ATOT's Second Annual Tax Time Thread!

[jbloggs]

Originally posted by: EagleKeeper

Originally posted by: jbloggs
I have a rental property and my understanding is I need to fill in Schedule S of the Tax forms. I also my understanding is that any repairs, cost of upkeeping, etc is considered an expense that I can deduct. Can you confirm this?

Also, if the rent paid is considered income, do I then consider the mortgage I pay on the house as an expense. And can I also deduct the interest I pay on the mortgage as I would do normally if it wasn't a rental and I lived there?

Is there anything else I should be aware of for file tax return that includes rental property?

Thanks in advance for any help you can provide.

Unsure about the Schedule S.

I do know that everything you are asking about is covered under the Schedule E.
You declare the income that the property generates and then also any mortgage interest and property taxes.
The mortgage itself is not deductible, however, Uncle allows you to depreciate the dwelling which acts as the same.
Expenses that you pay to maintain/upgrade are deductible along with any utilities that you may provide for the tennants.
Expenses for vehicle use w/ respect to the property are also deductible.
Tax S/W walks you through this area nicely.

Schedule E, that's what I meant. Thanks for that info.

 

[Pliablemoose]

What can I deduct if I moonlight? I already have a full time job & lots of opportunities to moonlight.

Travel expenses?
Depreciate vehicle?

 

[EagleKeeper]

Originally posted by: Pliablemoose
What can I deduct if I moonlight? I already have a full time job & lots of opportunities to moonlight.

Travel expenses?
Depreciate vehicle?

If moonlighting pays you a 1099 then the sky is the limit.
Anything that you can imagine that would be remotely related to the job and/or type or work becomes fair game.
Internet access
Computers/parts
Subscriptions
Meals
Conferences

- No booze or broads though unless you can bury it as entertainment.

 

[Twofootputt]

Here's that thread post. Time changed due to edit.

01/26/2005 10:29 PM



EagleKeeper
Diamond Member

Posts: 7631
Joined: 05/31/2001
quote:

--------------------------------------------------------------------------------
Originally posted by: Leejai
3 things:

1. Bought a house 60 miles away from my work when I had the ability to telecommute. I was promoted, and that took away my ability to work from home, therefore I sold the house w/in the same year. Can this count as "Unforseen Circumstances" or "Changes in place of employement" for selling the house w/in the 2 years required? All can be proven via document from my HR department.

2. Because I sold the house w/in the two years. CA required withholdings of about 3% of the sale price (even though it was a primary residence). A form 593 was given. Can I file that w/ my Federal return as well as prepaid estimated Income State and Local Taxes? If not, it shows I owe the Federal ALOT and I get back even more from the State. If I can, it somewhat evens out, but good news is I don't have to pay a crazy amount to Federal while I wait for the State to give it back

3. On the Buyer's and Seller's Final Statement, which of the following debits are Tax Deductible?

Buyer's Statement:

Adjustments and Loan Fees

Closing Delay Debits
County Tax
Pro-rated Interest on Loan
Appraisal Fee
Credit Report
Tax Service Fee (Bank)
Flood Certification Fee (Bank)
Doc Prep Fee (Bank)
Underwriting Fee (Bank)
Process Fee (lender)
Flood Determination (Bank)
Admin Fee (Bank)

Title/Escrow Fees

Eagle Lender's Policy
BBR - Eagles Owners Policy
Escrow Fee
Loan Tie In Fee
Special Messenger Fee
Notary Fee
Recording Services
Count Doc Transfer Tax
Fire Insurance Premium
New Home PDR to Property Disclosure Services

Seller's Statment: (much shorter)

Title Charges:

Reconveyances

Escrow Charges:

Escrow Fee
Doc Prep Fee
Express Mail
Notary Fees

Misc

Count Tax Collector Proration

As always, thanks for your help!



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Question #1 is Yes. change is status of employemnt and more than 50 miles.

Question #2. Beyond my scope.

However, nothing is written in stone that you have to file the Fed and state at the same time. You may not be able to E-file at different times depending on the state and tax S/W used.

Try to file the state ASAP (using paper if needed) and then mail in the Fed papers on the last possible date. Most (not all) states will turn around the refunds within 3-4 weeks on average. You should have a chance then to get the CA money in time to hand it over to the Feds.

Question #3. Those fees that are paid to a government entity or detailed as such will quaility as closing costs that are deductible.

A general rule is that if the description of an item contains the word tax, then the item is deductible.

Anything that states interest or points are classified as such.

Anything that is a fee or service is profit for some-one else at your expense and is not deductible.

A service/fee in the description overrides the word tax.


-------------------------
F15 Air Superiority Fighter - Never has one been lost in combat

Edited: 01/26/2005 at 10:40 PM by EagleKeeper

 

[Twofootputt]

Repost. Sorry. Got some unable to refresh message & hit enter three times.

 

[Twofootputt]

Repost. Sorry.

 

[sandmanwake]

I know you can't deduct moving expenses if it's for your first job. My question has to do with what constitues a "first job." I graduated with my Masters in May 2004 and got a temp job working 37.5 hours/week for the school for about 6 months. I paid into the optional retirement plan and was "full time," but didn't get any benefits. Does the temp job still count as a first job or would I have to count my current job as my first job?

 

[EagleKeeper]

I would say that if you filed a tax return with a W2 the previous year, then it is not your first job.

The IRS does not want people to claim moving expenses when leaving school and going to work.

 

[sandmanwake]

I did file a tax return with a W2 the previous year, but the position was part time while I was still a student. Part way through the year, it became full time after I graduated.

 

[EagleKeeper]

Originally posted by: sandmanwake
I know you can't deduct moving expenses if it's for your first job. My question has to do with what constitues a "first job." I graduated with my Masters in May 2004 and got a temp job working 37.5 hours/week for the school for about 6 months. I paid into the optional retirement plan and was "full time," but didn't get any benefits. Does the temp job still count as a first job or would I have to count my current job as my first job?

Bolded word should be the key.
You paid into the retirement plan and were classified as full time.
Many companies will not provide benifits for people working less than 40 hrs.
And many will deliberately keep "slave" labor at under 40 for that purpose.

 

[sandmanwake]

Cool. Next question is that since I'll be filing taxes for two different states this year, would I be able to deduct the full amount of moving expenses for each state or how would that work? Or is this only for federal taxes? The states are SC and VA if that makes any difference.

 

[EagleKeeper]

Originally posted by: sandmanwake
Cool. Next question is that since I'll be filing taxes for two different states this year, would I be able to deduct the full amount of moving expenses for each state or how would that work? Or is this only for federal taxes? The states are SC and VA if that makes any difference.

Moving expenses are deductible on the Fed using From 3903.
If you are re-embursed for expenses, the company may report is as income.

Expenses may be deductible from the state that you moved to.

 

[spp]

Question:

Is it still possible to claim my parents as dependent?
I made several checks to them, one of them being 10,000 and I would really like to be able to deduct that....

 

[EagleKeeper]

Originally posted by: spp
Question:

Is it still possible to claim my parents as dependent?
I made several checks to them, one of them being 10,000 and I would really like to be able to deduct that....

Make sure that the situation meets the requirements layed out by the IRS.

Look either in the IRS web site or check for cut & pasted quotes on the rules that have been posted in responses previously.

 

[spp]

So far I gathered that I have to pay for more than half of their expense for the last year in order for me to claim them.

Is that correct or is there any other caviad that I need to be aware of?

 

[edprush]

Last year (2004) I started developing a couple of websites that are not either not generating income, yet, or not operational, yet.

Am I able to deduct the costs I've incurred? It only amounts to $450 (web hosting, domain purchase, fees incurred, for some web development, purchase of a vBulletin license).


Also, should I deduct those costs or will it raise more flags than the small amount the deduction would give back to me? I have already incurred more costs (and still no profits) for the websites so far this year.

How many years of business losses can a person write off?
<EDIT> Oh yeah, do I have to depreciate the costs of the annual web hosting costs and annual domain registration?

Thanks.

 

[CPA]

Originally posted by: spp
Question:

Is it still possible to claim my parents as dependent?
I made several checks to them, one of them being 10,000 and I would really like to be able to deduct that....

Additionally, you better be careful that you are not liable for gift tax.

 

[CPA]

Originally posted by: edprush
Last year (2004) I started developing a couple of websites that are not either not generating income, yet, or not operational, yet.

Am I able to deduct the costs I've incurred? It only amounts to $450 (web hosting, domain purchase, fees incurred, for some web development, purchase of a vBulletin license).


Also, should I deduct those costs or will it raise more flags than the small out the deduction would give back to me? I have already incurred more costs (and still no profits) for the websites so far this year.

How many years of business losses can a person write off?
<EDIT> Oh yeah, do I have to depreciate the costs of the annual web hosting costs and annual domain registration?

Thanks.

1) Yes, you can deduct those as legitimate business expenses. The IRS will most likely only frown on it if you don't show any revenue for a couple years in row. They also have requirements to what consititutes a hobby. Right now, you should be fine.
2)As long as the costs were incurred after the company was formed and are not considered start up costs. Startup costs are generally amortized.
3) No, you generally don't have to depreciate those expenses.

 

[edprush]

Originally posted by: edprush
Last year (2004) I started developing a couple of websites that are not either not generating income, yet, or not operational, yet.

...

Also, should I deduct those costs or will it raise more flags than the small out the deduction would give back to me? I have already incurred more costs (and still no profits) for the websites so far this year.

Thanks.

Originally posted by: CPA

...
2)As long as the costs were incurred after the company was formed and are not considered start up costs. Startup costs are generally amortized.
...

How are startup costs defined? Some of the costs I have incurred are to purchase a domain name and purchase forum software--which I needed to 'startup' the sites.
Thank you.

 

[EagleKeeper]

Originally posted by: edprush

Originally posted by: edprush
Last year (2004) I started developing a couple of websites that are not either not generating income, yet, or not operational, yet.

...

Also, should I deduct those costs or will it raise more flags than the small out the deduction would give back to me? I have already incurred more costs (and still no profits) for the websites so far this year.

Thanks.

Originally posted by: CPA

...
2)As long as the costs were incurred after the company was formed and are not considered start up costs. Startup costs are generally amortized.
...

How are startup costs defined? Some of the costs I have incurred are to purchase a domain name and purchase forum software--which I needed to 'startup' the sites.
Thank you.

Think of startup costs as something that would be one time for the business and not needed again for a few years.

If the costs are re-occuring (paid every month, 6 months, year) then they are not considered to be startup.

Outside the IT world, it would be considered as buying equipment/furniture, etc./

 

[MrChad]

Question about moving expenses. In August, I quit my job in Baltimore, MD and moved up to New York with a new employer. I paid for all of my moving expenses. Does this qualify for form 3903. As far as I can tell, it does.

Do I just fill out the 3903 form and attach it to my 1040? Will I need to provide receipts as well?

 

[EagleKeeper]

Yes, 3903 will cut it. You do not need to add any supporting documentation

 

[stankonia3000]

My wife and I were married last year. She was a full-time college student until May, when she graduated. Her parents paid for her college. My wife made close to $10,000 last year on her own and lived with her parents until we were married (October). We are filing jointly. Can her parents claim her as a dependant?

 

[EagleKeeper]

Originally posted by: stankonia3000
My wife and I were married last year. She was a full-time college student until May, when she graduated. Her parents paid for her college. My wife made close to $10,000 last year on her own and lived with her parents until we were married (October). We are filing jointly. Can her parents claim her as a dependant?

If you file jointly, she can not be claimed as a dependant by her parents.
Her income/deductions/credits will be combined with yours.

Even though her parents paid for the college in 2004, because you are married/filing jointly, she must claim the LLC and any tutition credits out there.

 

[Gibson486]

I pay rent. SOmeone told mw that this qualifies as a tax credit. this true?