ATOT's Second Annual Tax Time Thread!

[lykaon78]

Originally posted by: EagleKeeper

Originally posted by: lykaon78
Problem:
Is this an educator expense, schedule A job expense (line 20), next year deduction, or neither.

Basics:
My wife is a teacher. This summer (2005) she is teaching a elective class on marine biology that she has volunteered to teach (unpaid). It involves two weeks of class room study and 1 week of field research in the Bahamas at a nature perserve. She may or may not be eligible for CE credit (still waiting to hear).

This year she has made a down payment for the airfare and lodging.

Question:
Should I list the down payment on as an educator expense on 1040 line 23, as a itemized deduction on line 20 of the Schedule A or save it and carry the expense over to next year?

Or is this even a eligible expense?

Thanks for the help.

The expenses will show on the 2005 tax year. Down payments are not expenses.
Being that the class is as a volunteer, it essentially becomes a charity item.
There are entries for expenses incurred for a charity. This is where the expenses should be listed.
She will need to keep track (documented) of all expenses incurred regarding this class.
Expenses incurred in preparing for the class before hand. ie. communication costs (phone/internet), medical services, passport expenses, transportation, advance clothing required for trip/class, bug repellant, film, etc.
Expenses while on site. ie account for every penny that is spent no matter how small; Lodging, meals, laundry, phones, transportation, bank fees for money access, tips, supplies for class, clothing purchased along with items already identified above.
Also, keep track of any expenses similar to the preparation items, when she returns.

Note that the clothing deduction must not be for items that can be used normally back at home.

Items purchased regarding the trip that could be utilized with the teaching job at home should be placed under the educator credit. However, use this credit for normal educational expenses first. It is easy for a teacher to rack up of $250 out of their pocket.

There should be no need to tap into the trip expenses to fill the educator line item expense.

The other thing to consider, is that some of the expenses could be classified as Form 2106 expenses.

The charity route may not have as large tax benefit as using the 2106 route.

You will need to try both and find out.

If you have Tax S/W then after you do the 2004 taxes, create two dummy set of returns and experiment with putting the costs (estimate in general terms) in the Charity item list and then the Form 2106 method.

That will allow you to understand which may have a better tax beneift and also alert you to what to make sure what should tracked as expenses.

Thanks, I would think the charitable giving route will be more effective because it doesn't get reduced by the first 2% of your AGI

 

[SunnyD]

1099-G : Statement of Tax Overpayment

I got one of these from New York regarding a 2003 overpayment, but have no freaking clue where to put this. I'm filing on TurboTax, and it asks for info from 1099-G, but the form I have has no box numbers and am not sure what the "Amount reported to the IRS" is supposed to be classified as.

My choices are:

Unemployment compensation,
State or Local Refund for Business or Farm
Taxable Grants
Agriculture Payments

and also "Federal or state income tax was withheld on THIS 1099-G payment"...

None of the options seem correct for this. What do I do with this 1099-G?

 

[MeanMeosh]

i was a student in texas through august 2004, where i had a $10/hour, 10 hours a week job. i just put down on the w4 (or was that w2?) that i didn't make enough money to have taxes withheld (as i didnt) and didn't get any taxes withheld.

from october 2004 to jan 15, 2005, i worked at a best buy in texas where i worked for multiple hours a week and made $13 an hour. the taxes were automatically withheld from my paychecks and they add up to about $300 in taxes that were withheld.

in feb 2005, i started a full time job as an engineer in delaware. my first paycheck will arrive 2/18 and biweekly after that. needless to say, i'm definitely making enough to have taxes withheld.

my questions are:

1. what are the dates we're paying income tax on? like, is it jan 1 - dec 31 2004 or april 1, 2004 - march 31, 2005?

2. if it is jan 1 - dec 31, 2004, can my mom claim me as a dependent AND i file a 1040ez to get the $250 or so i paid in taxes before dec 31 through my best buy income back? if my mom claims me as a dependent, do i have to file maybe some other form so that i can get that $250 back?

OR

3. will i have to file separately and not have my mom claim me (would it be better for her legally... i don't want her to have to pay any kinda penalties if it is illegal for her to claim me) since i will be making enough money in the 2005 fiscal year to be considered independent

 

[awal]

What forms need to be included with a 1040X? I filed my original return electonically, and the 1040X via turbo tax. The only bit of info Turbo Tax gave me was a mailing address, do I need to send a copy of my original retun or my W2s?

 

[EagleKeeper]

Originally posted by: SunnyD
1099-G : Statement of Tax Overpayment

I got one of these from New York regarding a 2003 overpayment, but have no freaking clue where to put this. I'm filing on TurboTax, and it asks for info from 1099-G, but the form I have has no box numbers and am not sure what the "Amount reported to the IRS" is supposed to be classified as.

My choices are:

Unemployment compensation,
State or Local Refund for Business or Farm
Taxable Grants
Agriculture Payments

and also "Federal or state income tax was withheld on THIS 1099-G payment"...

None of the options seem correct for this. What do I do with this 1099-G?

What was the $$ for. the amount on the form should match up with some total of payment received during 2004 from a government entitity.

That should give you a clue.

 

[EagleKeeper]

Originally posted by: MeanMeosh
i was a student in texas through august 2004, where i had a $10/hour, 10 hours a week job. i just put down on the w4 (or was that w2?) that i didn't make enough money to have taxes withheld (as i didnt) and didn't get any taxes withheld.

from october 2004 to jan 15, 2005, i worked at a best buy in texas where i worked for multiple hours a week and made $13 an hour. the taxes were automatically withheld from my paychecks and they add up to about $300 in taxes that were withheld.

in feb 2005, i started a full time job as an engineer in delaware. my first paycheck will arrive 2/18 and biweekly after that. needless to say, i'm definitely making enough to have taxes withheld.

my questions are:

1. what are the dates we're paying income tax on? like, is it jan 1 - dec 31 2004 or april 1, 2004 - march 31, 2005?

2. if it is jan 1 - dec 31, 2004, can my mom claim me as a dependent AND i file a 1040ez to get the $250 or so i paid in taxes before dec 31 through my best buy income back? if my mom claims me as a dependent, do i have to file maybe some other form so that i can get that $250 back?

OR

3. will i have to file separately and not have my mom claim me (would it be better for her legally... i don't want her to have to pay any kinda penalties if it is illegal for her to claim me) since i will be making enough money in the 2005 fiscal year to be considered independent

Tax Years are usually Jan 1 -> Dec 31 unless special circumstances apply.

Your mother can claim you as a dependant for 2004 based on the infrmation you provided. If she is not married at the end of 2004, then she should file as head-of-household. Make sure that she also takes advantages of the education credits for you schooling in 2004.
You would be best to use one of the free Web Tax S/W packages to file your taxes. The system will automatically determine which form to use and handle the situation properly.

Once you are on your own in 2005, then she will have to drop you from her taxes.

If she was unaware of the educations credits, you should review her filings (2000->2003) for when you were in school, to ensure that proper credit was taken.

 

[EagleKeeper]

Originally posted by: adrianwalters
What forms need to be included with a 1040X? I filed my original return electonically, and the 1040X via turbo tax. The only bit of info Turbo Tax gave me was a mailing address, do I need to send a copy of my original retun or my W2s?

the 1040X should not be files electronically. It needs to be mailed in.
It can be filled out electronically though.

All line items that were changed need to have an explaination for the change.

There are no additional papers needed unless you are adding a new form due to the 1040X.

 

[awal]

Originally posted by: EagleKeeper

Originally posted by: adrianwalters
What forms need to be included with a 1040X? I filed my original return electonically, and the 1040X via turbo tax. The only bit of info Turbo Tax gave me was a mailing address, do I need to send a copy of my original retun or my W2s?

the 1040X should not be files electronically. It needs to be mailed in.
It can be filled out electronically though.

All line items that were changed need to have an explaination for the change.

There are no additional papers needed unless you are adding a new form due to the 1040X.

Thanks for the answers... I have one more question. What is the turnaround time on a 1040X?

 

[EagleKeeper]

Originally posted by: adrianwalters

Originally posted by: EagleKeeper

Originally posted by: adrianwalters
What forms need to be included with a 1040X? I filed my original return electonically, and the 1040X via turbo tax. The only bit of info Turbo Tax gave me was a mailing address, do I need to send a copy of my original retun or my W2s?

the 1040X should not be files electronically. It needs to be mailed in.
It can be filled out electronically though.

All line items that were changed need to have an explaination for the change.

There are no additional papers needed unless you are adding a new form due to the 1040X.

Thanks for the answers... I have one more question. What is the turnaround time on a 1040X?

Based on the question, I would think that you have additiaonl $$ coming back to you.

The IRS will manually look at the 1040X; pull the original 1040 and hand check what the changes are.

Right now they are busy though April. Best bet is that is will get looked at in early May.

 

[SunnyD]

Originally posted by: EagleKeeper

Originally posted by: SunnyD
1099-G : Statement of Tax Overpayment

I got one of these from New York regarding a 2003 overpayment, but have no freaking clue where to put this. I'm filing on TurboTax, and it asks for info from 1099-G, but the form I have has no box numbers and am not sure what the "Amount reported to the IRS" is supposed to be classified as.

My choices are:

Unemployment compensation,
State or Local Refund for Business or Farm
Taxable Grants
Agriculture Payments

and also "Federal or state income tax was withheld on THIS 1099-G payment"...

None of the options seem correct for this. What do I do with this 1099-G?

What was the $$ for. the amount on the form should match up with some total of payment received during 2004 from a government entitity.

That should give you a clue.

That's the whole thing... I can't figure out what it's for. I assume it's a State Income Tax overpayment. But if it is that - what box is it designated? The 1099-G that NYS sent me gives no insight into what I'm supposed to do with it.

 

[EagleKeeper]

Originally posted by: SunnyD

Originally posted by: EagleKeeper

Originally posted by: SunnyD
1099-G : Statement of Tax Overpayment

I got one of these from New York regarding a 2003 overpayment, but have no freaking clue where to put this. I'm filing on TurboTax, and it asks for info from 1099-G, but the form I have has no box numbers and am not sure what the "Amount reported to the IRS" is supposed to be classified as.

My choices are:

Unemployment compensation,
State or Local Refund for Business or Farm
Taxable Grants
Agriculture Payments

and also "Federal or state income tax was withheld on THIS 1099-G payment"...

None of the options seem correct for this. What do I do with this 1099-G?

What was the $$ for. the amount on the form should match up with some total of payment received during 2004 from a government entitity.

That should give you a clue.

That's the whole thing... I can't figure out what it's for. I assume it's a State Income Tax overpayment. But if it is that - what box is it designated? The 1099-G that NYS sent me gives no insight into what I'm supposed to do with it.

If you are unsure what it is for and you feel uncomfortable putting it as a tax refund, then contact the State.

Look at your State Tax form for 2003, do the number match up?

 

[SunnyD]

Originally posted by: EagleKeeper

Originally posted by: SunnyD

That's the whole thing... I can't figure out what it's for. I assume it's a State Income Tax overpayment. But if it is that - what box is it designated? The 1099-G that NYS sent me gives no insight into what I'm supposed to do with it.

If you are unsure what it is for and you feel uncomfortable putting it as a tax refund, then contact the State.

Look at your State Tax form for 2003, do the number match up?

It's not that I feel uncomfortable about it being a tax refund - since it's from a tax refund. My question I guess really is based on my OP - TurboTax doesn't seems to have a proper designation for it - it's not a Farm or Business refund, it's from personal income tax. Hence it doesn't seem to belong in any of the listed categories in TurboTax. That's my connundrum.

 

[EagleKeeper]

turboTax has an entry in the inital questionaire if you received a tax refund. When you answer in the affermative, it will then ask you for that information.

If you skipped that answer, you will have to manually enter it in the appropriate line.

Note that unless you itemized on last year (2003), and deducted the state income taxes paid on Schedule A, the need to enter a tax refund received in 2004 is moot.

 

[RagingBITCH]

Just curious as to EK and CPA's thoughts on "crafty" tax refund specialists. IE, people who itemize every tiny little bit (including things that may/may not be 100% truthful) to maximize your refund. (A coworker went from a $1800 refund to a $4200 refund) I've already filed my taxes so it's not an option this year, I was just curious.

 

[EagleKeeper]

Originally posted by: RagingBITCH
Just curious as to EK and CPA's thoughts on "crafty" tax refund specialists. IE, people who itemize every tiny little bit (including things that may/may not be 100% truthful) to maximize your refund. (A coworker went from a $1800 refund to a $4200 refund) I've already filed my taxes so it's not an option this year, I was just curious.

There is black, white and different shades of grey.
IRS beleives in only two colors.

If one feels that the cn justify their creative (scrooge-linke) accountingg in a ball-breaking audit, then they can go for it.

Should the IRS ever latch on to one of those types of returns, they have special trained people that can easily sniff out a loose end. Then once they start pulling on the string, it can easily unravel the whole ball or yarn.

Penalties and interst for just a 2-3 years period can easily double what was "mis-acounted" for.

Then the IRS will go back as far as they can looking for additional flaws.
Plus expect to have detailed audits flagged for the follwoing few years.
Then one has to take into account your costs in time/expenses and headaches to justify each item. Tax lawyers could become involved to try to play CYA.

Also, there is a finders fee for tax fraud. Bragging about how you cheated/fudged on your taxes can provide another person some extra income and a big thank-you from your unfavorite Uncle.

Open & shut audits look good on the performance balance sheet.

 

[kermalou]

Originally posted by: Yossarian
thanks for your help! here's another one for you. if I bought a computer 2 years ago for biz purposes and started depreciating it over 5 years, am I under any obligation to continue the depreciation this year? can it just "disappear" from this return without showing any gain or loss?

yes

 

[cpals]

Okay, I didn't' have time to read all of the posts, so hopefully my situation is new. Here is my job/setup:

Job 1: Worked for grocery store from Jan 1 until December 1 - received W-2 from them. I received my 401k income and cashed it out THIS YEAR, so I assume the cash flow will go on my tax return next april?

Job 2: Started working in early October and have also received a W-2 from them.

Job 3/Side: Have been doing side computer jobs for the last couple years and keep a book of all income. I do hosting, web design, fixing computers, etc.... now this year I received two 1099-MISC in regards to this line of work (one from Google and another from a local business I do a lot of work for). So how do I list my other income, my two 1099s and my deductibles? Also, the deductibles I usually take out my web hosting, advertising and this year I bought a laptop and was planning on deducting that. That's okay, right?

I purchased TaxACT.... will this do everything I need from what I posted?

Thanks!

 

[EagleKeeper]

Originally posted by: cpals
Okay, I didn't' have time to read all of the posts, so hopefully my situation is new. Here is my job/setup:

Job 1: Worked for grocery store from Jan 1 until December 1 - received W-2 from them. I received my 401k income and cashed it out THIS YEAR, so I assume the cash flow will go on my tax return next april?

Job 2: Started working in early October and have also received a W-2 from them.

Job 3/Side: Have been doing side computer jobs for the last couple years and keep a book of all income. I do hosting, web design, fixing computers, etc.... now this year I received two 1099-MISC in regards to this line of work (one from Google and another from a local business I do a lot of work for). So how do I list my other income, my two 1099s and my deductibles? Also, the deductibles I usually take out my web hosting, advertising and this year I bought a laptop and was planning on deducting that. That's okay, right?

I purchased TaxACT.... will this do everything I need from what I posted?

Thanks!

Two items of concern right off the bat.

I received my 401k income
Was the check dated in 2004 or 2005?
If in 2004, you have to declare the income from the distribution on the 2004 taxes and pay the related penalties (if any).

It is not when you cash the check, it is when the check was cut that determines the tax year that it will be applied to.

and this year I bought a laptop and was planning on deducting that
Same thing applies for deductions. The tax year that the purchase was made determines the deduction/expense



By letting the Tax S/W know that you have 1099s and Misc income related to a business, it should walk you through the Schedule C. That is where you will list all the related expenses to the business income.

 

[cpals]

Originally posted by: EagleKeeper

Originally posted by: cpals
Okay, I didn't' have time to read all of the posts, so hopefully my situation is new. Here is my job/setup:

Job 1: Worked for grocery store from Jan 1 until December 1 - received W-2 from them. I received my 401k income and cashed it out THIS YEAR, so I assume the cash flow will go on my tax return next april?

Job 2: Started working in early October and have also received a W-2 from them.

Job 3/Side: Have been doing side computer jobs for the last couple years and keep a book of all income. I do hosting, web design, fixing computers, etc.... now this year I received two 1099-MISC in regards to this line of work (one from Google and another from a local business I do a lot of work for). So how do I list my other income, my two 1099s and my deductibles? Also, the deductibles I usually take out my web hosting, advertising and this year I bought a laptop and was planning on deducting that. That's okay, right?

I purchased TaxACT.... will this do everything I need from what I posted?

Thanks!

Two items of concern right off the bat.

I received my 401k income
Was the check dated in 2004 or 2005?
If in 2004, you have to declare the income from the distribution on the 2004 taxes and pay the related penalties (if any).

It is not when you cash the check, it is when the check was cut that determines the tax year that it will be applied to.

and this year I bought a laptop and was planning on deducting that
Same thing applies for deductions. The tax year that the purchase was made determines the deduction/expense



By letting the Tax S/W know that you have 1099s and Misc income related to a business, it should walk you through the Schedule C. That is where you will list all the related expenses to the business income.

Thanks for the quick reply (doing the taxes tonight)... The 401k check was cut in 2005. Also, I bought the laptop in 2004 (worded my sentence wrong).

Thanks!

 

[EagleKeeper]

Originally posted by: cpals

Originally posted by: EagleKeeper

Originally posted by: cpals
Okay, I didn't' have time to read all of the posts, so hopefully my situation is new. Here is my job/setup:

Job 1: Worked for grocery store from Jan 1 until December 1 - received W-2 from them. I received my 401k income and cashed it out THIS YEAR, so I assume the cash flow will go on my tax return next april?

Job 2: Started working in early October and have also received a W-2 from them.

Job 3/Side: Have been doing side computer jobs for the last couple years and keep a book of all income. I do hosting, web design, fixing computers, etc.... now this year I received two 1099-MISC in regards to this line of work (one from Google and another from a local business I do a lot of work for). So how do I list my other income, my two 1099s and my deductibles? Also, the deductibles I usually take out my web hosting, advertising and this year I bought a laptop and was planning on deducting that. That's okay, right?

I purchased TaxACT.... will this do everything I need from what I posted?

Thanks!

Two items of concern right off the bat.

I received my 401k income
Was the check dated in 2004 or 2005?
If in 2004, you have to declare the income from the distribution on the 2004 taxes and pay the related penalties (if any).

It is not when you cash the check, it is when the check was cut that determines the tax year that it will be applied to.

and this year I bought a laptop and was planning on deducting that
Same thing applies for deductions. The tax year that the purchase was made determines the deduction/expense



By letting the Tax S/W know that you have 1099s and Misc income related to a business, it should walk you through the Schedule C. That is where you will list all the related expenses to the business income.

Thanks for the quick reply (doing the taxes tonight)... The 401k check was cut in 2005. Also, I bought the laptop in 2004 (worded my sentence wrong).

Thanks!

You have a limited time frame to put the 401K funds back into an IRA (if you choose to) to avoid penalties.

 

[cpals]

Originally posted by: EagleKeeper

Originally posted by: cpals

Originally posted by: EagleKeeper

Originally posted by: cpals
Okay, I didn't' have time to read all of the posts, so hopefully my situation is new. Here is my job/setup:

Job 1: Worked for grocery store from Jan 1 until December 1 - received W-2 from them. I received my 401k income and cashed it out THIS YEAR, so I assume the cash flow will go on my tax return next april?

Job 2: Started working in early October and have also received a W-2 from them.

Job 3/Side: Have been doing side computer jobs for the last couple years and keep a book of all income. I do hosting, web design, fixing computers, etc.... now this year I received two 1099-MISC in regards to this line of work (one from Google and another from a local business I do a lot of work for). So how do I list my other income, my two 1099s and my deductibles? Also, the deductibles I usually take out my web hosting, advertising and this year I bought a laptop and was planning on deducting that. That's okay, right?

I purchased TaxACT.... will this do everything I need from what I posted?

Thanks!

Two items of concern right off the bat.

I received my 401k income
Was the check dated in 2004 or 2005?
If in 2004, you have to declare the income from the distribution on the 2004 taxes and pay the related penalties (if any).

It is not when you cash the check, it is when the check was cut that determines the tax year that it will be applied to.

and this year I bought a laptop and was planning on deducting that
Same thing applies for deductions. The tax year that the purchase was made determines the deduction/expense



By letting the Tax S/W know that you have 1099s and Misc income related to a business, it should walk you through the Schedule C. That is where you will list all the related expenses to the business income.

Thanks for the quick reply (doing the taxes tonight)... The 401k check was cut in 2005. Also, I bought the laptop in 2004 (worded my sentence wrong).

Thanks!

You have a limited time frame to put the 401K funds back into an IRA (if you choose to) to avoid penalties.

I decided against this with financial advise from people on here and elsewhere in order to eliminate a large credit card debt I have. I'm now controlling my spending.

 

[cpals]

Another question, since I seem to have the floor.

What qualifies as a full-time student anymore?? Let me clarify:

My parents have claimed me my whole 23 years and they are planning on doing it again this year. I don't have a HUGE issue with this since they do let me live at there house (I'm planning on getting a house hopefully this year), but it would be nice to have the extra money claiming myself would give. My question is more of can they get in trouble for claiming me?

1. I went to school the whole year in 2004 (9 credits in fall - 9 credits in spring - 2 credits in summer)
2. They provide housing/utilities and food sometimes, but other than that I pay for everything myself... clothes, internet, car, etc.

Are they allowed legally to claim me?

Thanks.

 

[EagleKeeper]

Originally posted by: cpals
Another question, since I seem to have the floor.

What qualifies as a full-time student anymore?? Let me clarify:

My parents have claimed me my whole 23 years and they are planning on doing it again this year. I don't have a HUGE issue with this since they do let me live at there house (I'm planning on getting a house hopefully this year), but it would be nice to have the extra money claiming myself would give. My question is more of can they get in trouble for claiming me?

1. I went to school the whole year in 2004 (12 credits in fall - 12 credits in spring)
2. They provide housing/utilities and food sometimes, but other than that I pay for everything myself... clothes, internet, car, etc.

Are they allowed legally to claim me?

Thanks.

Look above for my post on the 15th regarding dependant elgibility.

 

[cpals]

Do a quick search of the IRS Web site for Uncle's definition of dependant.

A general accepted definition is that after 18 and out of school, you are no longer needing to be a dependant.

Special circumstances may apply, however, those usually is for disabilites.

I read your post, but it doesn't really clear up my question. I don't think I was a full-time student last year (9 credits both semesters and 4 credits in summer), which would, according to the IRS website, not allow my parents to claim me. I'm willing to let them claim me if it would save them a lot more money than it would save me, but I want to know if they can legally do this and not get in trouble?

Thanks

 

[EagleKeeper]

Originally posted by: cpals

Do a quick search of the IRS Web site for Uncle's definition of dependant.

A general accepted definition is that after 18 and out of school, you are no longer needing to be a dependant.

Special circumstances may apply, however, those usually is for disabilites.

I read your post, but it doesn't really clear up my question. I don't think I was a full-time student last year (9 credits both semesters and 4 credits in summer), which would, according to the IRS website, not allow my parents to claim me. I'm willing to let them claim me if it would save them a lot more money than it would save me, but I want to know if they can legally do this and not get in trouble?

Thanks

IRS - FAQ - Pub 501 - Dependancy Test

Dependency Tests
The following five tests must be met for you to claim an exemption for a dependent.

1. Member of Household or Relationship Test.
2. Citizen or Resident Test.
3. Joint Return Test.
4. Gross Income Test.
5. Support Test.

You need to be concerned with the Gross Income and Support Tests

Generally, you cannot take an exemption for a dependent if that person had gross income of $3,100 or more for 2004. This test does not apply if the person is your child and is either:

Under age 19 at the end of the year, or

A student under age 24 at the end of the year.

The exceptions for children under age 19 and students under age 24 are discussed in detail later.

Student under age 24. The gross income test does not apply if your child is a student who is under age 24 at the end of the calendar year. The other dependency tests still must be met.

Student defined. To qualify as a student, your child must be, during some part of each of 5 calendar months during the calendar year (not necessarily consecutive):
A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or

A student taking a full-time, on-farm training course given by a school described in (1) above or a state, county, or local government.


Full-time student defined. A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance.

If your school would not classify you as a full time student, then you will not meet the dependancy test.

After that point it is between you and your parents on how you wish to proceed.