Who else is excited about doing their taxes?

[jagec]

Originally posted by: armatron

Originally posted by: jagec

Originally posted by: MSCoder610
I think I'll end up having to pay the IRS some of my scholarship money, since scholarships are taxable income over tuition/course expenses (room/board not included, etc)

yes, and that pisses me off. I'm scraping to get by here, they refuse to give me a penny of financial aid beyond my "needs", and, well, apparently taxes aren't a "need":roll:

I made a post in the "tax questions" sticky, and was told that I don't have to pay taxes on money given to me for school

Tuition is exempt, but room+board is not. Now, obviously you want to count everything you spent on books and supplies, and factor that in there if you can.

 

[Ranger X]

I'm only excited about getting money back.

 

[Jadow]

Summary of forms needed to do taxes (this is not an all inclusive list, these are just the common ones)

W2 - your pay summary from your employer
1098 - Mortgage interest you paid to the bank (if you have a mortgage, you will get one of these)
1099 - Interest you received from investments, (savings accounts, dividends from stocks, capital gains from stocks etc..)

 

[dullard]

Originally posted by: armatron
I made a post in the "tax questions" sticky, and was told that I don't have to pay taxes on money given to me for school

I've paid taxes on scholarships before. My whole tax bill came to $16 that year, so I gladly did it. You only pay taxes on 'excess' scholarships. Here are the 1040 instuctions (warning 1.2 MB download):

Page 19, line 7 wages, salaries, tips, etc: include "Scholarship and fellowship grants not reported on Form W-2. Also, enter "SCH" and the amount on the dotted line next to line 7. However, if you were a degree candidate, include on line 7 only the amounts you used for expenses other than tuition and course-related expenses. For example, amounts used for room, board, and travel must be reported on line 7."

 

[djheater]

Mine's all screwed up and I can't figure out what to expect... (I haven't looked that closely) I think I'll do OK but I'm not sure.

I take my max exemptions so I owe 0$ or as close to it as possible, but in july of last year I cbought a house and started paying the mortgage (extra on the payments too). THEN we had another child in November AND I donated a car at about $2000 (last year for that btw) AND we were given $12000 as a gift...

I don't know if I'll make something or be bled...

 

[GTaudiophile]

Fvck Uncle Sam! :|

 

[FoBoT]

no, i will probably have to pay

hopefully not more than the $1000 i have in the bank

i'll be doing mine about 2nd or 3rd week in Feb.

 

[mcvickj]

Originally posted by: dullard

Originally posted by: mcvickj
See that is the one thing I don't understand about taxes. How can you end up owing money? I'm guessing when you throw a house into the mix that is when things get confusing?

Lets do a few simple examples. Suppose for 2005 I will owe $3600 in federal income taxes (that means by April 15, 2006 I'll have to have paid $3600 to the federal government). There are three ways to proceed:

1) Have $300 withheld each month throughout 2005. Then by December, I will have 12 * $300 = $3600 withheld. When I file my taxes, I will owe nothing and get no return. Everything will balance out.

2) Have more than $300 withheld each month. Lets say I have my boss withhold $500 a month. By the end of the year, I'd have 12 * $500 = $6000 withheld. When I file my federal income taxes, I'd get $6000 - $3600 = $1400 back in a refund since I overpaid. This is really stupid of me, since I don't want to let the government borrow $1400 with no interest being paid to me. I'd be able to spend my $1400 month by month throughout 2005 rather than waiting until sometime in 2006 for it. For some unexplained reason, many people enjoy this method.

3) The final method is to have less than $300 a month withheld. Lets say I have my boss withhold $0 a month. By the end of the year I'd have paid $0 in federal income taxes. When I file my taxes, I'd still owe $3600. So I'd write a $3600 check sometime around April 15, 2006. This method lets me use that $3600 during the year 2005 to do whatever I need. Of course, there are two drawbacks. (A) I have to find a way to get $3600 when I file my taxes and many people can't do this - they would have spent it all. (B) This is against the intent of the federal income tax law and can result in hefty penalties in some cases.

In all 3 cases, I pay $3600 in federal income tax. The difference lies in when I pay them.

I see. I have no problem with option #3. But how do I know the final amount that I am going to owe? Is there some way to figure that out so I know how much to put away?

 

[EagleKeeper]

Originally posted by: djheater
Mine's all screwed up and I can't figure out what to expect... (I haven't looked that closely) I think I'll do OK but I'm not sure.

I take my max exemptions so I owe 0$ or as close to it as possible, but in july of last year I cbought a house and started paying the mortgage (extra on the payments too). THEN we had another child in November AND I donated a car at about $2000 (last year for that btw) AND we were given $12000 as a gift...

I don't know if I'll make something or be bled...

Depending on how much taxes were withheld during the year, between the house and sex you should receive a nice gift from your favorite uncle.

The 12K will not count toward income. The people that gave it to you may have to worry about gift tax (if it was from only one person).

Make sure that you keep a copy of a web page that shows the value of the vehicle.
Extra payments on the morgage will not have a major impact on the income taxes for a given year, just your bottom line when you can own the place free and clear.

 

[EagleKeeper]

Originally posted by: mcvickj

Originally posted by: dullard

Originally posted by: mcvickj
See that is the one thing I don't understand about taxes. How can you end up owing money? I'm guessing when you throw a house into the mix that is when things get confusing?

Lets do a few simple examples. Suppose for 2005 I will owe $3600 in federal income taxes (that means by April 15, 2006 I'll have to have paid $3600 to the federal government). There are three ways to proceed:

1) Have $300 withheld each month throughout 2005. Then by December, I will have 12 * $300 = $3600 withheld. When I file my taxes, I will owe nothing and get no return. Everything will balance out.

2) Have more than $300 withheld each month. Lets say I have my boss withhold $500 a month. By the end of the year, I'd have 12 * $500 = $6000 withheld. When I file my federal income taxes, I'd get $6000 - $3600 = $1400 back in a refund since I overpaid. This is really stupid of me, since I don't want to let the government borrow $1400 with no interest being paid to me. I'd be able to spend my $1400 month by month throughout 2005 rather than waiting until sometime in 2006 for it. For some unexplained reason, many people enjoy this method.

3) The final method is to have less than $300 a month withheld. Lets say I have my boss withhold $0 a month. By the end of the year I'd have paid $0 in federal income taxes. When I file my taxes, I'd still owe $3600. So I'd write a $3600 check sometime around April 15, 2006. This method lets me use that $3600 during the year 2005 to do whatever I need. Of course, there are two drawbacks. (A) I have to find a way to get $3600 when I file my taxes and many people can't do this - they would have spent it all. (B) This is against the intent of the federal income tax law and can result in hefty penalties in some cases.

In all 3 cases, I pay $3600 in federal income tax. The difference lies in when I pay them.

I see. I have no problem with option #3. But how do I know the final amount that I am going to owe? Is there some way to figure that out so I know how much to put away?

Estimate from the previous year.
That will still allow you 3 months to dig up the extra cash after you have calculated your taxes.

Note that Uncle will be unhappy if he has not gotten a large portion of what would be owed prior to the end of the tax year. there are certain tax guidelines that address this situation - underpayment of taxes.

It would be best to send the estimated $$ before 31 Dec. The difference (if any) can be made up on 15 April.

 

[CPA]

Originally posted by: RMSistight

Originally posted by: CPA
I had mine done mid-December.

Damn how did you get them done so early? Did you get your W-2s in advance?

No, I can estimate based on certain things. I didn't actually file, you can't because the tax forms are not finalized until mid-January, but you can have them "complete" if you know what your end of year earnings and taxes will be. Just have to wait for the W2s to verify and attach.


BTW, not bragging, but my estimated refund is about $21,000.

 

[CChaos]

Originally posted by: mcvickj
I see. I have no problem with option #3. But how do I know the final amount that I am going to owe? Is there some way to figure that out so I know how much to put away?

Check this out: http://www.irs.gov/individuals...le/0,,id=96196,00.html

 

[shopbruin]

Originally posted by: Vic
Did you give Uncle Sam a big interest-free loan and now you think that getting your own money back is like free prize money?

my bf keeps yelling at me about this. i claim that i'm single with zero exemptions. he told me to just change it to two, figure out how much more i'd be getting, put half into an automatic deposit each month into my ING account, and use the other half to pay bills so i don't feel so squeezed each month.

just don't want to have to pay taxes later on, but he tells me i shouldn't have to if i claim 2.

 

[KLin]

I haven't gotten my W-2 yet :thumbsdown:

 

[Vic]

Originally posted by: CPA

Originally posted by: RMSistight

Originally posted by: CPA
I had mine done mid-December.

Damn how did you get them done so early? Did you get your W-2s in advance?

No, I can estimate based on certain things. I didn't actually file, you can't because the tax forms are not finalized until mid-January, but you can have them "complete" if you know what your end of year earnings and taxes will be. Just have to wait for the W2s to verify and attach.


BTW, not bragging, but my estimated refund is about $21,000.

WTF? Why? That's an estimated $1,750 per month you were overwithheld last year.

Had you invested that monthly amount (starting from a zero balance) in something as simple and secure as an ING Direct savings account at 2.35% APY, you would have made $228 bucks last year on the interest alone.

 

[dullard]

Originally posted by: Vic

Originally posted by: CPA
BTW, not bragging, but my estimated refund is about $21,000.

WTF? Why? That's an estimated $1,750 per month you were overwithheld last year.

I'm not accusing Anandtech's CPA of doing this, but many CPAs love to discuss huge tax returns in advertizing. Telling a few naive potential customers about this massive return may earn him far more money than the ~$228 you calculated that he lost.

CPAs also want their clients to overwithhold. That way it makes it appear like they did more work for them in getting such a large tax return. If I recall correctly, didn't CPAs get paid by the size of the return for years? Then wasn't a law was passed to stop that? I may be mistaken, but I thought I heard this.

 

[KK]

Originally posted by: CPA

BTW, not bragging, but my estimated refund is about $21,000.

And the funny thing is you probably only paid in $10,000. Those damn CPA's, deducting the toilet paper they use as a business expense.

 

[CPA]

Originally posted by: Vic

Originally posted by: CPA

Originally posted by: RMSistight

Originally posted by: CPA
I had mine done mid-December.

Damn how did you get them done so early? Did you get your W-2s in advance?

No, I can estimate based on certain things. I didn't actually file, you can't because the tax forms are not finalized until mid-January, but you can have them "complete" if you know what your end of year earnings and taxes will be. Just have to wait for the W2s to verify and attach.


BTW, not bragging, but my estimated refund is about $21,000.

WTF? Why? That's an estimated $1,750 per month you were overwithheld last year.

Had you invested that monthly amount (starting from a zero balance) in something as simple and secure as an ING Direct savings account at 2.35% APY, you would have made $228 bucks last year on the interest alone.

It was not something we forecasted. It was due to the business we bought mid-year. We set up as an LLC, originally to be taxed as a Corporation. As we were headed to year end, I realized it would be much better, tax wise, to reclassify as a sole proprietorship. This IRS rule allows a one-time classification change for LLCs. The IRS does not classify an LLC, it is up to the member, so I switched us to a sole proprietorship. This also allowed me to take advantage of some small-business tax breaks, including the "SUV" expense rule (removed as of October 23rd). So we showed a large business loss and my AGI plummeted. Add in I have 4 kids and hefty itemized deductions and my 2004 tax was nearly 0.

All legal, all within the rules, but because of the timing I couldn't take advantage of it during the course of the year. Now that I am stuck with a sole proprietorship classification over the next 4 and half years, I will be able to plan better.

 

[CPA]

Originally posted by: dullard

Originally posted by: Vic

Originally posted by: CPA
BTW, not bragging, but my estimated refund is about $21,000.

WTF? Why? That's an estimated $1,750 per month you were overwithheld last year.

I'm not accusing Anandtech's CPA of doing this, but many CPAs love to discuss huge tax returns in advertizing. Telling a few naive potential customers about this massive return may earn him far more money than the ~$228 you calculated that he lost.

CPAs also want their clients to overwithhold. That way it makes it appear like they did more work for them in getting such a large tax return. If I recall correctly, didn't CPAs get paid by the size of the return for years? Then wasn't a law was passed to stop that? I may be mistaken, but I thought I heard this.

I concur with your suspicions.

I am not a tax specialist by trade. I do not do any other filings but my own. I work in industry accounting for a Fortune 500 company. Personally, I would not feel comfortable filing anyone else's return.

Oh, and my explanation above discusses how I got in this position.

 

[dullard]

Originally posted by: CPA
Oh, and my explanation above discusses how I got in this position.

I posted too early - should always wait for explanations first. You know what, your name, CPA, makes it very difficult to discuss CPAs in any thread. It is especially difficult when I want to mention your name in the same sentence with other CPAs. And I'm not about to type out the whole acronym. I'm too lazy.

 

[Vic]

Ah, I see. A one-time thing. Self-employment does have its benefits. Makes getting a loan harder though.

 

[randal]

I changed jobs Up ... so I made more money and was hence taxed a lot more, but I didn't change tax brackets (last 6 weeks of the year). That means a HUGE refund for me.

 

[Argo]

Done... Unfortunately, I really don't qualify for any deductions or anything at all. Sucks, comparing myself to a national average and people duduct insane amounts. Anyways looks like I'll be getting back around $1k.