2013 Annual Anandtech Tax Time Thread!

[MixMasterTang]

Nevermind, figured it out!

 

[Gunslinger08]

My wife's employer has a dress down day each week that "requires" a donation (check written to employer). The donation goes to a different charity each week. Can we claim this as a deduction? Is a check to her employer each week enough proof of the donation? Is it just not worth my time for the ~$200 deduction?

 

[CPA]

Maybe someone in this thread can enlighten me. I have no idea how to do taxes. I've just used TaxAct the past few years because I just had my income and student loan interest with nothing else of note to deductions.

Last September, my fiancee and I bought a house (getting married this coming June). How does this go into our taxes? Do both of us say we bought a home, with only one of us claiming the taxes/interest payments, or do only one of say we bought a home?

First, taxes and interest on a home are itemized deductions (Schedule C). In order to take advantage of itemizing, your total itemized deductions need to exceed your standard deduction.

So, when did you buy the house? January? December? My guess is that you won't more interest/taxes than your standard deduction. But, if I'm wrong, you can split it any way you want as long as both of you are on the deed and the mortgage.

 

[RockinZ28]

Need some help with this. My employer will cover up to $500/mo for the employee only, for their offered medical plans. That leaves me to pay 100% of my wife's insurance, and under their plans the cheapest was almost $500/mo with huge deductibles.

So I shopped online, found I could get better coverage for both of us on my own, for ~$650/mo. Called the owner and made a deal that I could just expense $500/mo for medical insurance. That would be tax free as a reimbursement. So I pay $150/mo, fine by me.

Then I get this email today:

I spoke with our tax consultants, they said that if you are enrolled through XXXX under the group plan, that the employer contribution ($500.00) is considered a fringe benefit. Once you elect to get coverage on your own, that $500.00 becomes taxable, therefore, we will issue you a separate monthly check if this is the way you choose to go.

So that seems to me they'll issue me a check for $500 each month, and I'll have to report that as income? Am I able to claim this as tax exempt come tax time next year?

Or do they have this wrong?

Fringe Benefit Exclusion Rules

This section discusses the exclusion rules that apply to fringe benefits. These rules exclude all or part of the value of certain benefits from the recipient's pay.

The excluded benefits are not subject to federal income tax withholding. Also, in most cases, they are not subject to social security, Medicare, or federal unemployment (FUTA) tax and are not reported on Form W-2.

This section discusses the exclusion rules for the following fringe benefits.

Accident and health benefits.

Table 2-1. Special Rules for Various Types of Fringe Benefits (For more information, see the full discussion in this section.)

Treatment Under Employment Taxes

Type of Fringe Benefit

Income Tax Withholding Exempt1,2, except for long-term care benefits provided through a flexible spending or similar arrangement.

Social Security and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)Exempt, except for certain payments to S corporation employees who are 2% shareholders.

Federal Unemployment (FUTA)
Accident and health benefits Exempt

Accident and Health Benefits

This exclusion applies to contributions you make to an accident or health plan for an employee, including the following.

Contributions to the cost of accident or health insurance including qualified long-term care insurance.

Contributions to a separate trust or fund that directly or through insurance provides accident or health benefits.

Contributions to Archer MSAs or health savings accounts (discussed in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans).

This exclusion also applies to payments you directly or indirectly make to an employee under an accident or health plan for employees that are either of the following.

Payments or reimbursements of medical expenses.

Payments for specific injuries or illnesses (such as the loss of the use of an arm or leg). The payments must be figured without regard to any period of absence from work.

http://www.irs.gov/publications/p15b/ar02.html#en_US_2014_publink1000193638

 

[CPA]

Are property taxes deductible? I am using Tax Cut and it *sounds* like they should be, but I just want to be 100% before I enter it in. I use an escrow account, and the tax form has the interest paid in box 1, with no other boxes having any amount. However below the boxes they specifically list out property taxes and the amount.

I'm in California if that matters.

For federal, most definitely.

 

[Xcobra]

My wife's employer has a dress down day each week that "requires" a donation (check written to employer). The donation goes to a different charity each week. Can we claim this as a deduction? Is a check to her employer each week enough proof of the donation? Is it just not worth my time for the ~$200 deduction?

If you itemize deductions, why not? Extra 200 doesn't hurt. I would save a copy of the cancelled check to be sure in case you get chosen for examination. At worst, you'll just have to pay that small amount back. But you should be ok. If your take the standard deduction (12,200 in 2013 for married couple), who cares? Don't even bother.

 

[Xcobra]

Need some help with this. My employer will cover up to $500/mo for the employee only, for their offered medical plans. That leaves me to pay 100% of my wife's insurance, and under their plans the cheapest was almost $500/mo with huge deductibles.

So I shopped online, found I could get better coverage for both of us on my own, for ~$650/mo. Called the owner and made a deal that I could just expense $500/mo for medical insurance. That would be tax free as a reimbursement. So I pay $150/mo, fine by me.

Then I get this email today:



So that seems to me they'll issue me a check for $500 each month, and I'll have to report that as income? Am I able to claim this as tax exempt come tax time next year?

Or do they have this wrong?



http://www.irs.gov/publications/p15b/ar02.html#en_US_2014_publink1000193638

My take on this is that there is no medical expense in the literal meaning of the word. Most of the time, you can pay medical premiums via pre-tax dollars if medical insurance is offered by a cafeteria plan from your employer. In your case, you are not opting in for the employer-provided medical insurance and in fact, are being reimbursed for your insurance premiums. This would be like providing you with an extra income stream at your discretion to spend on medical insurance elsewhere. Same idea.

The point of cafeteria plans and their tax "favorability" is to promote health insurance coverage via your employer and reduce costs. In your case, you are going around the rules (to enroll your employer's plan) to obtain cheaper insurance outside your employer.

If they include it in income, my take is that you can probably claim the premiums on Schedule A if you itemize (subject to the 10% floor). Sucks doesn't it?

Again, haven't seen your specific case before and this is all my take to the best of my ability.

 

[RockinZ28]

My take on this is that there is no medical expense in the literal meaning of the word. Most of the time, you can pay medical premiums via pre-tax dollars if medical insurance is offered by a cafeteria plan from your employer. In your case, you are not opting in for the employer-provided medical insurance and in fact, are being reimbursed for your insurance premiums. This would be like providing you with an extra income stream at your discretion to spend on medical insurance elsewhere. Same idea.

The point of cafeteria plans and their tax "favorability" is to promote health insurance coverage via your employer and reduce costs. In your case, you are going around the rules (to enroll your employer's plan) to obtain cheaper insurance outside your employer.

If they include it in income, my take is that you can probably claim the premiums on Schedule A if you itemize (subject to the 10% floor). Sucks doesn't it?

Again, haven't seen your specific case before and this is all my take to the best of my ability.

I've found under different healthcare tax rules, that premiums are considered medical expenses. Whether that applies here too not sure. Googled some more and found this, but I'm not sure if this is current or pre-ACA. Would not surprise me if ACA abolishes these policies if they are/were correct. I did call and email with some of this stuff, and they are going to do whatever they can to get me my $500 tax free legally.

Tax-Deductibility of Employer’s Medical Reimbursements:
Reimbursements provided by employers for medical expenses and health care coverage of employees are treated similarly to employer-provided premium contributions, as long as some rules are followed. The employer must have a “plan” in writing that stipulates the employer will provide health coverage by reimbursing its employees for all or part of medical expenses or the cost of coverage purchased directly by the employees. Employers should obtain documentation of the medical services before reimbursing the employee.

Taxability of Reimbursements to Employees:
If an employee pays the premiums on personally owned health insurance or incurs medical costs and is reimbursed by the employer, the reimbursement generally is excluded from the employee’s gross income and not taxed under both federal and state tax law. This includes premiums for tax dependents and opposite-sex spouses. However, there are some circumstances in which the reimbursement is taxable income, including the following:

If an employer simply pays the employee an extra amount and does not specify in writing that the amount must be used to pay the health coverage premium, it will be taxable to the employee as income.
If the employer is self-employed, any reimbursements for their own or their dependents’ health care costs are taxable income to the self-employed employer.
As long as the requirements are satisfied, employers may deduct as business expenses any reimbursements provided for their employees and their opposite-sex spouses and tax dependents under federal and state tax law.

 

[Xcobra]

I've found under different healthcare tax rules, that premiums are considered medical expenses. Whether that applies here too not sure. Googled some more and found this, but I'm not sure if this is current or pre-ACA. Would not surprise me if ACA abolishes these policies if they are/were correct. I did call and email with some of this stuff, and they are going to do whatever they can to get me my $500 tax free legally.

Tax-Deductibility of Employer’s Medical Reimbursements:
Reimbursements provided by employers for medical expenses and health care coverage of employees are treated similarly to employer-provided premium contributions, as long as some rules are followed. The employer must have a “plan” in writing that stipulates the employer will provide health coverage by reimbursing its employees for all or part of medical expenses or the cost of coverage purchased directly by the employees. Employers should obtain documentation of the medical services before reimbursing the employee.

Taxability of Reimbursements to Employees:
If an employee pays the premiums on personally owned health insurance or incurs medical costs and is reimbursed by the employer, the reimbursement generally is excluded from the employee’s gross income and not taxed under both federal and state tax law. This includes premiums for tax dependents and opposite-sex spouses. However, there are some circumstances in which the reimbursement is taxable income, including the following:

If an employer simply pays the employee an extra amount and does not specify in writing that the amount must be used to pay the health coverage premium, it will be taxable to the employee as income.
If the employer is self-employed, any reimbursements for their own or their dependents’ health care costs are taxable income to the self-employed employer.
As long as the requirements are satisfied, employers may deduct as business expenses any reimbursements provided for their employees and their opposite-sex spouses and tax dependents under federal and state tax law.

See, what you quoted there requires the employer to have a specific plan to reimburse employees for medical coverage if they do not have a plan that covers its employees. If the employer applies this on a company-wide basis, then it is acceptable to exclude the reimbursement. But if it's a one-off case (which may be in your case), then I think you have less chances of getting away with the above position. Find out more from your employer on this. Certainly an interesting case.

 

[RockinZ28]

Thanks for your input. I'm the only one attempting this as far as I know. Small business. Others are just taking whatever company group plan covers themselves, and buying their spouse/dependent coverage on their own.

Will see what they come up with. Hopefully can find some loophole.

 

[Xcobra]

Thanks for your input. I'm the only one attempting this as far as I know. Small business. Others are just taking whatever company group plan covers themselves, and buying their spouse/dependent coverage on their own.

Will see what they come up with. Hopefully can find some loophole.

No problem. Do let me know how it ends up being set up. It's quite interesting.

 

[senseamp]

Does anyone know if Roth IRA contribution limits it's $5500 per person if married filing jointly? Or total for both?

 

[JEDI]

1) is car milage, gas, maintenance, etc tax deductible if used to travel to/from work?
(employee in a fortune 500 company)

how about employee in a small business? (not owned by said employee)

2) Roth earned income credit (get $550 tax credit for maxed roth if agi = ~$29k)
is agi after tax deductions like mortgage, donations, and non-reimbursed employee expenses?

 

[Xcobra]

Does anyone know if Roth IRA contribution limits it's $5500 per person if married filing jointly? Or total for both?

That would be per person.

 

[Xcobra]

1) is car milage, gas, maintenance, etc tax deductible if used to travel to/from work?
(employee in a fortune 500 company)

You can only deduct mileage if it's NOT for commuting (back from home/work). You can deduct them if you have to go to a client's site, i.e. not your regular place of work (which is known as commuting).

how about employee in a small business? (not owned by said employee)

Same as above if an employee. Also, note that they would be subject to the 2% floor on Schedule A. Depending on your income levels and amount of deduction, it may be reduced or get no benefit at all (AND only if you itemize deductions [as opposed to taking the standard deduction]).

2) Roth earned income credit (get $550 tax credit for maxed roth if agi = ~$29k)
is agi after tax deductions like mortgage, donations, and non-reimbursed employee expenses?

Your AGI is the number after adjustments to income, see line 37 on the 1040. This number is before itemized deductions (as you described) and personal exemptions.

 

[Doppel]

Not sure i'll need help this year, but thanks for this thread. peeps obviously appreciate it.

I'd like to celebrate the fact that for the first time in my life I can import my W2 via turbo tax. I am thinking more employers (or their payroll entities) are supporting this now.

 

[msi1337]

I received a 1099K in email from paypal for eBay sales from last year. Normally I just do it as a hobby, but last year I was helping a (former) friend with his struggling business to sell items on ebay. We had a falling out and now am I stuck with the taxes for the items I sold for him? I sold probably 10-11K worth of his items out of my total 23k.

 

[rcpratt]

Ah, didn't even notice your location. Sounds like you'll be taking the standard deduction. Also, MIP is only deductible for this year anyway, unless Congress extends it again.

Got a pleasant surprise because of this. My PMI was rolled into my mortgage, so I got credit for paying the entire amount in 2013. Cool.

Too bad my normal interest payments and property taxes will hardly be above the standard deduction in future years since the rate is so low. Pretty lame complaint, I guess.

 

[blurredvision]

I know you cannot deduct PMI for mortgages originating before Jan 1st, 2007. Any chance of my mortgage being sold after would allow me to now deduct it? My thought is that maybe, by some chance in hell, it being sold might "reset" it somehow.

A shot in the dark, I know, but doesn't hurt to ask.

 

[raildogg]

A question for someone who knows more than me about tax forms:

I bought a 50-pack 1099-Misc forms for $28. I only need two of these forms so I feel that the money isn't well spent. Is it possible to go to the local IRS office and get 2 forms of the 1099-Misc instead?

And if so, is there a fee for them?

I would appreciate any response. Thank you.

 

[highland145]

A question for someone who knows more than me about tax forms:

I bought a 50-pack 1099-Misc forms for $28. I only need two of these forms so I feel that the money isn't well spent. Is it possible to go to the local IRS office and get 2 forms of the 1099-Misc instead?

And if so, is there a fee for them?

I would appreciate any response. Thank you.

You need the red forms to send to the IRS? You can order them free from the IRS but do it early.

I did order early and they shorted my w-2 order by 1/2. Happy me realized it last week. May have to find another source since they're due next week.

http://www.irs.gov/pub/irs-prior/f1099msc--2013.pdf
If you can print in red and fill in the other.

Still need to file the associated 1096.

edit: My local was closed but you could try it.

 

[raildogg]

You need the red forms to send to the IRS? You can order them free from the IRS but do it early.

I did order early and they shorted my w-2 order by 1/2. Happy me realized it last week. May have to find another source since they're due next week.

http://www.irs.gov/pub/irs-prior/f1099msc--2013.pdf
If you can print in red and fill in the other.

Still need to file the associated 1096.

In that case, I will keep the forms I bought already. So the IRS office does not have these forms on hand?

 

[highland145]

In that case, I will keep the forms I bought already. So the IRS office does not have these forms on hand?

Call the local office if you have one. Mine's closed. Most people do electronic now...I'm a dinosaur so I need the IRS red forms. I don't know what OD sells or why you need to file 1099-misc for 2 people...do you own your business? And you may be able to use the link for the red 1099.

You will also need to file the 1096, red and otherwise. So are you sure you need to report the 1099?

 

[raildogg]

Call the local office if you have one. Mine's closed. Most people do electronic now...I'm a dinosaur so I need the IRS red forms. I don't know what OD sells or why you need to file 1099-misc for 2 people...do you own your business? And you may be able to use the link for the red 1099.

You will also need to file the 1096, red and otherwise. So are you sure you need to report the 1099?

I own my business and have had work done from two contractors. Both amounts are over $900. Please correct me if I'm wrong but I believe I need to give them Copy A and file Copy B myself.

If I can use the link for the red 1099, that would be good. I don't have a color printer but I can go to a office store and get it printed there.

Thank you.

 

[highland145]

I own my business and have had work done from two contractors. Both amounts are over $900. Please correct me if I'm wrong but I believe I need to give them Copy A and file Copy B myself.

If I can use the link for the red 1099, that would be good. I don't have a color printer but I can go to a office store and get it printed there.

Thank you.

Over $600, you should file. As far as the red forms....the IRS sends me a stack and I print my info on them. I use a separate program (CFS tax tools) that prints all on the black forms.

Copy A goes to the IRS
Copy 1 goes to the state
Copy B is for the contractor

And you'll have to file the 1096's....which combines your 1099's.


CPA, etal ,can give you better advice on filing for the contractors. I, personally, would not if they are legitimate businesses. Wait for more responses.



Amazing how our government makes us scared to do business. "Did I fuck up my taxes?"....Bastards.