ATOT's Second Annual Tax Time Thread!

[EagleKeeper]

Originally posted by: abc
can a landlord buy

a fax machine

a desk

a chair

a computer

internet access fees


and expense it as expenses against rental income?

If it assists in managing the rental property, yes.

Up to landloard to determine the definition of "assist"

 

[abc]

Originally posted by: EagleKeeper

Originally posted by: abc
can a landlord buy

a fax machine

a desk

a chair

a computer

internet access fees



and expense it as expenses against rental income?

If it assists in managing the rental property, yes.

Up to landloard to determine the definition of "assist"

do tax preparers come across such items used as expenses very commonly?

or do they heighten a audit red flag. i guess you mean it is up to the landlord if under audit, to explain 'assist', not so much explain to the tax preparer.

i guess someone who works at home, and has a home office, typically has these as expenses... which i thought i read recently that home office expenses are coming under more scrutiny?

wondering if it's worth it as a landlord to create a home office.




How about everyone contribute $1 to an anandtech tax thread fund, funds divided amongst the annual experts?

 

[EagleKeeper]

Originally posted by: abc

Originally posted by: EagleKeeper

Originally posted by: abc
can a landlord buy

a fax machine

a desk

a chair

a computer

internet access fees



and expense it as expenses against rental income?

If it assists in managing the rental property, yes.

Up to landloard to determine the definition of "assist"

do tax preparers come across such items used as expenses very commonly?

or do they heighten a audit red flag. i guess you mean it is up to the landlord if under audit, to explain 'assist', not so much explain to the tax preparer.

i guess someone who works at home, and has a home office, typically has these as expenses... which i thought i read recently that home office expenses are coming under more scrutiny?

wondering if it's worth it as a landlord to create a home office.




How about everyone contribute $1 to an anandtech tax thread fund, funds divided amongst the annual experts?

A landlord should have an office location to manage the rental property.
An office that takes up half a house would be questioned.
An office that uses a spare bedroom should be acceptable.

 

[fbrdphreak]

Okay, so I went to H&R Block's site and did another return there. It specifically asked if I want to apply for the Lifetime Learning Credit and I of course answered yes. I put in all the pertinent information, bla bla bla. Well, my return amount STILL came out to be $503, only at the end of the return this popped up:
"Because your tax liability is less than the amount of your Education Credit, the amount of your credit is limited from $1080 to $0"
What does this mean? Thanks

I pulled up form 8863 and from what I can tell, my AGI has to be $52,000 or more to be able to claim an education credit??????
Form 8863, Line 11

 

[EagleKeeper]

The educational credits are used to reduce tax liability, not generate $$ back.

You already were getting all $$ paid in before the educational credits were applied.

 

[fbrdphreak]

So all educational credits do is if say I were to owe some amount of money in taxes, then it would offset the amount that I owe? Is that correct?
Is this the same with deducting interest paid on loans?
Maybe I just really know nothing about taxes, but I thought when you "deduct" or claim stuff, that it comes back to you on your return?

 

[EagleKeeper]

Originally posted by: fbrdphreak
So all educational credits do is if say I were to owe some amount of money in taxes, then it would offset the amount that I owe? Is that correct?
Is this the same with deducting interest paid on loans?
Maybe I just really know nothing about taxes, but I thought when you "deduct" or claim stuff, that it comes back to you on your return?

You are correct.

There are some "credits" that actually will return money to the taxpayer over and above tax owed.
These are usually due to having lower income and children.

 

[fbrdphreak]

So basically the only way to increase my tax return for next year is to work more or increase my exemptions, eh?

 

[EagleKeeper]

Originally posted by: fbrdphreak
So basically the only way to increase my tax return for next year is to work more or increase my exemptions, eh?

First part is yes.

Second pard is dependent on whether your exemptions are physical or virtual.

Increasing your physical exemptions will depend on either getting married and/or starting a couple of kids within the next 2-3 weeks.

Increasing your virtual exemptions (W4) will bring you more money each paycheck, however, you may need to pay Uncle next April.

Decreasing your W4 exemptions will give Uncle more money of yours now out of each paycheck and should generate a refund of your money next year.

 

[fbrdphreak]

I'm following you now. Guess educational credits aren't what I thought they were all cracked up to be

Thanks again for all the help; drop me a line if you're ever in Raleigh :beer:

 

[CPA]

Originally posted by: abc

Originally posted by: EagleKeeper

Originally posted by: abc
can a landlord buy

a fax machine

a desk

a chair

a computer

internet access fees



and expense it as expenses against rental income?

If it assists in managing the rental property, yes.

Up to landloard to determine the definition of "assist"

do tax preparers come across such items used as expenses very commonly?

or do they heighten a audit red flag. i guess you mean it is up to the landlord if under audit, to explain 'assist', not so much explain to the tax preparer.

i guess someone who works at home, and has a home office, typically has these as expenses... which i thought i read recently that home office expenses are coming under more scrutiny?

wondering if it's worth it as a landlord to create a home office.




How about everyone contribute $1 to an anandtech tax thread fund, funds divided amongst the annual experts?

While I like your last idea, keep in mind that it is NOT tax deductible.

 

[CPA]

Originally posted by: UTmtnbiker
It was for a small gain, although I played with the numbers both ways. When selling as a main house, it said it wasn't taxable, maybe because the cost basis was much higher after putting in the numbers for improvements.

Originally posted by: CPA

Originally posted by: UTmtnbiker
Tax advice please!!!!!

I'm using TaxCut Deluxe and have gotten to a point where I'm stuck. Any advice would be helpful...

The situation:

I got married in Aug. 2004 so we will be filing jointly
My wife had a condo for the last 7 years. She rented it out for 3 months in 2004 (Jan. Feb. Mar.) and then we sold it in September 2004.

In Taxcut I can treat this is a rental property and then a disposal of a rental property OR I can treat this as rentail property and then a Main Home sale as we qualify that way also (she lived there in 2 out of the last 5 years). Is one way right and the other way wrong? Am I missing anything?

TIA.

Did you sell the house for a loss or gain?

The gain is not taxable because you are allowed to exlude up to $500K (married filing joint) in home sale gains every two years. Treat this as a sale of your primary residence is my opinion.

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: abc

Originally posted by: EagleKeeper

Originally posted by: abc
can a landlord buy

a fax machine

a desk

a chair

a computer

internet access fees



and expense it as expenses against rental income?

If it assists in managing the rental property, yes.

Up to landloard to determine the definition of "assist"

do tax preparers come across such items used as expenses very commonly?

or do they heighten a audit red flag. i guess you mean it is up to the landlord if under audit, to explain 'assist', not so much explain to the tax preparer.

i guess someone who works at home, and has a home office, typically has these as expenses... which i thought i read recently that home office expenses are coming under more scrutiny?

wondering if it's worth it as a landlord to create a home office.




How about everyone contribute $1 to an anandtech tax thread fund, funds divided amongst the annual experts?

While I like your last idea, keep in mind that it is NOT tax deductible.

Like he11 it is.:laugh:

You forgot that we set up that non-profit last Dec.:light:
Of course it has not made a profit or had a single donation yet.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: sonambulo
rad. i owe you one.

another rumour i heard is that if somebody earns less than a certain amount of money they get all, or more than average, of their taxes back. true or no?

False.

The refund of taxes is based on your taxes owed vs. paid.
Taxes owed is determiend by income, filing status, exemptiosn, deductions, etc.

Most rumors are started by people who do not have/know the full story and want to impress some-one who is more gulible than they are.

this could be true if you are eligible for the Earned Income Credit. EIC will put money in your pocket even if your tax liability is 0.

 

[alkemyst]

Hey guys, off my 2 month vacation from AT I will be back after I get time to read this thread.

Things are looking lame for me this tax time....worked 3 months or so self employed this year and transfered back to salaried employment. Looking at $1000-1500 I am going to owe. Not much of any write offs this time around as this new job was a sort of surprize.

Anyone know any tricks that may help...I will be using phone, my office space, internet access for work, etc, but three months of that hardly add up. I took a big deduction for a machine I had to buy last year.

If there is nothing that can help me, what's the easiest way I can just file my taxes and eat the loss quickly with minimal paperwork unlike my 2" stack for a return last year.

Thanks

 

[EagleKeeper]

Originally posted by: alkemyst
worked 3 months or so self employed this year and transfered back to salaried employment. Looking at $1000-1500 I am going to owe. Not much of any write offs this time around as this new job was a sort of surprize.

Anyone know any tricks that may help...I will be using phone, my office space, internet access for work, etc, but three months of that hardly add up. I took a big deduction for a machine I had to buy last year.

If there is nothing that can help me, what's the easiest way I can just file my taxes and eat the loss quickly with minimal paperwork unlike my 2" stack for a return last year.

Thanks

Even though you only had income from self-employment, expenses still occurred in the months previously and post self-employmnet (fancy wording for before & after)
Those expenses can still count against the self-employment income.
Remember vehicle costs/depreciation as long as they do not overlap the wage employment. Different vehicles being declared for each area makes it easy to keep seperate and a "clean/clear" conscience.

After last year fiasco, you should have kept all records in a spreadsheet or used one of the free household checkbook packages (Quicken/Money). This way everything is already to be sucked in (financial S/W) of organized on the spreadsheet. A scanner makes a great way to organized your receipts.

Remember that you have no state income tax, therefore you get the sales tax credit on your Schedule A.

Also, the classes that you may have taken to improve your skills go against the LLC.

Dig deep for the charity deductions; after all, you are a religious person and there are laws in place implying seperation of church and state.

 

[dullard]

Thanks again for these helpful yearly threads.

I'm sure my question has been asked before, but I'm not reading 700+ posts. Sorry. As it is, I owe a little bit of money this year (which is what I wanted, no free loan to the government). Last year I started my first real job midyear and I did not have the available funds to start a retirement account. I know absolutely nothing about them. If I recall correctly, can I still start a retirement account now and apply that money to last year? Does that affect this years contributions at all? Am I limited to just the traditional IRA?

Thanks.

 

[CPA]

Originally posted by: dullard
Thanks again for these helpful yearly threads.

I'm sure my question has been asked before, but I'm not reading 700+ posts. Sorry. As it is, I owe a little bit of money this year (which is what I wanted, no free loan to the government). Last year I started my first real job midyear and I did not have the available funds to start a retirement account. I know absolutely nothing about them. If I recall correctly, can I still start a retirement account now and apply that money to last year? Does that affect this years contributions at all? Am I limited to just the traditional IRA?

Thanks.

yes, if you meet certain requirements. No. Yes, IIRC.

What is your income and filing status?

 

[EagleKeeper]

Originally posted by: dullard
Thanks again for these helpful yearly threads.

I'm sure my question has been asked before, but I'm not reading 700+ posts. Sorry. As it is, I owe a little bit of money this year (which is what I wanted, no free loan to the government). Last year I started my first real job midyear and I did not have the available funds to start a retirement account. I know absolutely nothing about them. If I recall correctly, can I still start a retirement account now and apply that money to last year? Does that affect this years contributions at all? Am I limited to just the traditional IRA?

Thanks.

You can fund a 2004 IRA up until 15 April. The funding credit will go on the 2004 tax return. Note that if you are covered by an employer retirement plan (not a 401K) you will not get the IRA deduction. Money put in for 2004 does not have any effect on what you can put in for 2005.

You can also look into the Roth IRA to see if you qualify. You pay taxes on it now, not when you pull it out as an old fogey.

 

[dullard]

Originally posted by: CPA
What is your income and filing status?

Married, jointly, let me just say the 2004 income was in the $60k range (I'll keep the exact numbers my own secret). Hopefully it'll be significantly more this year.

Originally posted by: EagleKeeper
You can fund a 2004 IRA up until 15 April. The funding credit will go on the 2004 tax return. Note that if you are covered by an employer retirement plan (not a 401K) you will not get the IRA deduction. Money put in for 2004 does not have any effect on what you can put in for 2005.

You can also look into the Roth IRA to see if you qualify. You pay taxes on it now, not when you pull it out as an old fogey.

Thanks. Does it matter if I had the option to be covered for half of the year and not the other half? I need to ask my employer about it. They said something is available if I wanted, but I just couldn't commit the funds just as I was hired.

 

[EagleKeeper]

If your W2 shows retirement plan/pension plan box checked, you are SOL.

Even covered for one day will shaft you for an normal IRA. Uncle does not delineate or apportionate.

 

[bolido2000]

My gf is out of the country, so she needs to file form 4868 for an extension. She usually gets a refund every year. Does that mean she can just file 4868 electronically and pay nothing? Or she has to pay some approximate amount and when she files 1040 get a refund?

 

[EagleKeeper]

Originally posted by: bolido2000
My gf is out of the country, so she needs to file form 4868 for an extension. She usually gets a refund every year. Does that mean she can just file 4868 electronically and pay nothing? Or she has to pay some approximate amount and when she files 1040 get a refund?

IF she expects a refund, then there is no need to send Uncle any money.

If she has all here paperwork available (or you have it) then do the taxes on line.

 

[Zebo]

Feeling lucky? Odds against finding big tax cheats

 

[EagleKeeper]

Originally posted by: Zebo
Feeling lucky? Odds against finding big tax cheats

For most taxpayers, there is little opportunity to cheat significantly without detection, because their wages and salaries, interest and dividends are reported independently to the IRS by their employers, banks and brokers, making it possible for the agency's computers to spot discrepancies

Apparently, a tip from the public put the IRS on Anderson's trail.

And as has been stated before, Uncle will reward you for turning in cheats.