6th Annual Anandtech Tax Time Thread

[EagleKeeper]

Originally posted by: 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.

Form 5695 was what was used last year.
Therer is no such number listed for the 2008 forms.

A search through the IRS website does not reveal anything for 2008 on the subject.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: 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.

Form 5695 was what was used last year.
Therer is no such number listed for the 2008 forms.

A search through the IRS website does not reveal anything for 2008 on the subject.

There is no home energy credit for 2008. However, the credit was reupped for 2009 as part of the economic stability package signed in October. So, hold off until tomorrow to make any efficiency improvements.

 

[mAdMaLuDaWg]

I'm a first-time homeowner who purchased in July 2008. Besides the $7500 tax credit, is there anything else that I need to be aware of. Currently, I'm receiving $1000 in rent every month (about 1/2 my mortgage) from a room-mate, do I need to declare that as income. Also, I've never itemized my deductions before... is that something I should be considering this time around?

Thanks.

 

[EagleKeeper]

Originally posted by: mAdMaLuDaWg
I'm a first-time homeowner who purchased in July 2008. Besides the $7500 tax credit, is there anything else that I need to be aware of. Currently, I'm receiving $1000 in rent every month (about 1/2 my mortgage) from a room-mate, do I need to declare that as income. Also, I've never itemized my deductions before... is that something I should be considering this time around?

Thanks.

Your best bet it to use Tax S/W. It will know what you need to plan for.

You should dig out your closing statement and make a copy of it.
Then circle in red anything on it that has the word tax.
Circle in red anything that states points.
Circle in red anything that has the word fees AND is related to a government entity.

These are deductible closing costs.

Locate your property taxes that were paid at closing.

The above suggestions w/ respect to the closing statement will only come into play the first year.

Keep an eye open for your end of year statements showing interest and taxes paid.

You will want to itemize from here on in.
Did up any donations that you may have made. Church/Charity/give away when cleaning /moving


w/ respect to the roommate.

You should declare the payments as income.
You can declare them on as misc income or start to treat the roommate as a renter.
By treating as a renter, you will use the Schedule E.
You will declare the rent; but you can now write off a proportion of the overall expenses of the house. The proportional ratio for costs can be based on # of bedrooms the roomie takes up vs overall bedrooms or ratio of people that the roomie is responsible for vs you.
Includes costs include those that could not be taken at closing, maintenance, improvements, utilities, insurance and support. Utilities can also include cable & INTERNET access along with computer equipment required to track expenses and ask questions on the INTERNET.
Your vehicle w/ insurance and maintenance as relates to taking care of the house.
You will also have the option of choosing to depreciate the house (1/25th of the value)

You may find that the total "expenses" exceed the rent paid. That is OK - the "loss" goes against your regular taxable income. That loss can be up to $25K and any excess difference is held for next year.

 

[mAdMaLuDaWg]

Thanks a lot Eaglekeeper. My roomate and myself split the utilities 50/50, can I still declare my 50% as deductible. I'm assuming that I also have to add his 50% to the rental income I declare in Schedule E.

I was reading up on depreciation, and I'm still confused as to how to depreciate. Is it just a straight up depreciation of 1/25 that I use? I was reading through some links and some of them seemed to indicate that depreciation was based on the amount of square footage that is used by the roommate and myself. Is there any reason why I wouldn't want to depreciate?

With regards to my computer, can I still declare it even though I built it two years before I purchased the house?

Also do you have a recommendation for Tax Software? I've used TurboTax online before but by software I'm assuming you mean an actual boxed product as opposed to just the online version.

 

[TraumaRN]

So I'm in the same position as mAdMaLuDaWg, I just bought a house and wanted to know what I can claim as deductible but what you wrote will certainly help me so thanks!

However I've got a question. For my job we are required to wear specific uniforms that we have to pay for ourselves. We are NOT reimbursed. I saved the receipts, can I claim that as a work related expense? Or however it's phrased.

Also for my job, can I claim deductible and/or credit for conferences(basically continuing education) and the like? I'm only reimbursed for 8 hours of conference time. However we are required to have 25 hours. Is the remaining 13 hours in anyway deductible/credit etc?

 

[EagleKeeper]

Originally posted by: mAdMaLuDaWg
Thanks a lot EagleKeeper. My roommate and myself split the utilities 50/50, can I still declare my 50% as deductible. I'm assuming that I also have to add his 50% to the rental income I declare in Schedule E.

I was reading up on depreciation, and I'm still confused as to how to depreciate. Is it just a straight up depreciation of 1/25 that I use? I was reading through some links and some of them seemed to indicate that depreciation was based on the amount of square footage that is used by the roommate and myself. Is there any reason why I wouldn't want to depreciate?

With regards to my computer, can I still declare it even though I built it two years before I purchased the house?

Also do you have a recommendation for Tax Software? I've used TurboTax online before but by software I'm assuming you mean an actual boxed product as opposed to just the online version.

If the roomie pays half the utilities then do not expense it or declare the income on it.
You will use the straight line 1/25 depreciation with the proportion of that amount.
the only reason for not depreciating is if you sell the house within the 25 yr time frame, you may have to recapture some of the depreciation back. ie. pay some tax relief back.
There square footage could be used if there were 2 bedrooms and one was much smaller than the other. Always choose the more beneficial method.

You can depreciate the computer based on a 5 year lifespan. So, you would be able to deduct 20% of the cost for each of three years times the proportion (estimated at 50%)

I would always prefer the box version vs the online. It is easier to manipulate the data, import data and you do not have to worry about them charging higher fees for extra schedules.

You will not need the business versions; the standard/premium will have the Schedule A-E which is all you will need.

As stated in the OP, we will not endorse a commercial S/W vendor. They all will do the job; the big 3 may be more user friendly than others. Some make you pay more for the name recognition or multiple filings.

 

[EagleKeeper]

Originally posted by: DeathBUA
So I'm in the same position as mAdMaLuDaWg, I just bought a house and wanted to know what I can claim as deductible but what you wrote will certainly help me so thanks!

However I've got a question. For my job we are required to wear specific uniforms that we have to pay for ourselves. We are NOT reimbursed. I saved the receipts, can I claim that as a work related expense? Or however it's phrased.

Also for my job, can I claim deductible and/or credit for conferences(basically continuing education) and the like? I'm only reimbursed for 8 hours of conference time. However we are required to have 25 hours. Is the remaining 13 hours in anyway deductible/credit etc?

If you have to purchase uniforms that are not acceptable out in the general public, then the cost for obtaining and maintaining is deductible using the Form 2106 - Business Expenses.


If you are paying for education/training/conferences, that is deductible also with the same form. this is different than the educational credit. Here you can put down the total cost that you pay, plus transportation & tolls/parking.

If the education training can fall under the Lifetime Learning Credit, it is best to test under which condition, the expenses will best fall. Conferences will not fall under the LLC. the LLC will only provide 20% credit and has a maximum.

Again, it is easier to play what if on a desktop than to step through all the Q/A or form lookups for the online versions.

 

[mAdMaLuDaWg]

Originally posted by: EagleKeeper

If the roomie pays half the utilities then do not expense it or declare the income on it.
You will use the straight line 1/25 depreciation with the proportion of that amount.
the only reason for not depreciating is if you sell the house within the 25 yr time frame, you may have to recapture some of the depreciation back. ie. pay some tax relief back.
There square footage could be used if there were 2 bedrooms and one was much smaller than the other. Always choose the more beneficial method.

You can depreciate the computer based on a 5 year lifespan. So, you would be able to deduct 20% of the cost for each of three years times the proportion (estimated at 50%)

I would always prefer the box version vs the online. It is easier to manipulate the data, import data and you do not have to worry about them charging higher fees for extra schedules.

You will not need the business versions; the standard/premium will have the Schedule A-E which is all you will need.

As stated in the OP, we will not endorse a commercial S/W vendor. They all will do the job; the big 3 may be more user friendly than others. Some make you pay more for the name recognition or multiple filings.

The tax software will guide me through the different depreciation methodologies right? I also see that you could actually download the cd-rom from the websites if you pay. I've noticed that tax-act is the cheapest if you do it that way ($20 as opposed to $60 for turbo-tax). I understand that you can't recommend any but is there a reason for this price difference or will it not matter? Basically, I will need all the help I can get so the easier it is to use the better.

Sorry, not sure I follow about the computer. So I paid about $1000 for my computer, you are saying I could deduct 3x20% off of $500?

Also do I need receipts for every single thing that I deduct? If I do get audited and fail to show receipts for a particular deduction, what will happen? Sorry for the dumb questions but I'm a total n00b..

 

[richardycc]

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.

even pre-tax insurance permiums?

 

[EagleKeeper]

Originally posted by: richardycc

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.

even pre-tax insurance permiums?

that is double dipping - No go

 

[EagleKeeper]

Originally posted by: mAdMaLuDaWg

Originally posted by: EagleKeeper

If the roomie pays half the utilities then do not expense it or declare the income on it.
You will use the straight line 1/25 depreciation with the proportion of that amount.
the only reason for not depreciating is if you sell the house within the 25 yr time frame, you may have to recapture some of the depreciation back. ie. pay some tax relief back.
There square footage could be used if there were 2 bedrooms and one was much smaller than the other. Always choose the more beneficial method.

You can depreciate the computer based on a 5 year lifespan. So, you would be able to deduct 20% of the cost for each of three years times the proportion (estimated at 50%)

I would always prefer the box version vs the online. It is easier to manipulate the data, import data and you do not have to worry about them charging higher fees for extra schedules.

You will not need the business versions; the standard/premium will have the Schedule A-E which is all you will need.

As stated in the OP, we will not endorse a commercial S/W vendor. They all will do the job; the big 3 may be more user friendly than others. Some make you pay more for the name recognition or multiple filings.

The tax software will guide me through the different depreciation methodologies right? I also see that you could actually download the cd-rom from the websites if you pay. I've noticed that tax-act is the cheapest if you do it that way ($20 as opposed to $60 for turbo-tax). I understand that you can't recommend any but is there a reason for this price difference or will it not matter? Basically, I will need all the help I can get so the easier it is to use the better.

Sorry, not sure I follow about the computer. So I paid about $1000 for my computer, you are saying I could deduct 3x20% off of $500?

Also do I need receipts for every single thing that I deduct? If I do get audited and fail to show receipts for a particular deduction, what will happen? Sorry for the dumb questions but I'm a total n00b..

The Tax S/W should guide you. You need to make sure that you enter the proper answers to the screening questions if you use the Q&A User interface.

TurboTax is the most well known and being around the longest has the name brand and you pay for their polished interface.

TaxCut is a attempt by H&R block to expand from the store sector using their own programs into the retail sector. Once they saw what Intuit was accomplishing without any competition, they started to pay attention. Then the spyware fiasco in 2002 allowed them a foothold. The interface is not a polished but they do guide you through everything needed. They try to undercut TT by $10-$15

TaxAct figured that that they could get a slice of the pie once people started realizing that all the S/W had to meet IRS standards. For $20, the user I/F used to be almost non existent. At the time, they provided the forms for you to fill in. No hand holding. Things may have changed.

And many others have jumped into the pool, some free and/or with catches.

If you claim that the computer is used strictly for the rental, you can deduct 60% of the $1000 you paid for it times the proportion that you do not use it for personal use.
Example: if the computer is used half time as related to the rental (roomie or rental related) the you would have $500 (value) * 20% (allowable depreciation/year) for 3 years.

So that is about $100 written off for the computer itself IF it is used in the manner described.



Receipts are your best friend. If the IRS pulls an audit, you need to be able to back up items with paper. Otherwise you can get into a long drawn out "discussion" over common sense for an expense. Or they will disallow the item. Much depends on the auditor.
Back in the 90's few were computer literate.

Example on my part - I did not keep tolls for commuting to school for advance classes when working. Fastest way was through toll plazas - saving 50 miles each way. Toll plaza(s) were $15 at the time each way.

Without the receipts, they were not going to take the tolls. So I reworked the expense to show the long way around. When asked why I took the long way, I stated, because there were no tolls. The numbers came out the close to the same.



I keep a spreadsheet of expenses and scan the receipts. At the end of the year, my working spreadsheet tis burned onto a CD along with the PDF of any online receipts and my tax forms. Once, scanned, I can safely throw away the receipt. Finding them on a CD using the spreadsheet makes it a breeze.

 

[IronWing]

Originally posted by: CPA

Originally posted by: EagleKeeper

Originally posted by: 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.

Form 5695 was what was used last year.
Therer is no such number listed for the 2008 forms.

A search through the IRS website does not reveal anything for 2008 on the subject.

There is no home energy credit for 2008. However, the credit was reupped for 2009 as part of the economic stability package signed in October. So, hold off until tomorrow to make any efficiency improvements.

Okay, thanks. The "What's New for 2008" section of the 1040 booklet (page 6) states:

Credit for nonbusiness energy property expired. The credit for nonbusiness energy property has expired and does not apply for 2008. Form 5695 is now used only to claim the residential energy efficient property credit.

so I was confused about the status of the credit.

 

[DomS]

OK, my question is a quick one. I have a td Ameritrade account. Are the 9.99 per trade commissions I get charged tax deductible?

 

[edro]

My fiance just finished her first full year of working from home.
She works for another company, but travels for work and works out of her home office.

What all can she deduct?
Her grandfather told her that she could deduct 1/4 of her heat / electric / internet bill (1 room out of 4, her office).
I think that is a stretch, but I think she could deduct something.

Any advice for people who work from home, for another company?

Thanks!

 

[EagleKeeper]

Originally posted by: DomS
OK, my question is a quick one. I have a td Ameritrade account. Are the 9.99 per trade commissions I get charged tax deductible?

The cost of commission should get added to the cost of the share price for the shares that were purchased at the time.

Example:
100 shares purchased at $x/share
Total cost is $100x + $9.99
Cost per share for tax purposes is x+.0999

 

[EagleKeeper]

Originally posted by: edro
My fiance just finished her first full year of working from home.
She works for another company, but travels for work and works out of her home office.

What all can she deduct?
Her grandfather told her that she could deduct 1/4 of her heat / electric / internet bill (1 room out of 4, her office).
I think that is a stretch, but I think she could deduct something.

Any advice for people who work from home, for another company?

Thanks!

If she works from home for the benefit of the company, she can deduct the proportional square footage or room use as a home office for costs. that includes what was described above, plus also the rent. If the HO is not used for anything else.

However, she should get a statement from the employer stating that she is working from home for their convience. Otherwise the IRS will disallow the home office. Claiming a HO increases the audit risk.

 

[OpenThirdEye]

QUESTION:

In 2008 I got married (Apr 12) and bought a house (Jun 30). The wife had 2 jobs last year. So here's my slew of questions:

- Both the wife and I changed our filings to "Married - filing jointly" after our wedding - so is that how we'll file for our 2008 taxes?
- What information will I need regarding my house when filing?
- I wasn't allowed to put my student loan interest into my taxes last year because I made too much money...will that change this year since I'm married and filing jointly?
- I usually go to H&R Block to have my taxes done...I thought about using something along the lines of the 3 software titles you mentioned - good idea or should I stick with H&R this year since so much went on?

Thanks guys!!

 

[EagleKeeper]

Originally posted by: OpenThirdEye
QUESTION:

In 2008 I got married (Apr 12) and bought a house (Jun 30). The wife had 2 jobs last year. So here's my slew of questions:

- Both the wife and I changed our filings to "Married - filing jointly" after our wedding - so is that how we'll file for our 2008 taxes?
- What information will I need regarding my house when filing?
- I wasn't allowed to put my student loan interest into my taxes last year because I made too much money...will that change this year since I'm married and filing jointly?
- I usually go to H&R Block to have my taxes done...I thought about using something along the lines of the 3 software titles you mentioned - good idea or should I stick with H&R this year since so much went on?

Thanks guys!!

1) It is usually best to do a file jointly. The nice thing about Tax S/W is that you can play what if inside 15 minutes. Make sure that you keep a master file that is the Joint return.

2) See reponse earlier to mAdMaLuDaWg

3) See what the numbers show. The rules are set in concrete, if you meet the guidelines, you can deduct the interest.

4) You know more than H&R does on your situation. They have a check list to go through. Unless you volunteer extra info, they will not ask for it. Many of the extras could be buried with these thread. Most will not apply, but there may be something that jogs your memory and saves you a couple of $$.

 

[JS80]

wtf is Recovery rebate credit and why did it decrease my refund (using taxact)?

I got married in 2008 and had a child, my wife got the stimulus, and I did not. in the section where it asked what my economic stimulus payment was I put $600 (my wife), and the next page it says "Your recovery rebate credit is $900. Your credit is reduced by any economic stimulus payment you received in 2008."

what the hell does that mean? Why does it say $900? Why does it reduce my refund?

 

[JS80]

LULZ WTF WHY DO I OWE AMT? MY WIFE WORKED HALF THE YEAR AND WE DON'T EVEN HAVE A MORTGAGE.

 

[CPA]

Originally posted by: JS80
wtf is Recovery rebate credit and why did it decrease my refund (using taxact)?

I got married in 2008 and had a child, my wife got the stimulus, and I did not. in the section where it asked what my economic stimulus payment was I put $600 (my wife), and the next page it says "Your recovery rebate credit is $900. Your credit is reduced by any economic stimulus payment you received in 2008."

what the hell does that mean? Why does it say $900? Why does it reduce my refund?

did you get a rebate?

That is strange, it should have added the difference.

 

[CPA]

Originally posted by: JS80
LULZ WTF WHY DO I OWE AMT? MY WIFE WORKED HALF THE YEAR AND WE DON'T EVEN HAVE A MORTGAGE.

You make too much money.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: OpenThirdEye
QUESTION:

In 2008 I got married (Apr 12) and bought a house (Jun 30). The wife had 2 jobs last year. So here's my slew of questions:

- Both the wife and I changed our filings to "Married - filing jointly" after our wedding - so is that how we'll file for our 2008 taxes?
- What information will I need regarding my house when filing?
- I wasn't allowed to put my student loan interest into my taxes last year because I made too much money...will that change this year since I'm married and filing jointly?
- I usually go to H&R Block to have my taxes done...I thought about using something along the lines of the 3 software titles you mentioned - good idea or should I stick with H&R this year since so much went on?

Thanks guys!!

1) It is usually best to do a file jointly. The nice thing about Tax S/W is that you can play what if inside 15 minutes. Make sure that you keep a master file that is the Joint return.

2) See reponse earlier to mAdMaLuDaWg

3) See what the numbers show. The rules are set in concrete, if you meet the guidelines, you can deduct the interest.

4) You know more than H&R does on your situation. They have a check list to go through. Unless you volunteer extra info, they will not ask for it. Many of the extras could be buried with these thread. Most will not apply, but there may be something that jogs your memory and saves you a couple of $$.

I will add to Number 4 that all of the tax software programs have easy to use Help. Taxact uses JK Lasser and the other two also use in-depth tax guides for their Help section.

 

[JS80]

Originally posted by: CPA

Originally posted by: JS80
wtf is Recovery rebate credit and why did it decrease my refund (using taxact)?

I got married in 2008 and had a child, my wife got the stimulus, and I did not. in the section where it asked what my economic stimulus payment was I put $600 (my wife), and the next page it says "Your recovery rebate credit is $900. Your credit is reduced by any economic stimulus payment you received in 2008."

what the hell does that mean? Why does it say $900? Why does it reduce my refund?

did you get a rebate?

That is strange, it should have added the difference.

Yea i didn't get one...i think the software isn't fully ready/updated and it's a bug. Now that i am married I qualify for one along with my baby $300. So it should have added $600+300=900, not subtract.