ATOT's Second Annual Tax Time Thread!

[cchen]

I'm a college student whose permanent address is in MD, school is in NY. Last summer I worked in MD, during the school year I work in NY. Do I need to file both MD and NY tax returns?

 

[EagleKeeper]

Originally posted by: cchen
I'm a college student whose permanent address is in MD, school is in NY. Last summer I worked in MD, during the school year I work in NY. Do I need to file both MD and NY tax returns?

Yes - MD should be a resident return, NY a non-resident. Federal does not care.

 

[BentValve]

In 04' I just barely got into the 15% bracket, I am a single male and let me assure you that I barely got by this year.

I am due for a raise and am fairly certain I will get it but I $2 more an hour will push me right into the low end of the 25% bracket.

I did the math and that $2 equates to me generating around $4000 extra per year and it puts me right about $32,000 ...after taxes id be making a lousy $1100 or so more per year.


I pretty much need $4 more an hour to make any difference in my lifestyle.

I tell you , its enough to off ones self. I live in a small town and wages are poor for mechanics and many other jobs yet cost of living is high.


Any ideas for those of us who are single and right on the low end of the 25% scale?

 

[EagleKeeper]

Originally posted by: BentValve
In 04' I just barely got into the 15% bracket, I am a single male and let me assure you that I barely got by this year.

I am due for a raise and am fairly certain I will get it but I $2 more an hour will push me right into the low end of the 25% bracket.

I did the math and that $2 equates to me generating around $4000 extra per year and it puts me right about $32,000 ...after taxes id be making a lousy $1100 or so more per year.


I pretty much need $4 more an hour to make any difference in my lifestyle.

I tell you , its enough to off ones self. I live in a small town and wages are poor for mechanics and many other jobs yet cost of living is high.


Any ideas for those of us who are single and right on the low end of the 25% scale?

Get a freelance job that will not pay you W2.
Then you can start deducting expenses.

Drop money into a 401K or IRA. That will save you some $$ and also help keep you below the threshold that you are worried about.

 

[BentValve]

A freelance job that will not pay me W2?


What are the benefits of an IRA and 401K ...how much would you suggest?

 

[EagleKeeper]

Originally posted by: BentValve
A freelance job that will not pay me W2?


What are the benefits of an IRA and 401K ...how much would you suggest?

If you can get paid as a 1099 (independent) then you can treat that income as a business income. All sorts of avenues open up for then reducing taxable income at that point. Anything remotely related to business work, cost of generating business, looking for business, maintaining skills for business can all come off the taxable income from the business (even if it generates a loss).

The benifits of a 401K/IRA is that money is put aside for your old age that you can not touch.
You can control the investments of the income, but can not use it (except for special emergencies) until you retire.

If you put $2K into one of these plans, that is $2K that you do not have to pay taxes on.
With a 401K, many employers will also match a certain portion of what you put into it.

Some employers will match more, some less and some not at all. Some do not even have a 401K for the employees. Best thing is to ask the HR department about it.



Example Only:
Therefore if an employer matches 25% up to a 8% contribution, then if you put 8% of your income
into the plan the employer would match 25% of that amount. Tax free.

At your income level, every year putting $2K into a 401K could give you an extra $500 in the account from your employer.

 

[iversonyin]

are those tax softwares any good?

 

[EagleKeeper]

They do the job nicely. I have been using them for past 10+ years.

 

[bobdole369]

My fiance lived with me for the entire year of 2004. She made just about $2800. I supported her fully, and can prove so. (I paid 100% of the rent, bills, food, etc). I live in Florida (no state income tax) According to the IRS, it would seem that I meet the 5 question test about dependency. Any other objection to me claiming her as a dependent?

I saw mention of cohabitation requirements, can someone please elaborate on that?

 

[EagleKeeper]

Originally posted by: bobdole369
My fiance lived with me for the entire year of 2004. She made just about $2800. I supported her fully, and can prove so. (I paid 100% of the rent, bills, food, etc). I live in Florida (no state income tax) According to the IRS, it would seem that I meet the 5 question test about dependency. Any other objection to me claiming her as a dependent?

I saw mention of cohabitation requirements, can someone please elaborate on that?

If the State of Florida has no problems with your living arrangements, the IRS should not.
The requirement is that is must be considered legal in the state that you live in.

You may wish to check with the local IRS office to verify your situation.

 

[Gbud]

I am thinking of graduating past the ole 1040ez form this time around. I am in the Operating Engeneers Union local 3. I was wondering how much of my dues are deductable?

EZ is so easy though... But I think I am screwing myself if I take the easy route.

 

[EagleKeeper]

Originally posted by: Gbud
I am thinking of graduating past the ole 1040ez form this time around. I am in the Operating Engeneers Union local 3. I was wondering how much of my dues are deductable?

EZ is so easy though... But I think I am screwing myself if I take the easy route.

The dues are deductible using the Form 2106 and Schedule A.

You will need to meet the limits imposed by both forms for it to be worthwhile.

You loose nothing expect a little time by testing the waters.

 

[bobdole369]

If the State of Florida has no problems with your living arrangements, the IRS should not.

Well after searching a bit, here is some info for all of us living in America's Wang. (Florida)

Florida state statute 798.02 Lewd and lascivious behavior.--If any man and woman, not being married to each other, lewdly and lasciviously associate and cohabit together, or if any man or woman, married or unmarried, engages in open and gross lewdness and lascivious behavior, they shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.

Essentially since FL forbids my current living arrangements LOL, I'm outta luck here.

Comments on this law follow...
Florida's law (Statute 798.02) says cohabitation is "open and gross lewdness and lascivious behavior." It is a misdemeanor punishable by 60 days in jail or a fine of up to $500.

Florida has a companion law (Statute 798.01) that forbids living in an open state of adultery, also a misdemeanor.

 

[Gbud]

Thanks for the quick reply. I will be picking up forms and be burning time tonight. More money back would be a good payoff though.

 

[EagleKeeper]

Originally posted by: Gbud
Thanks for the quick reply. I will be picking up forms and be burning time tonight. More money back would be a good payoff though.

Splurge and get the Tax S/W.

Makes it a lot easier. They walk you through everything and avoid math errors.
Then the best option will be presented to you. No extra thinking required.

The state will also be done at the same instant.

 

[Gbud]

I take it somewhere in this thread was a list of tax s/w? Or is there a good one that you know of?

So many years of EZ forms and telefile have dulled my brain I guess.

 

[CPA]

Originally posted by: Gbud
I take it somewhere in this thread was a list of tax s/w? Or is there a good one that you know of?

So many years of EZ forms and telefile have dulled my brain I guess.

They are all pretty good. TaxAct (I use), Turbotax, TaxCut. Take your pick.

 

[kchurch79]

Hi all,

RossMAN directed me to Vic from GottaDeal. I am a regular over at GottaDeal but not here.


My post from GottaDeal is posted below:

Hi all,

I am stuck on something on my taxes.

I know that property taxes are deductible. I purchased my home Sept 2004. At closing, I prepaid property taxes of say (not real numbers) of $775 for 3 months. That amount shows up on my escrow account balance now, but Form 1098 says that property taxes paid in 2004 are $0.

Does anyone know what is happening here? Is this deductible for 2004 taxes or is it going to be deductible in 2005?

Thanks for your help!

Keith


When I pay the property taxes (well, my mortage company), will it be for the 3 months of 2004 and is that deductible for 2004 taxes or do I have to wait until the amount is actually paid in 2005 and deduct then?

I'm so confused!

Thank you!

 

[EagleKeeper]

Originally posted by: kchurch79
Hi all,

RossMAN directed me to Vic from GottaDeal. I am a regular over at GottaDeal but not here.


My post from GottaDeal is posted below:

Hi all,

I am stuck on something on my taxes.

I know that property taxes are deductible. I purchased my home Sept 2004. At closing, I prepaid property taxes of say (not real numbers) of $775 for 3 months. That amount shows up on my escrow account balance now, but Form 1098 says that property taxes paid in 2004 are $0.

Does anyone know what is happening here? Is this deductible for 2004 taxes or is it going to be deductible in 2005?

Thanks for your help!

Keith


When I pay the property taxes (well, my mortage company), will it be for the 3 months of 2004 and is that deductible for 2004 taxes or do I have to wait until the amount is actually paid in 2005 and deduct then?

I'm so confused!

Thank you!

Your closing statement will show the amount of taxes paid in 2004 as well as other deductible closing costs.

The interest on the loan for 2004 will show up in a 1098 statement from the lender.

The statement from the lender next year (2006) should show the property taxes and interest for 2005.

 

[kchurch79]

Originally posted by: EagleKeeper

Originally posted by: kchurch79
Hi all,

RossMAN directed me to Vic from GottaDeal. I am a regular over at GottaDeal but not here.


My post from GottaDeal is posted below:

Hi all,

I am stuck on something on my taxes.

I know that property taxes are deductible. I purchased my home Sept 2004. At closing, I prepaid property taxes of say (not real numbers) of $775 for 3 months. That amount shows up on my escrow account balance now, but Form 1098 says that property taxes paid in 2004 are $0.

Does anyone know what is happening here? Is this deductible for 2004 taxes or is it going to be deductible in 2005?

Thanks for your help!

Keith


When I pay the property taxes (well, my mortage company), will it be for the 3 months of 2004 and is that deductible for 2004 taxes or do I have to wait until the amount is actually paid in 2005 and deduct then?

I'm so confused!

Thank you!

Your closing statement will show the amount of taxes paid in 2004 as well as other deductible closing costs.

The interest on the loan for 2004 will show up in a 1098 statement from the lender.

The statement from the lender next year (2006) should show the property taxes and interest for 2005.

Thanks for your reply! I know this was my first post.

I have the settlement papers from closing. What other things are deductible from closing? I know there is prepaid interest on the settlement papers and prepaid property taxes. However, the amount "prepaid" to the property taxes has shown up in my escrow account and STILL sits there to this day. Because this is my first house, I am a tad lost. The 1098 form states that $0 was paid for property taxes.

 

[EagleKeeper]

The form 1098 does not having anything to do with the closing costs on the settlement sheet.

Rule of thumb is that any government imposed fees and points to a lender, are deductible items off of the settlement sheet.

 

[b0mbrman]

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

 

[dabuddha]

Quick (hopefully simple) question.

I've been paying off a loan my wife's father took for my wife's education. The loan was taken in India and I've been paying ~$250 a month since July. Is there any way this can benefit me with my taxes? The loan is in my father in law's name. I'll be the one paying off the full loan.

 

[iamwiz82]

OK, question for you guys from my Father:

My brother is permenently disabled because of negligence on Ford's behalf. He lives with my parents, but also collects social security. He worked a few days this past year at Ford. His total income is below:

Ford - $1,000 total
SS - $1,600/month

Can my Dad claim him? The SS checks are non-taxable.

 

[EagleKeeper]

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

Keep the KBB.com printout attached to the donation receipt.

That will be all that you need for doc purposes (regarding the vehicle) if they get nosy.