3rd Annual AT Tax Time Thread

[ViviTheMage]

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
Is it possible to cancel a fedeal tax return? I just did one and noticed I am owed 20$ more then I should be (I did my own paper copy, relooked it times over and notice the site I used screwed up, as well on my State tax return it screwed up (which I did not file yet and decided to file that in paper because I am not spending any money to file that).

Whom can I call to cancel it?!

EDIT : nevermind, once its gone..its gone they said! I also submitted a tax return from one site at 10 pm and I submitted it again on another site at 11 pm (with corrected problems). Which one will go through ? or am I just going to have to wait it out?

Both may get rejected or the first will go through and the second will get rejected; Either way; Uncle will notice that you attempted to do a multiple filing (taboo - potential fraud); and flag your return for closer examination. (ie. preliminary audit).

When ever an error has been detected after filing; you need to use a 1040X to correct the mistake.

Could I just call the IRS and inform them that I did this and to not accept one of them and let the other go through ?

 

[SirChadwick]

I have been using paypal for some time now, but I don't have an online business. I buy movie memorabilia for my own collection and from time to time I will sell a piece I own. Sometimes these items will gross around $1000 each, but most of them go for around $200. I'd say that within the year I've probably sold off 10+ items amounting in over $4000 of income. Now like I've mentioned this is just my personal collection that I'm selling... it's not like I bought to resell for profit. Do I need to report all of this on my tax forms? I've been doing it for about 4 years and have never claimed it, nor have I had issues w/ the IRA. Let me know your experiences with this. All is appreciated. Thanks.

 

[CPA]

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
Is it possible to cancel a fedeal tax return? I just did one and noticed I am owed 20$ more then I should be (I did my own paper copy, relooked it times over and notice the site I used screwed up, as well on my State tax return it screwed up (which I did not file yet and decided to file that in paper because I am not spending any money to file that).

Whom can I call to cancel it?!

EDIT : nevermind, once its gone..its gone they said! I also submitted a tax return from one site at 10 pm and I submitted it again on another site at 11 pm (with corrected problems). Which one will go through ? or am I just going to have to wait it out?

Both may get rejected or the first will go through and the second will get rejected; Either way; Uncle will notice that you attempted to do a multiple filing (taboo - potential fraud); and flag your return for closer examination. (ie. preliminary audit).

When ever an error has been detected after filing; you need to use a 1040X to correct the mistake.

Could I just call the IRS and inform them that I did this and to not accept one of them and let the other go through ?

You can try, but they may not even have your filing in the "system" yet. If you received a reference number you can try. Also they can pull it up by primary SSN and expected refund amount.

 

[CPA]

Originally posted by: SirChadwick
I have been using paypal for some time now, but I don't have an online business. I buy movie memorabilia for my own collection and from time to time I will sell a piece I own. Sometimes these items will gross around $1000 each, but most of them go for around $200. I'd say that within the year I've probably sold off 10+ items amounting in over $4000 of income. Now like I've mentioned this is just my personal collection that I'm selling... it's not like I bought to resell for profit. Do I need to report all of this on my tax forms? I've been doing it for about 4 years and have never claimed it, nor have I had issues w/ the IRA. Let me know your experiences with this. All is appreciated. Thanks.

You are walking a fine line. IRS will look at history and intent. Based on what you stated they could make an argument that because you have done this for four years, you have made a profit each of those years, and you are an "expert" in this type of trade, you are a dealer and need to report the income. Having an online business is neither here nor there. You would report this as Schedule C business income using your SSN as your taxpayer ID.

I think, ethically, any taxpreparer is going to tell you that you should report this income.

I'm not going to get into whether or not the IRS would ever know that you were making income on this all cash business.

 

[CPA]

Originally posted by: Wonderful Pork
question regarding underpayment:

I put too many exemptions on my W-4(?), I'm really and S-1 and put down S-4 (this has been corrected for 2006), so I'm $1700 short on my 2005 taxes. I used TurboTax, and it did not calculate an underpayment fee because in 2004 I only made ~$10k and I paid 100% of the 2004 taxes in 2005 even though I did not pay 90% of my 2005 taxes.

so my question is, did the software figure something wrong? In 2004 I was a full time student and in 2005 I had a full time job, which accounts for the large difference in income and tax. Should I file my taxes now, or can I wait till April 17th? I don't want to accrue additional charges on top of any underpayment penalties due to not paying right away.

thanks!

Generally, as long as you paid at least the 100% of the previous year OR 90% of current year taxes, whichever is smaller, you will be fine.

 

[SirChadwick]

Originally posted by: CPA

Originally posted by: SirChadwick
I have been using paypal for some time now, but I don't have an online business. I buy movie memorabilia for my own collection and from time to time I will sell a piece I own. Sometimes these items will gross around $1000 each, but most of them go for around $200. I'd say that within the year I've probably sold off 10+ items amounting in over $4000 of income. Now like I've mentioned this is just my personal collection that I'm selling... it's not like I bought to resell for profit. Do I need to report all of this on my tax forms? I've been doing it for about 4 years and have never claimed it, nor have I had issues w/ the IRA. Let me know your experiences with this. All is appreciated. Thanks.

You are walking a fine line. IRS will look at history and intent. Based on what you stated they could make an argument that because you have done this for four years, you have made a profit each of those years, and you are an "expert" in this type of trade, you are a dealer and need to report the income. Having an online business is neither here nor there. You would report this as Schedule C business income using your SSN as your taxpayer ID.

I think, ethically, any taxpreparer is going to tell you that you should report this income.

I'm not going to get into whether or not the IRS would ever know that you were making income on this all cash business.

Thanks for the input... but I wouldn't really say I'm an expert in this type of trade. I just sell one mask or prop and then buy another w/ that money. It's not like I'm investing in the money or making a business out of it. It's just a hobby... I don't feel like it is something that should be reported.

 

[ViviTheMage]

Originally posted by: CPA

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
Is it possible to cancel a fedeal tax return? I just did one and noticed I am owed 20$ more then I should be (I did my own paper copy, relooked it times over and notice the site I used screwed up, as well on my State tax return it screwed up (which I did not file yet and decided to file that in paper because I am not spending any money to file that).

Whom can I call to cancel it?!

EDIT : nevermind, once its gone..its gone they said! I also submitted a tax return from one site at 10 pm and I submitted it again on another site at 11 pm (with corrected problems). Which one will go through ? or am I just going to have to wait it out?

Both may get rejected or the first will go through and the second will get rejected; Either way; Uncle will notice that you attempted to do a multiple filing (taboo - potential fraud); and flag your return for closer examination. (ie. preliminary audit).

When ever an error has been detected after filing; you need to use a 1040X to correct the mistake.

Could I just call the IRS and inform them that I did this and to not accept one of them and let the other go through ?

You can try, but they may not even have your filing in the "system" yet. If you received a reference number you can try. Also they can pull it up by primary SSN and expected refund amount.

thanks, ill give it a shot! Could you toss me a number I should sit on hold at for hours? thanks.

 

[CPA]

Originally posted by: SirChadwick

Originally posted by: CPA

Originally posted by: SirChadwick
I have been using paypal for some time now, but I don't have an online business. I buy movie memorabilia for my own collection and from time to time I will sell a piece I own. Sometimes these items will gross around $1000 each, but most of them go for around $200. I'd say that within the year I've probably sold off 10+ items amounting in over $4000 of income. Now like I've mentioned this is just my personal collection that I'm selling... it's not like I bought to resell for profit. Do I need to report all of this on my tax forms? I've been doing it for about 4 years and have never claimed it, nor have I had issues w/ the IRA. Let me know your experiences with this. All is appreciated. Thanks.

You are walking a fine line. IRS will look at history and intent. Based on what you stated they could make an argument that because you have done this for four years, you have made a profit each of those years, and you are an "expert" in this type of trade, you are a dealer and need to report the income. Having an online business is neither here nor there. You would report this as Schedule C business income using your SSN as your taxpayer ID.

I think, ethically, any taxpreparer is going to tell you that you should report this income.

I'm not going to get into whether or not the IRS would ever know that you were making income on this all cash business.

Thanks for the input... but I wouldn't really say I'm an expert in this type of trade. I just sell one mask or prop and then buy another w/ that money. It's not like I'm investing in the money or making a business out of it. It's just a hobby... I don't feel like it is something that should be reported.

I put "expert" in qoutes because your definition may be different than mine, or, more importantly, the IRS. The IRS will use a test to determine whether you are an "expert" or not. Mainly, it will be "Would a normal person know what the market rate is for these items?" If yes, then you would most likely not be considered an "expert", but generally the answer is NO. The rational is that in order for someone to make a profit on an item, they usually have an intimite understanding of the market for that type of item. I'm not going to know that because I don't dabble in buying and selling memorabilia, but you do as evidenced by your trend of buying and selling for a profit (even though you've only done it a few times).

Coin collectors, stamp collectors, card collectors, antique collectors, etc. all fall in this same realm.

By the way, the IRS does not consider something a hobby if you've made profit in it. Generally, hobbies incur losses to the taxpayer.

It's your call.

 

[CPA]

Originally posted by: ViviTheMage

Originally posted by: CPA

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
Is it possible to cancel a fedeal tax return? I just did one and noticed I am owed 20$ more then I should be (I did my own paper copy, relooked it times over and notice the site I used screwed up, as well on my State tax return it screwed up (which I did not file yet and decided to file that in paper because I am not spending any money to file that).

Whom can I call to cancel it?!

EDIT : nevermind, once its gone..its gone they said! I also submitted a tax return from one site at 10 pm and I submitted it again on another site at 11 pm (with corrected problems). Which one will go through ? or am I just going to have to wait it out?

Both may get rejected or the first will go through and the second will get rejected; Either way; Uncle will notice that you attempted to do a multiple filing (taboo - potential fraud); and flag your return for closer examination. (ie. preliminary audit).

When ever an error has been detected after filing; you need to use a 1040X to correct the mistake.

Could I just call the IRS and inform them that I did this and to not accept one of them and let the other go through ?

You can try, but they may not even have your filing in the "system" yet. If you received a reference number you can try. Also they can pull it up by primary SSN and expected refund amount.

thanks, ill give it a shot! Could you toss me a number I should sit on hold at for hours? thanks.

1-800-829-1040

 

[fooshkee]

I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

 

[CPA]

Originally posted by: fooshkee
I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

That is pretty much correct. Room and board is not an exludible education expense. Only tuition, fees, books, etc. are. If you can show that you used some of that money towards books then that may help.

 

[fooshkee]

Originally posted by: CPA

Originally posted by: fooshkee
I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

That is pretty much correct. Room and board is not an exludible education expense. Only tuition, fees, books, etc. are. If you can show that you used some of that money towards books then that may help.

Is there any way my parents can claim this instead of me (aka put it on their return, and me just exclude it?)

 

[CPA]

Originally posted by: fooshkee

Originally posted by: CPA

Originally posted by: fooshkee
I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

That is pretty much correct. Room and board is not an exludible education expense. Only tuition, fees, books, etc. are. If you can show that you used some of that money towards books then that may help.

Is there any way my parents can claim this instead of me (aka put it on their return, and me just exclude it?)

No. It's in your name and if the school reports it to the IRS, which is most likely the case, the IRS would hit both of you hard if it wasn't filed properly.

 

[fooshkee]

Originally posted by: CPA

Originally posted by: fooshkee

Originally posted by: CPA

Originally posted by: fooshkee
I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

That is pretty much correct. Room and board is not an exludible education expense. Only tuition, fees, books, etc. are. If you can show that you used some of that money towards books then that may help.

Is there any way my parents can claim this instead of me (aka put it on their return, and me just exclude it?)

No. It's in your name and if the school reports it to the IRS, which is most likely the case, the IRS would hit both of you hard if it wasn't filed properly.

It seems so backwards to take students on scholarships, it's not like i can use any of my scholarships for anything but school stuff, if i didn't use the scholarships for room and board they'd just go to waste, and there's no way for me to take that money out and spend it - it's only good my school's housing. i'm afraid thats it gonna show up on my fasfa as my income being the $3000 i earned from jobs plus all this scholarship money... and that'll royally screw me. oh america

 

[CPA]

Originally posted by: fooshkee

Originally posted by: CPA

Originally posted by: fooshkee

Originally posted by: CPA

Originally posted by: fooshkee
I'm a full time student (sophomore), and this year my TaxAct was asking about scholarships... now, I receive about $13,000 a year in scholarships, and around $7000 is used for tuition. Do I understand correctly that the $7000 used for tuition is exempt from taxes, but the $6000 that I end up using for room and board... is taxable? And is there any way around this? Because if that $6000 is taxable, I'll end up having to pay like $399 instead of getting $199 back, that hardly seems fair.

That is pretty much correct. Room and board is not an exludible education expense. Only tuition, fees, books, etc. are. If you can show that you used some of that money towards books then that may help.

Is there any way my parents can claim this instead of me (aka put it on their return, and me just exclude it?)

No. It's in your name and if the school reports it to the IRS, which is most likely the case, the IRS would hit both of you hard if it wasn't filed properly.

It seems so backwards to take students on scholarships, it's not like i can use any of my scholarships for anything but school stuff, if i didn't use the scholarships for room and board they'd just go to waste, and there's no way for me to take that money out and spend it - it's only good my school's housing. i'm afraid thats it gonna show up on my fasfa as my income being the $3000 i earned from jobs plus all this scholarship money... and that'll royally screw me. oh america

Well, it's certainly better than having the pay the room and board out of your pocket. But, I understand your point. There's a lot of things f'd up about our tax system.

 

[MikeyIs4Dcats]

refresh my memory as to the threshold for bank account interest that must be claimed?

 

[CPA]

Originally posted by: MikeyIs4Dcats
refresh my memory as to the threshold for bank account interest that must be claimed?

There is only an income threshold that I'm aware of. All interest must be reported as income. If you don't make enough in income you may not have to file, though.

 

[spidey07]

stupid question....

why do I have to pay taxes on dividend reinvestment programs and then taxes on any gains as well?

or better worded ..... "Do I?"

 

[CPA]

Originally posted by: spidey07
stupid question....

why do I have to pay taxes on dividend reinvestment programs and then taxes on any gains as well?

or better worded ..... "Do I?"

Because dividends are taxable income (whether you physically received them or not). Gains are taxable income.

Keep in mind when calculating the gain from your sale, it is sale price - purchase price for any and all purchases, including the dividend purchases. Therefore, you aren't being taxed on the dividend again. And you only pay the tax on the gain when you sell.

Also, if you are in a mutual fund, you will have to pay taxes on any reinvested gains. That's because mutual funds buy and sell all year round. You are taxed on any profit they make on your behalf from the sale. This works similar to a dividend but is reported on schedule D. Your mutual fund company will send you a 1098 with the proper amounts on it.

Here is a good Q&A about it.

 

[mugs]

I got married last year. How do I determine whether it would be better to file jointly or separately?

Edit: Also, my wife had tuition reimbursed. I understand that she she has to pay tax on anything more than $5200 in one year. She got one reimbursement check last year for $2000, and one reimbursement check for the second semester of last year which was $4000. Does the $4000 count for 2005 or 2006?

 

[spidey07]

Thanks CPA.

Seemed like a double tax to me, then again I'm not a CPA.

I'll check out that link.

 

[z0mb13]

Originally posted by: EagleKeeper

Originally posted by: z0mb13
I have question regarding tuition that I paid in 2005

I know that I can use tuition payment to reduce my taxable income (I believe up to 3000 IIRC, I will check again when I actually do my taxes).

My question is: I received scholarships amounting to 20% of my tuition fee. Since this amount is less than the total tuition, I should not report this as income, right?

Correct - however; you should reduce the tuition credit by the same amount.

I am confused.. isnt there a maximum amount for the tuition credit? I paid more than this maximum amount, even after the scholarship. I should be able to do the full amount of tuition credit, right?

lets say I paid $10k. Scholarship was $2k. IIRC maximum tuition credit is $6k. How much can I claim for tuition credit?

 

[EagleKeeper]

Originally posted by: z0mb13

Originally posted by: EagleKeeper

Originally posted by: z0mb13
I have question regarding tuition that I paid in 2005

I know that I can use tuition payment to reduce my taxable income (I believe up to 3000 IIRC, I will check again when I actually do my taxes).

My question is: I received scholarships amounting to 20% of my tuition fee. Since this amount is less than the total tuition, I should not report this as income, right?

Correct - however; you should reduce the tuition credit by the same amount.

I am confused.. isnt there a maximum amount for the tuition credit? I paid more than this maximum amount, even after the scholarship. I should be able to do the full amount of tuition credit, right?

lets say I paid $10k. Scholarship was $2k. IIRC maximum tuition credit is $6k. How much can I claim for tuition credit?

Based on your numbers in the theoretical situation $6K; it is whatever the max the IRS allows. Most tax S/W and/or the instructions for the tutition credit(s) will provide that info.

 

[EagleKeeper]

Originally posted by: mugs
I got married last year. How do I determine whether it would be better to file jointly or separately?

Edit: Also, my wife had tuition reimbursed. I understand that she she has to pay tax on anything more than $5200 in one year. She got one reimbursement check last year for $2000, and one reimbursement check for the second semester of last year which was $4000. Does the $4000 count for 2005 or 2006?

When she received that checks is the year that it should count; not what the school year the checks were for.

Usually it will be better to file jointly; however using tax S/W makes it a 10 minute job to remove one spuse income and play what if.

Trick is to build a master file with the joint income and then create two copies; one for each spouse and in each copy; change the filing status and remove the other spuisal income. If itemizing;you will have to adjust the deductions accodingly by income percentage and/or person that is responsible for the deduction.

 

[Hoober]

My 2 year old son sold stock and had interest income from a brokerage account my wife and I set up for his education. The total income is less than $8,000. Do I need to file a return for him?