The 2014 Annual Anandtech Tax Time Thread!

[TallBill]

Turbotax is free for military E-5 and under. I guess one positive thing from not being promoted yet lol.

 

[puffff]

I've been working overseas and am trying to clarify how the Foreign Income Exclusion and Foreign Tax Credit works. Is it possible to claim both? From the irs website, it says:

Foreign tax credit or deduction: Once the foreign earned income exclusion is chosen, a foreign tax credit, or deduction for taxes, cannot be claimed on the income that can be excluded.


For example, if I'm making $150,000 overseas, and the Foreign Income Exclusion for 2014 is $99,200, I'm only paying federal taxes on $50,800.

If I'm paying 10% foreign income taxes, that means I've paid $15,000 for 2014. I can't take the tax credit for the income that's excluded, does that mean I can still take a tax credit for the foreign taxes paid on the $50,800 (i.e. $5,080)?

 

[zinfamous]

I gotta say...this is already more entertaining than the previous versions....

And thanks for putting this up, CPA.

/eagle
/patriot
/salute
/bendoverandtakeit

 

[zinfamous]

What and do a flat tax? Yeah, everyone in the top 10% paying 90% of taxes isn't going to disagree with that notion.

Well, that kind of tax rate gave us some of our greatest years as a country..you know, the years that conservatives rave about how great we were. and most of those 10%ers didn't really mind (they were still able to invest some 8% of the 10% they kept...and still made, well, BANK)


well, they ignore that part, but well. ...you know. :whiste:

 

[CPA]

I've been working overseas and am trying to clarify how the Foreign Income Exclusion and Foreign Tax Credit works. Is it possible to claim both? From the irs website, it says:

Foreign tax credit or deduction: Once the foreign earned income exclusion is chosen, a foreign tax credit, or deduction for taxes, cannot be claimed on the income that can be excluded.


For example, if I'm making $150,000 overseas, and the Foreign Income Exclusion for 2014 is $99,200, I'm only paying federal taxes on $50,800.

If I'm paying 10% foreign income taxes, that means I've paid $15,000 for 2014. I can't take the tax credit for the income that's excluded, does that mean I can still take a tax credit for the foreign taxes paid on the $50,800 (i.e. $5,080)?

Yes. Per IRS:

Foreign Tax Credit

Once you choose to exclude either foreign earned income or foreign housing costs, you cannot take a foreign tax credit for taxes on income you exclude. If you do take the foreign tax credit, one or both of the choices may be considered revoked. However, you can choose to take the foreign tax credit on any amount of foreign income which has not been excluded under the foreign earned income exclusion or the foreign housing exclusion.

 

[NikolaeVarius]

I posted this already in another thread, but I guess I'll post in the official thread.

I filed my taxes a bit ago, but haven't received my return yet.

On a random curiosity, I checked on my student loan account and apparently I paid about 75 dollars less interest than they originally claimed.

Do I actually have to redo by goddamn taxes because of that 75 dollars? Because that's freaking obnoxious as hell.

 

[CPA]

I posted this already in another thread, but I guess I'll post in the official thread.

I filed my taxes a bit ago, but haven't received my return yet.

On a random curiosity, I checked on my student loan account and apparently I paid about 75 dollars less interest than they originally claimed.

Do I actually have to redo by goddamn taxes because of that 75 dollars? Because that's freaking obnoxious as hell.

You should, though the IRS may find the error themselves and correct it. You may want to call their automated system and check the status of your return. If it's on hold or delayed, the reason may be because of the inconsistency between your filing at the numbers reported by the bank.

edit: for clarification, did you report what was provided on the 1098-E or what was on some monthly statement?

 

[NikolaeVarius]

You should, though the IRS may find the error themselves and correct it. You may want to call their automated system and check the status of your return. If it's on hold or delayed, the reason may be because of the inconsistency between your filing at the numbers reported by the bank.

edit: for clarification, did you report what was provided on the 1098-E or what was on some monthly statement?

It was a 1098E.

 

[CPA]

It was a 1098E.

then go with that and don't worry about it. That's what the bank will submit and the IRS should receive. If they made an error and sent a corrected 1098E then you would need to send in a 1040X, but if not, I wouldn't worry about it.

 

[NikolaeVarius]

then go with that and don't worry about it. That's what the bank will submit and the IRS should receive. If they made an error and sent a corrected 1098E then you would need to send in a 1040X, but if not, I wouldn't worry about it.

Damn, they posted a corrected 1098E online. That's annoying, its all computerized, how the hell do they mess up 100% computerized finances?

 

[TurtleCrusher]

Damn I should probably look into that as well. I just got an email saying mine was also incorrect from my student loans.

How long has it been taking for returns to be processed, and how long for payment?

 

[HybridSquirrel]

my previous company under-withheld my taxes and I now owe $700 to the Fed and $1800 to my state. What can I do about this? I got hit with a penalty by my state because of it.

 

[highland145]

my previous company under-withheld my taxes and I now owe $700 to the Fed and $1800 to my state. What can I do about this? I got hit with a penalty by my state because of it.

Nothing but pay. You can look up the tax tables to see that you're currently paying the right amount.

 

[CPA]

my previous company under-withheld my taxes and I now owe $700 to the Fed and $1800 to my state. What can I do about this? I got hit with a penalty by my state because of it.

Did they under-withhold in error or did you have too many exemptions listed? If it was in error, I'd ask them to pay the penalty. They will probably say no, but it doesn't hurt to ask.

 

[Imported]

Trying to finish the taxes for my fiancee. She got a new job with stock options. Hasn't exercised any and from what I understand, if they haven't been exercised they don't need to be included.. but TaxCut is asking about option dates, etc. Is it necessary to still include that information?

 

[kranky]

If they are nonqualified stock options, there is no tax until they are exercised.

 

[jaedaliu]

I've been (stupidly?) ignoring the AMT as I've been taking the standard deduction on my return.

I plan on running through he AMT worksheet as a learning experience as 2015 will be an annoying return with moving expenses and 3 state returns, and 2016 may be an incredibly complicated return with my wife possibly starting her own company.

Enough back story, question: How risky has my AMT-ignoring behavior been?

 

[CPA]

I've been (stupidly?) ignoring the AMT as I've been taking the standard deduction on my return.

I plan on running through he AMT worksheet as a learning experience as 2015 will be an annoying return with moving expenses and 3 state returns, and 2016 may be an incredibly complicated return with my wife possibly starting her own company.

Enough back story, question: How risky has my AMT-ignoring behavior been?

Very, particularly if you owe additional taxes due to the AMT calculation.

Sounds like you are doing your taxes by hand and not using a software package, as most software packages will not allow you to ignore AMT. They will complete the calculations and form automatically.

 

[darom]

My employer collects Social Security taxes. My wife's work opted out of it years ago and manages its own PRA. So no Social Security taxes on her paycheck.
Every time I do taxes, my wife's W-2 kills me - we end up owing to the state of CA, because she underpays the taxes. Both of us claim 'married with 0'.

Besides increasing withholdings out of the paychecks, is there any better solution? Thanks!

 

[highland145]

My employer collects Social Security taxes. My wife's work opted out of it years ago and manages its own PRA. So no Social Security taxes on her paycheck.
Every time I do taxes, my wife's W-2 kills me - we end up owing to the state of CA, because she underpays the taxes. Both of us claim 'married with 0'.

Besides increasing withholdings out of the paychecks, is there any better solution? Thanks!

How can they do that for an employee and what's a PRA. I know clergy here can opt out of SS/medi but it still has to be paid for the employees unless they're a 1099.

 

[darom]

It is a Private Retirement Account. A lot of teachers have this option setup vs Social Security.

 

[highland145]

It is a Private Retirement Account. A lot of teachers have this option setup vs Social Security.

If she can opt into a PRA why would she have to pay the ss/medi? Other than the software out there makes you.

Waiting on CPA....

 

[zhwu]

Thanks for doing this every year!

I made a mistake buying my IRA fund for Year 2014 this month. Instead of buying the fund in my Vanguard ROTH IRA account, I purchased the same fund ($5,500) in my Vanguard Rollover IRA instead.

I noticed this issue the next day and called Vanguard to fix it. They told me they can only rollover that amount the very next day from my Rollover IRA to ROTH for my 2014 contribution.

After that I got confused about what they told me over the phone: I believe they told me I can list 5500 contribution for ROTH IRA in my tax return for 2014.
They will send me a form in May 2015 for whatever the gain/loss I made that day and I need it to admend my 2014 tax return.
Then Vanguard will send me another 1099R form next January for this.

Not sure why I am getting that many tax forms for different tax years to fix a simple contribution mistake. I have not filed my 2014 tax return and want to know what Vanguard will send to me in May? Should I file now and admend my tax return later, or file an extension & wait instead?

 

[CPA]

My employer collects Social Security taxes. My wife's work opted out of it years ago and manages its own PRA. So no Social Security taxes on her paycheck.
Every time I do taxes, my wife's W-2 kills me - we end up owing to the state of CA, because she underpays the taxes. Both of us claim 'married with 0'.

Besides increasing withholdings out of the paychecks, is there any better solution? Thanks!

Is your wife a teacher?

California is one of the states that opted out the social security system back in the 60's for government employees.

SS, however, as you know, doesn't impact state and federal withholding liabilities. So, as to your question, you could look into an IRA or increasing your 401K, or her 401B, if she has it.

But, don't look at this as killing you. Instead, look at it as you received an interest free loan for the year...or better yet, you didn't loan the government money interest free for the year.

 

[CPA]

Thanks for doing this every year!

I made a mistake buying my IRA fund for Year 2014 this month. Instead of buying the fund in my Vanguard ROTH IRA account, I purchased the same fund ($5,500) in my Vanguard Rollover IRA instead.

I noticed this issue the next day and called Vanguard to fix it. They told me they can only rollover that amount the very next day from my Rollover IRA to ROTH for my 2014 contribution.

After that I got confused about what they told me over the phone: I believe they told me I can list 5500 contribution for ROTH IRA in my tax return for 2014.
They will send me a form in May 2015 for whatever the gain/loss I made that day and I need it to admend my 2014 tax return.
Then Vanguard will send me another 1099R form next January for this.

Not sure why I am getting that many tax forms for different tax years to fix a simple contribution mistake. I have not filed my 2014 tax return and want to know what Vanguard will send to me in May? Should I file now and admend my tax return later, or file an extension & wait instead?

I would file and do a 1040X when you receive the corrected amount. Even if you filed for an extension, you would still have to pay your estimated tax. Now, if you could estimate it based on the corrected amount, that should work.