is deductible (sales tax, license fees, registration fees, etc...)?

If the cars are personal use and you itemize


The sales tax can be added to the state sales tax table (if you use the sales tax vs state income tax)

Registration fees & license fees are not deductible

...but my annual vehicle registration fees and taxes are deductible. Why aren't these fees deductible on the new vehicle purchase?

 

[HardcoreRobot]

In in 2007 and 2008 I rented out a room of a house that I purchased in 2007. For the 2007, I calculated the total basis and land basis for the depreciation worksheet based on the assessed value when the property was purchased.

The county just sent me a notice of real estate reassessment, and the property has lost ~25% of its value. Do I continue to use the original basis from when the house was purchased or does it change based on the new assessment?

Thanks

 

[EagleKeeper]

Originally posted by: Electric Amish

Originally posted by: EagleKeeper

Originally posted by: Electric Amish
I purchased two brand-new cars in 2008. Is there anything in those purchases that is deductible (sales tax, license fees, registration fees, etc...)?

If the cars are personal use and you itemize


The sales tax can be added to the state sales tax table (if you use the sales tax vs state income tax)

Registration fees & license fees are not deductible

...but my annual vehicle registration fees and taxes are deductible. Why aren't these fees deductible on the new vehicle purchase?

Those fees are deductible if they are identified in a specific way.
The IRS has the proper wording that the state/local government must match for such to be deductible as an itemization.

The IRS/Congress determined what could and could not be written off for personal taxes w/ respect to vehicles.

The fees/taxes MUST be labeled as a Personal Property Tax

 

[EagleKeeper]

Originally posted by: HardcoreRobot
In in 2007 and 2008 I rented out a room of a house that I purchased in 2007. For the 2007, I calculated the total basis and land basis for the depreciation worksheet based on the assessed value when the property was purchased.

The county just sent me a notice of real estate reassessment, and the property has lost ~25% of its value. Do I continue to use the original basis from when the house was purchased or does it change based on the new assessment?

Thanks

The Schedule E does not have a place to rework the cost basis of an piece of property.

Congress chose to not tax against the value of the property going up.
For one reason or another, they also chose to not adjust when the value goes down.

 

[HardcoreRobot]

Originally posted by: EagleKeeper

Originally posted by: HardcoreRobot
In in 2007 and 2008 I rented out a room of a house that I purchased in 2007. For the 2007, I calculated the total basis and land basis for the depreciation worksheet based on the assessed value when the property was purchased.

The county just sent me a notice of real estate reassessment, and the property has lost ~25% of its value. Do I continue to use the original basis from when the house was purchased or does it change based on the new assessment?

Thanks

The Schedule E does not have a place to rework the cost basis of an piece of property.

Congress chose to not tax against the value of the property going up.
For one reason or another, they aslo chose to not adjust when the value goes down.

Ok, thanks. The program didnt mention anything and I didn't see anything regarding this in my research so it all makes sense. Just going to take the numbers the program remembered from last year and run with it.

 

[memo]

I am trying to make sure I have the correct understand on the First-Time Homebuyer Credit rules.

Homes purchased in 2008. You generally must repay the credit over a 15-year period in 15 equal installments. The repayment period begins in 2010 and you must include the first installment as additional tax on your 2010 tax return. If your home ceases to be your main home before the 15-year period is up, you must include all remaining annual installments as additional tax on the return for the tax year that happens. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation.

Homes purchased in 2009. You must repay the credit only if the home ceases to be your main home within the 36-month period beginning on the purchase date. This includes situations where you sell the home, you convert it to business or rental property, or the home is destroyed, condemned, or disposed of under threat of condemnation. You repay the credit by including it as additional tax on the return for the year the home ceases to be your main home. If the home continues to be your main home for at least 36 months beginning on the purchase date, you do not have to repay any of the credit.

Source

So essentially if you bought a home in 2008 you have to repay the $7,500. If you bought a home in 2009 you can keep the $8,000 as long as you stay in your home for 3 years, failing that you have to pay that money back. Is that a basic explanation of it?


With that said, I bought my home last year, 2008, but refinanced this year in 2009. Does that still mean I bought my home last year? I plan on staying in my current home for a while so I'd love to be able to get that $8,000 without having to repay.

Also, does the $7,500 go straight into my pocket? Meaning I get $7,500 in my tax return. Or am I just deducting it from my gross salary? Meaning if I made $75,000 last year, I'm only taxed on $67,500.

Thanks for the help!

 

[vshah]

i'm doing taxes for the first time this year. i expect a complete refund of the federal taxes and partial from the state taxes. should i just use turbotax or is there some other software that is easier?

 

[FAS284]

can you deduct the cost of a necessary professional licensing exam (i.e. medicine board exam or bar exam) ?

 

[alkemyst]

Originally posted by: vshah
i'm doing taxes for the first time this year. i expect a complete refund of the federal taxes and partial from the state taxes. should i just use turbotax or is there some other software that is easier?

We do not give recommendations on tax software. It's hard to go wrong if you have a simple return though.

 

[alkemyst]

Originally posted by: FAS284
can you deduct the cost of a necessary professional licensing exam (i.e. medicine board exam or bar exam) ?

I took Cisco certifications, the way the lifetime learning works I was limited to what I could write off, but exams are one of them I could.

I am having a CPA do mine this year as I had 1099 income and about $8k+ in medical expenses + a ton of itemized deductions. The CPA said their is 'another place' he could put the education items under that will work out better for me. I am not sure where that is yet.

I figure I pay $200 this year and then I can duplicate it every year. I was getting myself back $900 (I took 3 exemptions for withholding so I didn't pay much)...we will see if he does better. If he gets me at least $120 I break even over TurboTax costs.

 

[alkemyst]

Originally posted by: memo
So essentially if you bought a home in 2008 you have to repay the $7,500. If you bought a home in 2009 you can keep the $8,000 as long as you stay in your home for 3 years, failing that you have to pay that money back. Is that a basic explanation of it?


With that said, I bought my home last year, 2008, but refinanced this year in 2009. Does that still mean I bought my home last year? I plan on staying in my current home for a while so I'd love to be able to get that $8,000 without having to repay.

Also, does the $7,500 go straight into my pocket? Meaning I get $7,500 in my tax return. Or am I just deducting it from my gross salary? Meaning if I made $75,000 last year, I'm only taxed on $67,500.

Thanks for the help!

Your refi doesn't count as a 'first time homebuyer'...however; you may have costs in the loan that you can deduct.

The $7500 tax credit is a direct credit to what you would owe and is refundable. It's not an AGI reducer at all. The $7500 goes straight to your pocket. There are situations though were you may not want to take this credit nor the full amount depending on your future situation. If you only owed $1000, you would get back a total of $6500.

Also it phases out based on income...you get nothing with an AGI of over $95k if single and $170k if married filling joint. The phase outs start at $75k and 150k respectively.

Of course also this assumes you purchase price was $75000 or more. Otherwise it's only 10%.

Edit...also that house had to close AFTER April 1, 2008 to be eligible. This is burning some people on the credit. There is one other exclusion too that you can not be a non-resident alien.

 

[FAS284]

Originally posted by: alkemyst

Originally posted by: FAS284
can you deduct the cost of a necessary professional licensing exam (i.e. medicine board exam or bar exam) ?

I took Cisco certifications, the way the lifetime learning works I was limited to what I could write off, but exams are one of them I could.

I am having a CPA do mine this year as I had 1099 income and about $8k+ in medical expenses + a ton of itemized deductions. The CPA said their is 'another place' he could put the education items under that will work out better for me. I am not sure where that is yet.

I figure I pay $200 this year and then I can duplicate it every year. I was getting myself back $900 (I took 3 exemptions for withholding so I didn't pay much)...we will see if he does better. If he gets me at least $120 I break even over TurboTax costs.

so you've put exams under lifeteime learning credits? a medical board exam is a personal expense, not associated with the university. Please let me know where your CPA puts exam expenses since I'm paying ~$1300 on my exam.

Along a similar line, my wife pays for attending an educational conference related to her studies (~$1000) but gets reimbursed for that 100%. Such expenses do not count, correct?

Thanks!

 

[alkemyst]

AFAIK exams whether or not through a university qualify for lifetime learning as long as they are to further your career. Books are 'iffy'...I should have my return back next week.

 

[overst33r]

Stupid questions:

Is mileage you drive to school and back deductible? Under what category? Also, I had an internship while going to school, are the miles on that deductible? Same category?

If I understand correctly, sales tax paid on a used car can be claimed even if you're only doing federal taxes?

As it stands currently, using turbotax, I owe money to the IRS this year. Can someone explain why this is?

I worked for a university (did not pay SS and Medicare) and had an internship at a private company.

 

[EagleKeeper]

Originally posted by: FAS284
can you deduct the cost of a necessary professional licensing exam (i.e. medicine board exam or bar exam) ?

Educational expenses such as above can also be written off as employee expenses using the Form 2106 when you itemize using the Schedule A.

This covers exams, mileage, books, supplies, equipment, parking fees, tolls, etc.

Many years ago, Itook courses in Orlando and lived in Ft Lauderdale.
Fees for the Fla Turnpike were expensed and allowed by the IRS.

If the education is related to employment, there is no limit on the distance to the school and/or seminar.

 

[EagleKeeper]

Originally posted by: FAS284

Originally posted by: alkemyst

Originally posted by: FAS284
can you deduct the cost of a necessary professional licensing exam (i.e. medicine board exam or bar exam) ?

I took Cisco certifications, the way the lifetime learning works I was limited to what I could write off, but exams are one of them I could.

I am having a CPA do mine this year as I had 1099 income and about $8k+ in medical expenses + a ton of itemized deductions. The CPA said their is 'another place' he could put the education items under that will work out better for me. I am not sure where that is yet.

I figure I pay $200 this year and then I can duplicate it every year. I was getting myself back $900 (I took 3 exemptions for withholding so I didn't pay much)...we will see if he does better. If he gets me at least $120 I break even over TurboTax costs.

so you've put exams under lifeteime learning credits? a medical board exam is a personal expense, not associated with the university. Please let me know where your CPA puts exam expenses since I'm paying ~$1300 on my exam.

Along a similar line, my wife pays for attending an educational conference related to her studies (~$1000) but gets reimbursed for that 100%. Such expenses do not count, correct?

Thanks!

For your wife - it is a wash as long as it does not get included as income on her W2.

Your other question is answered above -Alky should have remembered that.

 

[EagleKeeper]

Originally posted by: mariok2006
Stupid questions:

Is mileage you drive to school and back deductible? Under what category? Also, I had an internship while going to school, are the miles on that deductible? Same category?

If I understand correctly, sales tax paid on a used car can be claimed even if you're only doing federal taxes?

As it stands currently, using turbotax, I owe money to the IRS this year. Can someone explain why this is?

I worked for a university (did not pay SS and Medicare) and had an internship at a private company.

School mileage is deductible - see above answer to FAS284

Sales taxes for a vehicle fall under the Schedule A if you choose to use the sales tax vs the income tax deduction.

If you owe money, then your withholding is not setup correctly or you had extra income that was not accounted for. Or you are not entering data properly.

Many times people to not adjust their withholdingsfor multiple incomes.

 

[overst33r]

Originally posted by: EagleKeeper

Originally posted by: mariok2006
Stupid questions:

Is mileage you drive to school and back deductible? Under what category? Also, I had an internship while going to school, are the miles on that deductible? Same category?

If I understand correctly, sales tax paid on a used car can be claimed even if you're only doing federal taxes?

As it stands currently, using turbotax, I owe money to the IRS this year. Can someone explain why this is?

I worked for a university (did not pay SS and Medicare) and had an internship at a private company.

If you owe money, then your withholding is not setup correctly or you had extra income that was not accounted for. Or you are not entering data properly.

Many times people to not adjust their withholdingsfor multiple incomes.

If the withholding's were not adjusted properly during the year, I have to pay the difference now correct?

The extra income was scholarships/grants but I will let my mom take care of that because she's claiming me as a dependent.

 

[alkemyst]

Originally posted by: mariok2006

Originally posted by: EagleKeeper

Originally posted by: mariok2006
Stupid questions:

Is mileage you drive to school and back deductible? Under what category? Also, I had an internship while going to school, are the miles on that deductible? Same category?

If I understand correctly, sales tax paid on a used car can be claimed even if you're only doing federal taxes?

As it stands currently, using turbotax, I owe money to the IRS this year. Can someone explain why this is?

I worked for a university (did not pay SS and Medicare) and had an internship at a private company.

If you owe money, then your withholding is not setup correctly or you had extra income that was not accounted for. Or you are not entering data properly.

Many times people to not adjust their withholdingsfor multiple incomes.

If the withholding's were not adjusted properly during the year, I have to pay the difference now correct?

The extra income was scholarships/grants but I will let my mom take care of that because she's claiming me as a dependent.

If you are a dependent most of the above you discussed probably will not apply. Most of the time in any case ordinary commutes are never deductable.

edit: maybe eaglekeeper knows a bit more...I thought mileage for education (to and from the school) was not deductable for a regular student.

Income is income...and your tax liability is your tax liability regardless of how it was paid out during the year. Come April it's all about what you made total. The tax you owe is a set amount for your situation. If you paid more than that amount during the year, you get some back. If you paid less that that during the year, you owe some back. If you paid too little, then you owe some back plus a penalty.

 

[fallenangel99]

Hello,

I transferred $xx (all 2008 contributions, 0 withdrawals) from my Roth IRA account (vanguard) to a Traditional IRA because my MAGI was too high for 2008. I did the transfer through Vanguard and it went through.

Now, I am confused as to what form I need to fill out with the IRS. I did some research online and it seems I need to fill out the 8606 form: http://www.irs.gov/pub/irs-pdf/f8606.pdf

However, none of the descriptions in the 8606 form match what I did, i.e, transfer from roth to traditional

Any help?

Thanks

 

[troytime]

Originally posted by: EagleKeeper

Originally posted by: troytime

Originally posted by: CPA

Originally posted by: troytime
i received a 10990G a few weeks ago, but its for the 2007 tax year.

its for 510 dollars, payer is the illinois dept of revenue.

i don't know what its for, or what i should do with it.
do i have to revise my tax return that i submitted last year?

Did you receive unemployment income? What box is the $510 in?

I didn't receive any other income, other than my job.
the amount is in box 2 (refunds, credits, or offests from your state or local income tax)

simple question which you have yet to answer.

did you get a tax refund from the state last year.
If yes, what was the amount.

If you are unsure, look up your state tax paperwork for 2007

I found my 2007 taxes (took a while, sorry)
I received a 510 refund from my illinois state tax in 2007

 

[EagleKeeper]

Originally posted by: alkemyst

Originally posted by: mariok2006

Originally posted by: EagleKeeper

Originally posted by: mariok2006
Stupid questions:

Is mileage you drive to school and back deductible? Under what category? Also, I had an internship while going to school, are the miles on that deductible? Same category?

If I understand correctly, sales tax paid on a used car can be claimed even if you're only doing federal taxes?

As it stands currently, using turbotax, I owe money to the IRS this year. Can someone explain why this is?

I worked for a university (did not pay SS and Medicare) and had an internship at a private company.

If you owe money, then your withholding is not setup correctly or you had extra income that was not accounted for. Or you are not entering data properly.

Many times people to not adjust their withholdingsfor multiple incomes.

If the withholding's were not adjusted properly during the year, I have to pay the difference now correct?

The extra income was scholarships/grants but I will let my mom take care of that because she's claiming me as a dependent.

If you are a dependent most of the above you discussed probably will not apply. Most of the time in any case ordinary commutes are never deductable.

edit: maybe eaglekeeper knows a bit more...I thought mileage for education (to and from the school) was not deductable for a regular student.

Income is income...and your tax liability is your tax liability regardless of how it was paid out during the year. Come April it's all about what you made total. The tax you owe is a set amount for your situation. If you paid more than that amount during the year, you get some back. If you paid less that that during the year, you owe some back. If you paid too little, then you owe some back plus a penalty.

Mileage for Education is not deductible UNLESS the education is related to existing employment

 

[EagleKeeper]

Originally posted by: troytime

Originally posted by: EagleKeeper

Originally posted by: troytime

Originally posted by: CPA

Originally posted by: troytime
i received a 10990G a few weeks ago, but its for the 2007 tax year.

its for 510 dollars, payer is the illinois dept of revenue.

i don't know what its for, or what i should do with it.
do i have to revise my tax return that i submitted last year?

Did you receive unemployment income? What box is the $510 in?

I didn't receive any other income, other than my job.
the amount is in box 2 (refunds, credits, or offests from your state or local income tax)

simple question which you have yet to answer.

did you get a tax refund from the state last year.
If yes, what was the amount.

If you are unsure, look up your state tax paperwork for 2007

I found my 2007 taxes (took a while, sorry)
I received a 510 refund from my illinois state tax in 2007

If you itemized in 2007 - used the Schedule A, the $510 needs to be declared as income.
There is a line item for it.
If you did not itemize, then you can ignore the 1099-G from the state.

 

[polarmystery]

How do I figure out how many allowances I should take in order to have little to zero owed or returned at the end of the year? I don't want to file an income tax and get obscene amounts back at the end of the year, I'd like to just file and owe $0

 

[EagleKeeper]

# of peope that are claimed + 1.

That should be sum total of all W4 exemptions providing income into the household that is declared on the 1040.