7th Annual Anandtech Tax Time Thread

[Engineer]

If that is the only thing the IRS would chase you on, ignore it if you choose.

Thanks EagleKeeper. I took last years copy and filled in the numbers from my account 2009 transactions. I might have a capital gains vs dividends out of place but in reality, it's the same amount of money. Taxes now filed.

 

[JD50]

There is nothing to claim for the 2010 tax season.

You can file an ammended return (1040X) for 2009 to claim tuition costs of $5K

Ok thanks. I think I'll just wait another week or two and see if they take it out of my last pay check. Filing an amended return sounds like a PITA.

 

[JEDI]

Miles driving to work is tax deductible?

A co-worker lives in either Va or MD. he drives 70 miles each way. He's an employee, not a consultant. he doesnt drive anywhere once he's at work.

He hired an account to do his 2009 taxes. The accountant said his car is 80% business, and the miles are tax deductible.

either he lied to the accountant, or the account is incompetant. either way, i didnt inquire further.

Based on above, is his miles deductible?

 

[CPA]

Miles driving to work is tax deductible?

A co-worker lives in either Va or MD. he drives 70 miles each way. He's an employee, not a consultant. he doesnt drive anywhere once he's at work.

He hired an account to do his 2009 taxes. The accountant said his car is 80% business, and the miles are tax deductible.

either he lied to the accountant, or the account is incompetant. either way, i didnt inquire further.

Based on above, is his miles deductible?

The accountant is an idiot, if that's what he told your friend. None of those miles are deductible based on the scenario you described.

 

[Homerboy]

The accountant is an idiot, if that's what he told your friend. None of those miles are deductible based on the scenario you described.

I'm not even an account and I know that. Common sense would tell you that's not true as EVERYONE'S car would be considered 80% deductible.

 

[LostUte]

My wife did a 403(b) to IRA rollover this year. When we filled out the paperwork, we requested that it go to her traditional IRA. I was then going to do a Roth conversion of the rollover amount plus prior traditional IRA contributions.

She mentioned this on the phone to the new custodian, who put the rollover directly into the Roth IRA. The 1099-R from the previous custodian has $0.00 listed as the taxable amount, and a distribution code of G. With this info, the tax software (TurboTax) is not accounting for anything being taxable, even though it asked later if the amount was rolled into a Roth IRA.

The 5498 from the new custodian has the rollover amount listed next to "2. Rollover contributions."

Any ideas on what I need to do?

 

[Ushio]

If I hired someone to do regular house work and pay them cash, do I have to issue them a 1099??

because she said i'm one of her source of income and she uses it to apply medicaid etc etc and her tax guy told her that I need to give her a 1099. I have no problem with confirming what I paid her if/when asked, but is a 1099 necessary? Or can she just give me receipts confirming that I paid her for said amount each time?

Thanks!

 

[chipy]

Line 10 is for TAXABLE credits and refunds recieved in 2009 related to tax year 2008 (you would have received a 1099-G), it is not a deduction line, rather an income line. There is some convoluted walkthrough you need to do in order to determine if any of your state or local tax refund is taxable. Most aren't.

In order to deduct state and local taxes you paid in 2009, which you can do, you need to itemize and file Schedule A. However, in order to itemize, your schedule A deductions need to be greater than your standard deduction.

thanks CPA. i'll have to wait since i don't think my itemizing will be greater than the SD. appreciate your help!

 

[EagleKeeper]

1099 or not you are responsible for the taxes.

Incorrect.

The 1099 is a courtesy to you.

One is still responsible for reporting ALL income (earned and unearned) on your tax forms.

 

[EagleKeeper]

There is nothing to claim for the 2010 tax season.

You can file an ammended return (1040X) for 2009 to claim tuition costs of $5K

Ok thanks. I think I'll just wait another week or two and see if they take it out of my last pay check. Filing an amended return sounds like a PITA.

the ammended return is jsut a form that you list what the flawed year entries are and what they should have been.

You may aso have to attached a new form with the related changes if it is not directly on the 1040.

And an explanation.

If you used tax S/W, it is easy to generate.

If they take it out of the paycheck; you should confirm with the HR how it will be reported. If just deducted from the final check; then file the 1040X

 

[EagleKeeper]

If I hired someone to do regular house work and pay them cash, do I have to issue them a 1099??

because she said i'm one of her source of income and she uses it to apply medicaid etc etc and her tax guy told her that I need to give her a 1099. I have no problem with confirming what I paid her if/when asked, but is a 1099 necessary? Or can she just give me receipts confirming that I paid her for said amount each time?

Thanks!

When the amount is over ~$300, in theory, you should provide a 1099 (or substitute) so as to not get dinged for you treating her as an employee and being responsible for payroll related taxes.

 

[TheBull]

Info:
I was a salaried employee from 1/1/09 - 7/31/09. While laid-off I started my own s-corp (in PA) for database/software consulting during Aug. I have a few expenses: incorporting, insurance, interview travel, separate phone (voip), and web domain. Probably less than $2000 out-of-pocket. I started consulting on 12/1/2009 and issued my first invoice later that month. I did not receive any payments until Jan 20, 2010 (Net 30 terms). I have only gas and toll expenses for Dec 2009 while working. I have 100 mi/day commuting, so no mileage there.

Question:
I don't know if I should take any of these deductions on my 2009 taxes. Can or should I delay them to 2010. I don't want to waste any potential bonus depreciation on my car (purchased new 6/2008, placed in service 12/1/2009), because for most of the year the car was personal. My mileage log is 93% business for Dec and Jan.

Thanks,

 

[alkemyst]

The accountant is an idiot, if that's what he told your friend. None of those miles are deductible based on the scenario you described.

Exactly and pretty much every description in the instructions explains that mileage to and from work, clothes you wear to work (unless they are specifically a 'uniform' and cannot be worn out and about), etc are not deductible.

Likewise if you are a 'consultant' your initial mileage to your job is not deductible if it's along the way to the job after-work.

Some of the stuff I have seen many pros do are just them hedging the odds on their customers being audited.

 

[EagleKeeper]

Info:
I was a salaried employee from 1/1/09 - 7/31/09. While laid-off I started my own s-corp (in PA) for database/software consulting during Aug. I have a few expenses: incorporting, insurance, interview travel, separate phone (voip), and web domain. Probably less than $2000 out-of-pocket. I started consulting on 12/1/2009 and issued my first invoice later that month. I did not receive any payments until Jan 20, 2010 (Net 30 terms). I have only gas and toll expenses for Dec 2009 while working. I have 100 mi/day commuting, so no mileage there.

Question:
I don't know if I should take any of these deductions on my 2009 taxes. Can or should I delay them to 2010. I don't want to waste any potential bonus depreciation on my car (purchased new 6/2008, placed in service 12/1/2009), because for most of the year the car was personal. My mileage log is 93% business for Dec and Jan.

Thanks,

You can take the deductions for 2009 for any expenses related to the startup - use the Schedule C for income and expenses.
Remember there are a lot of indirect expenses that can also come into play.
Previous threads have identified such types of items.

Just do not put the car into service until 2010 if you are worried about deprecication.

 

[Ushio]

When the amount is over ~$300, in theory, you should provide a 1099 (or substitute) so as to not get dinged for you treating her as an employee and being responsible for payroll related taxes.

so by substitute that means if she gives me a bill each time then I won't have to provide the 1099?

Oh and thanks!!!

 

[EagleKeeper]

so by substitute that means if she gives me a bill each time then I won't have to provide the 1099?

Oh and thanks!!!

The main thing is that there is a paper trail showing that she is not an employee and she can account for where her income is coming from.

If you do not provide a 1099 form; you should provide a statement detailing the payments and dates.

 

[alkemyst]

so by substitute that means if she gives me a bill each time then I won't have to provide the 1099?

Oh and thanks!!!

To add to EK, her billing you is not enough in this. You have to reciprocate that with either a payment trail or just do the 1099.

Is there a reason you don't want to do this? We aren't here to audit you, but we can help more if all the details are given.

 

[Ushio]

To add to EK, her billing you is not enough in this. You have to reciprocate that with either a payment trail or just do the 1099.

Is there a reason you don't want to do this? We aren't here to audit you, but we can help more if all the details are given.

I just found it odd that having to do a 1099, I mean she doesn't come in like every week/month, only when we call sometimes few times a month and sometimes skipping a few months. in that case wouldn't I have to do a 1099 for everyone that provided services and which I paid more than $300?(doctors etc etc)

Mainly just wanted to have one less thing to keep track of in the future and one less mistake filing stuff to the IRS, if it was regular amounts each month or so then it would be easy.

So I would be giving her a 1099 and mail one to the IRS and keeping a copy myself correct? Would there be any other forms that need to go with it like 1096 i read somewhere?

 

[alkemyst]

I don't think you understand the difference between having a contractor work for you and showing up to an established business for a service.

Your 1099 helps her legitimatize her income.

 

[Ushio]

I don't think you understand the difference between having a contractor work for you and showing up to an established business for a service.

Your 1099 helps her legitimatize her income.

Ahhh I got it! I should've realized the difference, sorry for the dumb question.

Thanks again

 

[Jumpem]

Claiming daycare costs. I can't do this without the provider's SSN, correct? Is this so that that the IRS can be sure the provider listed it as income on their taxes?

 

[CPA]

Claiming daycare costs. I can't do this without the provider's SSN, correct? Is this so that that the IRS can be sure the provider listed it as income on their taxes?

That and to insure that you are not making them up. If the IRS doesn't see Schedule C income from the sole-proprietor then a red flag will come up for both returns.

However, that said, the IRS simply cannot match dollar for dollar because their is no requirement for the daycare provider to provide a 1099 or other document that specifies individual payments to the IRS. And not all people claim their daycare costs (ie, make too much income).

 

[Jumpem]

That and to insure that you are not making them up. If the IRS doesn't see Schedule C income from the sole-proprietor then a red flag will come up for both returns.

However, that said, the IRS simply cannot match dollar for dollar because their is no requirement for the daycare provider to provide a 1099 or other document that specifies individual payments to the IRS. And not all people claim their daycare costs (ie, make too much income).

I would claim them, but I doubt the provider claimed the income on her taxes. I don't want to stir up trouble for her.

 

[CPA]

I would claim them, but I doubt the provider claimed the income on her taxes. I don't want to stir up trouble for her.

As long as you keep your check copies or other receipts and she provides you her SSN. But, chances are she's going to get a letter if you and others are claiming her services, but she didn't claim the income.

 

[alkemyst]

I would claim them, but I doubt the provider claimed the income on her taxes. I don't want to stir up trouble for her.

That's part of it too. I see this a lot in 'Computer Consulting' which I do. Due to people simply not reporting their income has caused me a lot of grief running a legitimate business. I only made under $500 last year doing it (made as in the actual receipts from customers) and had no real deductible expenses. I wasn't really in business last year though, still I reported the money that just came my way.

There is quite a bit of mumbo jumbo going on in the child care business. In the beginning, "Grandma" figured out she could be a child care facility and make some/shelter some hefty cash off the government...once she began talking about it then the Feds stepped in since it became rampant.