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

[EagleKeeper]

Originally posted by: CoolTech
I did not file federal taxes last year cause I read somewhere that you did don't have to if you make less than a certain amount, I made 2288 in 2002 and 3.58 fed tax was withheld, was I right in not filing?

If you do not owe money, you do not need to file.

However, if any taxes were withheld, you may wish to file to get them refunded to you.

Up to you if you wish the $3.58 back.

Also, you can file for 2002 and just apply the $3.58 toward the next year (2003) tax bill.

 

[EagleKeeper]

Originally posted by: cchen

Originally posted by: EagleKeeper

Originally posted by: cchen

Originally posted by: EagleKeeper

Originally posted by: cchen
My mom made about 48k, I made about 10k. I'm paying all of my college tuition myself. What of the following options would benefit us the most financially?

1. file as dependent of mother, she claims deduction of 4k for "tuition and fees deduction"
2. file as dependent of mother, she claims lifetime learning credit of 2k
3. file as independent, i claim lifetime learning credit
4. file as independent, i claim deduction of 4k

Tax S/W will easily allow you to perform what ifs

Set up two scenerios.

a) Your mother w/ you and play with #1,2 - record the best option
b) You as an indendent - record the best option


Then choose the number that makes the most sense to the overall household.

The Hope deduction for the $4k (tuition?) will have a greater impact on reducing the bottom line (50% = $2K) than the Lifetime Credit(20% = $800).

Normally, the larger amount that can be removed from the higher income level, the better benefit to the bottom line

ie. The tax rate on $48K is higher than that on $10K - therefore either type of reduction should be worth more to the $48K income

I'm a little confused... according to this document I the lifetime learning credit is 2k? My tuition is about 12k after financial aid and grants.

Difference between the expense and credit. 10K expenses @ 20% = 2K credit.

You had previously not stated what the tuition was. I was using the 4K figure that you had provided as the tuition cost.

At $12K expense for tuition, your mother is the one that should take it under the Hope option.

You can not use it all, and it can not be broken apart.

Why do you say that I cannot use it at all? The document says that I can (meaning either my mother or me chooses to claim it). The 4k figure I got was from "Tuition and fees Deduction" on page 28 of the document. It says that this is taken as a deduction rather than a credit

1) Your mother must claim you as a dependant if she is to use the Hope for you. If she claims the Hope, you can not.
2) Only $3000 of the costs are able to be used. That translates to $1500 credit. The additional 9K is unable to be used as any type of deduction, unless you can file a Schedule A.
3) The $4000 limit will apply to the 2004 tax year. The 2003 tax year is $3000 of expenses

 

[EagleKeeper]

Originally posted by: BrunoPuntzJones
Unfortunately, I am a tax accountant, my specialty :disgust:

If there is anyone who made under $15k and put $2k away in a 401k or qualified retirement plan, you get a whopping $1000 credit. Doubt there are many people who can use it (can't be a dependent), but it's a helluva credit for those who do. It phases out as you approach $50k joint, 25K single.

Here's the table: Link

Hopefully someone can use it. At our firm no one even knew about it until someone asked. Can go back 2 years as well.

Please document where this information came from regarding the retirement plan.

 

[gluck]

Just another state tax question. I posted it again as didn't hear from any of the tax experts....

I came down from CA for a contract to TX in Nov '02. Filled 02 taxes from CA. I am here in TX since then. For six months in 03 my employer taxed me CA state taxes. Then he changed my address to the one in TX and stopped cutting the CA taxes.
So where do I file my taxes from this year ? CA or TX ? If TX then would I get my CA state tax back ? What should I got for that ?
Is my scenario complex ? Would I need a CPA doing the taxes ?

 

[Tycoonx]

Got a quick question, last year I filed and I was due for a refund, but I never received a check. Do I have to refile? I still have a copy of my tax return, will I have to pay penalties?

 

[EagleKeeper]

Originally posted by: Tycoonx
Got a quick question, last year I filed and I was due for a refund, but I never received a check. Do I have to refile? I still have a copy of my tax return, will I have to pay penalties?

If Uncle owes you a check, contact the IRS for a replacement. they will give you the proper instructions on how to request a replacement.
There is no need to refile, assuming the IRS received your return.

 

[EagleKeeper]

Originally posted by: gluck
Just another state tax question. I posted it again as didn't hear from any of the tax experts....

I came down from CA for a contract to TX in Nov '02. Filled 02 taxes from CA. I am here in TX since then. For six months in 03 my employer taxed me CA state taxes. Then he changed my address to the one in TX and stopped cutting the CA taxes.
So where do I file my taxes from this year ? CA or TX ? If TX then would I get my CA state tax back ? What should I got for that ?
Is my scenario complex ? Would I need a CPA doing the taxes ?

CPA had indicated that he would try to research it.

You will have to file a CA return in order to get the CA tax back.
A accountant should not be needed, just filling out the proper CA form with the correct numbers/dates. You may have to contact CA to deterine the proper forms.

 

[alkemyst]

Originally posted by: CoolTech
I did not file federal taxes last year cause I read somewhere that you did don't have to if you make less than a certain amount, I made 2288 in 2002 and 3.58 fed tax was withheld, was I right in not filing?

I had two exempt years, both I filled as exempt, but still filed.

I'd say you may have a problem....as far as how to handle it or if it's needed I don't know.

 

[CPA]

Originally posted by: gluck
Just another state tax question. I posted it again as didn't hear from any of the tax experts....

I came down from CA for a contract to TX in Nov '02. Filled 02 taxes from CA. I am here in TX since then. For six months in 03 my employer taxed me CA state taxes. Then he changed my address to the one in TX and stopped cutting the CA taxes.
So where do I file my taxes from this year ? CA or TX ? If TX then would I get my CA state tax back ? What should I got for that ?
Is my scenario complex ? Would I need a CPA doing the taxes ?

YGPM

 

[draggoon01]

Originally posted by: draggoon01

Originally posted by: CPA

Originally posted by: Skoorb

Originally posted by: CPA
Go back to a 2 party, cash system, like just about every other friggen business in this country, and watch health care costs plummet.

Do you mean remove health insurance?

YES. But it will never happen, just like we'll never get away from a graduated tax system - the rules benefit those who make them.

hey, in another thread you said this. what type of system would you propose which would be more fair? or how does the current graduated system benefit the wealthy the most?

?

 

[JeffreyLebowski]

Can i write off the interest on my car loan?

Also, can i write off Dr. ills for my kids?

 

[EagleKeeper]

Originally posted by: JeffreyLebowski
Can i write off the interest on my car loan?

Also, can i write off Dr. ills for my kids?

Car loan only if you use to car for business - self employed.

Medical bills can be used to the extent that that exceed a certain percentage of income (7.5%). The sum of medical expenses is entered on the Schedule A. Then your adjustedincome is used to calculate a percentage. Any Medical $$$ that exceed the gorss income percentage and be used with the Schedule A deduction. Then the Schedule A must meet the total deduction limit.

Normally medical expenses are not large enough to have any impact.

Example:
Gross Income $30K
Adjust Income $20K

Medical Expenses must exceed 20K * 7.5% = $1500.

 

[JeffreyLebowski]

Originally posted by: EagleKeeper

Originally posted by: JeffreyLebowski
Can i write off the interest on my car loan?

Also, can i write off Dr. ills for my kids?

Car loan only if you use to car for business - self employed.

Medical bills can be used to the extent that that exceed a certain percentage of income (7.5%). The sum of medical expenses is entered on the Schedule A. Then your adjustedincome is used to calculate a percentage. Any Medical $$$ that exceed the gorss income percentage and be used with the Schedule A deduction. Then the Schedule A must meet the total deduction limit.

Normally medical expenses are not large enough to have any impact.

Example:
Gross Income $30K
Adjust Income $20K

Medical Expenses must exceed 20K * 7.5% = $1500.

OK thanks, thou since i got laid oof mid year and didn't make a lot, i might be able to right them off as i had over $1000 in medical bills due to not having insurance anymore.

 

[EagleKeeper]

Originally posted by: JeffreyLebowski

Originally posted by: EagleKeeper

Originally posted by: JeffreyLebowski
Can i write off the interest on my car loan?

Also, can i write off Dr. ills for my kids?

Car loan only if you use to car for business - self employed.

Medical bills can be used to the extent that that exceed a certain percentage of income (7.5%). The sum of medical expenses is entered on the Schedule A. Then your adjustedincome is used to calculate a percentage. Any Medical $$$ that exceed the gorss income percentage and be used with the Schedule A deduction. Then the Schedule A must meet the total deduction limit.

Normally medical expenses are not large enough to have any impact.

Example:
Gross Income $30K
Adjust Income $20K

Medical Expenses must exceed 20K * 7.5% = $1500.

OK thanks, thou since i got laid oof mid year and didn't make a lot, i might be able to right them off as i had over $1000 in medical bills due to not having insurance anymore.

Remember, that you will still need to need the amount to exceed the standard deduction.

Also, un-employment income is taxable.

 

[alkemyst]

Originally posted by: EagleKeeper
Remember, that you will still need to meed the amount to exceed the standard deduction.

Also, un-employment income is taxable.

until I bought a house that was almost impossible to do. I need to buy another house if only to recapture lost income through deductions.

Å

 

[EagleKeeper]

Originally posted by: alkemyst

Originally posted by: EagleKeeper
Remember, that you will still need to meed the amount to exceed the standard deduction.

Also, un-employment income is taxable.

until I bought a house that was almost impossible to do. I need to buy another house if only to recapture lost income through deductions.

Å

Rugrats also will generate deductions 🙂 - but every year create a negative cash flow. 😀

 

[Michael]

CPA and other tax professionals are being very brave here.

I would never give out tax advice plus my credentials in a public forum like this one.

Plus the medium makes it really hard to make sure you have all the information in front of you to make the right decision.

I did see a few comments about letting the government get more taxes off of you if you don't own a house (vacation or primary residence). There is a certain basic fallacy in that type of statement.

Mortgage interest is tax deductible. As such, it actually pushes the price of houses higher as it lowers the money cost of getting them. In general, the ability to build equity and the general rise in house prices makes owning a house better than renting, but there are a lot of factors to consider and I never give that out as blanket advice.

For example, if you may move is less than 2 years, the closing costs and real estate commissions may make owning a house very cost prohibitive.

Vacation homes are even riskier as the chance of them appreciating may be even less.

Michael

 

[EagleKeeper]

Originally posted by: Michael
CPA and other tax professionals are being very brave here.

I would never give out tax advice plus my credentials in a public forum like this one.

Plus the medium makes it really hard to make sure you have all the information in front of you to make the right decision.

I did see a few comments about letting the government get more taxes off of you if you don't own a house (vacation or primary residence). There is a certain basic fallacy in that type of statement.

Mortgage interest is tax deductible. As such, it actually pushes the price of houses higher as it lowers the money cost of getting them. In general, the ability to build equity and the general rise in house prices makes owning a house better than renting, but there are a lot of factors to consider and I never give that out as blanket advice.

For example, if you may move is less than 2 years, the closing costs and real estate commissions may make owning a house very cost prohibitive.

Vacation homes are even riskier as the chance of them appreciating may be even less.

Michael

Agreed - to purchase real estate strictly for the tax break is unsound.

However, if one has a house, the tax benefits/advantages increase. The tax code is setup to do this.
If one is going to be stable in an area and is renting, it makes sense to look into purchasing a house.
This will depend on the lifestyle one has.
Some are not cut out for the effort it takes to maintain a house and therefore either renting of a condo may be better.

I myself in general am answering questions that the information is readily available due to experience and/or knowing where to look.
The majority of the questions that are being asked have the ansers within the govment pubs and are not difficult and/or complex.

Those that we do not feel comfortable in answering, we state so and/or provide advice on how to solve the problem.

 

[CPA]

Originally posted by: Michael
CPA and other tax professionals are being very brave here.

I would never give out tax advice plus my credentials in a public forum like this one.

Plus the medium makes it really hard to make sure you have all the information in front of you to make the right decision.

I did see a few comments about letting the government get more taxes off of you if you don't own a house (vacation or primary residence). There is a certain basic fallacy in that type of statement.

Mortgage interest is tax deductible. As such, it actually pushes the price of houses higher as it lowers the money cost of getting them. In general, the ability to build equity and the general rise in house prices makes owning a house better than renting, but there are a lot of factors to consider and I never give that out as blanket advice.

For example, if you may move is less than 2 years, the closing costs and real estate commissions may make owning a house very cost prohibitive.

Vacation homes are even riskier as the chance of them appreciating may be even less.

Michael

The rules and regulations are not so strict that I cannot offer common advice related to filing taxes. Advice for lifestyle issues, such as buy vs lease, purchase vs rent and the issues you present is not my intent and will generally not be answered by me.

Additionally, you can go to many, many sites that place articles, FAQs and expert opinions from CPAs and other tax professionals concerning tax time issues. We are providing a service no different than those.

 

[alkemyst]

Originally posted by: Michael
CPA and other tax professionals are being very brave here.

I would never give out tax advice plus my credentials in a public forum like this one.

huh? because the intraweb might get you? If you give sound advice, what difference does it make? I'd be very leery of the professional that DOESN'T want to make public statements.

Plus the medium makes it really hard to make sure you have all the information in front of you to make the right decision.

??? this is help/advice not the end all be all for filing.

I did see a few comments about letting the government get more taxes off of you if you don't own a house (vacation or primary residence). There is a certain basic fallacy in that type of statement.

Mortgage interest is tax deductible. As such, it actually pushes the price of houses higher as it lowers the money cost of getting them. In general, the ability to build equity and the general rise in house prices makes owning a house better than renting, but there are a lot of factors to consider and I never give that out as blanket advice.

For example, if you may move is less than 2 years, the closing costs and real estate commissions may make owning a house very cost prohibitive.

Vacation homes are even riskier as the chance of them appreciating may be even less.

Michael

This is a total tangent to what is being said. You own a home chances are even if for just two years the tax deductions are a lot better than closing costs and commissions. There are exceptions of course...however, how many people really buy a house for only 2 years of residence?

Vacation homes are a whole other ball game.

Å

 

[sygyzy]

My question is: If I started a business as a hobby and make zero profit from it, should I bother mentioning it? To give an example, say I sell cookies to friends but my materials cost for the cookies far exceeds the "income" I get from it. From a tax perspective, the IRS should not care about this right? Also, since I am doing it as a hobby/learning experience, I am not an official business. That is, I don't have a license, or office space, or employees (except myself). On a related note, could I claim a loss? Since I am losing money.

 

[wyvrn]

Originally posted by: CPA

Originally posted by: SuperTool
Do I have to live in a house to deduct the interest?

No, as long as you don't rent it out. If you rent it out, there are tests that must be passed in order to get the interest deduction on schedule A.

What are the tests? Is their a place on the IRS website I can find out, like a downloadable form? Thanks 🙂

 

[Michael]

CPA - All I know is that the professionals I know are real careful about giving public advice without the right type of insurance and disclaimers. I wouldn't do it, but I'm not as much an expert on US tax issues (unless it pertains to something that I faced in my own return, which is relatively complicated but not anywhere near as much as I've seen).

I would never take advice from a forum like this one and would pay a professional if I really needed the help, but maybe that's just me - I'm pretty careful overall.

Now back to the books, I was in NYC presenting at an investor conference earlier this week (talk about watching my words as we're in a quiet period) and was there over the Xmas break as well so the 2 x 3 hour changes have wacked me out a little. Need to check our Q4 numbers one more time.

Michael

 

[flot]

One question and one comment:

Question: I'm a pretty smart guy and I can muddle my way through most tax info I read. To save myself hassle, I use turbotax, which frequently points out other tax opportunities, which rarely if ever apply to me. I have any number of jackass friends who always laugh at tax time and say things like "I have this great accountant who saves me a bundle every year on my taxes!" I have done my research and believe I have a good understanding of the various ways I can save on my taxes (which, being single with one regular job, boils down basically to me buying a house, and itemizing my interest and a few other things and that's about it) and I see few "loopholes" that apply. Even with some liberal stretching of the truth, I just plain don't see a lot of opportunity. I guess my question is, are their tax people just outright lying for them, or are my friends just completely deluding themselves??

Comment: A number of people have talked about their homes, renting out rooms and/or deducting for a home office. It is my understanding that under the semi-recent (last 5-6 years?) changes in tax law that basically allow you to NOT pay taxes on the profit from the sale of your home, that it is generally preferred NOT to deduct anything related to your house anymore, because when you go to SELL your house, you'll have to suddenly pay tax on the portion that you claimed you had used for business purposes... I could be wrong there, but you guys might want to do some more reading on that.

 

[pyonir]

CPA (or anyone that knows):

Would it be worth it to claim the school loan interest i paid last year? it is only about $240. Would it even be worth it?

Thanks