3rd Annual AT Tax Time Thread

[EagleKeeper]

You can not double bill.

However, Items on the Form 2106/Schedule A do not affect the SS tax.
Therefore anything that is on the 2106 that could go on the Schedule C is costing you 15%.

How did you find out about the second job? Did you have to go there in person?
Think outside the box on things that you can not use for the primary job.

 

[CPA]

Originally posted by: Pho King
Question: I recieved an 83(b) election from my company back in December 2005. A copy was sent to the IRS, but it also states to attach a copy to my 2005 Federal and State returns - I don't see where I put this information in my taxes - do I just attach the sheet?

An 83(b) is a result of a Restricted Stock Award.

Couple of questions:

Do you recall making a Special Tax 83(b) election at any time?

Have the awards vested?

 

[RMSistight]

Originally posted by: EagleKeeper

Originally posted by: RMSistight
I know this is a little early. But I need to plan ahead for next year.

I recently got hired as an independent contractor for a winery doing IS helpdesk stuff. I got my first paycheck and my boss told me that I should store away about 25-30% of every paycheck into a separate checking account for tax purposes. I work three jobs and two of them I'm an employee so taxes are taken care of for me.

My question is: How do I determine how much tax I will have to pay when tax time rolls around 2007? I've already finished filing my taxes for this year. What about stuff like FICA, Medicare, state taxes and stuff....like taxes employers normally take out if I was an employee?

Just to clarify, when I signed up for the job, they specifically stated I was an indepedent contractor and would not handle any of the taxes. Thanks guys for your help.

When tax time rolls aroung, you will fill out a Schedule C for the 1099 income.
After figuring out the expenses, the net will become taxable for SS, etc.
There will be a formula that is used to determine the proper taxes.

Most Tax S/W will hande this situation for you in terms of figuring out the tax bite.

It is best to take 25% of the 1099 type income, stick it into a seperate account and sent it to Uncle every quarter.

That will then get accounted for against the total tax bill.

How do I go about sending my taxes to Uncle Sam quarterly?

 

[EagleKeeper]

US Mail

 

[Muse]

Originally posted by: CPA

Originally posted by: brtspears2
I bought a home in November. I'm currently renting out a room in my home. How do I count this income? What kind of depreciation deductions can I take for renting this room out?

Also, if I paid a corrected property tax bill which is due Jan 2006, but paid it this month, could I deduct the payment?

you itemize the taxes paid in the year they are paid, not due. Individuals are deemed cash basis taxpayers, so it's generally (mortgage interest and IRAs are treated differently) taken in the year paid.

Rental Income and expenses - Schedule C. Homes don't generally depreciate, the appreciate. But you can take interest, taxes, maintenance as deductions.

I own my home, but I don't see any place in my 1040 return where I can deduct for maintenance costs. I had my roof completely replaced in 2005. Is that deduction only possible if I have income from the house - e.g. if like the quoted poster, I'm renting a room, etc.? Thanks.

 

[EagleKeeper]

Originally posted by: Muse

Originally posted by: CPA

Originally posted by: brtspears2
I bought a home in November. I'm currently renting out a room in my home. How do I count this income? What kind of depreciation deductions can I take for renting this room out?

Also, if I paid a corrected property tax bill which is due Jan 2006, but paid it this month, could I deduct the payment?

you itemize the taxes paid in the year they are paid, not due. Individuals are deemed cash basis taxpayers, so it's generally (mortgage interest and IRAs are treated differently) taken in the year paid.

Rental Income and expenses - Schedule C. Homes don't generally depreciate, the appreciate. But you can take interest, taxes, maintenance as deductions.

I own my home, but I don't see any place in my 1040 return where I can deduct for maintenance costs. I had my roof completely replaced in 2005. Is that deduction only possible if I have income from the house - e.g. if like the quoted poster, I'm renting a room, etc.? Thanks.

Maintenance/improvements on your primary residence are not deductible.

If part of a house is rented, then a proportion of the expenses that are related to the rental area can be deducted using the Schedule E.

 

[bamacre]

I am filing a 1040 and a Schedule C (worked for the man until May, owned home business rest of the year).

In October, I moved into a 2-bedroom apt, one room is specifically for inventory. Because I am renting, do I need to file an 8829? So much of 8829 seems to be for home owners. Now, I know I can't deduct anything for a 1-bedroom from May until end of Sept, but I'd like to deduct the part of my rent for my 2-bedroom I used for business from Oct til year end. Can I do this on the Sched C, or do I need to do the 8829?

 

[EagleKeeper]

Originally posted by: bamacre
I am filing a 1040 and a Schedule C (worked for the man until May, owned home business rest of the year).

In October, I moved into a 2-bedroom apt, one room is specifically for inventory. Because I am renting, do I need to file an 8829? So much of 8829 seems to be for home owners. Now, I know I can't deduct anything for a 1-bedroom from May until end of Sept, but I'd like to deduct the part of my rent for my 2-bedroom I used for business from Oct til year end. Can I do this on the Sched C, or do I need to do the 8829?

I would recommend that you just use the Schedule C.

Use of the 8829 can easily raise a red flag to Uncle. It is intended for people that own their own home.

 

[bamacre]

Originally posted by: EagleKeeper

Originally posted by: bamacre
I am filing a 1040 and a Schedule C (worked for the man until May, owned home business rest of the year).

In October, I moved into a 2-bedroom apt, one room is specifically for inventory. Because I am renting, do I need to file an 8829? So much of 8829 seems to be for home owners. Now, I know I can't deduct anything for a 1-bedroom from May until end of Sept, but I'd like to deduct the part of my rent for my 2-bedroom I used for business from Oct til year end. Can I do this on the Sched C, or do I need to do the 8829?

I would recommend that you just use the Schedule C.

Use of the 8829 can easily raise a red flag to Uncle. It is intended for people that own their own home.

Sweet. Thanks, a lot. That saves me a LOT of trouble, and I do appreciate your time.

 

[bamacre]

One more question.

Am I missing something, or am I getting raped for being elf employed? Filing a Sched SE is going to almost double the amount I owe the IRS. I had >40K income from self employment. Please tell me I am missing something and not getting raped.

 

[EagleKeeper]

Originally posted by: bamacre
One more question.

Am I missing something, or am I getting raped for being elf employed? Filing a Sched SE is going to almost double the amount I owe the IRS. I had >40K income from self employment. Please tell me I am missing something and not getting raped.

You have the potential of removing the shaft if you utilize the benifts of the Schedule C to deduct all sorts of related costs.

First of all realize that you have an extra 7.5% tax that you normally do not see as an employee. That is the only real difference.

Visually, it may seem worse, because you may not have put the anticipated taxes aside for when you need them.

Depending on the type of work you do, one can easily drop half the income off as expense related.

 

[bamacre]

Originally posted by: EagleKeeper

Originally posted by: bamacre
One more question.

Am I missing something, or am I getting raped for being elf employed? Filing a Sched SE is going to almost double the amount I owe the IRS. I had >40K income from self employment. Please tell me I am missing something and not getting raped.

You have the potential of removing the shaft if you utilize the benifts of the Schedule C to deduct all sorts of related costs.

First of all realize that you have an extra 7.5% tax that you normally do not see as an employee. That is the only real difference.

Visually, it may seem worse, because you may not have put the anticipated taxes aside for when you need them.

Depending on the type of work you do, one can easily drop half the income off as expense related.

Thanks.



I see what you're saying, and I actually have put aside enough cash I thought I needed to send out to Sam, but damn!

I will see what I can do here with the sched C, but I have deducted as much as I possibly could think of.

 

[bamacre]

Sorry, one more question...

Is the 7.5% you spoke of above part of SS and Medicare? I have some $$ taken out shown on my W-2 from when I worked. Yet there is nowhere to deduct this on the 1040 or SE.

Edit: NVM. I realize now I am only paying the SE tax on the money I made while self-employed and thus can't deduct those amounts I paid to SS and Medicare from my employment on my w-2.

 

[Deleted member 4644]

Is it possible to write off mortgage interest on investment properties? I read that you can on a first home and a second home.. but what about a small apartment building? What if that building is a 2nd property? But what if it is a third property? Thanks!

 

[PlatinumGold]

filed my state and federal income taxes. got back my federal return. state wants me to send proof of residence because december of last year (i paid decembers rent state in question as well) i moved to another state.

will utility bills from that former state be sufficient proof of residence?

 

[CPA]

Originally posted by: LordSegan
Is it possible to write off mortgage interest on investment properties? I read that you can on a first home and a second home.. but what about a small apartment building? What if that building is a 2nd property? But what if it is a third property? Thanks!

If it is rented out, then it the interest can reduce your rental income. For any interest in the apartment to be used as a itemized deduction, you must use the house more than 14 days or more than 10% of the number of days it is rented out. If it is used for speculative purposes, then you may be able to deduct it from interest income. But, you must have some amount of interest income to be able to deduct the expense. It is not considered home interest deduction, rather investment deduction. Oh, and it can be any interest income, no matter the source.

 

[CPA]

Originally posted by: PlatinumGold
filed my state and federal income taxes. got back my federal return. state wants me to send proof of residence because december of last year (i paid decembers rent state in question as well) i moved to another state.

will utility bills from that former state be sufficient proof of residence?

yes

 

[masterxfob]

i didn't file a tax return for 2004, but i'm pretty sure that i was due a refund. do i have to file a 2004 return to get the refund? or can i expect to see it on top of my refund for 2005?

also, i settled 3 of my cc debts in 2005 and only received a 1099-c for 1 of them. does that mean that i am in the clear for the other 2 that i did not receive?

 

[masterxfob]

 

[CPA]

Originally posted by: masterxfob
i didn't file a tax return for 2004, but i'm pretty sure that i was due a refund. do i have to file a 2004 return to get the refund? or can i expect to see it on top of my refund for 2005?

also, i settled 3 of my cc debts in 2005 and only received a 1099-c for 1 of them. does that mean that i am in the clear for the other 2 that i did not receive?

You will need to file a 2004 1040 to get your 2004 refund.

I assume when you say settle you mean you paid less than what was owed and the rest was forgiven? If so, you need to report the 1099c, but you still may not have to pay any tax on the forgiven debt. I would call the cc companies for those two you haven't received.

 

[masterxfob]

Originally posted by: CPA

Originally posted by: masterxfob
i didn't file a tax return for 2004, but i'm pretty sure that i was due a refund. do i have to file a 2004 return to get the refund? or can i expect to see it on top of my refund for 2005?

also, i settled 3 of my cc debts in 2005 and only received a 1099-c for 1 of them. does that mean that i am in the clear for the other 2 that i did not receive?

You will need to file a 2004 1040 to get your 2004 refund.

I assume when you say settle you mean you paid less than what was owed and the rest was forgiven? If so, you need to report the 1099c, but you still may not have to pay any tax on the forgiven debt. I would call the cc companies for those two you haven't received.

thanks for the advice

 

[Ramma2]

Sort of tax related, I went to the post office today to ship out an ebay item and it was a mad house. Avoid the post offices until the 18th!

 

[ThePresence]

CPA and EagleKeeper, thank you for doing this every year. ATOT can be a valuable resource because of people like you.

 

[bamacre]

Originally posted by: ThePresence
CPA and EagleKeeper, thank you for doing this every year. ATOT can be a valuable resource because of people like you.

Agreed. :beer:'s for both of you. I seriously appreciate your help.

 

[Slew Foot]

Not necessarily for this year but for next year:

If I make a significant amount of $$$ from online advertising (say AdSense), can I deduct the cost my computer, internet, etc... from my taxes and would I need any special paperwork to do so? THanks.