9th Annual Tax Thread - 2011

[steppinthrax]

I'm having a hard time understanding this concept. I put in my rental deductions and I see my rebate go up. I put in a depreciation of my property and I see it go up even more. Why would rental property actually depreciation. And if the IRS is keeping track of the depreciation would it mean that eventually it would depreciation to 0.

 

[EagleKeeper]

Eventually, wear and tear means you need to replace the property. By that time the gov has provided you some assistance to do so.

 

[Francodman]

Kinda off the wall, but was wondering what you tax guys know what would be the benefit of the following situation:

A homeowner in the area has privately bought and sold the home about 6 or so times between themselves and a trust they manage. Is there some sort of tax benefit in doing this? I'm just curious.

 

[Caveman]

Are there any electronic tax forms I can download? Not talking about .pdf docs that are meant to be printed off... I mean docs that can be typed into so they look nice and can be edited if there's a mistake?

I usually use TTax, but can't this year and I wondered if there's a btter way then handwriting everything, which is a royal pain...

 

[alkemyst]

Are there any electronic tax forms I can download? Not talking about .pdf docs that are meant to be printed off... I mean docs that can be typed into so they look nice and can be edited if there's a mistake?

I usually use TTax, but can't this year and I wondered if there's a btter way then handwriting everything, which is a royal pain...

Turbotax will be your cheapest route...the other solution is over $100, it's still PDF and you'd use ACROBAT, not ACROBAT READER.

I own a legal copy of it and I'd not even consider using it over handwriting if I couldn't use a tax program.

How complicated is your tax situation? 1040EZ or just a simple 1040A doesn't work?

 

[alkemyst]

Kinda off the wall, but was wondering what you tax guys know what would be the benefit of the following situation:

A homeowner in the area has privately bought and sold the home about 6 or so times between themselves and a trust they manage. Is there some sort of tax benefit in doing this? I'm just curious.

Probably not so much a tax benefit, but a real estate scam.

Usually it's not back and forth between an individual and 'their' trust, but rather a group of individuals or entities. There was a group of 4-5 that got busted in my area that were buying cheap and then doing fake 'high' sales between them all really messing up the comps in the area.

What happens usually is these types have a dozen or so properties in the queue all bought at what becomes fire sale prices in a now inflated market. They then bring those properties into the game at just below the comps they created and people think they are getting a bargain.

 

[alkemyst]

Eventually, wear and tear means you need to replace the property. By that time the gov has provided you some assistance to do so.

This and like any property you use for business it's considered outside your normal 'enjoyment use'. When I was using my car for my side business, I could write off all 'side business' related use. However, my normal commute to my regular job; going out to clubs, shopping, just cruising, etc and the like were not write offs.

With a true rental, eventually the tenants will wear out the place. You didn't get the usage of it. So although you must pay tax on the profits, you are also entitled to a break in keeping it livable so good old Uncle Sam can get those taxes. He wants to help you help him 🙂

Don't stop at the rental itself though. Think about your computer, phone, printing, stamps, supplies, even utilities you used to support that rental. These costs are often trivial by themselves, but together can add up to a nice buck. The government will let you recapture that if you are willing to do the work and keep those records.

I have found though keeping the proper documentation from day 1 is a lot easier (and more profitable) than trying to reinvent it on tax day.

 

[alkemyst]

For the ATOT tax gurus:

I'm going back to school full time this fall. I know the obvious things like tuition and loan interest are usually tax deductible, but what else is there that I can use to my advantage for next year's taxes? What about school supplies (computers, books, etc)? Application fees? Travel expenses? I'll take anything I can get.

Look up HOPE and Life Time Learning credits. These documents will give you all the answers for your situation.

Just saying you are going back to school doesn't give us enough info to help you fully. If this was your first two years of higher learning then we could direct you better. Those are usually the most tax sheltered.

 

[Francodman]

Probably not so much a tax benefit, but a real estate scam.

Usually it's not back and forth between an individual and 'their' trust, but rather a group of individuals or entities. There was a group of 4-5 that got busted in my area that were buying cheap and then doing fake 'high' sales between them all really messing up the comps in the area.

What happens usually is these types have a dozen or so properties in the queue all bought at what becomes fire sale prices in a now inflated market. They then bring those properties into the game at just below the comps they created and people think they are getting a bargain.

Interesting, and thanks for getting back to me. Not sure if that's the case here. There were 2 sales in 2005, 2 in 2003, and 1 in '98 and '99. I just found it odd.

 

[alkemyst]

Interesting, and thanks for getting back to me. Not sure if that's the case here. There were 2 sales in 2005, 2 in 2003, and 1 in '98 and '99. I just found it odd.

based on how you presented this I thought it was for one tax year.

based on what you know you should be able to look up more info on those sales...

 

[Francodman]

based on how you presented this I thought it was for one tax year.

based on what you know you should be able to look up more info on those sales...

sorry for the confusion, and all I know are dates and the name of the buyer and seller.

 

[EagleKeeper]

Are there any electronic tax forms I can download? Not talking about .pdf docs that are meant to be printed off... I mean docs that can be typed into so they look nice and can be edited if there's a mistake?

I usually use TTax, but can't this year and I wondered if there's a btter way then handwriting everything, which is a royal pain...

Unless you can edit the ones from the IRS, you are out of luck.

For $25 you can get what you need from Tax S/W that you can store on your system.

 

[EagleKeeper]

Kinda off the wall, but was wondering what you tax guys know what would be the benefit of the following situation:

A homeowner in the area has privately bought and sold the home about 6 or so times between themselves and a trust they manage. Is there some sort of tax benefit in doing this? I'm just curious.

Probably not so much a tax benefit, but a real estate scam.

Usually it's not back and forth between an individual and 'their' trust, but rather a group of individuals or entities. There was a group of 4-5 that got busted in my area that were buying cheap and then doing fake 'high' sales between them all really messing up the comps in the area.

What happens usually is these types have a dozen or so properties in the queue all bought at what becomes fire sale prices in a now inflated market. They then bring those properties into the game at just below the comps they created and people think they are getting a bargain.

My guess. They either are setting up other "investors/purchasers/suckers" or inflating the prices such that the last one walks away from the house and the finance company is left holding the bag for the inflated purchase.

 

[SunnyD]

Question:

If I decide to file Married Filing Separate for the first time in ~15 years, what are the odds that I'll get flagged for an audit? (Not that I have anything to hide, just wondering)

Also, if filing as above, does my wife HAVE TO file despite having no income?

 

[EagleKeeper]

Question:

If I decide to file Married Filing Separate for the first time in ~15 years, what are the odds that I'll get flagged for an audit? (Not that I have anything to hide, just wondering)

Also, if filing as above, does my wife HAVE TO file despite having no income?

MFS carries no baggage that would trigger an audit. There may be some deductions that are disallowed though.

Second question - No she does not if she has no income.

 

[shortylickens]

Every year I use Turbo Tax it gets more cumbersome and makes more errors.

Oh, and it gets more expensive too.

 

[EagleKeeper]

Every year I use Turbo Tax it gets more cumbersome and makes more errors.

Oh, and it gets more expensive too.

No one says that you have to use it.😕

 

[dquan97]

My business checking acct received a 1099-INT ($200). Do I have to report this in the 1040 form or can I list it as income under Sch. C (along w/ deductions offsetting it)? 1st yr side business. Planning on showing 1st yr loss of $300 after a $500 computer purchase.

 

[EagleKeeper]

My business checking acct received a 1099-INT ($200). Do I have to report this in the 1040 form or can I list it as income under Sch. C (along w/ deductions offsetting it)? 1st yr side business. Planning on showing 1st yr loss of $300 after a $500 computer purchase.

Schedule C

 

[redgtxdi]

Forgive me cuz I didn't search in this thread BUT........

can I write off the stuff we buy for the troops send off boxes at our church? It's always the same stuff:

Socks
Pens
Paper
Cheezits (not kidding)
And more socks
And other stuff I can't remember

We call it "support the troops" but we buy all the stuff as well as pay for the shipping but I don't know that it counts as an official charity and it's not stuff we see on our regular church 1099.

TIA

 

[EagleKeeper]

Schedule A as long as going through an approved charity/church

 

[DigitalCancer]

Hello,

I'm using the online TaxAct system to do our taxes this year and we purchased a house this year (well..closing 2/16/12 so technically 2012).

We took out my wifes 401k to help with the down-payment ($5,100) and in doing our taxes we were doing good (something like $592 Fed and $300 State coming back) until I had thrown in the 1099-R form. Now, we're OWING Fed $980 and State we'll get back $192. Does this sound right to you guys or did I do something wrong?

Also on my wifes W2 it has a box 12a of 'D - $1028.52'

 

[EagleKeeper]

The 401K withdrawal vs a loan is the issue.

A loan needs to be paid back to the plan is is not taxable unless you do not pay it all back.
A withdrawal is taking money that you do not intend on paying back - therefore it becomes taxable.

Code D is elective deferrals - usually retirement plan

If you intend on paying it back via withholding from her paycheck; talk to the plan administrator and find out if the withdrawal can be reclassified as a loan and therefore issue a corrective 1099-R

 

[DigitalCancer]

The 401K withdrawal vs a loan is the issue.

A loan needs to be paid back to the plan is is not taxable unless you do not pay it all back.
A withdrawal is taking money that you do not intend on paying back - therefore it becomes taxable.

Code D is elective deferrals - usually retirement plan

I understand that. We took the 401k on a hardship (no penalty) and we decided to not take a 50% loan on it b/c we needed as much as possible.

My question is...did I figure this up correctly? Should I owe $930 in taxes now from this?

 

[EagleKeeper]

I understand that. We took the 401k on a hardship (no penalty) and we decided to not take a 50% loan on it b/c we needed as much as possible.

My question is...did I figure this up correctly? Should I owe $930 in taxes now from this?

10% penalty - $510 (This is able to be waived as a hardship) may being added. Look for your options where you added the 1099-R for a checkbox for hardship

Under a “safe harbor” in IRS regulations, an employee is automatically considered to have an immediate and heavy financial need if the distribution is for:

Medical care expenses for the employee, the employee’s spouse, dependents or beneficiary;
Costs directly related to the purchase of an employee’s principal residence (excluding mortgage payments);
Tuition, related educational fees and room and board expenses for the next 12 months of postsecondary education for the employee or the employee’s spouse, children, dependents or beneficiary;
Payments necessary to prevent the eviction of the employee from the employee’s principal residence or foreclosure on the mortgage on that residence;
Funeral expenses for the employee, the employee’s spouse, children, dependents, or beneficiary; or
Certain expenses to repair damage to the employee’s principal residence.

If not; you are in the 18% bracket for taxes