ATOT's Second Annual Tax Time Thread!

[Muse]

Originally posted by: CPA

Originally posted by: Muse
I'm unclear on the home office rules. My job is part time telecommute and it requires me, when working, to work in my home office. I need a computer of sufficient power and configuration, a high bandwidth internet connection, a printer, a cell phone (which my employer compensates me for up to $40/month, although it costs me a bit more because of taxes), an answering machine, and certain software for analysis and testing purposes.

So, I have a home office. I can't say in all honesty that I do nothing in this office but service my employer. I do some other stuff. I get email, I browse the internet when I want or need to, I have a projector in the room and occasionally watch movies with it. I have a TV card in one of my two computers and sometimes watch TV using it.

Can I deduct part of the equipment in this space as business related expenses? Without it, I couldn't do my job. This is the sole space where I work for my employer. Thanks for any input.

You would pass the test of home office use from your explanation above. You could expense the majority of that office equipment fully, including the computer.

Last year I depreciated on my computer equipment. However, when I say "Yes" to the question of whether I had a home office in this year's Turbotax, it has me doing a lot of stuff I didn't do last year. I wonder if I should do this portion, or say "No" to that question. For instance, it wants to know the square feet of my office and home, the property taxes I paid, home insurance, the total cost of my utilities for the year, repairs and maintenance (so far, I've done all that myself, and it would be hard for me to make an accurate accounting of it - I buy tools, supplies, etc. semi-constantly at Home Depot, etc.) etc. Should I do all that or just do some other portion of the exam to expense my computer equipment and some other related expenses (cell phone, DSL or partial DSL, maybe)? Thanks!

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: dakata24
been awhile since ive filed by mail. but this is my first year that i owe the feds money. i dont want to pay the $50-60 convience charge to do it by credit card...

should i rely on regular snail mail or should i play it safe and send it cerified mail or something?

snail mail has always been fine for me when I have owed. Just make sure it's postmarked by or on the 15th.

Get a receipt from the Post Office if you are concerned. They will write in the zip code for you; that will act as proof.

 

[EagleKeeper]

Originally posted by: shimsham
no i havent tried to figure anything yet.

usually when we file together it takes 6-8 weeks for the irs to determine my portion and send the refund, but i cant afford to wait that long. if i could somehow get an idea of the percentage of the penalty for filing seperate then i could make a decision. for example, if im going to lose 50% of what i would normally get by filing together, then ill just file together and have to wait. but if im only going to lose 10%, then id rather have the refund as soon as possible for bills and such, and will probably do a rapid refund.

bah, im a little stressd and just babbling, so let me ask it this way: what, if any, is the normal % penalty (rough estimate) for filing seperately instead of together? ive always been under the impression that filing seperately would basically lose money on the return.

As CPA indicated, get the Tax S/W installed on your system (not online), set up for a normal joint filing and do the numbers.

Now make a two copies of the tax file, label on HIS and the other HERS.

Go into each file and remove the stuff that will be related to the other persons.

The S/W should immediately show you the numbers in the summary area.

You can also adjust the dependents between spouses and allocate the itemizations between them. Note that if one itemizes, the other must file itemized. Splitting itemizations may hurt the total becuase of the starndard deduction that will apply.

Figure that it will take about 15-30 minutes to do the base comparison.

Efile will cost you about $20 without coupons/rebates.

Uncle should put the direct deposit in your account within 3 Fridays from filing.

You can stop by any place that offers "refund loans" and ask what the cost/interest rate is on the loan. The E-filing S/W vendors will probably come close to thse numbers.

 

[EagleKeeper]

Originally posted by: Muse

Originally posted by: CPA

Originally posted by: Muse
I'm unclear on the home office rules. My job is part time telecommute and it requires me, when working, to work in my home office. I need a computer of sufficient power and configuration, a high bandwidth internet connection, a printer, a cell phone (which my employer compensates me for up to $40/month, although it costs me a bit more because of taxes), an answering machine, and certain software for analysis and testing purposes.

So, I have a home office. I can't say in all honesty that I do nothing in this office but service my employer. I do some other stuff. I get email, I browse the internet when I want or need to, I have a projector in the room and occasionally watch movies with it. I have a TV card in one of my two computers and sometimes watch TV using it.

Can I deduct part of the equipment in this space as business related expenses? Without it, I couldn't do my job. This is the sole space where I work for my employer. Thanks for any input.

You would pass the test of home office use from your explanation above. You could expense the majority of that office equipment fully, including the computer.

Last year I depreciated on my computer equipment. However, when I say "Yes" to the question of whether I had a home office in this year's Turbotax, it has me doing a lot of stuff I didn't do last year. I wonder if I should do this portion, or say "No" to that question. For instance, it wants to know the square feet of my office and home, the property taxes I paid, home insurance, the total cost of my utilities for the year, repairs and maintenance (so far, I've done all that myself, and it would be hard for me to make an accurate accounting of it - I buy tools, supplies, etc. semi-constantly at Home Depot, etc.) etc. Should I do all that or just do some other portion of the exam to expense my computer equipment and some other related expenses (cell phone, DSL or partial DSL, maybe)? Thanks!

All the home office expenses go onto the 2106/Schedule A.
What they are trying to do is help you determine a proper number.
You either answer their questions or just enter the data directly into the 2106 section.
Their method is intended to help you get the majority of popular items.

 

[Muse]

Originally posted by: EagleKeeper

Originally posted by: Muse

Originally posted by: CPA

Originally posted by: Muse
I'm unclear on the home office rules. My job is part time telecommute and it requires me, when working, to work in my home office. I need a computer of sufficient power and configuration, a high bandwidth internet connection, a printer, a cell phone (which my employer compensates me for up to $40/month, although it costs me a bit more because of taxes), an answering machine, and certain software for analysis and testing purposes.

So, I have a home office. I can't say in all honesty that I do nothing in this office but service my employer. I do some other stuff. I get email, I browse the internet when I want or need to, I have a projector in the room and occasionally watch movies with it. I have a TV card in one of my two computers and sometimes watch TV using it.

Can I deduct part of the equipment in this space as business related expenses? Without it, I couldn't do my job. This is the sole space where I work for my employer. Thanks for any input.

You would pass the test of home office use from your explanation above. You could expense the majority of that office equipment fully, including the computer.

Last year I depreciated on my computer equipment. However, when I say "Yes" to the question of whether I had a home office in this year's Turbotax, it has me doing a lot of stuff I didn't do last year. I wonder if I should do this portion, or say "No" to that question. For instance, it wants to know the square feet of my office and home, the property taxes I paid, home insurance, the total cost of my utilities for the year, repairs and maintenance (so far, I've done all that myself, and it would be hard for me to make an accurate accounting of it - I buy tools, supplies, etc. semi-constantly at Home Depot, etc.) etc. Should I do all that or just do some other portion of the exam to expense my computer equipment and some other related expenses (cell phone, DSL or partial DSL, maybe)? Thanks!

All the home office expenses go onto the 2106/Schedule A.
What they are trying to do is help you determine a proper number.
You either answer their questions or just enter the data directly into the 2106 section.
Their method is intended to help you get the majority of popular items.

OK, thanks. I wanted to make sure I was doing the right thing in answering the questions in that part. I've never entered stuff like utility bills on my tax returns, but I should have all my records and can enter it.

 

[EagleKeeper]

Originally posted by: Muse

Originally posted by: EagleKeeper

Originally posted by: Muse

Originally posted by: CPA

Originally posted by: Muse
I'm unclear on the home office rules. My job is part time telecommute and it requires me, when working, to work in my home office. I need a computer of sufficient power and configuration, a high bandwidth internet connection, a printer, a cell phone (which my employer compensates me for up to $40/month, although it costs me a bit more because of taxes), an answering machine, and certain software for analysis and testing purposes.

So, I have a home office. I can't say in all honesty that I do nothing in this office but service my employer. I do some other stuff. I get email, I browse the internet when I want or need to, I have a projector in the room and occasionally watch movies with it. I have a TV card in one of my two computers and sometimes watch TV using it.

Can I deduct part of the equipment in this space as business related expenses? Without it, I couldn't do my job. This is the sole space where I work for my employer. Thanks for any input.

You would pass the test of home office use from your explanation above. You could expense the majority of that office equipment fully, including the computer.

Last year I depreciated on my computer equipment. However, when I say "Yes" to the question of whether I had a home office in this year's Turbotax, it has me doing a lot of stuff I didn't do last year. I wonder if I should do this portion, or say "No" to that question. For instance, it wants to know the square feet of my office and home, the property taxes I paid, home insurance, the total cost of my utilities for the year, repairs and maintenance (so far, I've done all that myself, and it would be hard for me to make an accurate accounting of it - I buy tools, supplies, etc. semi-constantly at Home Depot, etc.) etc. Should I do all that or just do some other portion of the exam to expense my computer equipment and some other related expenses (cell phone, DSL or partial DSL, maybe)? Thanks!

All the home office expenses go onto the 2106/Schedule A.
What they are trying to do is help you determine a proper number.
You either answer their questions or just enter the data directly into the 2106 section.
Their method is intended to help you get the majority of popular items.

OK, thanks. I wanted to make sure I was doing the right thing in answering the questions in that part. I've never entered stuff like utility bills on my tax returns, but I should have all my records and can enter it.

The utilities will have a percentage used as business expenses. The percentage will be based on the ratio of office space to total space.

Just make sure that you have a statement from the employer indicating that the home office is required by them.

IRS looks at home office claims closely.

 

[Muse]

Originally posted by: EagleKeeper

Originally posted by: Muse

Originally posted by: EagleKeeper

Originally posted by: Muse

Originally posted by: CPA

Originally posted by: Muse
I'm unclear on the home office rules. My job is part time telecommute and it requires me, when working, to work in my home office. I need a computer of sufficient power and configuration, a high bandwidth internet connection, a printer, a cell phone (which my employer compensates me for up to $40/month, although it costs me a bit more because of taxes), an answering machine, and certain software for analysis and testing purposes.

So, I have a home office. I can't say in all honesty that I do nothing in this office but service my employer. I do some other stuff. I get email, I browse the internet when I want or need to, I have a projector in the room and occasionally watch movies with it. I have a TV card in one of my two computers and sometimes watch TV using it.

Can I deduct part of the equipment in this space as business related expenses? Without it, I couldn't do my job. This is the sole space where I work for my employer. Thanks for any input.

You would pass the test of home office use from your explanation above. You could expense the majority of that office equipment fully, including the computer.

Last year I depreciated on my computer equipment. However, when I say "Yes" to the question of whether I had a home office in this year's Turbotax, it has me doing a lot of stuff I didn't do last year. I wonder if I should do this portion, or say "No" to that question. For instance, it wants to know the square feet of my office and home, the property taxes I paid, home insurance, the total cost of my utilities for the year, repairs and maintenance (so far, I've done all that myself, and it would be hard for me to make an accurate accounting of it - I buy tools, supplies, etc. semi-constantly at Home Depot, etc.) etc. Should I do all that or just do some other portion of the exam to expense my computer equipment and some other related expenses (cell phone, DSL or partial DSL, maybe)? Thanks!

All the home office expenses go onto the 2106/Schedule A.
What they are trying to do is help you determine a proper number.
You either answer their questions or just enter the data directly into the 2106 section.
Their method is intended to help you get the majority of popular items.

OK, thanks. I wanted to make sure I was doing the right thing in answering the questions in that part. I've never entered stuff like utility bills on my tax returns, but I should have all my records and can enter it.

The utilities will have a percentage used as business expenses. The percentage will be based on the ratio of office space to total space.

Just make sure that you have a statement from the employer indicating that the home office is required by them.

IRS looks at home office claims closely.

I don't have any such statement, but it's implicit in my job that all those things I stated are necessary to accomplish my work. Those things essentially require a home office. I realize that the IRS tends to look closely at claims of home office deductions. I suppose if I got audited I could get a statement from my employer of some kind, but I don't know that I want to bother them with that at this point. My employer doesn't require me to have a home office but they require me to perform in a manner consistent with having a home office, which I figure is virtually the same thing.

 

[EagleKeeper]

Originally posted by: Muse

Originally posted by: EagleKeeper

Just make sure that you have a statement from the employer indicating that the home office is required by them.

IRS looks at home office claims closely.

I don't have any such statement, but it's implicit in my job that all those things I stated are necessary to accomplish my work. Those things essentially require a home office. I realize that the IRS tends to look closely at claims of home office deductions. I suppose if I got audited I could get a statement from my employer of some kind, but I don't know that I want to bother them with that at this point. My employer doesn't require me to have a home office but they require me to perform in a manner consistent with having a home office, which I figure is virtually the same thing.

What you think and what the IRS wants can b e two different things.

Hypothetical situation:

The IRs audits you for 2004.

You no longer are working for the current employer; therefore can not show that a home-office situation was a requiremnt of the job.

You will be SOL.

Get something to CYA.

 

[Muse]

Originally posted by: EagleKeeper

Originally posted by: Muse

Originally posted by: EagleKeeper

Just make sure that you have a statement from the employer indicating that the home office is required by them.

IRS looks at home office claims closely.

I don't have any such statement, but it's implicit in my job that all those things I stated are necessary to accomplish my work. Those things essentially require a home office. I realize that the IRS tends to look closely at claims of home office deductions. I suppose if I got audited I could get a statement from my employer of some kind, but I don't know that I want to bother them with that at this point. My employer doesn't require me to have a home office but they require me to perform in a manner consistent with having a home office, which I figure is virtually the same thing.

What you think and what the IRS wants can b e two different things.

Hypothetical situation:

The IRs audits you for 2004.

You no longer are working for the current employer; therefore can not show that a home-office situation was a requiremnt of the job.

You will be SOL.

Get something to CYA.

OK, point well taken. If I present the situation something like you present it here, I can see where they'd totally understand and provide me with something sensible. I'll draft something that looks about like that and send it to them and ask them to send it back. Do you think an email would be sufficient or should I ask them to send it to me US Mail? I guess the mail would be best... I'll ask them to corroborate that I am working for them telecommute and required to perform many typical office tasks that require a computer, printer, faxing capabilities, phone and machine and/or cell phone, internet connectivity, etc. Thanks!!

 

[aux]

Question on 1099-MISC and Schedule C: I worked as an independent contractor for a period of time and received 1099-MISC with an amount in box 7 (non-employee compensation). It seems that the net profit from Schedule C is taxed twice. Once the net profit goes to form 1040, line 12 that ends up in the taxable income; the second time it is because of the additional self-employment tax (Schedule SE that goes to form 1040, line 57). Is this correct?

 

[bolido2000]

My gf quitted her job in January and she went back to Taiwan for 2 months to look for a job/visit friends. She didn't find anything good, so she is coming back to the US and will look for a job here. Can she deduct the travel expenses as job search related?

 

[HeroOfPellinor]

I declared 9 fed and state withholdings last year and I'm still getting almost a grand back for a refund. I'm sure that means something. :Q I ended up paying about 10% taxes, fed and state combined.

 

[EagleKeeper]

Originally posted by: aux
Question on 1099-MISC and Schedule C: I worked as an independent contractor for a period of time and received 1099-MISC with an amount in box 7 (non-employee compensation). It seems that the net profit from Schedule C is taxed twice. Once the net profit goes to form 1040, line 12 that ends up in the taxable income; the second time it is because of the additional self-employment tax (Schedule SE that goes to form 1040, line 57). Is this correct?

You are correct.

As self-employed, you are covering both theemployer share of SS and the employee share.

The good news is that you can easily write off items via the Schedule C that are either rejected for the Form 2106 or get clobbered by rules and other limitations. Only you imagination and common sense are the limit.

 

[EagleKeeper]

To take a visit while on an employment interview is acceptable.

To go 10K miles for a visit to a foriegn country and declare it a job search will not fly.
(Pun intended)

Also she will have to itemize using the Schedule A & Form 2106 to use any job searching expenses.

 

[dullard]

Two simple questions:
1) If a business gives away bottled water/pop to its customers, is that considered a supply or a gift (office expense)? I suppose you could almost call it a meal.
2) Do auditors really care if you mistakenly put a $1 expense in the wrong spot on a Schedule C? Some items really are on the border and I don't want to make a mistake.
3) Is there a website with many examples of what goes where on the Schedule C?

 

[EagleKeeper]

Originally posted by: dullard
Two simple questions:
1) If a business gives away bottled water/pop to its customers, is that considered a supply or a gift (office expense)? I suppose you could almost call it a meal.
2) Do auditors really care if you mistakenly put a $1 expense in the wrong spot on a Schedule C? Some items really are on the border and I don't want to make a mistake.
3) Is there a website with many examples of what goes where on the Schedule C?

This looks like three questions:

1) It should be considered an expense when it is targeted for all customers rather than a gift which is considered to be targeted toward specific people.

2) With the exception of meals, a $ is worth a $ on the Schedule C. As long as one can back up the cost, no-one should get in a tizzy. Auditors can realize that there are grey areas in classification of an item. Where one can get into trouble, is if you try to list items that should not be even considered.

3) Link Many excellent examples, of what can be used (not which line item to place it in).

For more than those, you should look at some of the tax guides that are sold at bookstores. Spend an hour or two browsing through them. The IRS Web site also will have some examples and the tax S/W itself comes with many hints.

There is not one over all definite place of what is acceptable or not. If you feel that you can not justify an item then do not use it.

Once you determine what can be used, then common sense should allow you to locate the proper line entry for it.

 

[dullard]

Originally posted by: EagleKeeper
This looks like three questions:

I rephrased the questions and it became three rather than two. I didn't remember to go back and update the first sentence.

1) It should be considered an expense when it is targeted for all customers rather than a gift which is considered to be targeted toward specific people.

An expense? Which category?

There is not one over all definite place of what is acceptable or not. If you feel that you can not justify an item then do not use it.

I have no trouble justifying the costs, but I just was uncertain on a few simple items. For example: Is a nail an office expense (art hanging) or repair expense? If they don't care about the specific locations, then I don't have to worry that much (which can be frustrating when a receipt has ~100 items which belong in multiple categories).

 

[EagleKeeper]

Originally posted by: dullard

Originally posted by: EagleKeeper
This looks like three questions:

I rephrased the questions and it became three rather than two. I didn't remember to go back and update the first sentence.

1) It should be considered an expense when it is targeted for all customers rather than a gift which is considered to be targeted toward specific people.

An expense? Which category?

There is not one over all definite place of what is acceptable or not. If you feel that you can not justify an item then do not use it.

I have no trouble justifying the costs, but I just was uncertain on a few simple items. For example: Is a nail an office expense (art hanging) or repair expense? If they don't care about the specific locations, then I don't have to worry that much (which can be frustrating when a receipt has ~100 items which belong in multiple categories).

If you provide a bottle of water to every customer that visits the location, it could be cosidered supplies, not an office expense.

Example:
Office expenses included maintenance services, rug cleaning, window washing and office parties.

If you promote the water in order to attract a customer, then is could be considered to be advertising.

Either option should work, however it should not be classified as supplies
They will usually look at the type of store where you get an items.

Office supply store - Supplies.
Hardware store - Repairs.

They will not look at each item on a receipt if there is a large amount of items and a sampling shows them to be related.

The breakdown is more for your purposes and for them to look at what would be considered reasonable (to prevent padding for personal use).

 

[Kroze]

Is your federal return suppose to be more than your state?



I'm a homeowner and i pay property taxes.



Does this seems right to you?



I have a total income of $ ~8500.



My federal return comes out to be $379. and my state (NJ) comes out to be $99.

 

[CPA]

Originally posted by: Kroze
Is your federal return suppose to be more than your state?



I'm a homeowner and i pay property taxes.



Does this seems right to you?



I have a total income of $ ~8500.



My federal return comes out to be $379. and my state (NJ) comes out to be $99.

1. Not sure I understand the question, but we generally don't answer state tax questions because of the complexity and non-standardization of state taxes.
2. Um, yes, in most states if you own a house you pay property taxes at the end of the year. You are allowed to include as an itemized deduction on your federal if you are filing such (not sure about state).
3. with income of only 8500, I would expect that you are just using the standard deduction and not itemizing, correct?

 

[bondboy]

Question about property taxes:

If I paid part of taxes for '05 in Dec '04, can I deduct that in '04 return?
What if I paid in Jan '05? Or is that too late?

TIA.

 

[EagleKeeper]

Originally posted by: bondboy
Question about property taxes:

If I paid part of taxes for '05 in Dec '04, can I deduct that in '04 return?
What if I paid in Jan '05? Or is that too late?

TIA.

Uncle looks at the date on the check for when it becomes deductible.

 

[Turin39789]

Originally posted by: Turin39789
I found some information on 1099's in here already but was unable to make much sense from it.


I was unemployed for a few months this year, but managed to get a few basic contract jobs, doing pc installation.

One of them sent me a w2 and took out taxes, GREAT.

The other one sent me a 1099-misc and this is my first time dealing with one.


I made 876.00 on this job over the course of several weekends, how much more complicated will this make my taxes. What do I need to do.

Thanks! You guys are lifesavers

Would you recommend taking these to someone? I have a 1099 misc 1099 b and c i think, one for the job, one for a late return that i got last year and one for credit card debt that was forgiven, they are all new to me, but i dont know anything about the deductions, would it be worth it to take it in to a cpa or h and r block etc?

 

[EagleKeeper]

Originally posted by: Turin39789

Originally posted by: Turin39789
I found some information on 1099's in here already but was unable to make much sense from it.


I was unemployed for a few months this year, but managed to get a few basic contract jobs, doing pc installation.

One of them sent me a w2 and took out taxes, GREAT.

The other one sent me a 1099-misc and this is my first time dealing with one.


I made 876.00 on this job over the course of several weekends, how much more complicated will this make my taxes. What do I need to do.

Thanks! You guys are lifesavers

Would you recommend taking these to someone? I have a 1099 misc 1099 b and c i think, one for the job, one for a late return that i got last year and one for credit card debt that was forgiven, they are all new to me, but i dont know anything about the deductions, would it be worth it to take it in to a cpa or h and r block etc?

Block will charge you a min of $55 to talk to you. that should be about true for most quicky tax preparers.

You should be able to use on-line S/W to try and do it first. It will not cost you anything initially. If you have collected info regarding the job that paid you the 1099, then you are well ahead of the game.

Make sure that you go through your states free filing site to get to an online site. That way, if you qualify, you can file for free.

Otherwise one has to re-enter information if you attempt to do it free.

PM me if additional info/help is required.

 

[dakata24]

Originally posted by: Muse

Originally posted by: dakata24
been awhile since ive filed by mail. but this is my first year that i owe the feds money. i dont want to pay the $50-60 convience charge to do it by credit card...

should i rely on regular snail mail or should i play it safe and send it cerified mail or something?

Personally, I wouldn't sweat it. I've always sent my returns regular first class mail. You just need to have it postmarked by April 15 unless you get an extension. For a little additional security in something like this, I bring it right to the post office, not a box on the street, unless it's the one in front of the post office. Nowadays I efile my fed return because that's free with Turbotax (after mail-in rebate). I'd have to pay for efiling state, so I send that first class.

Thanks for the tips, EagleKeeper and CPA. Quite helpful!

ok. cool. thanks.

do you know how quickly they deposit checks for payment?