10th Annual Tax Thread - 2012

[Lazarus52980]

It is a great help. We have only one child (not even 2, so obviously younger than 19 years) and he was placed with us by the county. We do get some $$ based on his DOC (difficulty of care) so I wish I knew if I had to claim part of the $$ I received... Regardless, I will just file without claiming that income. Thank you for the info Eaglekeeper.

 

[EagleKeeper]

It is a great help. We have only one child (not even 2, so obviously younger than 19 years) and he was placed with us by the county. We do get some $$ based on his DOC (difficulty of care) so I wish I knew if I had to claim part of the $$ I received... Regardless, I will just file without claiming that income. Thank you for the info Eaglekeeper.

Because the child is under 19; the DOC does not even come into play.

Your concerns are groundless :thumbsup:

 

[NoCreativity]

We gave to a charity last year. Sent a check in near end of 2012. They cashed it in 2013 but sent us a statement showing the contribution dated 2012. Which year do I claim it in? TIA.

 

[fjmeat]

If a Texas company does work in other states (whether the work is done physically in the other state, or not ..such as a project where the Texas company does not have to travel to the other state), what determines the foreign states taxable income?

For example: The Texas company does work in Arkansas. Does Arkansas require taxes on revenue when an employee of the Texas company is physically in Arkansas? And/or, what if the Texas Company never had to go to Arkansas, but still worked on the Arkansas project?

 

[EagleKeeper]

We gave to a charity last year. Sent a check in near end of 2012. They cashed it in 2013 but sent us a statement showing the contribution dated 2012. Which year do I claim it in? TIA.

2012

 

[EagleKeeper]

If a Texas company does work in other states (whether the work is done physically in the other state, or not ..such as a project where the Texas company does not have to travel to the other state), what determines the foreign states taxable income?

For example: The Texas company does work in Arkansas. Does Arkansas require taxes on revenue when an employee of the Texas company is physically in Arkansas? And/or, what if the Texas Company never had to go to Arkansas, but still worked on the Arkansas project?

This is a state tax issue. We try to not get involved with that situation - 50 separate sets of rules to track/understand.

In general (based on experience) most states require taxes to be paid on employee income earned within the state if working for more than 30 days within the state's borders.

In terms of company revenue being taxed; I can not even hazard a guess.

 

[fjmeat]

This is a state tax issue. We try to not get involved with that situation - 50 separate sets of rules to track/understand.

In general (based on experience) most states require taxes to be paid on employee income earned within the state if working for more than 30 days within the state's borders.

In terms of company revenue being taxed; I can not even hazard a guess.

Thanks. However this is now on my to-do list (for 20 states). I'll post my findings for future reference.

 

[HybridSquirrel]

I sold some stock in a taxable brokerage account (ESPP shares), only make like $100 bucks or so total profit.

Where do I claim that? Do I add it to my income from last year? Or is there some special box im not seeing.

 

[EagleKeeper]

I sold some stock in a taxable brokerage account (ESPP shares), only make like $100 bucks or so total profit.

Where do I claim that? Do I add it to my income from last year? Or is there some special box im not seeing.

Schedule D covers stock sales

 

[zhwu]

I have a question regarding Federal itemized deductions on State Taxes:

I understand if you get a refund from state the previous year, you may need to pay income tax on that the next year (since you have claimed the credit previous year) I am wondering what will happen if I own some state tax?

This is the first year I end up owning the state $400, just wondering if I can get any deduction for that on Federal tax form? ( Am I suppose to claim it next year by entering a negative amount for state refund? )

 

[HybridSquirrel]

Schedule D covers stock sales

Thanks. One last question, I don't see an area on turbo tax to enter this information. Is it "non-statutory stock options"? I also am not seeing where i enter my Roth IRA contributions (do you evenn claim those?)


edit: I found it. Now I am just trying to figure out why everywhere I do an estimated refund at online it tells me ~1500ish give or take and turbo tax is telling me $354 -_-

 

[Dr. Detroit]

F-U AMT!

Jeezus, I'm at 6 of the last 7yrs getting bitch slapped by the AMT -

Thank you California for giving me a massive State Tax deduction to which the Feds proceed to bend me over and ass rape me on!

Thank you all for listening as I vent in this time of sorrow!

 

[EagleKeeper]

I have a question regarding Federal itemized deductions on State Taxes:

I understand if you get a refund from state the previous year, you may need to pay income tax on that the next year (since you have claimed the credit previous year) I am wondering what will happen if I own some state tax?

This is the first year I end up owning the state $400, just wondering if I can get any deduction for that on Federal tax form? ( Am I suppose to claim it next year by entering a negative amount for state refund? )

Taxes owed to the state for 2012 taxes and paid in 2013 ARE NOT placed on the Federal Tax forms for tax year 2013.



Normal Example:
Right now we are in the 2012 tax season
Your State income tax withholding for 2012 was $750.
You choose to itemize your Federal deductions using the Schedule A
You enter the $750 in the appropriate line item for tax payments.

When you file your State income tax, you have a refund of $250 that arrives sometime in 2013.

When you file your 2013 taxes in calendar year 2014; you MUST declare the $250 refund as income on the 1040. Regardless if you itemize of not.


Now if your withholding was $750 and you owe another $250; the $250 has no impact if you pay it in 2013; If you paid it in 2012; it becomes deductible.


State Income Taxes are deductible against Federal income. Not the amount you owe the State, but the amount you actually paid, through withholding, prior year credits, payments with the prior year state return, and/or estimated payments, during the calendar year for which you are filing Form 1040.

 

[zhwu]

Thanks for the clarification, looks like it will be better to withhold more state tax in my paycheck.

Here is how I understand this: if I own the state any amount ($400 in my case) for 2012 tax return, there is no way I can get any federal deduction from that amount in 2012 or 2013. Bascially, I shoot my self in the foot by not withholding enough state tax in my regular paychecks.

Taxes owed to the state for 2012 taxes and paid in 2013 ARE NOT placed on the Federal Tax forms for tax year 2013.



Normal Example:
Right now we are in the 2012 tax season
Your State income tax withholding for 2012 was $750.
You choose to itemize your Federal deductions using the Schedule A
You enter the $750 in the appropriate line item for tax payments.

When you file your State income tax, you have a refund of $250 that arrives sometime in 2013.

When you file your 2013 taxes in calendar year 2014; you MUST declare the $250 refund as income on the 1040. Regardless if you itemize of not.


Now if your withholding was $750 and you owe another $250; the $250 has no impact if you pay it in 2013; If you paid it in 2012; it becomes deductible.


State Income Taxes are deductible against Federal income. Not the amount you owe the State, but the amount you actually paid, through withholding, prior year credits, payments with the prior year state return, and/or estimated payments, during the calendar year for which you are filing Form 1040.

 

[EagleKeeper]

Thanks for the clarification, looks like it will be better to withhold more state tax in my paycheck.

Here is how I understand this: if I own the state any amount ($400 in my case) for 2012 tax return, there is no way I can get any federal deduction from that amount in 2012 or 2013. Basically, I shoot my self in the foot by not withholding enough state tax in my regular paychecks.

If you are itemizing, that is true.

Or you can just send in a check to the state in the second half of December as an estimated payment.

 

[thestrangebrew1]

If I'm starting a new business for computer repair & custom built PCs, Do I need to file for a CA Seller's Permit with the Board of Equalization? I'm mainly going to start off as repairs, but I'm assuming it's better to be all encompassing at the get go.

 

[EagleKeeper]

If I'm starting a new business for computer repair & custom built PCs, Do I need to file for a CA Seller's Permit with the Board of Equalization? I'm mainly going to start off as repairs, but I'm assuming it's better to be all encompassing at the get go.

From the OP

Okay, moving on. This thread is NOT intended to:

-Answer state tax questions. Sorry folks, states are their own beasts. They all have different rules and regs, heck 7 states don't even have income taxes. We are not about to keep up with 43 different state codes. Therefore, we won't be answering specific state questions. The best way to get an answer for a state question is to call up the State Treasury or Revenue Dept.

 

[thestrangebrew1]

From the OP

Oh crap sorry about that!

 

[HardcoreRobot]

Question for 2013 taxes... We plan on buying a new home this year and turning our existing home into a rental property. There are a few repairs that need to be made that we have been putting off, but really need to be done before we get tenants.

Ex. leaking kitchen faucet

Can I deduct this even though the property isn't being used for rental currently? In general, are the costs to prep (via repairs or improvements) a property for renting before there is a tenant deductible?

 

[EagleKeeper]

Question for 2013 taxes... We plan on buying a new home this year and turning our existing home into a rental property. There are a few repairs that need to be made that we have been putting off, but really need to be done before we get tenants.

Ex. leaking kitchen faucet

Can I deduct this even though the property isn't being used for rental currently? In general, are the costs to prep (via repairs or improvements) a property for renting before there is a tenant deductible?

gut feeling is yes - will need to research and fill in this place holder with the IRS guideline.

 

[lenablue]

Do not cringe when I explain MFS

I do not think that it will apply
Married, Filing Separately

:biggrin: Everything will be all right.

 

[CPA]

Question for 2013 taxes... We plan on buying a new home this year and turning our existing home into a rental property. There are a few repairs that need to be made that we have been putting off, but really need to be done before we get tenants.

Ex. leaking kitchen faucet

Can I deduct this even though the property isn't being used for rental currently? In general, are the costs to prep (via repairs or improvements) a property for renting before there is a tenant deductible?

Assuming you are still living in the home you will be renting, you can only deduct those expenses AFTER you begin renting out the house. Also, if you do improvements after a tenant moves in or between tenants, then you have to depreciate those costs using General Depreciation System or Accelerated Depreciation System lives.

Improvements can be deducted if put in place before renting out a house, but as part of the depreciation of the basis of your house, assuming your new basis is less or equal to the FMV of the house at the time you rented the house. Clear as mud?

 

[sjwaste]

I hope I can ask here, it's more of a "what if" but here goes:

Let's say next year I want to help a family member, maybe sending $500/mo to help them cover their property taxes. Is there any way at all to reduce my tax liability (and not increase theirs) on that $6000 a year?

 

[EagleKeeper]

I hope I can ask here, it's more of a "what if" but here goes:

Let's say next year I want to help a family member, maybe sending $500/mo to help them cover their property taxes. Is there any way at all to reduce my tax liability (and not increase theirs) on that $6000 a year?

No. You have to be responsible for the tax bill in order to deduct it on the Federal.

 

[Scarpozzi]

Can you explain to me the difference between contribution limits on a 401k and Traditional/Roth IRA.

If I invest in a 401k through work, then decide to invest in a Roth IRA....does the 401k count against my Roth IRA limits? It's obvious that IRA limits for 2012 are $5000, but I've read that 401k contributions are limited to $17000. I've heard people say all kinds of stuff about the limits and don't know what to believe.