CPA's Annual Tax Time Help - Filing Day is over. This thread can be unstickied.

[EagleKeeper]

Originally posted by: JPS
alkemyst & EagleKeeper

Going back to my brother and his unemployment predictament, I found out something new that I find interesting. Turns out his current employer is an international firm with US headquarters in New Jersey and employess all 50 states (not to mention all of the their other global offices and locations). They have no home office in his state, Colordao. I did some searching and it turns out his employer can do one of two things regarding new hire reporting etc.

1) They can report newly hired employees to the states in which they are working, following the requirements established by each state.

2) They can report all newly hired employees to one state, regardless where the employees work. They must have at least one employee working in the state choosen for reporting.

Given that corp headquarters are in NJ, I would be more than willing to bet that his company chose option 2 and reports all new hires and tax payments to NJ. If that is the case, how long do you think before the paper trail might catch up to him in Colorado though cross checks? Asking becasue he has decided to repay the UI office the overpaid benefits, but he does not want to do so until he as all of the money together. Bear in mind he was hired beginning of last August and continued to pull UI benefits through mid-September.

Thanks again guys - you advice has really helped!

speculation is very dangerous.

Based on option #1:

If they are withholding income tax from his paycheck based on Colorado, then they will send the funds to CO at least once a quarter if not monthly. CO may check on items quarterly and be behind by 1 quarter. Therefore, it CO checks, best case would be that they will make checks in the spring for the previous fall.
If they are withholding tax based on NJ, then CO may not know about him until he files his income taxes and then a sweep is made. Best case is looking at summertime to be detected.

Option #2 will speed up process by maybe three months at worst case.


No matter what, he needs to squeeze tightly before April/May time frame to ensure that he can slip the funds back before some-one starts raising cane. Every week that goes by can increase the detection and/or penalties.
It will be easier to ask forgiveness and get away with a minor lock on his account for x months if he delivers before they ask for it.

 

[Zombie]

Turbo Tax says I owe $991. How do I verify this ? It seems to know how much I owe as soon as I enter gross Income and taxes paid. I only have about $500 in deductions(for student loans) and rent an apartment so nothing major to deduct.

help plz, thanks.

 

[Noirish]

Originally posted by: Zombie
Turbo Tax says I owe $991. How do I verify this ? It seems to know how much I owe as soon as I enter gross Income and taxes paid. I only have about $500 in deductions(for student loans) and rent an apartment so nothing major to deduct.

help plz, thanks.

Haha, same situation here.
I have nothing to claim as deductible this year.
It seems like donation won't help either since it's still less than standard deductible for single.
Why oh why they want my money all the time...

 

[Zombie]

The deduction I get doesn't even equal to the rent of the apartment for 6 months, forget the cost of living.

 

[alkemyst]

Originally posted by: EagleKeeper
speculation is very dangerous.

EagleKeeper and I seem to be on the same side of this issue. Someone may know 20 people cheating, but for each of those 20 there is probably some poor guy that is getting dragged through tax hell for a simple clerical error he made 3 years ago. The excuse "I didn't know" or "It was a simple mistake" holds no weight. I have witnessed people in IRS hell like this that made genuine mistakes and had no idea....if there is a way to avoid it personally I would. However, it depends on how much a gambler you are.

Good luck either way....I really can't vouch for the odds or anything else on this, I don't think anyone can.

Å

 

[JEDI]

I rented a room in my house.

In turbo tax, the only thing i see to enter rental income is rental property. But is this considered rental property? It's my only house and i live there.

THX

 

[CPA]

Originally posted by: JEDI
I rented a room in my house.

In turbo tax, the only thing i see to enter rental income is rental property. But is this considered rental property? It's my only house and i live there.

THX

how many days out of the year did you rent it out for and how many days was it unoccupied and used as part of the house?

 

[Shockwave]

So, are closing costs and down payments placed on a house deductable as well?

 

[alkemyst]

Originally posted by: Shockwave
So, are closing costs and down payments placed on a house deductable as well?

It's outlined within the thread pretty much...not all closing costs and a down payment is not deductable I believe.

Å

 

[EagleKeeper]

Originally posted by: Shockwave
So, are closing costs and down payments placed on a house deductable as well?

Some closing costs are deductible. Points paid and some itemized taxes.
Down payment is not deductible. That is part of the value of the house.

 

[JEDI]

Originally posted by: CPA

Originally posted by: JEDI
I rented a room in my house.

In turbo tax, the only thing i see to enter rental income is rental property. But is this considered rental property? It's my only house and i live there.

THX

how many days out of the year did you rent it out for and how many days was it unoccupied and used as part of the house?

2 out of 3 bedrooms were occupied all year long.

i lived in the 3rd bedroom

 

[EagleKeeper]

the house can be considered rental property.

Use the Schedule E to start handling the rental income.

Expenses for the house including interest/taxes/utilities/maintence now go against the rental income. You can use a percentage of square footage or # bedrooms for the value of expenses.
Vehicle usage related to the house over and beyond personal use is now deductible.
You also start getting a depreciation value for the house.

A negative cash flow relating to the house can be used against your normal income (up to $25K), reducing your personal tax liability.

When you sell the house, you will need to recapture the depreciation if the house is still used for rental purposes.

 

[Zombie]

can I put money in to roth IRA today and have it count as 2003 contribution ?

 

[EagleKeeper]

Originally posted by: Zombie
can I put money in to roth IRA today and have it count as 2003 contribution ?

Yes - up through 15 April. Make sure that it gets identified as a 2003 contribution.

FAQ - IRS - Roth IRA

When to Make Contributions?
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

 

[Zombie]

Originally posted by: EagleKeeper

Originally posted by: Zombie
can I put money in to roth IRA today and have it count as 2003 contribution ?

Yes - up through 15 April. Make sure that it gets identified as a 2003 contribution.

FAQ - IRS - Roth IRA

When to Make Contributions?
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

ok thanks, now can any of those contributions help me in lowering the $941 in taxes that I have to pay for 2003 ?

 

[EagleKeeper]

Originally posted by: Zombie

Originally posted by: EagleKeeper

Originally posted by: Zombie
can I put money in to roth IRA today and have it count as 2003 contribution ?

Yes - up through 15 April. Make sure that it gets identified as a 2003 contribution.

FAQ - IRS - Roth IRA

When to Make Contributions?
Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

ok thanks, now can any of those contributions help me in lowering the $941 in taxes that I have to pay for 2003 ?

Roth - will not

Normal IRA will - same rules apply.

Are you itemizing or have taken any educational learning this past year?
Self employment?

The above areas are where some tax bill reductions can occur.

 

[Zombie]

no just got out of school couple years ago and not self employed.

 

[EagleKeeper]

Originally posted by: Zombie
no just got out of school couple years ago and not self employed.

You are SOL - the standard IRA is the only immediate help that is available to you.

 

[optoman]

I am in the middle of doing taxes and one of the forms I got was for a piece of equipment I sold on ebay. The person I sold the item to sent me a 1099-Misc and the amount was about $1800 and reported in box 7, nonemployee compensation. Is this amount taxable even though I sold the item for less than I paid for it?

 

[EagleKeeper]

Originally posted by: optoman
I am in the middle of doing taxes and one of the forms I got was for a piece of equipment I sold on ebay. The person I sold the item to sent me a 1099-Misc and the amount was about $1800 and reported in box 7, nonemployee compensation. Is this amount taxable even though I sold the item for less than I paid for it?

It can be considered taxable.

Best bet is to use a Schedule C to report the E-Bay selling as self-employment.
This way you can itemize the cost of the item as well as any other expenses.
A net loss will assist you on your taxes.

 

[optoman]

Originally posted by: EagleKeeper

Originally posted by: optoman
I am in the middle of doing taxes and one of the forms I got was for a piece of equipment I sold on ebay. The person I sold the item to sent me a 1099-Misc and the amount was about $1800 and reported in box 7, nonemployee compensation. Is this amount taxable even though I sold the item for less than I paid for it?

It can be considered taxable.

Best bet is to use a Schedule C to report the E-Bay selling as self-employment.
This way you can itemize the cost of the item as well as any other expenses.
A net loss will assist you on your taxes.

Thanks!

 

[Noirish]

Originally posted by: EagleKeeper
the house can be considered rental property.

Use the Schedule E to start handling the rental income.

Expenses for the house including interest/taxes/utilities/maintence now go against the rental income. You can use a percentage of square footage or # bedrooms for the value of expenses.
Vehicle usage related to the house over and beyond personal use is now deductible.
You also start getting a depreciation value for the house.

A negative cash flow relating to the house can be used against your normal income (up to $25K), reducing your personal tax liability.

When you sell the house, you will need to recapture the depreciation if the house is still used for rental purposes.

What do you mean by "When you sell the house, you will need to recapture the depreciation if the house is still used for rental purposes."?

 

[EagleKeeper]

Originally posted by: orangel

Originally posted by: EagleKeeper
the house can be considered rental property.

Use the Schedule E to start handling the rental income.

Expenses for the house including interest/taxes/utilities/maintence now go against the rental income. You can use a percentage of square footage or # bedrooms for the value of expenses.
Vehicle usage related to the house over and beyond personal use is now deductible.
You also start getting a depreciation value for the house.

A negative cash flow relating to the house can be used against your normal income (up to $25K), reducing your personal tax liability.

When you sell the house, you will need to recapture the depreciation if the house is still used for rental purposes.

What do you mean by "When you sell the house, you will need to recapture the depreciation if the house is still used for rental purposes."?

The house will no longer be considered a personal house exempt from capital gains when sold, it has become an investment.
You will need to recover the bedrooms (convert them back to personal use) for set period of time to avoid this situation.

The way to avoid this situation is to no longer treat the house as a partial rental for the required period of time prior a sale.

 

[EagleKeeper]

dp

 

[jjmIII]

I love my accountant. He tells me if a deduction will create more money in bills from him than the deduction is worth.

This is often worth considering. I own an incorporated business and consider my accountant nearly a business partner.