3rd Annual AT Tax Time Thread

[EagleKeeper]

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.

There is usually a percentage and/or a value limit that can be forgiven before the company is required to send out a 1099-c

 

[EagleKeeper]

Originally posted by: 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.

As you will have noticed by reading comments within this thread, you should report this income.

Because it is considered to be a business; then you will use the Schedule C.
Any expenses that are directly, indirectly or proportional related to generating such income can be written off.
Expenses that are written off can actually exceed the amount of income and generate a paper tax loss for the income. That loss will then be applied against normal income.

Examples of area to look for a scattered through this thread.

 

[EagleKeeper]

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?

They should suffice.

 

[Pho King]

Originally posted by: CPA

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?

Sorry I forgot I posted in this thread. I found out that I needed to fill out the AMT form for the spread difference. Thanks though.

 

[KoolAidKid]

EDIT: Nevermind, just noticed the ban on state tax-related questions.

 

[Slew Foot]

Originally posted by: EagleKeeper

Originally posted by: 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.

As you will have noticed by reading comments within this thread, you should report this income.

Because it is considered to be a business; then you will use the Schedule C.
Any expenses that are directly, indirectly or proportional related to generating such income can be written off.
Expenses that are written off can actually exceed the amount of income and generate a paper tax loss for the income. That loss will then be applied against normal income.

Examples of area to look for a scattered through this thread.

Thanks, I just started this year so Ill apply it to 2006s taxes. Do I need proof of a business (business license or anything?) or can I just file a simple schedule C?

Not that I would ever dream of doing so but say if I made $1000 but bought $5000 in comptuer equpitment, I would be able to write the entire $5K off, correct? I assume this would make it more likely that I would get audited?

 

[EagleKeeper]

Originally posted by: Slew Foot
Thanks, I just started this year so Ill apply it to 2006s taxes. Do I need proof of a business (business license or anything?) or can I just file a simple schedule C?

Not that I would ever dream of doing so but say if I made $1000 but bought $5000 in comptuer equpitment, I would be able to write the entire $5K off, correct? I assume this would make it more likely that I would get audited?

You do not need a business license.
However, if you file a Schedule C, the IRS may/will share the fact that you did file with the state that you listed as being a resident of. IF that state will then require a business license depends on the type of income and/or amount.

Using your example, if the equipment was purchased for the sake of generating income, then it could be written off entirely.

However, that percentage of 5->1, could certainly raise a flag depending on the classification that you use when declaring the income.

It can be very difficult to justify to the IRS the cost of a top end gaming system for income generated by Web ad referral or design (as an example only).

 

[Slew Foot]

Originally posted by: EagleKeeper

Originally posted by: Slew Foot

However, that percentage of 5->1, could certainly raise a flag depending on the classification that you use when declaring the income.

It can be very difficult to justify to the IRS the cost of a top end gaming system for income generated by Web ad referral or design (as an example only).

That's what I figured. What if my webpage's content was based on comptuter games, would that justify the purchase of a high end system (you know, for "research"?). Alternatively, if my web content was focused on BBQ, could I deduct the cost of a new BBQ?


Thanks!

 

[EagleKeeper]

Originally posted by: Slew Foot

Originally posted by: EagleKeeper

However, that percentage of 5->1, could certainly raise a flag depending on the classification that you use when declaring the income.

It can be very difficult to justify to the IRS the cost of a top end gaming system for income generated by Web ad referral or design (as an example only).

That's what I figured. What if my webpage's content was based on comptuter games, would that justify the purchase of a high end system (you know, for "research"?). Alternatively, if my web content was focused on BBQ, could I deduct the cost of a new BBQ?


Thanks!

Should your business of "reviewing" games show that it is a business vs a hobby, then you would be able to skate. However, if it was viewed as a hobby; based on the impression of intent, then you are SOL.

w/ respect to the BBQ; as long as the BBQ unti is not used for personal reasons, then the deduction could be considered valid. If you were ever audited and the BBQ showed that it was in use after the "review" was written, then you again would be SOL.

Intent of items purchased when being deducted is the key. And the IRS gets first crack at defining intent.

 

[TraumaRN]

Well just now finished my taxes, I'll mail them in next week when I'm actually back home from college
I get $79 back from the city of Detroit
$72 back from the state of Mich(greedy bastards)
and $480 back from Federal. Not bad for a college student

 

[sygyzy]

Does the IRS process payments the day they receive them? That is, when they get your check, do they cash it that same day?

 

[EagleKeeper]

Originally posted by: sygyzy
Does the IRS process payments the day they receive them? That is, when they get your check, do they cash it that same day?

They try to.

Mail comes in, gets sorted according to payment or refund.

Payments have the amount of payment verfied against the line item.
check gets sent forward for processing.
If an error occurred between the amounts, a note is then put on the paper return for when it gets hand processed.

 

[Kev]

i guess this thread is why my other one was insta-locked.

anyway... if i mail my taxes on monday, i'm good, right?

 

[EagleKeeper]

Anytime before midnight on Monday. They must be stamped by the PO though.
You can not jsut drop them in a pickup box at 11PM when the last scheduled pickup is 6PM and have it considered it valid.

Only exception is if you live in a state where Monday is a holiday. Then you have one more day of grace.

 

[FoBoT]

http://www.irs.gov/newsroom/article/0,,id=154808,00.html

Individuals in six eastern states and the District of Columbia will have an extra day, until April 18, 2006, to file returns and pay any taxes due, according to the Internal Revenue Service.

In formal guidance (Notice 2006-23) released today, the IRS said that these taxpayers, served by the Andover, Mass., IRS processing center, will receive an additional day to file and pay because April 17 is Patriot?s Day, a state holiday in Massachusetts. Thus, the April 18 deadline will apply to individuals in Maine, Maryland, Massachusetts, New Hampshire, New York, Vermont and the District of Columbia.

To avoid confusion, all individuals in these states will get the extra day, even though, in some cases, they are instructed to send payments or returns to locations outside Massachusetts. Accordingly, the April 18 deadline will apply to any of the following:

*
2005 federal individual income tax returns, whether filed electronically or on paper;

*
Requests for an automatic six-month tax-filing extension, whether submitted electronically or on Form 4868;

*
Tax year 2005 balance due payments, whether made electronically (direct debit or credit card) or by check;

*
Individual estimated tax payments for the first quarter of 2006, whether made electronically or by check; and

*
Individual refund claims for tax year 2002 where the regular three-year statute of limitations is expiring.

By law, filing and payment deadlines that fall on a Saturday, Sunday or legal holiday are timely satisfied if met on the next business day. Thus, since April 15 is a Saturday this year, taxpayers in most of the country will have until Monday, April 17, to file and pay. But Maine and Massachusetts observe the third Monday of April as Patriot?s Day, which this year falls on April 17.

 

[Linflas]

Back in the late 90's I owned Ford stock. At some point while I owned it they spun off a segment of their financial services operations as a result of which I received a distributiion of new shares of stock for the spun off company. The number was somehow related to the number of shares of Ford I held. That company eventually became part of Citigroup and I sold my shares in 2005. Do I just report the sale as is or is there some trick I can use to calculate the basis to lower the taxable amount?

 

[EagleKeeper]

Originally posted by: Linflas
Back in the late 90's I owned Ford stock. At some point while I owned it they spun off a segment of their financial services operations as a result of which I received a distributiion of new shares of stock for the spun off company. The number was somehow related to the number of shares of Ford I held. That company eventually became part of Citigroup and I sold my shares in 2005. Do I just report the sale as is or is there some trick I can use to calculate the basis to lower the taxable amount?

When the Ford stock was "exchanged" for the new Financial Stock, you should have a new number of stocks shares and a new basis for each of those shares.

The same may also apply when the company became part of Citigroup.
If the financial shares were not converted to Citigroup shares, then you can determine the capital gain as the value change that occurred on the financial shares.

If they were converted; then you will need to determine the basis for the CitiGroup shares that you received for the Financial shares.

If you recieved any sort of extra shares/benifits for either of the two potential transactions; you need to take that into account.

 

[Linflas]

Originally posted by: EagleKeeper

Originally posted by: Linflas
Back in the late 90's I owned Ford stock. At some point while I owned it they spun off a segment of their financial services operations as a result of which I received a distributiion of new shares of stock for the spun off company. The number was somehow related to the number of shares of Ford I held. That company eventually became part of Citigroup and I sold my shares in 2005. Do I just report the sale as is or is there some trick I can use to calculate the basis to lower the taxable amount?

When the Ford stock was "exchanged" for the new Financial Stock, you should have a new number of stocks shares and a new basis for each of those shares.

The same may also apply when the company became part of Citigroup.
If the financial shares were not converted to Citigroup shares, then you can determine the capital gain as the value change that occurred on the financial shares.

If they were converted; then you will need to determine the basis for the CitiGroup shares that you received for the Financial shares.

If you recieved any sort of extra shares/benifits for either of the two potential transactions; you need to take that into account.

Ugh this is a real quagmire now that I have researched it a bit. What happened was that I owned 50 shares of Ford when they did this spin off. Here is what a pdf says about this:

A sample calculation follows:
Assume you own 100 shares of Ford stock with a $35 per share basis for a total basis of $3,500,
and you received 26.209 shares of Associates stock as a result of the distribution. Your total basis
in your Ford shares would be reduced to $2,324.35 (66.41% of $3,500), or $23.24 per share
($2,324.35 divided by 100 shares). Your total basis in your Associates shares would be
$1,175.65 (33.59% of $3,500), or $44.86 per share ($1,175.65 divided by 26.209 shares).

Quoted pdf here.
I ended up with 13 shares of this stuff at the beginning which eventually turned into 19 shares of Citigroup after this buyout. So do I need to find out what Ford closed at on 7 April 1998 and calculate the basis from that?

 

[EagleKeeper]

You need to determine the cost basis of your Ford shares (when you obtain them).
You will need the price point of Ford shares when you exchanged the stock into Associates. This will allow you to determine the gains of Ford.

You also need the priice point of the Associates shares when you exchanged the stock into Citigroup. This will allow you to determine the gains for the Associates.

If the Associates were exchange for Citigroup; then you need the price point of Citigroup when the shares were exchanged and sold.

This will allow you to determine the gains when with CitiGroup.

Sum up the Ford gains, Associates gain and Citigroup gains for the total gains.

Have fun - it is nice to procrastinate.

You may wish to file an extension if you can locate the required information before Monday.

 

[apac]

Can anyone recommend e-file software to file back taxes? I didn't file last years, and I still have the W2, but TurboTax wants me to buy their upgraded software to file back taxes.

 

[EagleKeeper]

Originally posted by: apac
Can anyone recommend e-file software to file back taxes? I didn't file last years, and I still have the W2, but TurboTax wants me to buy their upgraded software to file back taxes.

You can not e-file back taxes.

You can download the PDF files from Uncle and manually fill them out, fi you do not have S/W for the needed year.

Another option would be to try to find someone that may have Tax S/W for the year you are looking for, it you do not wish to do it by hand.

 

[Anonemous]

Doh, I forgot to deduct one of the standard deductions and I already mailed in my form. Should I amend this before or after I receive the refund? I heard they do severe audits for these amended forms is it true?

 

[RecliningPenguin]

Okay, this one is really pushing the limits of "last minute". Hide your eyes from the horror...

Somebody I know, let's just call him RP, did not file a return for Tax Year 2002. He knows that he has "three years from the due date of the return" (according to IRS letter) to file and claim his refund. (He does actually have a refund due since he paid his quarterly estimated taxes for tax year 2002, and these estimated tax payments exceed the tax owed for 2002.)

The question is regarding "three years from the due date of the return". RP filed an extension in 2002, so would the official due date of his 2002 tax return be 4/15/2003, or the extension date 8/15/2003? In other words, does RP need to bust a$$ to mail his 2002 return by the end of the day today (three years after the original due date), or does he have until 8/15/2006 (three years after the extension due date) to let a good CPA review it and submit it -- and kick RP's a$$ for dragging his feet?

You guys absolutely rock for offering up so much of your time and effort towards answering these questions. TIA, big time! :thumbsup:


(Edit)
The following link might shed some light on this question... is this saying that a granted extension in 2002 would allow someone until 8/15/2006 to claim their 2002 tax year refund?
Link: here in paragraphs 8, 9, and 10.

 

[LordSnailz]

Hopefully, there's still someone to help.

I contributed $220 over the maximum allowed into my roth IRA acct. for the 2005 year and my taxes were mailed in on Friday. What's the best course of action to take to correct this? I talked with Fidelity and they said that I should file a 'IRA return of excess contribution request', I'm just wondering what are the tax implications, if there are any.

Also, what penalties are involved? Is it 6% of the excess contribution AND 10% on the earnings?

 

[Canun]

Originally posted by: RecliningPenguin
Okay, this one is really pushing the limits of "last minute". Hide your eyes from the horror...

Somebody I know, let's just call him RP, did not file a return for Tax Year 2002. He knows that he has "three years from the due date of the return" (according to IRS letter) to file and claim his refund. (He does actually have a refund due since he paid his quarterly estimated taxes for tax year 2002, and these estimated tax payments exceed the tax owed for 2002.)

The question is regarding "three years from the due date of the return". RP filed an extension in 2002, so would the official due date of his 2002 tax return be 4/15/2003, or the extension date 8/15/2003? In other words, does RP need to bust a$$ to mail his 2002 return by the end of the day today (three years after the original due date), or does he have until 8/15/2006 (three years after the extension due date) to let a good CPA review it and submit it -- and kick RP's a$$ for dragging his feet?

You guys absolutely rock for offering up so much of your time and effort towards answering these questions. TIA, big time! :thumbsup:


(Edit)
The following link might shed some light on this question... is this saying that a granted extension in 2002 would allow someone until 8/15/2006 to claim their 2002 tax year refund?
Link: here in paragraphs 8, 9, and 10.

From what I can tell, it is due today. The due date of the return is the 15th (17th in this case), it just goes on extension.