3rd Annual AT Tax Time Thread

[Leejai]

I have a quick question. I bought some investment property which closed in 2006 (new property which had to be built). However, all my dealings regarding this investment (travel expenses, etc..) were made in 2005. Can I claim these on my 2005 tax return using my SS# or do I have to obtain a federal tax ID number to do this?

Also, if I travelled to other areas in which I did not purchase a home but the reason for my being there was for investment (just wasn't good). Are these deductable too? I have all docs to prove, etc...but wanted to check before I start plugging those deductions in.

Thanks!

 

[GeneValgene]

Originally posted by: CPA

Originally posted by: GeneValgene
<sigh>

i owed $287 this year on my tax return

that's good. You want to owe. It means you kept more of your money during the year. Unfortunately, the IRS, the media, and retail companies have conditioned many of us that not getting a huge refund is bad.

thanks for the reminder. i wonder what caused me to owe money though...i wonder why my workplace didn't withhold enough

 

[EagleKeeper]

Originally posted by: GeneValgene

Originally posted by: CPA

Originally posted by: GeneValgene
<sigh>

i owed $287 this year on my tax return

that's good. You want to owe. It means you kept more of your money during the year. Unfortunately, the IRS, the media, and retail companies have conditioned many of us that not getting a huge refund is bad.

thanks for the reminder. i wonder what caused me to owe money though...i wonder why my workplace didn't withhold enough

Your workplace withheld what you requested.

You may wish to look at what changed between the past couple of years in terms of all types of income and deductions/credits.

 

[GeneValgene]

Originally posted by: EagleKeeper

Originally posted by: GeneValgene

Originally posted by: CPA

Originally posted by: GeneValgene
<sigh>

i owed $287 this year on my tax return

that's good. You want to owe. It means you kept more of your money during the year. Unfortunately, the IRS, the media, and retail companies have conditioned many of us that not getting a huge refund is bad.

thanks for the reminder. i wonder what caused me to owe money though...i wonder why my workplace didn't withhold enough

Your workplace withheld what you requested.

You may wish to look at what changed between the past couple of years in terms of all types of income and deductions/credits.

hmmm....well, i increased my allowances on my w-4 from 1 to 2. plus i got 5 weeks of vacation paid out to me. and i decreased my 401K contributions from 15% to 10%. my deductions didn't exceed my standard deduction when i tried to itemize.

do you think that could have been it? i went from a refund of $447 last year to owing $287 this year.

assuming that you claim the proper allowances on your w-4, shouldn't theoretically the amount you owe at the end of the year be 0?

 

[edprush]

Originally posted by: EagleKeeper

Originally posted by: edprush
I bought property last year (house and land) as an investment.


Are there any tax advantages/disadvantages for having property as an investment? Is there anything I can write off regarding expenses or repairs?

Please keep in mind that this is NOT a rental property.

Thanks.

Is the property/house completely vacant and just sitting there?

If not being used as a rental, then only the taxes are deductible.
If you could use it as a rental, then much more can be deducted/expensed.

Yes, it's vacant.
So even the heating bills to keep the pipes from freezing aren't deductible?

 

[CPA]

Originally posted by: GeneValgene

Originally posted by: EagleKeeper

Originally posted by: GeneValgene

Originally posted by: CPA

Originally posted by: GeneValgene
<sigh>

i owed $287 this year on my tax return

that's good. You want to owe. It means you kept more of your money during the year. Unfortunately, the IRS, the media, and retail companies have conditioned many of us that not getting a huge refund is bad.

thanks for the reminder. i wonder what caused me to owe money though...i wonder why my workplace didn't withhold enough

Your workplace withheld what you requested.

You may wish to look at what changed between the past couple of years in terms of all types of income and deductions/credits.

hmmm....well, i increased my allowances on my w-4 from 1 to 2. plus i got 5 weeks of vacation paid out to me. and i decreased my 401K contributions from 15% to 10%. my deductions didn't exceed my standard deduction when i tried to itemize.

do you think that could have been it? i went from a refund of $447 last year to owing $287 this year.

assuming that you claim the proper allowances on your w-4, shouldn't theoretically the amount you owe at the end of the year be 0?

W4 is an estimate based on exemptions only. It doesn't factor in 401K, medical withholdings, itemizing, child credits, etc, etc. In my case, it is waaaaaaaaaaayyyyyyyyy off.

 

[CPA]

Originally posted by: Leejai
I have a quick question. I bought some investment property which closed in 2006 (new property which had to be built). However, all my dealings regarding this investment (travel expenses, etc..) were made in 2005. Can I claim these on my 2005 tax return using my SS# or do I have to obtain a federal tax ID number to do this?

Also, if I travelled to other areas in which I did not purchase a home but the reason for my being there was for investment (just wasn't good). Are these deductable too? I have all docs to prove, etc...but wanted to check before I start plugging those deductions in.

Thanks!

My understanding is that you can not deduct the costs of travel until you own an income producing property. The costs associated with finding an investment are not tax deductible. You can only deduct the costs of travel related to collecting rent, manage or maintain (not improve) the property.

 

[CPA]

Originally posted by: edprush

Originally posted by: EagleKeeper

Originally posted by: edprush
I bought property last year (house and land) as an investment.


Are there any tax advantages/disadvantages for having property as an investment? Is there anything I can write off regarding expenses or repairs?

Please keep in mind that this is NOT a rental property.

Thanks.

Is the property/house completely vacant and just sitting there?

If not being used as a rental, then only the taxes are deductible.
If you could use it as a rental, then much more can be deducted/expensed.

Yes, it's vacant.
So even the heating bills to keep the pipes from freezing aren't deductible?

If you do not intend to rent it out, then you can not deduct anything but interest on it. And then, it is part of your itemized deductions, which could be limited in certain circumstances.

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: edprush

Originally posted by: EagleKeeper

Originally posted by: edprush
I bought property last year (house and land) as an investment.


Are there any tax advantages/disadvantages for having property as an investment? Is there anything I can write off regarding expenses or repairs?

Please keep in mind that this is NOT a rental property.

Thanks.

Is the property/house completely vacant and just sitting there?

If not being used as a rental, then only the taxes are deductible.
If you could use it as a rental, then much more can be deducted/expensed.

Yes, it's vacant.
So even the heating bills to keep the pipes from freezing aren't deductible?

If you do not intend to rent it out, then you can not deduct anything but interest on it. And then, it is part of your itemized deductions, which could be limited in certain circumstances.

Therefore, taxwise, it would be best to attempt to classify/use this as a rental until you actually sell it.

 

[edprush]

I had a net loss for a sole proprietorship business in 2005.

How do I determine if my investment was:

• --all at risk
  --partially at risk
  --not applicable?

 

[CPA]

Originally posted by: edprush
I had a net loss for a sole proprietorship business in 2005.

How do I determine if my investment was:

• --all at risk
  --partially at risk
  --not applicable?

It's all at risk. You put your money into it, right? If the business fails, you've lost all of the money/investment you put into it, correct?

The not at risk or partially at risk deals with certain types of grants/loans that you could get, where the money is not "lost" in the business sense. Unless, you had that, then it was at risk.

 

[Ausm]

CPA and/or EagleKeeper I have a couple of questions.

1) I have a Simple IRA through the company I work for but my Boss tells me I can't start an Individual IRA that I fund myself is this true?

2)If not true how much can I contribute to each and can I deduct both of them from my taxes?


Thank you,

Ausm

 

[EagleKeeper]

Originally posted by: Ausm
CPA and/or EagleKeeper I have a couple of questions.

1) I have a Simple IRA through the company I work for but my Boss tells me I can't start an Individual IRA that I fund myself is this true?

2)If not true how much can I contribute to each and can I deduct both of them from my taxes?


Thank you,

Ausm

You are allowed to fund up to the max.
The fundings can be split across mulitple IRAs; however the total can not exceed (for tax purposes) the allowed max as defined by Uncle based on your income and filing status.

Therefore, if you are already contributing the max allowed through work; you can not create a seperate IRA and have it deductible.

You can create a Roth IRA that is not deductible now, but the value when withdrawn is not taxed.

 

[edprush]

I found this odd:

I use part of my home (about 10% of the total square footage) for a small business. When I input the various business-related expenses into an online tax preparation site (taxact.com) it calculated the total expenses but it said that $0 are deductible.

Why would that be?

 

[EagleKeeper]

Without knowing what you are entering it is unwise for us to offer any explanations.

 

[Ausm]

Originally posted by: EagleKeeper

Originally posted by: Ausm
CPA and/or EagleKeeper I have a couple of questions.

1) I have a Simple IRA through the company I work for but my Boss tells me I can't start an Individual IRA that I fund myself is this true?

2)If not true how much can I contribute to each and can I deduct both of them from my taxes?


Thank you,

Ausm

You are allowed to fund up to the max.
The fundings can be split across mulitple IRAs; however the total can not exceed (for tax purposes) the allowed max as defined by Uncle based on your income and filing status.

Therefore, if you are already contributing the max allowed through work; you can not create a seperate IRA and have it deductible.

You can create a KEOGH IRA that is not deductible now, but the value when withdrawn is not taxed.

Ok Eaglekeeper thank you for the explanation!

Ausm

 

[Noirish]

Problem with Traditional IRA contribution.

I contributed and reported the max amount ($3000) in 2004 tax year.
However, I just found out, the brokerage firm coded it as 2005 instead of 2004.

What can I do?

I reported but didn't really contribute last year so do I contribute (already contributed due to the error) and don't report this year?

BTW, who should keep track of all IRA contributions? To be honest, I've already lost track.

 

[EagleKeeper]

Originally posted by: Noirish
Problem with Traditional IRA contribution.

I contributed and reported the max amount ($3000) in 2004 tax year.
However, I just found out, the brokerage firm coded it as 2005 instead of 2004.

What can I do?

I reported but didn't really contribute last year so do I contribute (already contributed due to the error) and don't report this year?

BTW, who should keep track of all IRA contributions? To be honest, I've already lost track.

Do you have any type of documentation showing that the contributions were for 2004 tax year.

If so, then just have that info as reference and get your contributions in for 2005; operating on the assumption that it was the brokerages fault and you can prove it.

If not, then you have filled your 2005 quota.

In the end, you are responsible for keeping track of whatyou put in and what you need to take out.

One can have multiple IRA accounts; therefore it is not the "custodian" of the account responsbility to monitor your behaivor. It is their responsiblity to follow the rules for what ever accounts they are monitoring.

 

[edprush]

Originally posted by: EagleKeeper
Without knowing what you are entering it is unwise for us to offer any explanations.

These are my inputs:

Area used for business: 170 sq feet
Total area of home: 1300 sq feet

Indirect Insurance: $300
Indirect Utility: $3236

Here is taxact.com's output:

The allowable 2005 expense for the business use of your home is $0.

 

[kevinthenerd]

I'm an undergraduate research assistant. My university didn't take out social security as shown in my W2. What's going on?

 

[kevinthenerd]

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.

If you previously filed, I think you're still required to file saying that you didn't earn anything. (If you're outside of the US, there's nothing they can do, but I think it's a good idea to file 0 if you're still a citizen to maintain good standing with the IRS.)

 

[udonoogen]

want to double check ... if i pay for my orthodontics through my FSA, can i still deduct it? i would think not

 

[Muse]

I started at Roth IRA 5-6 years ago. Being over 50 I think I can contribute up to $4500 for 2005. I have another IRA, a rollover of my 401K from a job that terminated in September 2001. I have $2367 in that account and it's registered at my securities investment firm, Ameritrade. I lost a few hundred dollars in the account this year on a stock trade. My Roth IRA is also in an investment account at Ameritrade.

I'm using TurboTax Deluxe 2005 and I get the impression I might be able to convert this IRA rollover account into my Roth IRA account. I haven't yet made my contribution into my Roth IRA for tax year 2005. Is it possible for me to convert the funds from my IRA rollover account into the Roth IRA and then add funds from other sources for a total of my maximum contribution of $4500? What's the story with this? Thanks for any help.

 

[EagleKeeper]

Originally posted by: udonoogen
want to double check ... if i pay for my orthodontics through my FSA, can i still deduct it? i would think not

No - The FSA is setup before taxes.

 

[EagleKeeper]

Originally posted by: Muse
I started at Roth IRA 5-6 years ago. Being over 50 I think I can contribute up to $4500 for 2005. I have another IRA, a rollover of my 401K from a job that terminated in September 2001. I have $2367 in that account and it's registered at my securities investment firm, Ameritrade. I lost a few hundred dollars in the account this year on a stock trade. My Roth IRA is also in an investment account at Ameritrade.

I'm using TurboTax Deluxe 2005 and I get the impression I might be able to convert this IRA rollover account into my Roth IRA account. I haven't yet made my contribution into my Roth IRA for tax year 2005. Is it possible for me to convert the funds from my IRA rollover account into the Roth IRA and then add funds from other sources for a total of my maximum contribution of $4500? What's the story with this? Thanks for any help.

Two different colors of money.

The normal IRA avoided taxes up "front".
The Roth IRA avoids taxes at the "end".

FRONT $$ != END $$

Just like on StarTrek. Never mix matter with anti-matter.