ATOT's Second Annual Tax Time Thread!

[wiredspider]

I'm 18 and decided to do my own taxes this year... Anyhow, I had everything filed yesterday (both fed and state). Well, guess what comes today, a 1099R! It is for a 401k plan with a company I worked for but left this year and thus they sent me a check to cash it out. The taxable amount is only $21, but that does push me into the next tax bracket. The amount additional I need to pay for the next bracket is $5 and $4 federal income tax was withheld, so basically my refund would be $1 less once I get this amended.

Let me get to the point now, I filed all my info on the 1040EZ, but with a 1099R I wouldn't qualify for using the 1040EZ, so when I ammend with the 1040X, are there any additional steps I need to take? Also, any way to do the 1040X electronically? I originally used the free turbo tax site.

Thanks!

 

[new2AMD]

If my wife made less than $600 in a side business this year does she need to report that?

 

[EagleKeeper]

Originally posted by: wiredspider
I'm 18 and decided to do my own taxes this year... Anyhow, I had everything filed yesterday (both fed and state). Well, guess what comes today, a 1099R! It is for a 401k plan with a company I worked for but left this year and thus they sent me a check to cash it out. The taxable amount is only $21, but that does push me into the next tax bracket. The amount additional I need to pay for the next bracket is $5 and $4 federal income tax was withheld, so basically my refund would be $1 less once I get this amended.

Let me get to the point now, I filed all my info on the 1040EZ, but with a 1099R I wouldn't qualify for using the 1040EZ, so when I ammend with the 1040X, are there any additional steps I need to take? Also, any way to do the 1040X electronically? I originally used the free turbo tax site.

Thanks!

1040X can not be filed electronically.

Because you used the free web site, you will have to enter all the information by hand also.

The 1040X asks for the original infomration files and then the changed information along with an explanation.

Send in the check if you will owe moneybased on the difference.

 

[EagleKeeper]

Originally posted by: new2AMD
If my wife made less than $600 in a side business this year does she need to report that?

Yes. Either under the misc income line or start a Schedule C.

The Schedule C will allow you to write off expenses related to the business; even more than the income generated.

See other posts in this thread for ideas.

 

[archcommus]

So having any miscellaneous income at all requires abandoning the 1040EZ? What about the 1040A?

Also if anyone can answer my FAFSA question...

 

[EagleKeeper]

Originally posted by: archcommus87
So having any miscellaneous income at all requires abandoning the 1040EZ? What about the 1040A?

Also if anyone can answer my FAFSA question...

Look at the 1040A form to see if there is a line for misc income.
You will have to use the 1040 if you chose to use the Schedule C route.

Give of the easy route to save $$.

With regard to the FAFSA, just keep a copy of whatever 1040 form that you filed.

 

[sygyzy]

Originally posted by: CPA

Originally posted by: sygyzy

Originally posted by: CPA

Originally posted by: sygyzy
You're right, I'll repost.

I was granted some stock last year (2004). The stock vested and half was converted to a different company's stock (we were bought) and half was put into cash. Part of cash was given to me and part was kept to be distributed over the next three years (40%, 40%, 20%). I wrote a check to cover the stock purchases (paying less than their value of course). I sold half the stock and made some gains (very little). I still own half.

What are my tax consequences? I assume it is 100% ordinary income? What exactly will be taxed? Will I be taxed on the cash portion that I never received (they are keeping it then slowly releasing it, remember). Do I simply take the value of the stocks, minus the cost, then add that to my yearly income as if I was given all cash?

Do I fall under AMT?

sygyzy, sorry about missing your question earlier, I thought I had responded, but it looks like I just read it and thought to myself "crap, that's complicated" and forgot to get back to it. In any case, I can answer one question and have several questions to help me understand your issue.

1) AMT is not something that can be answered easily. You will need to account for everything and determine if you will have to pay AMT. A software program will help with this. Or you can rough draft it by hand with schedule 1040, schedule A (if you itemize) and schedule 6251 (AMT schedule).

2) Now for my questions. Do you know if these were Incentive Stock Options or Non-qualified stock options (This is key)? Did you receive the cash from the broker or through payroll? If I understand you right, you received a portion of the cash that came from the conversion AND you made some money selling the converted stock, correct? How long did you hold the stock?

CPA,

Thanks for taking the time. Answers:

I held the stock a few months. Much less than a year. I still have roughly half that will reach a year in a few months. I received the cash from payroll I believe. I am not sure why this makes a difference? It might be the broker. I gave them my bank routing number and account and the money just appeared deposited. Then I wrote a check to cover my cost for the stocks. The stocks are Incentive Stock Options. You are correct, I made some money from selling the converted stock. Not much though, maybe a few $100. One confusing part is that the cash I received was because they just cashed out half my shares into cash. They weren't really "sold" per se. They just took number stocks, divided by two, and gave me cash for it. In that case, I didn't profit on the market per se. But I did "profit" since I bought them for less than their value. I want to know how this is going to be taxed?

If ran through payroll, it will show up on your W2 (which they should have already accounted for the tax impact), if only through the broker then you will get a 1099 (which may not have had the taxes withheld).

But for the rest of your issue, I'm still not sure I'm clear what happened or which portion (the cash you were given or the options you exercised) that you are asking the question about. As much as I hate to hang you out to dry, it may be a good idea to take your issue to a local tax accountant.

I got my W2 and it did not appear on them. So I guess I will get a 1099 from my broker or whoever transactioned the deal.

To clarify the second part - Half the shares were converted to cash (aka involuntarily sold) and given to me. And the other half was converted to the new company's stock. Then I sold about half of that.

 

[archcommus]

Originally posted by: EagleKeeper

Originally posted by: archcommus87
So having any miscellaneous income at all requires abandoning the 1040EZ? What about the 1040A?

Also if anyone can answer my FAFSA question...

With regard to the FAFSA, just keep a copy of whatever 1040 form that you filed.

How do I do that last part if I file online? That was my reason for asking.

 

[TitanDiddly]

I'm a 17 year old with a part time job and I've never filed taxes before. If I understand correctly, having not made a some amount of money means I don't have to do the normal tax thing, and I get (some of?) the money that was taken from my paychecks back. I got some form letter type things in the mail from my employer and my bank. I have no experience with this. What do I do? Thanks!

 

[zixxer]

after my tax refund is shown as "accepted" by turbotax; how long does it normally take for the refund to be entered into my bank account?

 

[EagleKeeper]

Originally posted by: archcommus87

Originally posted by: EagleKeeper

Originally posted by: archcommus87
So having any miscellaneous income at all requires abandoning the 1040EZ? What about the 1040A?

Also if anyone can answer my FAFSA question...

With regard to the FAFSA, just keep a copy of whatever 1040 form that you filed.

How do I do that last part if I file online? That was my reason for asking.

You can/should get a printout of what you filed online. Having that form can be very useful for additional purposes, if nothing else, to have a paper trail of that you filed on time.

 

[archcommus]

Originally posted by: EagleKeeper

Originally posted by: archcommus87

Originally posted by: EagleKeeper

Originally posted by: archcommus87
So having any miscellaneous income at all requires abandoning the 1040EZ? What about the 1040A?

Also if anyone can answer my FAFSA question...

With regard to the FAFSA, just keep a copy of whatever 1040 form that you filed.

How do I do that last part if I file online? That was my reason for asking.

You can/should get a printout of what you filed online. Having that form can be very useful for additional purposes, if nothing else, to have a paper trail of that you filed on time.

Thanks, I just submitted my federal now. Refund came to $164, happy with that. Now I need to wait to see if it's accepted. If it is I can go back to TurboTax online and print it.

Thanks for your help!

 

[EagleKeeper]

Originally posted by: PhasmatisNox
I'm a 17 year old with a part time job and I've never filed taxes before. If I understand correctly, having not made a some amount of money means I don't have to do the normal tax thing, and I get (some of?) the money that was taken from my paychecks back. I got some form letter type things in the mail from my employer and my bank. I have no experience with this. What do I do? Thanks!

Collect and organize the paperwork.

From an employer you will either get a W2 or 1099.

From the bank you will get 1099-I or 1099-D.

The go to an online site and follow the instructions. Based on your age, you are probably classified as a dependent, make sure that if so, you select the appropriate single/dependanet options when asked for.

 

[archcommus]

Another quick Q, how come when doing it online it doesn't matter that the IRS is not getting a physical copy of your W-2?

 

[EagleKeeper]

Originally posted by: armatron
after my tax refund is shown as "accepted" by turbotax; how long does it normally take for the refund to be entered into my bank account?

Turbotax (retail) will normally provide you with a estimated date that they get from the Feds.
Figure 2-3 Fridays from when the return was filed.

You can also go the the IRS Web Site and look it up there.
They will usually require your SS# and some information fromt he return.

 

[EagleKeeper]

Originally posted by: archcommus87
Another quick Q, how come when doing it online it doesn't matter that the IRS is not getting a physical copy of your W-2?

The IRS has already gotten either a physical or electronic copy. The people who generate the W2 for you are required to also send the same information to Uncle.

 

[archcommus]

Originally posted by: EagleKeeper

Originally posted by: archcommus87
Another quick Q, how come when doing it online it doesn't matter that the IRS is not getting a physical copy of your W-2?

The IRS has already gotten either a physical or electronic copy. The people who generate the W2 for you are required to also send the same information to Uncle.

How come you need to attach it when you file by paper then?

I registered to do direct file on PA's website, needed my SSN and some various information. However, before I can do my taxes, they require I sign a form that has my SSN and other info printed on it, and fax it to them. Does this sound normal? Safe?

 

[djheater]

My wife thinks that the tuition we pay for my 7 year olds public school is non-taxable. Can anyone confirm or deny this?

 

[EagleKeeper]

Originally posted by: archcommus87

Originally posted by: EagleKeeper

Originally posted by: archcommus87
Another quick Q, how come when doing it online it doesn't matter that the IRS is not getting a physical copy of your W-2?

The IRS has already gotten either a physical or electronic copy. The people who generate the W2 for you are required to also send the same information to Uncle.

How come you need to attach it when you file by paper then?

I registered to do direct file on PA's website, needed my SSN and some various information. However, before I can do my taxes, they require I sign a form that has my SSN and other info printed on it, and fax it to them. Does this sound normal? Safe?

The IRs is a buerocracy. They want paperwork.

When you file electronically, they can then compare the info electronically.

When you file by paper, they need to enter certain codes into the system to cross reference the information.

What each state's rules are is up to the state in terms of verificaiton.

When you file elecronically with the Fed, all that verification is done for you.

 

[EagleKeeper]

Originally posted by: djheater
My wife thinks that the tuition we pay for my 7 year olds public school is non-taxable. Can anyone confirm or deny this?

Tution credits are for secondary (post High school education).

However, daycare expenses are deductible if a parent can either go to school, look or work relating to a job.

Taxes for public school are not directly non-taxable, however, property taxes are deductible if you itemize.

I have never heard of tutition for a public shcool being required. Extra expenses may be required, those are not deductible.

 

[djheater]

Originally posted by: EagleKeeper

Originally posted by: djheater
My wife thinks that the tuition we pay for my 7 year olds public school is non-taxable. Can anyone confirm or deny this?

Tution credits are for secondary (post High school education).

However, daycare expenses are deductible if a parent can either go to school, look or work relating to a job.

Taxes for public school are not directly non-taxable, however, property taxes are deductible if you itemize.

I have never heard of tutition for a public shcool being required. Extra expenses may be required, those are not deductible.

I'm an idiot. I meant private school.

I did some research, Illinois is one of only a handful of states that offer any type of reimbursement. We get a $500 credit for tuition.

Thanks for your help.

 

[new2AMD]

Just did my taxes and have a few questions before I file.

It keeps telling me I could save money if I had mortgage interest used for something other than buying, building or repairing a house. I do have a 2nd that was used as a consolidation loan. The interest came on a 1098 just like my 1st mortgage. I reported the both of them and they were combined. What is this other thing they are asking me? There is also an option to check that it what they are asking me to declare it as doesnt apply to this return. Hope this makes sense. I might have to ask it again when I am home to get the proper verbage.

I pay child care but I the sitter doesnt report it. So I am SOL then right?

Any state tax I paid in 2004 due to being under on my 2003 return should be reported in this return right? Likewise i seem to owe around $200 this year. I can claim that next year as well? I also owed on my federal last year. Does that get reported?

Also, I had a flood and had an insurance claim. Does that factor in anywhere?

Sorry for all the questions but I am learning. Thanks guys.

 

[EagleKeeper]

Originally posted by: new2AMD
Just did my taxes and have a few questions before I file.

It keeps telling me I could save money if I had mortgage interest used for something other than buying, building or repairing a house. I do have a 2nd that was used as a consolidation loan. The interest came on a 1098 just like my 1st mortgage. I reported the both of them and they were combined. What is this other thing they are asking me? There is also an option to check that it what they are asking me to declare it as doesnt apply to this return. Hope this makes sense. I might have to ask it again when I am home to get the proper verbage.

I pay child care but I the sitter doesnt report it. So I am SOL then right?

Any state tax I paid in 2004 due to being under on my 2003 return should be reported in this return right? Likewise i seem to owe around $200 this year. I can claim that next year as well? I also owed on my federal last year. Does that get reported?

Also, I had a flood and had an insurance claim. Does that factor in anywhere?

Sorry for all the questions but I am learning. Thanks guys.

1) 2nd mortgages are interest deductible. Some S/W attempts to encourage you to apply for loans that can have the interest written off. This has nothing to do with the S/W but an attempt for martketing and referal fees by steering you to a certain loan vendor.

2) Unless the sitter will provide you with a SS# or you can obtain a tax number from some location, you are SOL.

3) Taxes are to be deducted in the year that they are paid, not when they were due.
Uncle will not give you a break if you owe them additianol funds. Be glad that you did not get penalized.

4) There is a line item for casuality losses. However, there is a percentage of your income that must be "lost" before it can come into play. The line item should be on the Schedule A and uses an auxilliary form.

 

[new2AMD]

Originally posted by: EagleKeeper

Originally posted by: new2AMD
Just did my taxes and have a few questions before I file.

It keeps telling me I could save money if I had mortgage interest used for something other than buying, building or repairing a house. I do have a 2nd that was used as a consolidation loan. The interest came on a 1098 just like my 1st mortgage. I reported the both of them and they were combined. What is this other thing they are asking me? There is also an option to check that it what they are asking me to declare it as doesnt apply to this return. Hope this makes sense. I might have to ask it again when I am home to get the proper verbage.

I pay child care but I the sitter doesnt report it. So I am SOL then right?

Any state tax I paid in 2004 due to being under on my 2003 return should be reported in this return right? Likewise i seem to owe around $200 this year. I can claim that next year as well? I also owed on my federal last year. Does that get reported?

Also, I had a flood and had an insurance claim. Does that factor in anywhere?

Sorry for all the questions but I am learning. Thanks guys.

1) 2nd mortgages are interest deductible. Some S/W attempts to encourage you to apply for loans that can have the interest written off. This has nothing to do with the S/W but an attempt for martketing and referal fees by steering you to a certain loan vendor.

2) Unless the sitter will provide you with a SS# or you can obtain a tax number from some location, you are SOL.

3) Taxes are to be deducted in the year that they are paid, not when they were due.
Uncle will not give you a break if you owe them additianol funds. Be glad that you did not get penalized.

4) There is a line item for casuality losses. However, there is a percentage of your income that must be "lost" before it can come into play. The line item should be on the Schedule A and uses an auxilliary form.

1. So I just report the interest the same as the 1st mortgage?

2. Figured that, thanks

3. The taxes were paid in 2004. What would the penalty be for? I owed more taxes then I paid in 2003 so I had to pay the amount by april 15 of 2004. So I cant do anything with those?

4. Thanks

 

[EagleKeeper]

Originally posted by: new2AMD

Originally posted by: EagleKeeper

Originally posted by: new2AMD
Just did my taxes and have a few questions before I file.

It keeps telling me I could save money if I had mortgage interest used for something other than buying, building or repairing a house. I do have a 2nd that was used as a consolidation loan. The interest came on a 1098 just like my 1st mortgage. I reported the both of them and they were combined. What is this other thing they are asking me? There is also an option to check that it what they are asking me to declare it as doesnt apply to this return. Hope this makes sense. I might have to ask it again when I am home to get the proper verbage.

I pay child care but I the sitter doesnt report it. So I am SOL then right?

Any state tax I paid in 2004 due to being under on my 2003 return should be reported in this return right? Likewise i seem to owe around $200 this year. I can claim that next year as well? I also owed on my federal last year. Does that get reported?

Also, I had a flood and had an insurance claim. Does that factor in anywhere?

Sorry for all the questions but I am learning. Thanks guys.

1) 2nd mortgages are interest deductible. Some S/W attempts to encourage you to apply for loans that can have the interest written off. This has nothing to do with the S/W but an attempt for martketing and referal fees by steering you to a certain loan vendor.

2) Unless the sitter will provide you with a SS# or you can obtain a tax number from some location, you are SOL.

3) Taxes are to be deducted in the year that they are paid, not when they were due.
Uncle will not give you a break if you owe them additianol funds. Be glad that you did not get penalized.

4) There is a line item for casuality losses. However, there is a percentage of your income that must be "lost" before it can come into play. The line item should be on the Schedule A and uses an auxilliary form.

1. So I just report the interest the same as the 1st mortgage?

2. Figured that, thanks

3. The taxes were paid in 2004. What would the penalty be for? I owed more taxes then I paid in 2003 so I had to pay the amount by april 15 of 2004. So I cant do anything with those?

4. Thanks

3. The taxes were paid in 2004. What would the penalty be for? I owed more taxes then I paid in 2003 so I had to pay the amount by april 15 of 2004. So I cant do anything with those?

Uncle has a penalty if you underwithhold your taxes. You need to have paid via W2 or estimated payments 90% of what is owed for the tax year.
There are some exemptions to having to pay the penalty.
One purpose is to prevent people from not paying any withholding during the year and then sending in a single check in April.
Uncle needs the funds coming in all the time to pay his bills.