7th Annual Anandtech Tax Time Thread

[cpals]

Is there a reason you don't want to use Married Filing Jointly (being she married him while he was in jail I am assuming they still see each other)? Also did he not make any income while in jail? If he had a job, that income is usually taxable.

I haven't heard anyone get 'single' status while married unless you mean Married Filing Separate (which is a definite option), Head of Household could become an option with kids...

No reason other than I wasn't sure if him being in jail complicated things? She said he did not have a job in jail last year so did not make any money.

I think I mistook 'single' for 'head of household', which I'm not sure what the difference is.

From about.com:

Married taxpayers may be eligible to file using the Head of Household filing status if your spouse did not live with you during the last six months of the year and your home was the main home of your child for more than half the year. Here's what the IRS has to say:

"You may be able to choose head of household filing status if you live apart from your spouse, meet certain tests, and are considered unmarried.... This can apply to you even if you are not divorced or legally separated. If you qualify to file as head of household, instead of as married filing separately, your tax may be lower, you may be able to claim the earned income credit and certain other credits, and your standard deduction will be higher. The head of household filing status allows you to choose the standard deduction even if your spouse chooses to itemize deductions." (From IRS Publication 501, "Married Filing Separately")

 

[alkemyst]

We don't have enough info to know if they qualify. Do the HoH test and if she passes she can use it. Personally I'd run a couple models and see what's better, but is this person someone that would want to file anything but a 1040EZ? Can they itemize?

 

[EagleKeeper]

Suppose that the wife + I are in 25% tax bracket, married filing jointly with our withholding from our salaries set to match our taxes in a normal year as close as possible. Suppose I receive a one time payment of $10,000 today. Suppose that no tax was withheld from that payment. Is the following correct?

1) I need to pay estimated 2010 taxes (using form 1040-ES) since we have a pay-as-you-go tax system.
2) Form 1040-ES would say that since I am in the 25% tax bracket (and still will be after the royalty payment), that I owe $2500 in tax through estimated payments.
3) I only have to pay 1/4 of that $2500 each quarter. Meaning each quarter I have to pay $625 in estimated tax.

I think I have that all correct. If not, please let me know where I erred. Now, my main question is: what happens if later this year I get another one time royalty payment of $10,000? I really don't know if it'll happen or not and at this point the magic 8-ball says "no". Suppose I get lucky and I do get another payment in August. When I do my quarterly payment after August, do I have to make up for the quarterly payments that I didn't do earlier before I knew about this second royalty payment? Or what? I'm new to this estimated payment stuff. I'm paying enough tax this year, I don't want to add a penalty for doing something at the wrong time.

Or can I just make it easy on myself and do a one-time estimated payment of $2500 now and a second one-time payment of $2500 if I ever get that second royalty payment?

The quarterly taxes should be the tax percentage of the income that you received during the quarter. The IRS expects that you are estimating that that income will continue for each quarter.

If you can put the extra 1800 (3/4 of 2500) to use to benefit yourself during the year; pay the quarterer as if the 10K comes in 2500 each quarter.

Otherwise pay the tax on the income as it arrives to avoid your internal paperwork headaches.

 

[EagleKeeper]

Lets say this person meets everything listed above.. maybe. The person however made over 3,650 from state/gov help, but is disabled. The unless part confuses me so does that mean i can file the disabled person as a dependent? (aka is this person a qualifying relative?

If the person is classified as a dependant, the income test goes out the window - all other test much pass.

The Dependant will have to file their own tax return declaring their income.

 

[EagleKeeper]

We have two houses, the one we live in and an older house we sold in last year for a loss. The old house was not our primary residence for the past two years. Can we claim this as a capital loss? I'm finding conflicting info on irs.gov

"You cannot deduct a loss from the sale of your main home." - Well this isn't my main house

But it seems to meet the requirements listed in the Capital Gains and Losses section.

If the house was used for income generation/investment then you can declare a loss.

If the house was sitting around (like a vacation home), you can not claim any loss.

 

[EagleKeeper]

Head of Household and Married Joint should generate the same benefits if the incarcerated spouse has no reportable income.

Married Seperately reduces some deductions/credits that are available to single/joint filers

 

[snoopdoug1]

I am in an MBA program, and my employer paid for the education. I was required to pay tax on the money they paid for tuition.

In my opinion, this job improves or maintains skills in my current job and does not qualify me for a new trade or business (based on my current skill set). Can I get my tax money back by claiming this as a business expense?

 

[alkemyst]

I am in an MBA program, and my employer paid for the education. I was required to pay tax on the money they paid for tuition.

In my opinion, this job improves or maintains skills in my current job and does not qualify me for a new trade or business (based on my current skill set). Can I get my tax money back by claiming this as a business expense?

Why was the money taxed? If it was paid as extra income then you may be able to claim it. If it was paid as money for the classes or a reimbursement then not.

 

[redgtxdi]

I did a quick search, but didn't find anything so here goes........


What about a 1099 INT under $10??? Do I need to claim it??

Googling says yes and no. I don't think it'd hurt, it's more or less just not having to fill out info for one more institution that's the work I'd rather not do.

TIA

 

[alkemyst]

technically you owe taxes on any income. Whether or not the IRS is going to care is another matter. It should have taken no longer than posting about it to have it squared away in any tax program.

I had $7 in one account, I put it down. Personally I'd rather not have something stupid open me up to an audit.

 

[EagleKeeper]

I did a quick search, but didn't find anything so here goes........


What about a 1099 INT under $10??? Do I need to claim it??

Googling says yes and no. I don't think it'd hurt, it's more or less just not having to fill out info for one more institution that's the work I'd rather not do.

TIA

You spent more time trying to ask the question than it would take to fill out the entry for the 1099.

If the IRS can waste 100s of man hours to verify your entries, at least make sure that you entered everything to the best of your ability

 

[GTaudiophile]

Tax audits: Uncle Sam wants you!

More than 1.4 million Americans were audited last year, the most in a decade. Even more audits are expected as the Obama administration plans to spend $8.2 billion in tax enforcement initiatives in 2011, a nearly 10% increase over last year.

 

[GTaudiophile]

How does one go about declaring his or her income without the use of W2s?

 

[EagleKeeper]

How does one go about declaring his or her income without the use of W2s?

Schedule C for self employment.

If you have wage income, the employer should provide you with a W2.

 

[snoopdoug1]

Why was the money taxed? If it was paid as extra income then you may be able to claim it. If it was paid as money for the classes or a reimbursement then not.

The money showed up as income on my W-2.

Thanks for the help.

 

[pontifex]

I forgot to enter my 1099-G form info before I E-filed. I ran it through taxact again and neither state nor federal refund amounts changed at all, so am I ok or could this hurt me later?

 

[EagleKeeper]

I forgot to enter my 1099-G form info before I E-filed. I ran it through taxact again and neither state nor federal refund amounts changed at all, so am I ok or could this hurt me later?

If you are not itemizing, then a state refund will have no difference on your Federal return.

A state refund should have no impact on your state return.

I am operating on the assumption that the 1099-G is for last years state tax refund.

 

[pontifex]

If you are not itemizing, then a state refund will have no difference on your Federal return.

A state refund should have no impact on your state return.

I am operating on the assumption that the 1099-G is for last years state tax refund.

I'm actually not sure what it is for. I'm pretty sure I owed state tax last year, like maybe $1 or so. I'd have to look up last year's filing. It was only like $38 and some change that was on the 1099-G form.

 

[jiggahertz]

This is a 2010 tax question, but figured this would be the best place to ask. My fiance and I both own condos. We are in the process of selling mine and buying a house before April 30th. If we do this, would we be eligible for the $6500 tax credit? The full amount or 50%. Would it matter if my condo was sold before/after we got married?

 

[Pantoot]

I own a home that I lived in for half of last year and rented out the other half.

Second home rented out. If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you do not use the home long enough, it is considered rental property and not a second home. For information on residential rental property, see Publication 527.

To my non CPA mind it looks like this would be a qualified home, so I can deduct the interest that I paid for the whole year. Is that correct, or do I split it for half the year and show half personal and half rental expense and use it to offset the rental income?

Thanks!

 

[EagleKeeper]

This is a 2010 tax question, but figured this would be the best place to ask. My fiancé and I both own condos. We are in the process of selling mine and buying a house before April 30th. If we do this, would we be eligible for the $6500 tax credit? The full amount or 50%. Would it matter if my condo was sold before/after we got married?

You are eligible for the full amount (depending on your income level) if you meet the length of time in the existing place.
If married, the income level increases.
You will have to include her income if married.
The income level will be based on your martial status on 31 Dec

 

[EagleKeeper]

I own a home that I lived in for half of last year and rented out the other half.



To my non CPA mind it looks like this would be a qualified home, so I can deduct the interest that I paid for the whole year. Is that correct, or do I split it for half the year and show half personal and half rental expense and use it to offset the rental income?

Thanks!

If you are able to itemize, the interest and taxes come out in the wash.

It is proper to allocate those items proportionally based on length of time - however, your interest statement will not show the deliniation. Given that, keep all the interest and taxes together on one form

 

[lonelyt]

Question about deducting Property Taxes:

I bought my first home in 2009 - and received a property tax bill from the county. Because they take payments in two separate installments, I only paid the first part of the 2009 property taxes in 2009 - the rest I'm going to pay this year. So first I want to confirm I only deduct the portion I paid in 2009.

I've read some of the bill is not deductible (like Mello-roos taxes). Should I subtract that amount and divide it evenly between the two payments? Meaning if my total bill is $1000, Mello-roos is $200, my first payment is $500 (half of $1000), so I subtract $100 (half of $200) and deduct $400?

Last question - I closed escrow on 6/9/2009 - I'm not sure how/if this affects the property taxes I can deduct. I guess the property tax bill I received covers July 1st - June 30th...Does that mean I should add the Property taxes paid from 6/9/2009-7/1/2009 in escrow to my deduction (I think they were paid by the seller)? I'd have no idea how to split the non-deductible amount from that though as I didn't get a bill for that amount.

Thanks for the help!

 

[EagleKeeper]

Your escrow statement should indicate what property taxes you are responsible for at time of closing. Then you should have received an interst paid statement from the lender along with the amount of property taxes that they paid for July-Dec.

You should ask your taxing authority on what part of the property tax bill is not considered to be deductible.

 

[JohnnyMCE]

I'm working on my parents taxes now and there is something I am unsure of. For a two week period last year my father was on short term disability. He received income from an insurance company and they took social security and medicare out of it. I have both receipts so I know all the numbers to work on the taxes, but should he have gotten some kind of 1099 from the insurance company? Also where in his federal would i place this income?