ATOT's Second Annual Tax Time Thread!

[abc]

I'm reading pub 530 and it does run through some things closing costs etc... anyway,

i was wondering what the heck these are:

Abstract and recording fees ___________

legal fees, title search, document Preparation ___________

Land surveys ________

Title Insurance _________

Transfer or stamp taxes _________

Expenses you paid for the seller ________

These six items are on 1 page in TurboTax2004.

Titled "enter Escrow Fees"


Things like land survey and title insurance I was able to find in my binder that contains like 60 pages of closing documents. I am now almost blind... but after this, I started wondering why would Turbo Tax be asking this, since closing cost items are not deductible...

Also, TurboTax for this page is AWFUL in that they offer NO help if you don't know what these fields are. This page alone made me feel like I was using a TurboTax of 10yrs ago. I've been stuck on this page for 2 hrs and stopped my Turbo return.

 

[alkemyst]

Originally posted by: abc
I'm reading pub 530 and it does run through some things closing costs etc... anyway,

i was wondering what the heck these are:

Abstract and recording fees ___________

legal fees, title search, document Preparation ___________

Land surveys ________

Title Insurance _________

Transfer or stamp taxes _________

Expenses you paid for the seller ________

These six items are on 1 page in TurboTax2004.

Titled "enter Escrow Fees"


Things like land survey and title insurance I was able to find in my binder that contains like 60 pages of closing documents. I am now almost blind... but after this, I started wondering why would Turbo Tax be asking this, since closing cost items are not deductible...

Also, TurboTax for this page is AWFUL in that they offer NO help if you don't know what these fields are. This page alone made me feel like I was using a TurboTax of 10yrs ago. I've been stuck on this page for 2 hrs and stopped my Turbo return.

abc...you seem to be pretty unknowledgable for presenting such a very complex after very complex tax scenario. You'd do best to both buy a few tax books and also retain an accountant or tax guy to sit with for an initial consultation/plan.

If you could lay it all out in one post perhaps we'd all be able to give you a decent answer.

I really have no idea how even to classify your situation...

 

[EagleKeeper]

Originally posted by: abc
what is defined as rental property.

if the mutifloor property which I live in, but rent 1fl... considered 'rental property' yes?

The physical area that you are paid by some-one else to be occupied by them as private space would be considered a rental area.
For dwellings, you can use a proportianal value based on square footage or the area or the numbers of bedrooms.

so based on what you're saying... and based on my 2 flr house....

17k divided by 2 (1 fl rent, 1 fl not rent) = 8.5k


8.5k cannot do anything with

8.5k amortized over 27.5yrs.

That is correct.

what's the difference between:

real estate tax

vs.

personal property tax


on my return, looks like what i paid in property taxes was placed on the 'real estate tax' column, while presonal property tax column had nothing.

Personal property tax would be additionial taxes levied. If nothing is entered, then is should be a no brainer.

I'm reading pub 530 and it does run through some things closing costs etc... anyway,

Look at my post on 1/26, in response to Leejai, regarding how to determine what is classifed as deductible closing costs for the 1040 schedule A.

TurboTax knows that you started a rental property. It needs all the information to break down what needs to be amortitized over the rental property lifetime.

 

[abc]

thanks, I referenced the 1/26 post: regarding closing costs being deducted...


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.

 

[olds]

My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

 

[PMFleXXX]

question:

my folks started a 529 qualified college savings plan and contributed 30K to it in 2004. They're allowed to contribute up to 55K at once as long as they spread it out over 5 years on the tax docs. How do I go about filling out the appropriate paperwork? I know it's a Form 709.
1. Does this have to be filed with their 1040 or is it filed seperately.
2. If i break it up over 5 years, then they only contributed 6K this year which is under the 11K limit, is the paperwork even necessary?
3. Is form 709 something I can do easily by hand or on the computer (I have gotten through Schedule A Part I, but can't figure out the computing tax payments part)? Do I need a tax expert to do it instead?

Thanks for all your help guys.

 

[alkemyst]

Originally posted by: oldsmoboat
My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

Sales are never gifts if you are participating...however; it seems you don't even know the details as stated above.

Figure it out first. We aren't going to be a 'yes man' on taxes really.

Chances are if he profited, he will need to report it especially in Real Estate.

 

[SarcasticDwarf]

2004 1040EZ

If line 5 is checked, I need to fill out a worksheet. I can't find that worksheet in publication i1040ez.pdf off the IRS website. Where can I find it?

------

I was not a resident in Arizona during 2004, but I did receive a small paycheck a couple of days into the year. The state tax withheld was $0.33. Do I even need to file for that state?

 

[EagleKeeper]

Originally posted by: oldsmoboat
My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

A lot will depend on how the original purchase/inheritance was setup.
There will probably be a capital gain within the sale, the key question is:
Who is liable for the capital gain?


Until that question is answered, the status of the $20K is unknown.

 

[EagleKeeper]

Originally posted by: SarcasticDwarf
2004 1040EZ

If line 5 is checked, I need to fill out a worksheet. I can't find that worksheet in publication i1040ez.pdf off the IRS website. Where can I find it?

------

I was not a resident in Arizona during 2004, but I did receive a small paycheck a couple of days into the year. The state tax withheld was $0.33. Do I even need to file for that state?

1)
1040EZ Instructions

Look for chart B.


2) That is between you and the state of AZ.
If you can file electronicaly for free, it will not matter.
The tax would have been because you were probably in AZ at the end of 2003 and received pay in a pay period that ended in 2004.

 

[SarcasticDwarf]

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf
2004 1040EZ

If line 5 is checked, I need to fill out a worksheet. I can't find that worksheet in publication i1040ez.pdf off the IRS website. Where can I find it?

------

I was not a resident in Arizona during 2004, but I did receive a small paycheck a couple of days into the year. The state tax withheld was $0.33. Do I even need to file for that state?

1)
1040EZ Instructions

Look for chart B.


2) That is between you and the state of AZ.
If you can file electronicaly for free, it will not matter.
The tax would have been because you were probably in AZ at the end of 2003 and received pay in a pay period that ended in 2004.

My total iincome was only 4,553.xx, so according to that I wouldn't even need to file? But then how do I get my refund?

Also, that chart doesn't seem to answer the question. The line requires a worksheet, not a chart

 

[sigpop]

my wife got four w2's this year. two were very small. one was for $183 and the other was for $275. isnt there some cutoff where you dont have to report income for being so low? my guess is that since she was sent a w2, it needs reported. just seems asinine since fed tax witheld on both totalled $1.88.

 

[olds]

Originally posted by: EagleKeeper

Originally posted by: oldsmoboat
My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

A lot will depend on how the original purchase/inheritance was setup.
There will probably be a capital gain within the sale, the key question is:
Who is liable for the capital gain?


Until that question is answered, the status of the $20K is unknown.

The property is solely in his father's name.

 

[EagleKeeper]

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf
2004 1040EZ

If line 5 is checked, I need to fill out a worksheet. I can't find that worksheet in publication i1040ez.pdf off the IRS website. Where can I find it?

------

I was not a resident in Arizona during 2004, but I did receive a small paycheck a couple of days into the year. The state tax withheld was $0.33. Do I even need to file for that state?

1)
1040EZ Instructions

Look for chart B.


2) That is between you and the state of AZ.
If you can file electronicaly for free, it will not matter.
The tax would have been because you were probably in AZ at the end of 2003 and received pay in a pay period that ended in 2004.

My total iincome was only 4,553.xx, so according to that I wouldn't even need to file? But then how do I get my refund?

Also, that chart doesn't seem to answer the question. The line requires a worksheet, not a chart

The chart provides you with the number that goes into line 5 based on what was checked.

If you are owed a refund, then Uncle does not require you to file for it back.
If you owe Uncle any money, then you must file and pay it - OR ELSE!!!

You seem to want your money from Uncle, therefore you must file the paperwork for it.

Below a certain income level, Federal Income tax is not normally withheld.
That is why there are instructions for those people who would file a 1040EZ (single) and may not have to.

 

[EagleKeeper]

Originally posted by: sigpop
my wife got four w2's this year. two were very small. one was for $183 and the other was for $275. isnt there some cutoff where you dont have to report income for being so low? my guess is that since she was sent a w2, it needs reported. just seems asinine since fed tax witheld on both totalled $1.88.

The employer obeyed the Federal tax rules. They had no way of knowing how long your wife will choose to work at that particular position.

Federal tax is withheld based on income earned and what was put on the W4 form that is turned into the employer. Tax tables determine what is then withheld from each pay period and sent into the Federal and state goverment.

 

[EagleKeeper]

Originally posted by: oldsmoboat

Originally posted by: EagleKeeper

Originally posted by: oldsmoboat
My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

A lot will depend on how the original purchase/inheritance was setup.
There will probably be a capital gain within the sale, the key question is:
Who is liable for the capital gain?


Until that question is answered, the status of the $20K is unknown.

The property is solely in his father's name.

The father is responsible for the capital gains.
The father will be responsible for the gift tax if the $20K gift is made within a year.
If both parents are filing a joint return, then each parent can make a gift under the limit.
There should be a paper trail showing the seperate gifts.

 

[olds]

Originally posted by: EagleKeeper

Originally posted by: oldsmoboat

Originally posted by: EagleKeeper

Originally posted by: oldsmoboat
My son in law is getting about $20,000 for his share of a family land sale. I don't believe the land is in his name, the family is just sharing the proceeds.
What is their (daughter/son in law) liability? Is the $20,000 considered a gift?

A lot will depend on how the original purchase/inheritance was setup.
There will probably be a capital gain within the sale, the key question is:
Who is liable for the capital gain?


Until that question is answered, the status of the $20K is unknown.

The property is solely in his father's name.

The father is responsible for the capital gains.
The father will be responsible for the gift tax if the $20K gift is made within a year.
If both parents are filing a joint return, then each parent can make a gift under the limit.
There should be a paper trail showing the seperate gifts.

Thank you.

 

[shilala]

This thread scares the begeebers out of me.

 

[SarcasticDwarf]

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf
2004 1040EZ

If line 5 is checked, I need to fill out a worksheet. I can't find that worksheet in publication i1040ez.pdf off the IRS website. Where can I find it?

------

I was not a resident in Arizona during 2004, but I did receive a small paycheck a couple of days into the year. The state tax withheld was $0.33. Do I even need to file for that state?

1)
1040EZ Instructions

Look for chart B.


2) That is between you and the state of AZ.
If you can file electronicaly for free, it will not matter.
The tax would have been because you were probably in AZ at the end of 2003 and received pay in a pay period that ended in 2004.

My total iincome was only 4,553.xx, so according to that I wouldn't even need to file? But then how do I get my refund?

Also, that chart doesn't seem to answer the question. The line requires a worksheet, not a chart

The chart provides you with the number that goes into line 5 based on what was checked.

If you are owed a refund, then Uncle does not require you to file for it back.
If you owe Uncle any money, then you must file and pay it - OR ELSE!!!

You seem to want your money from Uncle, therefore you must file the paperwork for it.

Below a certain income level, Federal Income tax is not normally withheld.
That is why there are instructions for those people who would file a 1040EZ (single) and may not have to.

Here's what chart B states:
If your parent (or someone else) can claim you as a dependent, use this chart to see if you must file a return.
In this chart, unearned income includes taxable interest, ordinary dividends, and capital gain distributions. Earned income includes wages,
tips, and taxable scholarship and fellowship grants. Gross income is the total of your unearned and earned income.
If your gross income was $3,100 or more, you usually cannot be claimed as a dependent unless you were under age 19 or a student and
under age 24. For details, use TeleTax topic 354 (see page 6). CAUTION
!
You must file a return if any of the following apply.
? Your unearned income was over $800.
? Your earned income was over $4,850.
? Your gross income was more than the larger of?
? $800, or
? Your earned income (up to $4,600) plus $250.


Now, where is this number in that text that I am supposed to plug in? I am not seeing it.

 

[Spooner]

so I'm filling in turbotax, things go smoothly and all until i get to the state portion and try to enter information into an additional non-resident state tax. Apparently, the online version of TurboTax will not allow submissions of more than one state. Wtf?!?

So, I ask you all then, what should I use?

 

[EagleKeeper]

Originally posted by: Spooner
so I'm filling in turbotax, things go smoothly and all until i get to the state portion and try to enter information into an additional non-resident state tax. Apparently, the online version of TurboTax will not allow submissions of more than one state. Wtf?!?

So, I ask you all then, what should I use?

You are SOL.

As previous mentioned with this thread, TaxCut and TurboTax will not support multi-state filing.

 

[abc]

Originally posted by: alkemyst


abc...you seem to be pretty unknowledgable for presenting such a very complex after very complex tax scenario. You'd do best to both buy a few tax books and also retain an accountant or tax guy to sit with for an initial consultation/plan.

If you could lay it all out in one post perhaps we'd all be able to give you a decent answer.

I really have no idea how even to classify your situation...

ive been doing my own taxes for about 5 yrs, which represent just about all years of my financial life. But they were straight forward... now that i have a house this is llike the Major leagues after spending 5 yrs in AAA ball... learning the strategies to 'maximize' my return with house/landlord expense is what i'm such an obvious virgin with.

 

[abc]

Originally posted by: EagleKeeper

Originally posted by: abc
say, i think i paid like 17k in house purchase closing costs. aren't the deductible entirely or partially... and if not entirely, would more of it be deductible if I had a renter?

i'm trying to look at my itemized 1040 and I don't see anything relating to my closing costs. I only see mortage insurance stuff and property tax stuff.

For the rental property, you will have the Schedule E.
On the 1040, closing costs are not deductible with the exception of government imposed fees/taxes.

Posts above have dealt with what is deductible for a private person.
for rental property, the closing costs that are not deductible need to be proportioned between the retnal and personal use.

Then the rental proportion will be depreciated according the the IRS schedule. It has become part of the cost basis for the rental property.

talked to my acct for aboug 30min in person regarding a few things...

again this is a return without having put down any rental income, so it's a 'private person' with house scenario entirely.

I found out what she had done with ALL my closing costs... she amortized it over 27.5yrs, and split each year in half to share between me and my sibling since we co-own it.


I asked her about including 1 month rental income so that I can expense a lot more things and report a loss.

then she said including a schedule E, that would cause my 20k in mortgage interest deduction, currently split as 10k and 10k between my return and my sibling to reduce each of our tax return's taxable income, to be reduced to 5k each... as 10k would go to Schedule E.

She said my return would trigger an alternative minimum tax thing too.


The bottom line of my 30min meeting with my accountant was I wanted to report a rental loss so the loss as you taught me Eagle, carries over to my taxable income, reducing it.

She felt it is awful suspicious to the IRS to show 1month rent and have all kinds of expenses.

I said look at a business, don't you report massive losses the first year.

She said next year (meaning this year right now 2005) I can report a lot more things as far as expenses...

yes but this year I'd have to spend money on projects on the house in order to have 'a lot more things' available to deduct, and I'd have a whole year's worth of rental income to fight off instead of 1 month.

 

[alkemyst]

Originally posted by: abc

ive been doing my own taxes for about 5 yrs, which represent just about all years of my financial life. But they were straight forward... now that i have a house this is llike the Major leagues after spending 5 yrs in AAA ball... learning the strategies to 'maximize' my return with house/landlord expense is what i'm such an obvious virgin with.

We are here to help, however; your *need* seems to be constantly going further down the rabbithole that will get the IRS questioning your return.

Lay the whole situation you have out in a post and let us figure out where you stand. There are many here that like to bend the rules as much as they can, I am included....we will give you the best advice possible. If you don't give us the whole picture we are pretty much going to prove useless or a pot shot at best.

 

[alkemyst]

Originally posted by: abc
talked to my acct for aboug 30min in person regarding a few things...

again this is a return without having put down any rental income, so it's a 'private person' with house scenario entirely.

I found out what she had done with ALL my closing costs... she amortized it over 27.5yrs, and split each year in half to share between me and my sibling since we co-own it.


I asked her about including 1 month rental income so that I can expense a lot more things and report a loss.

then she said including a schedule E, that would cause my 20k in mortgage interest deduction, currently split as 10k and 10k between my return and my sibling to reduce each of our tax return's taxable income, to be reduced to 5k each... as 10k would go to Schedule E.

She said my return would trigger an alternative minimum tax thing too.


The bottom line of my 30min meeting with my accountant was I wanted to report a rental loss so the loss as you taught me Eagle, carries over to my taxable income, reducing it.

She felt it is awful suspicious to the IRS to show 1month rent and have all kinds of expenses.

I said look at a business, don't you report massive losses the first year.

She said next year (meaning this year right now 2005) I can report a lot more things as far as expenses...

yes but this year I'd have to spend money on projects on the house in order to have 'a lot more things' available to deduct, and I'd have a whole year's worth of rental income to fight off instead of 1 month.

If you have an accountant, why are you looking for this advice here? I'd go with my accountant doing my filing as they would have the clearest financial picture of you.

Owning a rental is a little different than a business persay. If your own acct is concerned with the IRS catching your scenario, I'd really steer clear.