3rd Annual AT Tax Time Thread

[Reel]

I bought a condo last year. Is there some place that lays out what closing costs (if any) are deductible? I found the document about moving expenses but I didn't find anything relating to closing costs. Besides those two expenses and the interest and tax deductions, are there any other deductions associated with owning a home (I'm a first timer). Thanks.

 

[EagleKeeper]

Originally posted by: Reel
I bought a condo last year. Is there some place that lays out what closing costs (if any) are deductible? I found the document about moving expenses but I didn't find anything relating to closing costs. Besides those two expenses and the interest and tax deductions, are there any other deductions associated with owning a home (I'm a first timer). Thanks.

Information about closing costs was previously answered early in this thread.

There are no other deductions for homeownership that what you listed

 

[CptObvious]

Sorry if this question's been asked, I searched the thread for 'allowances' but didn't find any.

On my W-4, I put down 2 as the number of allowances I was claiming (1 because I was single and had one job, and 1 because no one else could claim me as a dependent). However, my first paycheck and my W-2 that I just got says I have 0 exemptions/allowances, and I was wondering if this is a mistake. Right now I'm getting about 17% of my gross pay withheld for fed. income tax.

 

[EagleKeeper]

The W4 is a guideline only.

If you paystub states 0; then the payroll has made a mistake.
If you wish to increse the withholding exemption to 1; contact them.

 

[edprush]

Originally posted by: Izusaga

Originally posted by: edprush

Originally posted by: EagleKeeper

Originally posted by: edprush
I bought property in 2005 as an investment. I don't live at the property but I pay property tax, utility minimums, and have 'upkeep/maintenance' expenses.

Can any of that be used to my tax advantage?

More details on this would be required for any opinion to be provided.

Type of property?
Income generation?

The property is a house with an accessory buiilding (Morton building) on 3 acres of land.

Income generation: I guy paid me $30 to store his furniture in the Morton building for one month.

If I can't get it rented out I will put it on the 'for sale' market and if it doesn't sell I may consider moving into it.


Thanks.

Well, obviously you incurred expenses due to placing the property in service with the intent to rent, correct? You mentioned property tax, utilities, and upkeep. I would suggest a good reading of IRS Publication 527 - Residental Rental Property. I would refer you to Schedule E form 1040.

What penalties will I incur if I should decide to live in the house later in 2006?

 

[EagleKeeper]

No penalties; however, when you actually sell the house within a set time frame; you will have to recover the depreciation as a taxable capital gain.
For Details IRS - FAQ - Pub523 - & Pub 527

 

[edprush]

Originally posted by: EagleKeeper
No penalties; however, when you actually sell the house within a set time frame; you will have to recover the depreciation as a taxable capital gain.
For Details IRS - FAQ - Pub523 -

Did I make it clear that I originally purchased the house to rent out and earn income from the rent?

I incurred expenses (utilities and repairs) when it was rented. I plan to write those expenses off, if possible. Won't I have penalties for taking a rental property and then making it my principal residence?

 

[49erinnc]

Originally posted by: EagleKeeper

Originally posted by: 49erinnc
I apologize if this has been asked/answered but it's like finding a needle in a haystack....

I am hearing/reading conflicting info regarding student loan interest. According to something I read on the IRS website, it says that an individual cannot deduct student loan interest if he or she is filing "married but separate."

If this is true, what are my options? I've been legally separated since May 19th, 2005 and we are unable to divorce until May of 2006. We will be filing "Married but separate" unless I have another option here. I really hate to pass up the college loan interest deductions. I'd appreciate any clarity to this clause or any suggestions.

Thanks for all of this great info. Really helps out people like myself out.

If you are living apart; then you can file as single.
If children are involved; the parent that has the children can use Head-of-Household

Married filing seperately is more intended for a married couples that have seperate incomes and expenses and also wish to keep their finances seperate.

Interesting. I thought that legally, we were considered "married" despite being separated and living apart since May. I wasn't aware that I could state my status is "single." There are no children involved and we haven't slept under the same roof 8 months. If I can file "single" that will help me out a great deal. I didn't see anything on the IRS site that confirms that option but hopefully you're correct on that one. Thanks!

 

[CPA]

Originally posted by: 49erinnc

Originally posted by: EagleKeeper

Originally posted by: 49erinnc
I apologize if this has been asked/answered but it's like finding a needle in a haystack....

I am hearing/reading conflicting info regarding student loan interest. According to something I read on the IRS website, it says that an individual cannot deduct student loan interest if he or she is filing "married but separate."

If this is true, what are my options? I've been legally separated since May 19th, 2005 and we are unable to divorce until May of 2006. We will be filing "Married but separate" unless I have another option here. I really hate to pass up the college loan interest deductions. I'd appreciate any clarity to this clause or any suggestions.

Thanks for all of this great info. Really helps out people like myself out.

If you are living apart; then you can file as single.
If children are involved; the parent that has the children can use Head-of-Household

Married filing seperately is more intended for a married couples that have seperate incomes and expenses and also wish to keep their finances seperate.

Interesting. I thought that legally, we were considered "married" despite being separated and living apart since May. I wasn't aware that I could state my status is "single." There are no children involved and we haven't slept under the same roof 8 months. If I can file "single" that will help me out a great deal. I didn't see anything on the IRS site that confirms that option but hopefully you're correct on that one. Thanks!

If you are legally recognized by your state as seperated, then you can file single. But it has to be legally recognized, usually be a seperation agreement.

 

[CPA]

Originally posted by: Reel
I bought a condo last year. Is there some place that lays out what closing costs (if any) are deductible? I found the document about moving expenses but I didn't find anything relating to closing costs. Besides those two expenses and the interest and tax deductions, are there any other deductions associated with owning a home (I'm a first timer). Thanks.

a google search of "deductible closing costs" should help you. For the most part, only points and prepaid expenses (taxes & interest) are deductible. Your mortgage company should send you a 1098 with your deductible closing costs. Fees and service charges are not deductible.

 

[49erinnc]

If you are legally recognized by your state as seperated, then you can file single. But it has to be legally recognized, usually be a seperation agreement.

Thanks! Filed separation papers with the courts here the day we both signed them so everything is legal. Just didn't know I could file "single" so that info is much appreciated. Keep up the great work guys! This is a great annual thread.

 

[chuckywang]

I'm filling out my W4 form right now from a Teaching Assistantship for mys chool. What does it mean for "income tax to be withheld" and what does "tax liability" mean? I'm trying to decide if I should claim myself EXEMPT from withholding or not. From the form, I have two allowances (one for myself and one since I'm single with only one job).

Is it good for tax to be withheld or not?

 

[EagleKeeper]

Originally posted by: chuckywang
I'm filling out my W4 form right now from a Teaching Assistantship for mys chool. What does it mean for "income tax to be withheld" and what does "tax liability" mean? I'm trying to decide if I should claim myself EXEMPT from withholding or not. From the form, I have two allowances (one for myself and one since I'm single with only one job).

Is it good for tax to be withheld or not?

l

Claiming two allowances could result in a tax liability at the end of the year.

On the question of withholding, it depends of financially mature you are.
If you can put aside the "windfall" during the year so it is available when 31 Dec rolls around (not 15 April) then the less tax withheld the better.

If you hold back for a nest egg; you need to determine how much should be sent to Uncle on 31 Dec to avoid potential problems.

 

[woowoo]

Originally posted by: EagleKeeper

Originally posted by: woowoo

Originally posted by: EagleKeeper

Originally posted by: woowoo
In my state public school kindergarden is free for the half day class, you have to pay extra for full day.
Is there a way to recover the extra? ($1400).
Were would that go on federal tax form?

See the post by AnyMal just above.

This was not for after school care.
If was for kindergarden

It is still classified as child care in Uncle's eyes

Just for the record.
The feds will not allow you to take kindergarden fees off as dependent care
See IRS form 2441 second page

 

[DrPizza]

Question regarding mileage -

Wife travels to the house we rent out, to pick up the rent check. By arrangement, our renter pays every other week (rather than 1x / month) - makes it an easier budget.

We generally don't travel 20 miles just to pick up the check; we usually run other errands (grocery store, etc.) when we make those trips. However, the trips are timed for when the rent is due. Is the normal round-trip (our house to rental and back) deductible? - what documentation would be necessary? And, if my wife worked on some of those days, (and work was close to the rental house), would it not be deductible on those days?

Thanks for any help.

 

[ironk]

I took a online class for around $1000 at Umass lowell. Then my employer reimbursed me half of that amount. What do i report in my taxes? $1000 or $500? I am pretty sure it would be $500, but just wanna make sure.

Thx.

 

[EagleKeeper]

Originally posted by: ironk
I took a online class for around $1000 at Umass lowell. Then my employer reimbursed me half of that amount. What do i report in my taxes? $1000 or $500? I am pretty sure it would be $500, but just wanna make sure.

Thx.

$500

FYI: Lowell Tech Alumni

 

[EagleKeeper]

Originally posted by: DrPizza
Question regarding mileage -

Wife travels to the house we rent out, to pick up the rent check. By arrangement, our renter pays every other week (rather than 1x / month) - makes it an easier budget.

We generally don't travel 20 miles just to pick up the check; we usually run other errands (grocery store, etc.) when we make those trips. However, the trips are timed for when the rent is due. Is the normal round-trip (our house to rental and back) deductible? - what documentation would be necessary? And, if my wife worked on some of those days, (and work was close to the rental house), would it not be deductible on those days?

Thanks for any help.

If the primary purpose of the trip to the retnal is to pick up the check; then that mileage in total is dedcutible.

Documentation would just be your "travel log".

Technically only the mileage to/from your wife's work to the rental could be deductible on those days.

 

[EagleKeeper]

Originally posted by: woowoo

Originally posted by: EagleKeeper

Originally posted by: woowoo

Originally posted by: EagleKeeper

Originally posted by: woowoo
In my state public school kindergarden is free for the half day class, you have to pay extra for full day.
Is there a way to recover the extra? ($1400).
Were would that go on federal tax form?

See the post by AnyMal just above.

This was not for after school care.
If was for kindergarden

It is still classified as child care in Uncle's eyes

Just for the record.
The feds will not allow you to take kindergarden fees off as dependent care
See IRS form 2441 second page

Instructions for Form 2441

But do not include the cost of schooling for a child in kindergarten or above

I becomes a matter of seperating educational expense vs child care.

If the kindergarten is acting as a childcare for the half day then you should be able to deduct it.

If it is being used for educational purposes, then no.

 

[blues008]

I've spent a small fortune on applying to graduate school:

applications, tests, score reports, travel, clothing, etc.

Are any of these expenses deductable?

 

[EagleKeeper]

Originally posted by: blues008
I've spent a small fortune on applying to graduate school:

applications, tests, score reports, travel, clothing, etc.

Are any of these expenses deductable?

Only those that will fall under the Form 2106 category and/or Mis expenses. Both require use of the Schedule A.

 

[sonoma1993]

Well i did part of my taxes so far. According to turbotax.com website, from federal i'll get back around $700 and state around $100. I cant file them yet, I need my w2 from my current job. i just put in the info from my last pay stub for 2005, just to see If i was going to pay in, or get money back.

 

[ironk]

$500 FYI: Lowell Tech Alumni

Thx, Eagle.

 

[daniel49]

Is this statement true for filing my 2005 federal tax return?
(I am the parent ,child lived with me over 6 months in 2005. And is 18 years of age.)

* There is only one exemption credit for each person.
* If you are a dependent, your exemption credit belongs to your parent(s) or guardian(s). They can claim you as a dependent on their tax return.
* Because they can claim you as a dependent on their tax return, you cannot claim your own exemption credit, even if they choose not to.

So in essence even if I chose not to claim him, because he lived with me over 6 months, he could stll only get the standard $5000.00 deduction allowed on 1040EZ and not the additional $3200.00 exemption? Regardless of what I do on my taxes?

thats the way I read it am I right?

 

[EagleKeeper]

Technically - Yes