10th Annual Tax Thread - 2012

[realredpanda]

two questions:

my only income last year was a settlement check from a previous job years ago for the amount of 12 dollars, and an inheritance from my grandparents' passing of 10,000 dollars.

the estate lawyer told me i don't need to file income taxes for the inheritance (money came out of california though i'm currently residing in wisconsin).

so, do i need to file nothing this year? i thought if you made over 8k or so you had to report something, and secondly can my father still clam me as a dependent this year given the inheritance money (he's disabled and retired so i live with him to help out full time thus no other income) ?

 

[EagleKeeper]

two questions:

my only income last year was a settlement check from a previous job years ago for the amount of 12 dollars, and an inheritance from my grandparents' passing of 10,000 dollars.

the estate lawyer told me i don't need to file income taxes for the inheritance (money came out of california though i'm currently residing in wisconsin).

so, do i need to file nothing this year? i thought if you made over 8k or so you had to report something, and secondly can my father still clam me as a dependent this year given the inheritance money (he's disabled and retired so i live with him to help out full time thus no other income) ?

In theory, you should file on the 12$.
Use a free edition. They should also have sent you a W2. No W2, use misc income.

If your father provided more than half of your support, he can file with you ad a dependent and you earned less than the minimum. Money on the bank is not used to determine support, only what is spent.

If he is not getting any earned income from wages, it may not make a difference ifhe claims you.

 

[EagleKeeper]

I had a 1982 series EE savings bond reach final maturity last year. I know I need to pay taxes on it for 2012, but I didn't get around to cashing it in until yesterday. I've got a slip from my back that lists the interest earned, though I'm not sure the 1099-int will show up in time. It looks like I can enter this into turbotax easy enough, I assume that box 3 (U.S. Treasury int) is where the interest will show up, but I'm not sure what I should put in the "received from" field - the bank that cashed it or "U.S. Treasury"?

one more question on this. I've got everything wrapped up and entered in to turbotax, but it keeps throwing an error because the date of sale is 2013 instead of 2012. Will the irs have any problem with this or is it a simple matter of turbotax not understanding that the taxes are due for the year of final maturity?

TT is doing what it is supposed to.
Anything that happens in 2013 is not retroactive back to 2012 (unless Congress does something) You are cashing in/selling the bond in 2013.
you still have to report the interest for 2012.

Enter the interest earned for 2012;

Come 2013 taxes; enter the sale and also interest earned for 2013. If 0; enter 0

 

[Dubb]

TT is doing what it is supposed to.
Anything that happens in 2013 is not retroactive back to 2012 (unless Congress does something) You are cashing in/selling the bond in 2013.
you still have to report the interest for 2012.

Enter the interest earned for 2012;

Come 2013 taxes; enter the sale and also interest earned for 2013. If 0; enter 0

Much thanks for this.

 

[Daverino]

Here's a question:

I had a 401K disbursement that was wired to my savings account last year to provide cash reserves for a real estate deal. Once the deal was done, I rolled it back into the 401K. According to the IRS, there should be a mandatory 20% withholding from the amount disbursed, but looking at my 1099R, it seems that that never happened. The amount withdrawn from the 401K was equal to the amount that was wired to my account.

How is this possible? Did the bank running the 401K just forget the withholding?

Also, should I have received a 5498 from the bank when the money was redeposited into the 401K?

 

[EagleKeeper]

Here's a question:

I had a 401K disbursement that was wired to my savings account last year to provide cash reserves for a real estate deal. Once the deal was done, I rolled it back into the 401K. According to the IRS, there should be a mandatory 20% withholding from the amount disbursed, but looking at my 1099R, it seems that that never happened. The amount withdrawn from the 401K was equal to the amount that was wired to my account.

How is this possible? Did the bank running the 401K just forget the withholding?

Also, should I have received a 5498 from the bank when the money was redeposited into the 401K?

the bank may have detected that the withdrawal equaled the deposit and was within the allocated time. Treated it as a wash.

Or they screwed up and everyone lucks out with less paperwork :thubmsup:

 

[fuzzybabybunny]

I'm a little confused with what to do with my 1099-MISC forms.

I have my total sales figures put into Turbo Tax. That includes everything I've sold for the year.

I also have 1099-MISC forms from customers of mine that I have sold over $X,XXX to.

Turbotax wants me to enter both the amount of Sales and the amount / info on my 1099-MISC. But that's double entry. My Sales figure includes everything, including the amounts in the 1099-MISC. So what do I need the 1099-MISC for?

 

[EagleKeeper]

I'm a little confused with what to do with my 1099-MISC forms.

I have my total sales figures put into Turbo Tax. That includes everything I've sold for the year.

I also have 1099-MISC forms from customers of mine that I have sold over $X,XXX to.

Turbotax wants me to enter both the amount of Sales and the amount / info on my 1099-MISC. But that's double entry. My Sales figure includes everything, including the amounts in the 1099-MISC. So what do I need the 1099-MISC for?

The amount for Sales entry are not supposed to include the amount in the 1099 forms received.

Remember that many stores use the Schedule C and do not receive a 1099 from a customer.

TT wants to make sure you are fully covered as to what is being reported.

 

[fuzzybabybunny]

The amount for Sales entry are not supposed to include the amount in the 1099 forms received.

Remember that many stores use the Schedule C and do not receive a 1099 from a customer.

TT wants to make sure you are fully covered as to what is being reported.

Dammit. So say that I have sales of $100K. And I get five 1099's, each for different amounts.

I have to subtract these amounts from my total sales figures and then report this new lower figure as "sales" and the 1099 "sales" separately?

What if I miss a 1099? Meaning I get the form but then misplace it?

I'm a single member LLC, so I guess I don't use Schedule C, which is for Sole Props?

 

[EagleKeeper]

Dammit. So say that I have sales of $100K. And I get five 1099's, each for different amounts.

I have to subtract these amounts from my total sales figures and then report this new lower figure as "sales" and the 1099 "sales" separately?

What if I miss a 1099? Meaning I get the form but then misplace it?

I'm a single member LLC, so I guess I don't use Schedule C, which is for Sole Props?

FALSE

A limited liability company (LLC) is not a separate tax entity like a corporation; instead, it is what the IRS calls a "pass-through entity," like a partnership or sole proprietorship. All of the profits and losses of the LLC "pass through" the business to the LLC owners (called members), who report this information on their personal tax returns. The LLC itself does not pay federal income taxes, but some states impose an annual tax on LLCs.

Income Taxes
The IRS treats your LLC like a sole proprietorship or a partnership, depending on the number of members in your LLC.

Single-Owner LLCs
The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS.
As the sole owner of your LLC, you must report all profits (or losses) of the LLC on Schedule C and submit it with your 1040 tax return. Even if you leave profits in the company's bank account at the end of the year -- for instance, to cover future expenses or expand the business -- you must pay income tax on that money.

How you keep track of your income is up to you; how you justify what you state you have earned is also up to you.

Example:
Your accounting system shows $10K worth of income
You identify company xyz on that income $2K.
You identify company abc on that income $4K.
Both send you a 1099
You misplace abc 1099
If you know, you misplaced abc, contact them for a copy:\


For filing
show $8K income as non-1099
show $2K income as 1099

If you get audited, as long as your income records shows abc when the IRS asks where is abc income via 1099, you are OK. Expect to get a scolding from them though

 

[fuzzybabybunny]

Thanks!

One last (dumb) question:

I have a Roth IRA and a Profit Sharing Keogh

For the first time in my life, I bought and sold some stocks in 2012.

Do I have to list every single stock that I bought and sold in 2012?

 

[Linflas]

2 questions:

I received a payment for rental of some farmland for 2012. The check was not cashed until January 2013, do I include it on my 2012 return?

Out mother gifted each of us an amount of cash this year(Tax year 2013). I was not aware that this would be taxable in excess of $14,000.00. Can we return the difference to her to defer giving to us until next year or are we stuck now paying the tax? Or is it the case that we are exempt from this tax since it is not anywhere close to the lifetime exemption amount?

 

[EagleKeeper]

2 questions:

I received a payment for rental of some farmland for 2012. The check was not cashed until January 2013, do I include it on my 2012 return?

Out mother gifted each of us an amount of cash this year(Tax year 2013). I was not aware that this would be taxable in excess of $14,000.00. Can we return the difference to her to defer giving to us until next year or are we stuck now paying the tax? Or is it the case that we are exempt from this tax since it is not anywhere close to the lifetime exemption amount?

When you cashed the check is when you declare it as income. 2013.

I believe the tax is on her side, not yours.
You used the word us. The limit applies to each person, not family.
I will double check and confirm though for you

 

[fuzzybabybunny]

FALSE



How you keep track of your income is up to you; how you justify what you state you have earned is also up to you.

Example:
Your accounting system shows $10K worth of income
You identify company xyz on that income $2K.
You identify company abc on that income $4K.
Both send you a 1099
You misplace abc 1099
If you know, you misplaced abc, contact them for a copy:\


For filing
show $8K income as non-1099
show $2K income as 1099

If you get audited, as long as your income records shows abc when the IRS asks where is abc income via 1099, you are OK. Expect to get a scolding from them though

Oh, and another thing - the actual piece of paper that is the 1099-Misc is worthless, right? Since I file electronically, all I need to copy from that sheet are the customer's name, tax ID number, and amount paid to me. Then I can just chuck it? Is there any reason I should keep it? Would the IRS actually want to see it for audit purposes?

 

[Muse]

I have been filing every year. I wonder if I need to file this year. I have next to no income (a little interest and dividend income, not even a pile of beans, i.e. probably less than $500). I have money in a stock trading account that I've been actively investing. I lost money the last two years with my trades when added up, so I am entitled to a rollover for losses if I should manage to make money investing this year. So I have two questions:

1. Do I need to file a return? Maybe I'd need to file to get my rollover for investment losses. Is that the case?

2. How does the stock investment losses rollover work? Can I continually roll over indefinitely if I don't manage to at least cover my losses with gains in subsequent years or does that stuff expire in X number of years?

I've been using Turbotax Premier in recent years, which automatically pulls data from the last return.

Thanks for any help with these issues.

 

[EagleKeeper]

Oh, and another thing - the actual piece of paper that is the 1099-Misc is worthless, right? Since I file electronically, all I need to copy from that sheet are the customer's name, tax ID number, and amount paid to me. Then I can just chuck it? Is there any reason I should keep it? Would the IRS actually want to see it for audit purposes?

IRS will have their own copy. Your tax S/W will retain tbe details in the data file. Also will be dumped in the PDF for your records.

 

[EagleKeeper]

I have been filing every year. I wonder if I need to file this year. I have next to no income (a little interest and dividend income, not even a pile of beans, i.e. probably less than $500). I have money in a stock trading account that I've been actively investing. I lost money the last two years with my trades when added up, so I am entitled to a rollover for losses if I should manage to make money investing this year. So I have two questions:

1. Do I need to file a return? Maybe I'd need to file to get my rollover for investment losses. Is that the case?

2. How does the stock investment losses rollover work? Can I continually roll over indefinitely if I don't manage to at least cover my losses with gains in subsequent years or does that stuff expire in X number of years?

I've been using Turbotax Premier in recent years, which automatically pulls data from the last return.

Thanks for any help with these issues.

You should file to ensure proper tracking of your losses.

$3000 can apply each year as losses against income until looses are accounted for.

No expiration date, however the 3K may get used up each year.

As you noted, TT will handle the rollover for you.

Premier version is a marketing tool, look at the capability chary. No actual increase other than help and documentation

 

[fuzzybabybunny]

I think someone may have given me some bad information when I first started out my business.

I didn't want to go through all the trouble of tracking business miles with my only vehicle.

Someone with their own business told me that if I have two vehicles, it can be argued that I use one 100% for personal and the other 100% for business, so that I don't have to track miles.

I bought a second vehicle and have been using the older car 100% for business since it gets better gas mileage and I drive a LOT. Both cars are just regular cars.

I haven't been keeping exact records of my business mileage for the past 4 years - just start and end of year odometer readings for the business vehicle.

I just read from here (http://www.easymilelog.com/faqs/tax-deduction-faqs - "What if my car is specific for my business?") that "If the vehicle can be driven for non-business purposes easily, than the IRS will assume that you did. You need to have your documentation to prove that the vehicle was used for business purposes only, or they could disallow the deduction."

Well, I guess they're both just regular cars and I could have easily driven the business one for personal use. And I have ZERO documentation to say otherwise because I was under the assumption that if I had TWO vehicles, I didn't need to have mileage logs for the 100% business vehicle.

How screwed am I?

 

[Muse]

You should file to ensure proper tracking of your losses.

$3000 can apply each year as losses against income until looses are accounted for.

No expiration date, however the 3K may get used up each year.

As you noted, TT will handle the rollover for you.

Premier version is a marketing tool, look at the capability chary. No actual increase other than help and documentation

Thank you. One more question please:

My capital losses for 2011 were over $3000. Also, after my standard deduction and other deductibles, I had zero tax owed. I believe then I would be able to deduct $3000 from my taxable income for 2012. What if I have, say, $2000 capital losses (stock investments) for this year, 2013? Would I have a cumulative loss effect, i.e. $5000 carryover that I could apply toward the 2014 tax season? Or is the limit carryover to the following year $3000 in spite of my having lost more than that cumulatively in previous years? Thanks for your help.

 

[EagleKeeper]

Assuming you meant that the capital losses were for 2012, $5K is now available to be applied against capital gains for 2013

 

[Linflas]

When you cashed the check is when you declare it as income. 2013.

I believe the tax is on her side, not yours.
You used the word us. The limit applies to each person, not family.
I will double check and confirm though for you

What about the 5 million lifetime exclusion I saw mentioned as part of the law, would that apply to this for her? And if not and we return the amount over 14K each to her does that work or would it now be considered a gift from us to her?

 

[Muse]

Ah, the news is good. Apparently, the loss carryovers extend indefinitely. My cumulative total is pretty big now, because there's some losses from the dog years around 2007-2008 to some mutual funds I had. At some point, hopefully, I'll be able to write off all those accumulated losses with some gains! Here's what it says in TT:

- - - -
Capital Loss Carryovers

What's a capital loss carryover? Let's start with the capital loss part.

So let's say you sold some stocks this year, and you and your spouse made money (had capital gains) and lost some money (had capital losses). You have a net capital loss if your capital losses are more than your capital gains. And you have a capital loss carryover if your net capital loss is more than $3,000 ($1,500 if married filing separately).

How do you figure out your net capital loss?

Here's an example: Say you (filing jointly with your spouse) have a gain of $5,000 on some stock sales, but you had a loss of $15,000 on other stocks. That means you're left with a net capital loss of $10,000.

The "carryover" part

Now the rule is if your net capital loss (loss in excess of gain) is $3,000 or less in one year, you can write it all off this year (assuming you have $3,000 of other income to offset). If it's more than $3,000, then you can offset $3,000 of your other, ordinary income this year and carry over the balance to next year. If you don't have any other income to offset this year, the entire $10,000 would carry over to next year.

So in our example above, your capital loss carryover amount would be $7,000 ($10,000 total minus $3,000 used this year to offset other income like wages). Next year, you would apply the $7,000 carryover to any capital gains and losses, and use the same method to figure your net capital loss and any carryover.
- - - -

Assuming you meant that the capital losses were for 2012, $5K is now available to be applied against capital gains for 2013

Actually (please correct me if I'm mistaken), my $5k net loss in stock investments in 2012 is added to my carryovers from previous years. Turbotax says I have a capital loss carryover from 2011 much in excess of my ~$5K net loss for 2012.

 

[jEnus]

Question regarding 1099-MISC -

I did some work for a business and sent them a bill broken out into three parts; Labor, Services (Domain / Email / Hosting Fees that I was charged and passed back), and Parts (Computer Parts that I purchased and passed back).


The 1099-MISC that I received is a sum of everything, not just Labor like I imagined. How should I handle this? Is how they filled out the 1099 correct?

 

[EagleKeeper]

Question regarding 1099-MISC -

I did some work for a business and sent them a bill broken out into three parts; Labor, Services (Domain / Email / Hosting Fees that I was charged and passed back), and Parts (Computer Parts that I purchased and passed back).


The 1099-MISC that I received is a sum of everything, not just Labor like I imagined. How should I handle this? Is how they filled out the 1099 correct?

They filled out the 1099 correctly - it is the SUM of what they paid you.

Now you have the option of treating the entire payment as misc income and paying SS and other taxes on it fully or going the Schedule C route so you can only be taxed on your labor; this Schedule C will also allow you to write off expenses you incurred but did not bill the client.

 

[EagleKeeper]

Ah, the news is good. Apparently, the loss carryovers extend indefinitely. My cumulative total is pretty big now, because there's some losses from the dog years around 2007-2008 to some mutual funds I had. At some point, hopefully, I'll be able to write off all those accumulated losses with some gains!
<snip>
- - - -
Actually (please correct me if I'm mistaken), my $5k net loss in stock investments in 2012 is added to my carryovers from previous years. Turbotax says I have a capital loss carryover from 2011 much in excess of my ~$5K net loss for 2012.

You are correct