ATOT's Second Annual Tax Time Thread!

[EagleKeeper]

Originally posted by: FrustratedUser
Does this mean H&R fubared my friends taxes?

edit:
I have a taxable part and a non-taxable part. I already paid taxes on it.

Only your friend can tell if he was FUBARd. His best bet is to look closely at what was done.
Many times the H&R type people do not look ask questions about your tax situation, they are q

If you apid taxes on the moving expenses (taken out by the employer), use the 3903 if you would like some of it back.

 

[EagleKeeper]

Originally posted by: FrustratedUser
Does this mean H&R fubared my friends taxes?

edit:
I have a taxable part and a non-taxable part. I already paid taxes on it.

Only your friend can tell if he was FUBARd. His best bet is to look closely at what was done.
Many times the H&R type people do not look ask questions about your tax situation, they are quickly trained and onlyi operate on information that is porovided by the client. If the client does not mentioned that they moved for job reasons, the fact that there are different W2s from different states does not trigger any ideas.

If you apid taxes on the moving expenses (taken out by the employer), use the 3903 if you would like some of it back.

 

[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?

 

[sonambulo]

nonresident tax question:

ok...a friend of mine is a nonresident alien working in the united states with a J-1 visa. a little birdie told him that he's supposed to get all of his taxes back but i'm pretty sure that's not the case. everyplace we've gone to has given us a different answer. what's the deal?

 

[EagleKeeper]

IRS - FAQ - Non-Resident Aliens

Doing a quick read on Chapter 5 - Figuring Your Tax looks like non-residents are treated similar to residents.

Income is figured, exemptions and deductions are taken and tasex are figured out.

Best bet is to read the primary link in detail. The second link will provide instructions on how to determine the tax.

 

[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?

 

[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?

 

[EagleKeeper]

If you sold for a loss, then treat the property as a rental.

If sold for a gain, then you have the $500K exclusion before paying any taxes on the gain.

 

[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.

 

[Wduaqnug]

Which tax return software is more friendlier and simple to use? will i be able to deduct my car donation?

 

[whoops]

I ran a tiny ebay business.

Of the 1040, 1040A, 1040 EZ, which one is the simplest that I can use ?

I am guessing 1040 because I can't find a slot for business in the other 2.

 

[EagleKeeper]

Originally posted by: whoops
I ran a tiny ebay business.

Of the 1040, 1040A, 1040 EZ, which one is the simplest that I can use ?

I am guessing 1040 because I can't find a slot for business in the other 2.

1040 if you choose to use the Schedule C to generate expenses to offset the income.

Otherwise the 1040A may have a line item for misc income.

 

[EagleKeeper]

Originally posted by: Wduaqnug
Which tax return software is more friendlier and simple to use? will i be able to deduct my car donation?

Car donations will show as a charitable expense on teh Schedule A/1040. You must itemize to get the benifit. Make sure that you understand the guidelines for itemizing.

Most of the tax S/W is easy to use.

I have used both TaxCut & TurboTax.

I felt that TT was a better U/I adn used it until the fiasco a few years ago.

Others have used TaxAct and other s/w applicationis.

As long as they provide the proper number to the government and you are willing to pay the costs of the S/w and e-filing costs (if desired), it is up to you.

The Web S/W is usually patterened around the stand S/W (UI wise) but you have less flexability in jumping around and can not import files. You have to have used the vendor's Web system from the previous year to get any importing benefitsa. You can not even get tax files from your PC to the Web system.

The S/W for your system can import a competitors fiels from the previous year adn siome can import financial data from Mony/Quicken, etc

 

[fbrdphreak]

Hey guys,

I would first like to give a big thanks to the CPA, EagleKeeper, and the other few ATers here who have provided so much great help. I've read through part of the thread and am thoroughly impressed.
Now onto my question
I'm a full-time college student in NC, finishing my third year and graduating May 2006. The entire time I have gotten student loans, mostly Stafford sub & unsub, with a couple of EXTRA loans the past two years. The first EXTRA loan (basically a private educational loan done through my primary loan organization, CFNC) was done to pay the difference in tuition from my Stafford loans. The second EXTRA loan was last semester to purchase a laptop.
This tax year (2005) will be my first where my parents don't claim me as a dependent. I was wondering what advice and suggestions you all had as to maximize my return next year. I haven't paid any interest on the loans yet, but I was thinking about doing so. I pay for pretty much everything myself: textbooks, school supplies, gas, cell phone, everything except car insurance.
I was also thinking about taking a Business Management program this summer to complement my EE/CPE degree, I think it runs close to $1000 for the program. Would this be eligible to be deducted at all?
I guess I will have more specific questions once you guys can give me a direction in which to head, as I'm rather clueless!
Thanks in advance, and if any of you guys are in or around Raleigh, NC; drop me a PM and I'll take you out for a beer

 

[EagleKeeper]

Originally posted by: fbrdphreak
Hey guys,
I'm a full-time college student in NC, finishing my third year and graduating May 2006. The entire time I have gotten student loans, mostly Stafford sub & unsub, with a couple of EXTRA loans the past two years. The first EXTRA loan (basically a private educational loan done through my primary loan organization, CFNC) was done to pay the difference in tuition from my Stafford loans. The second EXTRA loan was last semester to purchase a laptop.
This tax year (2005) will be my first where my parents don't claim me as a dependent. I was wondering what advice and suggestions you all had as to maximize my return next year. I haven't paid any interest on the loans yet, but I was thinking about doing so. I pay for pretty much everything myself: textbooks, school supplies, gas, cell phone, everything except car insurance.
I was also thinking about taking a Business Management program this summer to complement my EE/CPE degree, I think it runs close to $1000 for the program. Would this be eligible to be deducted at all?
I guess I will have more specific questions once you guys can give me a direction in which to head, as I'm rather clueless!
Thanks in advance, and if any of you guys are in or around Raleigh, NC; drop me a PM and I'll take you out for a beer

If you are not paying the loans back at the present time, then they have no impact for 2005 tax planning. Interest paid on the loans will be applied as a credit.
Your tutition costs for college and any additional course work will fall under the Lifetime Learning Credit.

Unless you actually have taxable income, not much will help.

Being a student, will probably not allow you to generate much income. It can be done though (I did it as an EE, full time work and raising a family w/ 3 kids:beer

Take a look at if will benefit the family unit (as a whole) if you stay as a dependant while in school. Your income level should be the determining factor.

 

[fbrdphreak]

Interest paid on the loans will be applied as a credit.

So any interest I pay will come back to me in my 2005 tax return, correct? Do you happen to know the cut-off date for making these payments or where I can find it?

Your tutition costs for college and any additional course work will fall under the Lifetime Learning Credit.

So when I buy books, microcontroller boards, etc I should save these receipts? After reading the LLC FAQ on the IRS site, it seems that this is a general "credit," not like an itemized deduction (Stop me if I'm using the wrong terminology here). But I also see that it says you can't be credited textbooks if your university doesn't "require" them for admission. Does that mean I can't deduct textbooks?
It looks like I pay $2200 per semester for tuition & fees. So I would get 20% of that back on a taz return? (x2 since it will be for Spring & Fall semesters of 2005 I assume)

Unless you actually have taxable income, not much will help. Being a student, will probably not allow you to generate much income.

Last year I made about $7,000 AGI, got $272 back. This year I will probably make more. At a minimum, I should make $8,000 gross from Jan-Dec 2005. How much would my return change given that I wouldn't be a dependant?

Take a look at if will benefit the family unit (as a whole) if you stay as a dependant while in school.

The problem with me staying a dependent is that I'm not getting all the money I should; the student loans are all in my name (with the private loans cosigned w/a friend of the family) and I pay everything else out of my pocket. My parents don't help much, if at all, except for paying my car insurance. If my Dad is getting a few extra grand each year, he's not doing much to share it with me which is a problem for me. If I can get the 20% of my tuition & all of my expenses (textbooks, required course stuff, etc) plus a lot more on my return each year, that would be damn helpful. One of the things that peaked my interest is my buddy; he's not been a dependant for a few years (we're the same age) and I'm pretty sure that I make more than him in a given year, but he's getting like over an $800 return this year. Is that what I have to look forward to?

Thanks for all the help

 

[EagleKeeper]

Originally posted by: fbrdphreak

Interest paid on the loans will be applied as a credit.

So any interest I pay will come back to me in my 2005 tax return, correct? Do you happen to know the cut-off date for making these payments or where I can find it?

Your tutition costs for college and any additional course work will fall under the Lifetime Learning Credit.

So when I buy books, microcontroller boards, etc I should save these receipts? After reading the LLC FAQ on the IRS site, it seems that this is a general "credit," not like an itemized deduction (Stop me if I'm using the wrong terminology here). But I also see that it says you can't be credited textbooks if your university doesn't "require" them for admission. Does that mean I can't deduct textbooks?
It looks like I pay $2200 per semester for tuition & fees. So I would get 20% of that back on a taz return? (x2 since it will be for Spring & Fall semesters of 2005 I assume)

Unless you actually have taxable income, not much will help. Being a student, will probably not allow you to generate much income.

Last year I made about $7,000 AGI, got $272 back. This year I will probably make more. At a minimum, I should make $8,000 gross from Jan-Dec 2005. How much would my return change given that I wouldn't be a dependant?

Take a look at if will benefit the family unit (as a whole) if you stay as a dependant while in school.

The problem with me staying a dependent is that I'm not getting all the money I should; the student loans are all in my name (with the private loans cosigned w/a friend of the family) and I pay everything else out of my pocket. My parents don't help much, if at all, except for paying my car insurance. If my Dad is getting a few extra grand each year, he's not doing much to share it with me which is a problem for me. If I can get the 20% of my tuition & all of my expenses (textbooks, required course stuff, etc) plus a lot more on my return each year, that would be damn helpful. One of the things that peaked my interest is my buddy; he's not been a dependant for a few years (we're the same age) and I'm pretty sure that I make more than him in a given year, but he's getting like over an $800 return this year. Is that what I have to look forward to?

Thanks for all the help

Cutoff date is Dec 31, 2005 for interest or anything else paid as applied toward the 2005 tax return (unless special conditions appl - very unusual)

Tutition is the only thing that can be applied toward the LLC. Other schooling supplies should fall under the Schedule A/Form 2106 for edcuational costs. This requires itemization. Based on your estimated income, itemization will not help you.

You may not always get the money back. You will get a credit against taxes owed.

With respect to estimating your return, you should have your withholding setup (optimally) so that you do not get anything back. This allows you to have full use of your money during the year. If you have the disipline to save extra $$, then increase your exemptions from any wage income and squirrel the extra away incase needed when it becomes this time next year. If you prefer Uncle to hold your money for you and give it back next year without interest for the use, then lower your withholdings

By not being a dependant will increse your personal exemption and also allow the LLC to come into play. This past year, it should be your parents that get the advantage of either the Hope or LLC.

Best way to create anticipation is to create a dummy return using Tax S/W and pretend that your estimates for year 2005 are year 2004 income and expenses.

 

[fbrdphreak]

Other schooling supplies should fall under the Schedule A/Form 2106 for edcuational costs. This requires itemization. Based on your estimated income, itemization will not help you.

Is this because to be reimbursed for this requires the total expense of these items to be at least 2% of your AGI?

You may not always get the money back. You will get a credit against taxes owed.

I have never had to pay federal taxes back, so wouldn't that mean it will just come back to me? I've only payed like $2 back to the State before.

If you have the disipline to save extra $$, then increase your exemptions from any wage income and squirrel the extra away incase needed when it becomes this time next year. If you prefer Uncle to hold your money for you and give it back next year without interest for the use, then lower your withholdings

I'm a little confused here, so lemme make sure I have this part right: increasing my exemptions will increase the amt of money I actually get on each paycheck? Or I could decrease my exemptions & have MORE "saved" for my '05 Tax Return? Now, if I increase my exemptions, I assume that means I will have to pay taxes back on what I made? I'm used to getting my paycheck raped, so I'm not worried about getting more back each month if it might cause me to PAY money come tax time.

With respect to estimating your return, you should have your withholding setup (optimally) so that you do not get anything back. This allows you to have full use of your money during the year.

How do I set this up? Is this where I pull up some tax software, play with my exemptions, and even it out to where I get the most money on a paycheck without paying money to the IRS?

Thanks again

 

[EagleKeeper]

Originally posted by: fbrdphreak

Other schooling supplies should fall under the Schedule A/Form 2106 for edcuational costs. This requires itemization. Based on your estimated income, itemization will not help you.

Is this because to be reimbursed for this requires the total expense of these items to be at least 2% of your AGI?

You may not always get the money back. You will get a credit against taxes owed.

I have never had to pay federal taxes back, so wouldn't that mean it will just come back to me? I've only payed like $2 back to the State before.

If you have the disipline to save extra $$, then increase your exemptions from any wage income and squirrel the extra away incase needed when it becomes this time next year. If you prefer Uncle to hold your money for you and give it back next year without interest for the use, then lower your withholdings

I'm a little confused here, so lemme make sure I have this part right: increasing my exemptions will increase the amt of money I actually get on each paycheck? Or I could decrease my exemptions & have MORE "saved" for my '05 Tax Return? Now, if I increase my exemptions, I assume that means I will have to pay taxes back on what I made? I'm used to getting my paycheck raped, so I'm not worried about getting more back each month if it might cause me to PAY money come tax time.

With respect to estimating your return, you should have your withholding setup (optimally) so that you do not get anything back. This allows you to have full use of your money during the year.

How do I set this up? Is this where I pull up some tax software, play with my exemptions, and even it out to where I get the most money on a paycheck without paying money to the IRS?

Thanks again

Is this because to be reimbursed for this requires the total expense of these items to be at least 2% of your AGI?

Yes

I have never had to pay federal taxes back, so wouldn't that mean it will just come back to me? I've only payed like $2 back to the State before

Federal taxes are entirely based on what you earn and what your tax status is.
Tax owed ore refunded is based on what you pay in over the year and what the tax is after sweating through the 1040 paperwork and related forms.

I'm a little confused here, so lemme make sure I have this part right: increasing my exemptions will increase the amt of money I actually get on each paycheck? Or I could decrease my exemptions & have MORE "saved" for my '05 Tax Return? Now, if I increase my exemptions, I assume that means I will have to pay taxes back on what I made? I'm used to getting my paycheck raped, so I'm not worried about getting more back each month if it might cause me to PAY money come tax time.

You are correct. You can get raped in April 06 or get raped continually during the year. Whicher feels better. To be raped in April 06 will required disapline, otherwise it becomes both raped and screwed.

How do I set this up? Is this where I pull up some tax software, play with my exemptions, and even it out to where I get the most money on a paycheck without paying money to the IRS?

Answer is yes:

For the uninformed:

Best thing is to use the TurboTax on the Web to get a gut feeling for what this year would have been using your estimated 2005 numbers.
That will tell you how much tax will be owed and you can then determine what/if any refund would have been.

Also it should tell you what your effective tax rate (percentage is). For every exemption that you take; the take home $$ over a year should shift about $2500 in your favor.
by looking at your tax rate, you can determine what the extra percentage would due to taxes (% * 2500).

Adjust the exemptions (withholding) until the tax owed, equals close to what you paid in over the year. That is the break-even point. After that point either you are taking advantage of the system and will be possibly raped in April or you are allowing yourself to be raped during the year.

 

[fbrdphreak]

Okay, so now I'm REALLY confused. I've used TurboTax for the Web to do my returns before (including 2004), so I pulled that up real quick and put in all my info for 2004 again; just not registering again of course.
I used the 1040 "Premiere," to cover all the bases just for fun.
"Did you pay tuition or other expenses for yourself, your spouse or your dependent(s) to attend college, vocational school or other post-high school program? These expenses are sometimes reported on Form 1098-T." Answered Yes
Did you take an education credit on a prior year's tax return for expenses that were refunded in 2004? Answered No

"Tell us the qualified expenses for each person listed below. Include expenses paid by students who are your dependents." Input $5,392 (estimated tuition, fees, and books)

Before this point, my total refund with just the W-2 put in was $503.
"Your 2004 tuition and fees deduction is $4,000."
And now it is still $503.
I continue through the web application, pretty much answering no to everything else; except when I get to the paying interest on student loans. I say that I paid $500 in interest on student loans and it responds saying that I can deduct the total $500.
Well, I proceed to the end of the return process and its asking me if I want to direct deposit my return, but it STILL says my total return is only $503. WTF??? What happened to the $4,000 + $500????

So I also went to "Preview My 1040" and here is the relevant info from that:
Line 7: 7,159
Line 15: 7,159
Line 18 (Student loan interest deduction): 500
Line 19 (Tuition & Fees deduction): 4000
Line 20: 4500
Line 21: 2659
On line 31, "Education Credits," nothing is listed? Why?
If you need any other info from the 1040 to figure this out, just let me know
Thank you so much for helping me figure this crap out

 

[CPA]

Originally posted by: fbrdphreak
Okay, so now I'm REALLY confused. I've used TurboTax for the Web to do my returns before (including 2004), so I pulled that up real quick and put in all my info for 2004 again; just not registering again of course.
I used the 1040 "Premiere," to cover all the bases just for fun.
"Did you pay tuition or other expenses for yourself, your spouse or your dependent(s) to attend college, vocational school or other post-high school program? These expenses are sometimes reported on Form 1098-T." Answered Yes
Did you take an education credit on a prior year's tax return for expenses that were refunded in 2004? Answered No

"Tell us the qualified expenses for each person listed below. Include expenses paid by students who are your dependents." Input $5,392 (estimated tuition, fees, and books)

Before this point, my total refund with just the W-2 put in was $503.
"Your 2004 tuition and fees deduction is $4,000."
And now it is still $503.
I continue through the web application, pretty much answering no to everything else; except when I get to the paying interest on student loans. I say that I paid $500 in interest on student loans and it responds saying that I can deduct the total $500.
Well, I proceed to the end of the return process and its asking me if I want to direct deposit my return, but it STILL says my total return is only $503. WTF??? What happened to the $4,000 + $500????

So I also went to "Preview My 1040" and here is the relevant info from that:
Line 7: 7,159
Line 15: 7,159
Line 18 (Student loan interest deduction): 500
Line 19 (Tuition & Fees deduction): 4000
Line 20: 4500
Line 21: 2659
On line 31, "Education Credits," nothing is listed? Why?
If you need any other info from the 1040 to figure this out, just let me know
Thank you so much for helping me figure this crap out

You already have the 4000 on line 19. You cannot take it in both places.

If you decide to go the Education Credit route, you will need to fill out a form 8863. It's possible the program already filled this form out and the result was your return would be less going this route, but that would be highly unlikely. Check to see if the form exists on the website.

Also, you might want to try the free file on the IRS website to see if you get a different result.

 

[fbrdphreak]

What is the difference between "Tuition and Fees Deduction" and "Education Credits" ? And why didn't the "Student loan interest deduction" get credited back to me in my return? Do both the tuition reimbursement & loan interest need to be entered on form 8863 to receive credit for those on the return? Thanks

 

[fbrdphreak]

And I googled IRS Freefile, but all I see is a list of online free file providers; one which I was using, TurboTax.
Would it be better to just pull up PDF's of the tax forms and do the calculations myself? I don't have anything complicated; just the W2 & college stuff

 

[EagleKeeper]

Originally posted by: fbrdphreak
And I googled IRS Freefile, but all I see is a list of online free file providers; one which I was using, TurboTax.
Would it be better to just pull up PDF's of the tax forms and do the calculations myself? I don't have anything complicated; just the W2 & college stuff

Yes

Make sure that you look carefully at the instructions regarding the schooling areas.

 

[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?