7th Annual Anandtech Tax Time Thread

[Xcobra]

I have 3 accounts that earn interest but none of them earned over $10, so I received no 1099 on any of them. Do I still need to report the interest? It may sound petty but I don't want to be audited over $15 I didn't report

Chances are, the IRS won't know of that income if you don't report it. But you have report it regardless, even if you made $1 in interest.

 

[Mill]

You can not based on the income test described below

From Pub 501 - Dependants

I have to disagree slightly with you here. You are right, he cannot claim HOH, but it is not because of the income test. The sister would be his qualifying child. As long as she does not provide more than half of her own support he could use her as a qualifying child. The problem is that she is 25 years old. That means she is disqualified under the age test.

If she was 23 and a full-time student she could qualify him as long as she lived there more than 6 months and if he is older than her.

 

[Mill]

Can I deduct my COBRA payments for me and my dependents (wife and children) at all?

I'm using Turbo Tax and I searched but all they have is a wizard to see if you need to repay the premium assistance program (the 35% program) which I did take part in, but do not have to repay.

Of course you can. They are health insurance premiums and they go on your schedule A. Now, do you itemize or take the standard deduction? If you have mortgage interest and other deductions run the numbers both ways. A program like Turbo Tax will do that automatically.

You should put your "COBRA payments" under health insurance premiums under medical and dental on schedule A. Unfortunately, you have to spend more than 7.5% of AGI on health insurance/unreimbursed costs for it to have any effect.

 

[briguy812]

I did a paper return (not submitted) of my wife's and my return as Married Filing Jointly, but am curious if Married Filing Separately would change the outcome.

When it comes to itemized deductions - do we simply split our Mortgage Interest and Charitable Donations (which were paid from a shared checking account) 50/50? Or can we go 60/40 as long as the total is the same?

Thanks for your response and service to the AT community!

 

[Mill]

I did a paper return (not submitted) of my wife's and my return as Married Filing Jointly, but am curious if Married Filing Separately would change the outcome.

Yes, it would change the outcome. Probably not for the better.

When it comes to itemized deductions - do we simply split our Mortgage Interest and Charitable Donations (which were paid from a shared checking account) 50/50? Or can we go 60/40 as long as the total is the same?

Thanks for your response and service to the AT community!

Did one of you have a lot of medical expenses or business expenses? If either one of you itemize you both have to with MFS.

With MFS:

Education credits will be disallowed if you have any. IRA contributions are phased out at 10k unless you lived apart all year. Child and dependent care is disallowed.

Do you live in a community property state?

We need more information to give you an accurate picture. If you paid from a joint account and both of you can legimately claim the deduction it has to be 50/50. No 60/40.

 

[Chrono]

You can not based on the income test described below

From Pub 501 - Dependants

Hm... Is there anything that I can claim then?

 

[Joemonkey]

Did I get screwed by buying my trade-up house in September last year? Looks like to claim the $6500 trade up credit you have to have closed after November 6 2009... Do I get any special tax breaks or credits for having mortgages on 2 houses?

 

[briguy812]

I did a paper return (not submitted) of my wife's and my return as Married Filing Jointly, but am curious if Married Filing Separately would change the outcome.

Yes, it would change the outcome. Probably not for the better.



Did one of you have a lot of medical expenses or business expenses? If either one of you itemize you both have to with MFS.

With MFS:

Education credits will be disallowed if you have any. IRA contributions are phased out at 10k unless you lived apart all year. Child and dependent care is disallowed.

Do you live in a community property state?

We need more information to give you an accurate picture. If you paid from a joint account and both of you can legimately claim the deduction it has to be 50/50. No 60/40.

Thanks for the reply!
We live in MN, which I believe is a community property state and did not have any sizeable medical or business expenses.
The reason for thinking about doing MFS, is right now our AGI is about $2,000 over the Retirement Savings Contribution Credit ceiling (line 50), and thought that by filing separately we could scoot under the single limits.

 

[LostUte]

Any answers to my question?

To repeat: Wife planned to do 403b to traditional IRA rollover. We were then going to take her traditional IRA and convert it to a Roth. New custodian rolled 403b directly into Roth IRA. 1099-R from previous custodian lists distribution code 7 and that $0.00 is taxable (I assume because the paperwork said the money was going to a traditional IRA). 5498 from the new custodian lists a rollover contribution for item 2. The new custodian did not issue a 1099-R for the converted amount.

Do we need to get a corrected 1099-R, or can we use the current paperwork as long as we report the distribution as taxable?

 

[alkemyst]

Did I get screwed by buying my trade-up house in September last year? Looks like to claim the $6500 trade up credit you have to have closed after November 6 2009... Do I get any special tax breaks or credits for having mortgages on 2 houses?

Many of the credits do not allow for more than one home being owned.

There are new limits though and the dates are the same for both. Your purchase must be secured by April 30, 2010 and your closings must be finalized by June 30, 2010.

 

[EagleKeeper]

My wife is a teacher and spends a lot of pocket on teaching related things for her classroom, students, etc. There is a $250 deduction we can take, but she spends much more. If we itemize can we claim all of these types of expenses, or are we still limited to the $250?

You can claim those expenses on the Form 2106 under the Schedule A
Do not use the intial $250 that you would claim on the 1040 for educator expenses.

Note also that the 2106 has a 2% AGI overhead.

 

[EagleKeeper]

You can not based on the income test described below

From Pub 501 - Dependants

I have to disagree slightly with you here. You are right, he cannot claim HOH, but it is not because of the income test. The sister would be his qualifying child. As long as she does not provide more than half of her own support he could use her as a qualifying child. The problem is that she is 25 years old. That means she is disqualified under the age test.

If she was 23 and a full-time student she could qualify him as long as she lived there more than 6 months and if he is older than her.

I stand corrected - the IRS is becoming more and more lenient.

 

[LuckyTaxi]

Question regarding Roth IRA Distribution. I'm using Turbotax and I'm a little confused with some of the questions. Here's my breakdown.

YE 2008: Contributed $400
YE 2009: Contributed $600

I took out $800 in the middle of 2009 to cover some bills while I was switching jobs.
Technically I shouldn't have to pay any taxes since I only took out what I contributed (left some in account for this reason). Tell me if this is right, it seems Turbotax ask if I took out any money PRIOR TO 2009. I answered "No" since I took out money in the middle of 2009. If this is correct, does that mean I'll have to answer "Yes" in 2011 for my 2010 return?

 

[Chrono]

I stand corrected - the IRS is becoming more and more lenient.

Ok... how about this? Can I claim my mom? My mom worked for 5-6 months of 2009. Collected some unemployment, earned about... 13k. However she lives with me and I pay for everything.

 

[jmagg]

Similar to Chrono.

I take care of my mother in my home. SSI is her only form of income. She is not disabled and over 70 yrs old.

 

[CPA]

Ok... how about this? Can I claim my mom? My mom worked for 5-6 months of 2009. Collected some unemployment, earned about... 13k. However she lives with me and I pay for everything.

Nope, she fails the gross income test. She must have earned less than $3650 for the year.

 

[Chrono]

Damn thanks anyway. I still wonder about this. How does a person survive if they earn more than 3650 but less than 15k a year?

 

[chipy]

i currently live in Pennsylvania and i'm not sure if i'm suppose to pay capital gains from stock sold for state income tax. Like 3 of the state income tax form says "Dividends and Capital Gains Distributions Income". i read the instructions and it says "Dividends and Capital Gains Distributions From Mutual Funds". that makes me want to think that i don't have to report capital gains from the sale of stock (not mutual fund)... am i right?

thanks again!

 

[alkemyst]

i currently live in Pennsylvania and i'm not sure if i'm suppose to pay capital gains from stock sold for state income tax. Like 3 of the state income tax form says "Dividends and Capital Gains Distributions Income". i read the instructions and it says "Dividends and Capital Gains Distributions From Mutual Funds". that makes me want to think that i don't have to report capital gains from the sale of stock (not mutual fund)... am i right?

thanks again!

The thread is not for state tax questions. A simple phone call should be able to answer that question for you though.

 

[alkemyst]

Damn thanks anyway. I still wonder about this. How does a person survive if they earn more than 3650 but less than 15k a year?

cohabitation, welfare, etc. Not really for this thread. Hell most here are probably sore so much of what they pay go to these programs.

 

[NoCreativity]

Does changing the marital status on your W-4 from single to married cause less taxes to be taken out of your paycheck? I'm getting a good sized refund but if I lower my exemptions I would owe quite a bit next year according to the calculator on irs.gov. I got married but never changed my status on my W-4.

 

[Xcobra]

Does changing the marital status on your W-4 from single to married cause less taxes to be taken out of your paycheck? I'm getting a good sized refund but if I lower my exemptions I would owe quite a bit next year according to the calculator on irs.gov. I got married but never changed my status on my W-4.

Yes your withholding would be modified, since MFJ has a more favorable tax rate. Chances are, as single, they are taking more taxes out, depending on your SO's withholding and that's why you have a big refund. I suggest you change that to get that extra money on your paychecks.

EDIT: Doing the proper planning is important. Keep this in mind and you will be ok.

 

[EagleKeeper]

Change your withholding and stuff the difference in the paycheck into a "Do Not Touch" account. Look at the size of your refund and send that amount into Uncle by mid Dec (avoids any penalties of under-withholding).

 

[NoCreativity]

Yes your withholding would be modified, since MFJ has a more favorable tax rate. Chances are, as single, they are taking more taxes out, depending on your SO's withholding and that's why you have a big refund. I suggest you change that to get that extra money on your paychecks.

EDIT: Doing the proper planning is important. Keep this in mind and you will be ok.

Thanks! One of those things I completley forgot to change when I got married. Shows up on my pay stub every 2 weeks but I just overlooked the box with the "S" in it.

 

[chipy]

The thread is not for state tax questions. A simple phone call should be able to answer that question for you though.

ah, sorry about that. i did call the PA Dept of Revenue and... doh! i have to pay capital gains tax.