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

[MustISO]

The state calculations may be because of the fact that you are also having a shared business.

All AGI is the original gross income adjusted for additions and subtractions listed on the front of the 1040 form.

It's not a shared business, it's hers. She's sole proprieter.

The problem with the AGI calculation is that all our numbers are added together since we're filing jointly. The state form wants it separate. I don't know how to calculate my AGI vs. hers.

They also want to know what percentage of the refund we got last year was mine and what percentage was hers. Why does it matter? and would I just do it 50/50?

 

[CPA]

Originally posted by: BenSkywalker
For 1099-R and form 5329- how do you figure out the amount that is not subject to the additional 10% tax?

I have one 1099-R and have an exemption code of 2 on it, but this is for a couple making ~$90K(~$80K without the 1099-R) a year at their current jobs and neither are 59 1/2 yet(her brother left his pension plan in her name). Is the entire amount not subject to the additional tax due to the code 2, or is there some worksheet I'm missing?

Any help greatly appreciated.

I'm a little unclear of your situation. Can you be specific to the reason you received the 1099-R and what is reported in which boxes.

 

[CPA]

Originally posted by: BenSkywalker
For 1099-R and form 5329- how do you figure out the amount that is not subject to the additional 10% tax?

I have one 1099-R and have an exemption code of 2 on it, but this is for a couple making ~$90K(~$80K without the 1099-R) a year at their current jobs and neither are 59 1/2 yet(her brother left his pension plan in her name). Is the entire amount not subject to the additional tax due to the code 2, or is there some worksheet I'm missing?

Any help greatly appreciated.

I'm a little unclear of your situation. Can you be specific to the reason you received the 1099-R and what is reported in which boxes.

 

[ExplodingBoy]

Here's my question: Can you claim, as an investment expense, various banking fees?

- bill payment fee?
- monthly account fee (for a savings account?)

 

[CPA]

Originally posted by: ExplodingBoy
Here's my question: Can you claim, as an investment expense, various banking fees?

- bill payment fee?
- monthly account fee (for a savings account?)

- No
- Yes

 

[alkemyst]

Originally posted by: ExplodingBoy
Here's my question: Can you claim, as an investment expense, various banking fees?

- bill payment fee?
- monthly account fee (for a savings account?)

First most 'savings' plans should be without fees if you are using them to save...

If you are merely trying to circumvent bank fees as an individual claiming them as long term savings plans you can't...IRA's and the like have special rules though and if you are serious on investments a savings account is usually the worst place to have your money....shoebox may be possibly better if you are paying fees. However, this all goes beyond tax help...

Bill payment fees are almost never deductable, even as a small business/full business especially when payment can be done without fees. It sort of depends on what bills and what they are for though....IRA type items probably yes, Business types it depends, private items almost definitely not.

EDIT: CPA seems to think savings account fees are deductable...perhaps I am wrong on this. I could swear though I was instructed before that only under my business could I deduct savings account fees outside of things like IRA's and longer term management fees.

Å

 

[ExplodingBoy]

CPA- thanks for answering my other question. Now I've thought of a couple more. Sorry a few of them are a bit more complicated... ;-)



1. If I itemize, can I deduct for the following as taxes paid or misc. taxes?

- State and Federal taxes on local and LD phone service
- State and Federal taxes on cell phone service (example: PA's gross receipts tax) NOT including sales tax
- Federal income tax (any amount due and paid when filing return)
- Interest paid on payment of federal, state, or local income tax
- State income taxes paid on ISO options income (income reported on W2)

2. Concerning deduction of home office space and/or equipment used exclusively for business use...

- If my employer agrees to let me work from home one day a week as part of a relocation agreement, does that fulfill the "for the employer's convenience" rule and let me deduct any part of the equipment or space's cost?

3. If I have $500 in self-employment income, can I deduct any portion of the health insurance premiums paid to my regular employer?

 

[EagleKeeper]

Originally posted by: ExplodingBoy

1. If I itemize, can I deduct for the following as taxes paid or misc. taxes?

- State and Federal taxes on local and LD phone service
- State and Federal taxes on cell phone service (example: PA's gross receipts tax) NOT including sales tax
- Federal income tax (any amount due and paid when filing return)
- Interest paid on payment of federal, state, or local income tax
- State income taxes paid on ISO options income (income reported on W2)

As an indivigual, you can not deduct additional taxes on anything but income and property.
Income tax that can be deducted is assessed by the state and/or local government.
Property tax is added cost each years assessed by the state of local government.
Some states levy a tax on vehicles beyond the cost of registration when you pay the registration. That is considered to be deductible.

Sales taxes and taxes for service are not deductible. (Item #1,2)
I do not believe that Interest on late tax payments is deductible. Uncle feels that you had over 450 days to take care of this. (Item #3)
Tax on income is deductible on Schedule A (Item #4)

Originally posted by: ExplodingBoy

2. Concerning deduction of home office space and/or equipment used exclusively for business use...

- If my employer agrees to let me work from home one day a week as part of a relocation agreement, does that fulfill the "for the employer's convenience" rule and let me deduct any part of the equipment or space's cost?

If it is written down, you may have a leg to stand on. However, if you are able to work at the employers location4 days a week, then this could be looked at as for your convience.
three legged stool with only one leg to use requires a very delicate balancing act.

If you were challenged and won, the IRS would comb through everything and get you on something.

I would not try to touch it.

Originally posted by: ExplodingBoy

3. If I have $500 in self-employment income, can I deduct any portion of the health insurance premiums paid to my regular employer?

No.

 

[EagleKeeper]

Originally posted by: xSauronx
what happens to be the preferred tax software here anyway? i didnt get any for....reasons im not pleased about

Any copy of tax S/W will allow you to get a general handle on predictions. The numbers will not be completely accurate due to tweaks in tax tables, etc done by congress each year, but it is enough to help give you a close idea on where you stand quarterly. I would expect that you will only be off less than 10-15% at the end of the year.

I have never come out behind the curve when doing it this way. there are always mis deductions that get figured into the final that are not used within the estimation.

Another way is to look at what your 2003 tax percentage is and just pay that quarterly.

I have some old copies of TurboTax andor TaxCut lying around if you are interested.

 

[EagleKeeper]

Originally posted by: MustISO

The state calculations may be because of the fact that you are also having a shared business.

All AGI is the original gross income adjusted for additions and subtractions listed on the front of the 1040 form.

It's not a shared business, it's hers. She's sole proprieter.

The problem with the AGI calculation is that all our numbers are added together since we're filing jointly. The state form wants it separate. I don't know how to calculate my AGI vs. hers.

They also want to know what percentage of the refund we got last year was mine and what percentage was hers. Why does it matter? and would I just do it 50/50?

Tax S/W Use
I do not have an answer why the state tax S/W is having a problem.
I would first though contact their help desk to find out if you doing something incorrectly. However, you may not get an answer in time. You have waited until the last figurative hour.
Because you feel that it is having a problem, I would file it by paper and also complain to the tax S/W manufacturer.

Request for a refund on the state tax S/W due to the fact that it is not able to handle your situation.
That will not happen though. I ran into the situation that I could not file due to a firewall and had to buy a second copy of the state.

AGI
You can easily determine strip out the AGI for yourself.
If you have tax S/W just create two copies of the working file.
In one copy, delete all your income. If you have joint income from last year, remove your share. For any 2002 state tax refunds, base it on the percentage of state tax income for 2002.
This will provide her AGI when you printout the front side of the 1040.

Now you can manually perform a line-by-line substraction of repeat the process on the second copy.

Either way, now you have the numbers needed for the MD 502.

Refund Split
The state tax refund is considered to be based on a percentage of the AGI from 2002.

 

[amd4life]

OKay this is a cool post hopefully someone can help me. Here it goes I had a family inheritance that showed up on two 1099-R (CA by the way) in the amount of 17,000. The accounts are classified as death withdrawls on my 1040 so no withdrawal penalties--thank goodness!!! The question is this, I have four siblings so we all split the money five ways (some dependants were listed as beneficiaries some where not due to paper trail error--so two of the five received the monies and we then split it out five ways).

SO anyway I wrote a check to one of my siblings for $8,000. How do I adjust my income to reflect this subtraction from my overall annual earnings? Do I adjust the actual 1099-R value on my 1040 to 50% distribution, or is there somwhere on the 1040 where I can list the 8 grand as a charity payment and use it as a itemized deduction?

Thanks for those that can help

K

 

[morkinva]

Thanks in advance for your efforts in answering these questions, its very nice of you.

My friend has liquidated an IRA and received a 1099-R. Section 2B has both boxes checked, which I assume means he is responsible for the 10% penalty. But he has no income for the year 2003. Is there some way to offset the $230 or so penalty?

 

[EagleKeeper]

Originally posted by: morkinva
Thanks in advance for your efforts in answering these questions, its very nice of you.

My friend has liquidated an IRA and received a 1099-R. Section 2B has both boxes checked, which I assume means he is responsible for the 10% penalty. But he has no income for the year 2003. Is there some way to offset the $230 or so penalty?

According to the IRS he had to have had income - he liquidated the IRA.

Penalty must be paid, taxes on income are dependent on the income level.
With no income, it is difficult to create deductions/credits.

If single, then about the only credit is the educational.

 

[BenSkywalker]

I'm a little unclear of your situation. Can you be specific to the reason you received the 1099-R and what is reported in which boxes.

A family member(my Uncle) worked for the State Liqour Store for most of his life and had a pension plan, he passed away a while ago and left the plan to his sister(my Mother) which sends her monthly payments.

Box 1- 9,047.13
Box 2a- 8,966.97
2B- blank
3,4- 0
5- 80.16
6- 0
7- 2
8,9a,9b- blank

I put the amount from Box2A in to line 16a of the 1040, but I'm not sure if this is subject to the additional tax on line 57 even after going over form 5329. The instructions for the form state that a code 2 is an exemption code- but it doesn't clarify if the entirety of the amount is exempt from the additional 10% tax or if it is partial or not at all. Thanks for any help you can offer.

 

[CPA]

Originally posted by: amd4life
OKay this is a cool post hopefully someone can help me. Here it goes I had a family inheritance that showed up on two 1099-R (CA by the way) in the amount of 17,000. The accounts are classified as death withdrawls on my 1040 so no withdrawal penalties--thank goodness!!! The question is this, I have four siblings so we all split the money five ways (some dependants were listed as beneficiaries some where not due to paper trail error--so two of the five received the monies and we then split it out five ways).

SO anyway I wrote a check to one of my siblings for $8,000. How do I adjust my income to reflect this subtraction from my overall annual earnings? Do I adjust the actual 1099-R value on my 1040 to 50% distribution, or is there somwhere on the 1040 where I can list the 8 grand as a charity payment and use it as a itemized deduction?

Thanks for those that can help

K

this is kind of a unique, complicated scenario. From the face, it looks like you just have a gift exchange (and since it's under 10K it would not be reported or taxed). This is not a charitable deduction, unless your sibling files as a 503c organization. My intuition also says you can not deduct this off of your 1099-R, because it was you who received the money. The paper trail problem is not the concern of the IRS, nor the CA Tax Dept. They don't allow deductions and reduction of income on "what if" scenarios. The best way to handle this is to sign a contract with your sibling to have him repay you the tax amount you had to pay because you had to claim "his earnings" on your 1040.

I would suggest, though, that you speak with a local CPA and see what their response it, because I will not claim to be in expert in this situation.

 

[CPA]

Originally posted by: morkinva
Thanks in advance for your efforts in answering these questions, its very nice of you.

My friend has liquidated an IRA and received a 1099-R. Section 2B has both boxes checked, which I assume means he is responsible for the 10% penalty. But he has no income for the year 2003. Is there some way to offset the $230 or so penalty?

None that I know of. Eaglekeeper, alkemyst do either of you have an Ace up your sleeve?

 

[CPA]

Originally posted by: BenSkywalker

I'm a little unclear of your situation. Can you be specific to the reason you received the 1099-R and what is reported in which boxes.

A family member(my Uncle) worked for the State Liqour Store for most of his life and had a pension plan, he passed away a while ago and left the plan to his sister(my Mother) which sends her monthly payments.

Box 1- 9,047.13
Box 2a- 8,966.97
2B- blank
3,4- 0
5- 80.16
6- 0
7- 2
8,9a,9b- blank

I put the amount from Box2A in to line 16a of the 1040, but I'm not sure if this is subject to the additional tax on line 57 even after going over form 5329. The instructions for the form state that a code 2 is an exemption code- but it doesn't clarify if the entirety of the amount is exempt from the additional 10% tax or if it is partial or not at all. Thanks for any help you can offer.

Got it.

First issue. By my understanding, since your uncle died and the pension is being paid to his beneficiary the code in box 7 should be 4, not 2. 2 is only for early distribution. Code 4 is for distribution to beneficiary regardless of age. I think the state made a mistake on you 1099-R.

Regardless, due to the distribution being a result of death, you should not have to pay the penalty according to Form 5329 exemptions.

 

[alkemyst]

Originally posted by: CPA

Originally posted by: morkinva
Thanks in advance for your efforts in answering these questions, its very nice of you.

My friend has liquidated an IRA and received a 1099-R. Section 2B has both boxes checked, which I assume means he is responsible for the 10% penalty. But he has no income for the year 2003. Is there some way to offset the $230 or so penalty?

None that I know of. Eaglekeeper, alkemyst do either of you have an Ace up your sleeve?

I don't know IRA's that well, just starting to look into them, but the way I understand it is you are always responsible for that 10%, it has nothing to do with income levels...just the way it is. I think there is no solution to that $230. Like EK said, education and I think sometimes house purchasing you can shield yourself from that 10%.

Anyways that $2300 (I am assuming if $230 was the 10%) is his income. Whenever you get money coming in from cashouts, prizes, payments via cash...it's all income. Selling something on ebay the same. I don't get 1099's for all my stuff (as I would have to file them for myself) but I am pretty sure the IRS won't like me ignoring my small 5 figure income over this past year .

Å

 

[alkemyst]

Originally posted by: CPA
[

this is kind of a unique, complicated scenario. From the face, it looks like you just have a gift exchange (and since it's under 10K it would not be reported or taxed). This is not a charitable deduction, unless your sibling files as a 503c organization. My intuition also says you can not deduct this off of your 1099-R, because it was you who received the money. The paper trail problem is not the concern of the IRS, nor the CA Tax Dept. They don't allow deductions and reduction of income on "what if" scenarios. The best way to handle this is to sign a contract with your sibling to have him repay you the tax amount you had to pay because you had to claim "his earnings" on your 1040.

I would suggest, though, that you speak with a local CPA and see what their response it, because I will not claim to be in expert in this situation.

This is another one I have been thinking about. You definitely can't do the charitable contribution thing as is....

They should have set this up as an executor with power to make pay outs...I think that shelters the executor as he is just a holder/escrow. You said there is a paper trail problem so that may be the whole issue in this and unfixable.

You may be able to play around with who'd get hit the least with taxes on the backend of the second transfer (you to whomever) and then do gifts to each other.

This is a good reason to make sure one's 'estate' is in order. Dying can leave a mess for your family in more ways than emotionally/physically. The financial aspects can be equally traumatic.

If you find out a better answer please update us.

Å

 

[EagleKeeper]

Originally posted by: amd4life
OKay this is a cool post hopefully someone can help me. Here it goes I had a family inheritance that showed up on two 1099-R (CA by the way) in the amount of 17,000. The accounts are classified as death withdrawls on my 1040 so no withdrawal penalties--thank goodness!!! The question is this, I have four siblings so we all split the money five ways (some dependants were listed as beneficiaries some where not due to paper trail error--so two of the five received the monies and we then split it out five ways).

SO anyway I wrote a check to one of my siblings for $8,000. How do I adjust my income to reflect this subtraction from my overall annual earnings? Do I adjust the actual 1099-R value on my 1040 to 50% distribution, or is there somwhere on the 1040 where I can list the 8 grand as a charity payment and use it as a itemized deduction?

Thanks for those that can help

K

Depending on who controls the estate paperwork, you may be able to get the 1099-R corrected.
Otherwise the 8K is taxable income. You may be able to convice the sibling to cover/reemburse the extra tax on your part.

As another has stated, make sure paperwork is all in order before it is to late.
The unintended consequences to others can be enormous.

 

[amd4life]

thx all I have an appt with a local CPA tommorrow, and I will let you all know how it goes

 

[max105]

I just completed my federal tax return with TurboTax on the Web. Right before I submit my return, it asks me if I want to wait and file my state tax return together with the federal. Apparently some states require you to submit both returns together if you're filing them electronically. I was planning on using TurboTax for my federal and NetFile for my California state return. I wasn't able to find information about whether or not California requires the returns to be submitted together or not. Can someone tell me or point me in the correct direction to where I can find more info about it?

I chose TurboTax because the only people I know who file their own taxes use it and its easier to get help that way. I also qualify for free eFiling with them too. I chose NetFile for my state return for the same reason: FREE. My other option (if I can't file them separately) is to redo my taxes with CompleteTax.com since I qualify for free filing for both state and federal taxes. Has anybody used them before? Any good experiences?

 

[alkemyst]

Originally posted by: max105
I just completed my federal tax return with TurboTax on the Web. Right before I submit my return, it asks me if I want to wait and file my state tax return together with the federal. Apparently some states require you to submit both returns together if you're filing them electronically. I was planning on using TurboTax for my federal and NetFile for my California state return. I wasn't able to find information about whether or not California requires the returns to be submitted together or not. Can someone tell me or point me in the correct direction to where I can find more info about it?

I chose TurboTax because the only people I know who file their own taxes use it and its easier to get help that way. I also qualify for free eFiling with them too. I chose NetFile for my state return for the same reason: FREE. My other option (if I can't file them separately) is to redo my taxes with CompleteTax.com since I qualify for free filing for both state and federal taxes. Has anybody used them before? Any good experiences?

I am taking that since you are filing for 'free' you should have a very simplistic return. That said you should know what you owe/get back as well pretty much. Go through CompleteTax.Com and see if the numbers match. If they do almost any tax software is just as good as another for electronic filing.

To find out about California taxes (google: california state taxes): www.taxes.ca.gov/ is the link that came up and looks like the right place.

Å

 

[EagleKeeper]

Originally posted by: max105
I just completed my federal tax return with TurboTax on the Web. Right before I submit my return, it asks me if I want to wait and file my state tax return together with the federal. Apparently some states require you to submit both returns together if you're filing them electronically. I was planning on using TurboTax for my federal and NetFile for my California state return. I wasn't able to find information about whether or not California requires the returns to be submitted together or not. Can someone tell me or point me in the correct direction to where I can find more info about it?

I chose TurboTax because the only people I know who file their own taxes use it and its easier to get help that way. I also qualify for free eFiling with them too. I chose NetFile for my state return for the same reason: FREE. My other option (if I can't file them separately) is to redo my taxes with CompleteTax.com since I qualify for free filing for both state and federal taxes. Has anybody used them before? Any good experiences?

You may wish to verify that TurboTax Web charges for State filing. I believe that if you qualify for free Fed, the state is also free.
I did an in-laws in Mass that way (TT/Web). No charges for state filing because she qualified for free Federal.

 

[max105]

TurboTax Web does have free state filing too but only for states that are participating in the free filing program. Unfortunately, California doesn't participate in it .

alkemyst: I searched through the California taxes site. I'm able to find globs of information about eFiling my state taxes but nothing about whether or not i have to file it with my federal tax together or not.