3rd Annual AT Tax Time Thread

[EagleKeeper]

Originally posted by: Len12345
Thanks in advance for your help.

Last year I did the taxes for my family using turbo tax and it wasn?t too hard. First the background. My mom passed away late 2005 and I?m not sure about whether I?ll be able to do the taxes for 2005. My brother (22) and I (23) both had joint accounts with my mom some of which was our money listed with our SS# and some of which was her money listed with her SS# as well as individual accounts. I have the 1099s for these accounts and they credit all of the interest income as if she lived the whole year, basically the same way they came for the year before. I also have bank statements showing interest earned around her date of death.

The main problem, as I see it, is that I?m not sure how I have to account for the interest income earned after my mothers death, because I?ve heard conflicting information.

Based on the above information hopefully the following make sense.

1) I can file a joint return for my parents for 2005 my dad for the whole year, and my mom through the day she died.

2) My brother?s and I can file our returns as normal, but will need to add any interest earned, after her death, from joint or POD accounts with my mom respectively

3) If 1 and 2 are correct how do I show that with just a single 1099.

4) A final return will have to be filed that will include income earned after her death that will include things like interest earned on individual accounts that weren?t included above. Is this part something I?m better off having an accountant do.


I?m sure there are some things I?m forgetting but this is what I want to try to figure out so I can get started. If you have any questions or need more information let me know. Thanks again.

If your parents were together in 2005; then your father should file a joint return for 2005.
On the return he can indicate that your mother passed away; there should be a checkbox to indicate such a situation.
Operating on that assumption; interest that was earned by your mother's accounts will be included in the joint return.
You can choose to take some of the interest on your taxes; an explaination will have to accompy the return explaining the diference in interest being reported and the relevant SS#s. That will preclude e-filing.

If your parents were not together; then you mother's estate wil have to file with respect to the interest - there is no way you father can file a joint return.

All interest reported on 1099s get summed together on the 1040 forms.

A final tax form may need to be filed regarding your mothers estate; that is the responsibility of the executor to determine if and how.

 

[CPA]

Originally posted by: Len12345
Thanks in advance for your help.

Last year I did the taxes for my family using turbo tax and it wasn?t too hard. First the background. My mom passed away late 2005 and I?m not sure about whether I?ll be able to do the taxes for 2005. My brother (22) and I (23) both had joint accounts with my mom some of which was our money listed with our SS# and some of which was her money listed with her SS# as well as individual accounts. I have the 1099s for these accounts and they credit all of the interest income as if she lived the whole year, basically the same way they came for the year before. I also have bank statements showing interest earned around her date of death.

The main problem, as I see it, is that I?m not sure how I have to account for the interest income earned after my mothers death, because I?ve heard conflicting information.

Based on the above information hopefully the following make sense.

1) I can file a joint return for my parents for 2005 my dad for the whole year, and my mom through the day she died.

2) My brother?s and I can file our returns as normal, but will need to add any interest earned, after her death, from joint or POD accounts with my mom respectively

3) If 1 and 2 are correct how do I show that with just a single 1099.

4) A final return will have to be filed that will include income earned after her death that will include things like interest earned on individual accounts that weren?t included above. Is this part something I?m better off having an accountant do.


I?m sure there are some things I?m forgetting but this is what I want to try to figure out so I can get started. If you have any questions or need more information let me know. Thanks again.

You have some complicated issues, so it may be best to contact a local, reputable tax accountant. For your questions, assuming your dad is still alive:

1) Your dad will file joint return for the whole year. There is no seperate return for your mom, if that was what you were implying. In fact, your dad can file as a qualifying widow next year if he is can claim either you or your brother as a dependent (doesn't sound like it though from your facts)

2) Generally, Yes. Only file the interest tied directly to your name.

3) You can send a statement with your return along with copies of the 1099 showing the ownership of the account.

4) Most likely, yes.

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: aphex
Sister in law has been living down in Costa Rica for the past 2 years... This is the first year that she did not earn any money in the US.

Is she still required to file taxes as she has filed for 10 or so years in the US? She is not giving up her citizenship and still returns every few months or so.

No earnings = no filing as far as I'm concerned.

As long as no other income came from a 1099 situation (dividends/interest)

 

[aphex]

Originally posted by: CPA

Originally posted by: aphex
Sister in law has been living down in Costa Rica for the past 2 years... This is the first year that she did not earn any money in the US.

Is she still required to file taxes as she has filed for 10 or so years in the US? She is not giving up her citizenship and still returns every few months or so.

No earnings = no filing as far as I'm concerned.

Cool, thanks for the info.

 

[Rallispec]

sorry if this is considered off topic - but someone here has got to have an answer--

i'm getting ready to purchase a house - my mortgage will be roughly 2k a month (100% interest) - so, 24k a year.

say I make 50k a year - I can deduct that 24k, so my taxible income the becomes 26k, correct?

now, here is where i'm at now - thats 24k in deductible interest each year. assuming 25% tax bracket, that works out to a 6k tax credit. (24,000 x .025 = 6000) , divide by 12 and you get 500 dollars a month.


SO = i need to re-adjust my W-4 form to take into account the $500 that I wont be giving the IRS each month -- but i have no idea how many allowances that actually equals. I have used thier allowance worksheet to get an idea, but have no idea if i'm right or not.

is thier any way to actually put a dollar figure on each allowance to get an idea of what my monthly withholdings will be? Should somebody in our payroll deptartment be able to answer this question? (ie: if i claim 5 additional allowances, that will be 500 less in taxes i pay each month)

thanks,




oh yeah, does getting married make my situation better or worse - as i'm getting married in july - and increase our household income by about 50%



thanks again!

 

[Meractik]

I plan on doing my taxes with Turbo Tax and I need to claim the Hope and Lifetime learning credit because for the past 2 years my dad has already claimed the Hope credit and I was told we couldn't claim them both in the same year. My only question is how exactly should this form be filled out and is there anything that effects my federal/state tax filing when claiming this credit? I have the PDF document of the form for the Lifetime learning credit but im not sure how to append it to my Turbo Tax filing or have Turbo Tax know that I need to or want to fill out this form....? any information you could provide is greatly appreciated.

 

[CPA]

Originally posted by: Rallispec
sorry if this is considered off topic - but someone here has got to have an answer--

i'm getting ready to purchase a house - my mortgage will be roughly 2k a month (100% interest) - so, 24k a year.

say I make 50k a year - I can deduct that 24k, so my taxible income the becomes 26k, correct?

now, here is where i'm at now - thats 24k in deductible interest each year. assuming 25% tax bracket, that works out to a 6k tax credit. (24,000 x .025 = 6000) , divide by 12 and you get 500 dollars a month.


SO = i need to re-adjust my W-4 form to take into account the $500 that I wont be giving the IRS each month -- but i have no idea how many allowances that actually equals. I have used thier allowance worksheet to get an idea, but have no idea if i'm right or not.

is thier any way to actually put a dollar figure on each allowance to get an idea of what my monthly withholdings will be? Should somebody in our payroll deptartment be able to answer this question? (ie: if i claim 5 additional allowances, that will be 500 less in taxes i pay each month)

thanks,




oh yeah, does getting married make my situation better or worse - as i'm getting married in july - and increase our household income by about 50%



thanks again!

Scroll down to page 38

 

[CPA]

Originally posted by: Meractik
I plan on doing my taxes with Turbo Tax and I need to claim the Hope and Lifetime learning credit because for the past 2 years my dad has already claimed the Hope credit and I was told we couldn't claim them both in the same year. My only question is how exactly should this form be filled out and is there anything that effects my federal/state tax filing when claiming this credit? I have the PDF document of the form for the Lifetime learning credit but im not sure how to append it to my Turbo Tax filing or have Turbo Tax know that I need to or want to fill out this form....? any information you could provide is greatly appreciated.

I'm not sure what form you are speaking of. TurboTax should ask you whether or not you want have any educational expenses that are eligible for either the Hope or LLC. You shouldn't need to append or send anything with it.

 

[Rallispec]

Originally posted by: CPA

Scroll down to page 38

thanks!


so, is there anything wrong with claiming 10 allowances? (according to that it looks like it's the maximum) --- and even at 10, I'd still be getting a refund at the end of the year... (assuming i'm doing my math correct...

 

[QueHuong]

CPA,

My sister gets both grants and a scholarship for college. She got an email saying she wouldn't be getting a 1098T because the grants and scholarship does not qualify her to receive tax credits. Does this mean the grants and scholarships don't have to be reported to the IRS? She doesn't have a job for 2005, so...so far, she's not filing a tax return because we've been going on the assumption that scholarships and grants do not need to be reported. My parents are claiming her as a dependent.

1) Does she need to have a tax return done when her only income are grants (SEOG, etc.) and scholarships?
2) Do these grants/scholarships need to be reported to the IRS?

Thanks in advance for your help.

 

[CPA]

Originally posted by: Rallispec

Originally posted by: CPA

Scroll down to page 38

thanks!


so, is there anything wrong with claiming 10 allowances? (according to that it looks like it's the maximum) --- and even at 10, I'd still be getting a refund at the end of the year... (assuming i'm doing my math correct...

Nope nothing wrong with it in your scenario.

 

[CPA]

Originally posted by: QueHuong
CPA,

My sister gets both grants and a scholarship for college. She got an email saying she wouldn't be getting a 1098T because the grants and scholarship does not qualify her to receive tax credits. Does this mean the grants and scholarships don't have to be reported to the IRS? She doesn't have a job for 2005, so...so far, she's not filing a tax return because we've been going on the assumption that scholarships and grants do not need to be reported. My parents are claiming her as a dependent.

1) Does she need to have a tax return done when her only income are grants (SEOG, etc.) and scholarships?
2) Do these grants/scholarships need to be reported to the IRS?

Thanks in advance for your help.

As long as the grants/scholarships were used for eligible education expenses then they don't need to be reported. Eligible expenses are tuition, books, fees, equipment required by school. Non-eligible expenses are room/board, travel, research, equipment not required by school. If she used her grant or scholarship for any non-eligible expenses then that portion will need to be reported as income.

A 1098T will not be issued if all qualifying expenses were paid by the grant/scholarships. It is only issued if you paid for the qualifying expenses yourself. It has nothing to do with whether you have to report a grant or scholarship to the IRS. It is used for taxfilers who want to claim the Hope Credit or Lifetime Learning Credit.

 

[MuffD]

Hi
I am using Turbo Tax Premier to do my taxes this year. Everything looks good so far minus the fact that I owe some money. I am going to end up paying capital gains because we sold a house last year that we only lived in for about 9 months. Is there a way to postpone the payment of the capital gains payment? Maybe installments or something?

TIA

 

[CPA]

Originally posted by: MuffD
Hi
I am using Turbo Tax Premier to do my taxes this year. Everything looks good so far minus the fact that I owe some money. I am going to end up paying capital gains because we sold a house last year that we only lived in for about 9 months. Is there a way to postpone the payment of the capital gains payment? Maybe installments or something?

TIA

Make sure you add any improvement costs. Remember gain is calculated by selling price - basis; not selling price - original cost. Basis is original price + improvement costs +/- other items. Also, your selling price will be reduce by any commissions, ad fees, legal fees and points/loan charges you paid. So the over all formula is:

(selling price - commissions - ad fees - legal fees - seller paid points/loan charges) - (basis + improvements + special assessments - depreciation recaptions (if home used in business))

Also, you may be able to claim a reduced exclusion if you had to sell the home because of employment or health or any unforeseen circumstance.

As far as paying in installments, I believe there is a process that you can do that. Your best bet is to contact a local CPA or your local IRS office.

 

[Gatos]

I am using turbo tax and I currently live in the state of WI, my tuition cost 12,000 US, so I got a lifetime learning credit, the question I have for you is when I do my state taxes, turbo tax just switches everything over to my state taxes, do you know if I can put my tuition down again when they ask for other deductions when tuition expesnes are included in deductions, or should I just leave it blank?

 

[EagleKeeper]

We do not attempt to do the state.

 

[fbrdphreak]

Question: My gf is 20 years old. She bought a condo last year (with her Dad co-signing) and is a full-time student in college. She's got about $6500 in wages from last year. Logged onto TurboTax, it pulled up her info from last year and I put in her only W-2. I then put in Mortgage interest paid ($2967) and points paid ($429); this did not raise her refund from like ~$250. I put in her college expenses and it went up to $402, same as the amt of federal taxes paid. Just wanted to make sure that was correct, and wondering why her Mortgage didn't give her anymore back on the refund. Thanks!

 

[CPA]

Originally posted by: fbrdphreak
Question: My gf is 20 years old. She bought a condo last year (with her Dad co-signing) and is a full-time student in college. She's got about $6500 in wages from last year. Logged onto TurboTax, it pulled up her info from last year and I put in her only W-2. I then put in Mortgage interest paid ($2967) and points paid ($429); this did not raise her refund from like ~$250. I put in her college expenses and it went up to $402, same as the amt of federal taxes paid. Just wanted to make sure that was correct, and wondering why her Mortgage didn't give her anymore back on the refund. Thanks!

Because the Standard deduction for Single is $5000. TurboTax is going to take either the Standard Deduction or the Itemized Deductions, whichever is greater.

I'm not sure which way you put in your educational costs, but the increased refund could have occurred in two different scenarios. If you used the Hope Credit or Lifetime Learning Credit, then it would have increased becuase the credit would reduce your income tax liability. Or you included the costs as job related itemized expenses (probably didn't) which increased your itemized deductions to above your Standard Deduction.

 

[fbrdphreak]

Originally posted by: CPA

Originally posted by: fbrdphreak
Question: My gf is 20 years old. She bought a condo last year (with her Dad co-signing) and is a full-time student in college. She's got about $6500 in wages from last year. Logged onto TurboTax, it pulled up her info from last year and I put in her only W-2. I then put in Mortgage interest paid ($2967) and points paid ($429); this did not raise her refund from like ~$250. I put in her college expenses and it went up to $402, same as the amt of federal taxes paid. Just wanted to make sure that was correct, and wondering why her Mortgage didn't give her anymore back on the refund. Thanks!

Because the Standard deduction for Single is $5000. TurboTax is going to take either the Standard Deduction or the Itemized Deductions, whichever is greater.

I'm not sure which way you put in your educational costs, but the increased refund could have occurred in two different scenarios. If you used the Hope Credit or Lifetime Learning Credit, then it would have increased becuase the credit would reduce your income tax liability. Or you included the costs as job related itemized expenses (probably didn't) which increased your itemized deductions to above your Standard Deduction.

I put the college expenses in as just the standard Tuition and Fees deduction.

The mortgage interest was $3397 & her education expenses were $5072. Even removing the mortgage interest and lowering her education expenses for $4672, her refund is still $402.

Is this because she cannot get more than she paid in taxes back? (Which was $402) Does it have to anything with her amt of income? i.e. If she made more (and was obviously taxed more), she could get more back? Is there like a cutoff level where she could get more back?

Thanks

 

[EagleKeeper]

Originally posted by: fbrdphreak

Originally posted by: CPA

Originally posted by: fbrdphreak
Question: My gf is 20 years old. She bought a condo last year (with her Dad co-signing) and is a full-time student in college. She's got about $6500 in wages from last year. Logged onto TurboTax, it pulled up her info from last year and I put in her only W-2. I then put in Mortgage interest paid ($2967) and points paid ($429); this did not raise her refund from like ~$250. I put in her college expenses and it went up to $402, same as the amt of federal taxes paid. Just wanted to make sure that was correct, and wondering why her Mortgage didn't give her anymore back on the refund. Thanks!

Because the Standard deduction for Single is $5000. TurboTax is going to take either the Standard Deduction or the Itemized Deductions, whichever is greater.

I'm not sure which way you put in your educational costs, but the increased refund could have occurred in two different scenarios. If you used the Hope Credit or Lifetime Learning Credit, then it would have increased becuase the credit would reduce your income tax liability. Or you included the costs as job related itemized expenses (probably didn't) which increased your itemized deductions to above your Standard Deduction.

I put the college expenses in as just the standard Tuition and Fees deduction.

The mortgage interest was $3397 & her education expenses were $5072. Even removing the mortgage interest and lowering her education expenses for $4672, her refund is still $402.

Is this because she cannot get more than she paid in taxes back? (Which was $402) Does it have to anything with her amt of income? i.e. If she made more (and was obviously taxed more), she could get more back? Is there like a cutoff level where she could get more back?

Thanks

The answer is in bold.

With the exception of a few specific credits targeted toward children & low income; one can not get back much more than one puts in

 

[fbrdphreak]

Makes sense to me, just wanted to confirm. Thanks for all the help guys

EDIT Clarification question: but when I put her W2 in and then JUST her ~$3300 mortgage interest, there was no change in her refund. Why does putting in the education credit make that difference?

 

[EagleKeeper]

Originally posted by: fbrdphreak
Makes sense to me, just wanted to confirm. Thanks for all the help guys

EDIT Clarification question: but when I put her W2 in and then JUST her ~$3300 mortgage interest, there was no change in her refund. Why does putting in the education credit make that difference?

The standard deduction goes against the income.

The educational credits go against the tax owed.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: fbrdphreak
Makes sense to me, just wanted to confirm. Thanks for all the help guys

EDIT Clarification question: but when I put her W2 in and then JUST her ~$3300 mortgage interest, there was no change in her refund. Why does putting in the education credit make that difference?

The standard deduction goes against the income.

The educational credits go against the tax owed.

as my first reply stated

 

[fbrdphreak]

Thanks guys

 

[Squisher]

Dearest CPAs:

I have tax question, yet not really an income tax filing question, but I thought I'd ask it in this thread rather than starting a new one.


My wife is a co-owner (with rights of survivorship) along with my mother-in-law of a house (maybe $300K). She would like to be taken off the deed and have her brother installed as co-owner.

I didn't have a problem with it yet the thought occurred to me that this could be considered as a gift and we my be responsible for gift taxes as such.

Am I off base here?