3rd Annual AT Tax Time Thread

[EagleKeeper]

Originally posted by: Doghouse
Childcare expenses. Our child care expense have gone through the roof with a second child. Our childcare expenses are now 20 to 25% of our gross income. Besides the normal child deduction and the pre-tax $5000 max per year/family cafeteria plan are there any other deductions when it becomes this high?

SOL

 

[azoomee]

I currently own a rental property. Is there any LEGAL way to sell it (and sell my current home) and then buy a property with its proceeds to use as my main home?

 

[EagleKeeper]

Only way that I can see would be to locate another home (using an exchange method) that you want; rent it out for a short time and then move in.

You can sell the existing home with no tax liabilities if the profit is less than 250K/500K (single/married)

 

[azoomee]

Originally posted by: EagleKeeper
Only way that I can see would be to locate another home (using an exchange method) that you want; rent it out for a short time and then move in.

You can sell the existing home with no tax liabilities if the profit is less than 250K/500K (single/married)

Thanks Eagle -- By the way, did you used to be an F15 pilot?

 

[dababus]

Hey CPA,

I have a quick question, "What is the subject of the so called "income-tax"?"

Thanks.

 

[EagleKeeper]

Originally posted by: azoomee

Originally posted by: EagleKeeper
Only way that I can see would be to locate another home (using an exchange method) that you want; rent it out for a short time and then move in.

You can sell the existing home with no tax liabilities if the profit is less than 250K/500K (single/married)

Thanks Eagle -- By the way, did you used to be an F15 pilot?

Trained as a weps officer; able to drive an Eagle though.

 

[HomeAppraiser]

I am a self employed, sole proprietor who pays quarterly taxes. Since my income and expenses vary widely from year to year I always either pay too little or too much. Is there an easy way to annualize my quarterly tax payments without the paperwork of having to do my taxes five times a year?

 

[EagleKeeper]

Determine what a proper percentage seems to be for taxes based on the previous year.

Use that percentage when sending in quarterly payments against the quarterly income.

 

[HomeAppraiser]

Originally posted by: EagleKeeper
Determine what a proper percentage seems to be for taxes based on the previous year.

Use that percentage when sending in quarterly payments against the quarterly income.

2004 was a down year for income and a big expense year so by 01/15/2005 we had over paid all of our taxes and skipped the fourth quarter payment to the state & fed. We still had a credit on April 15, 2005 which we applied to our first AND second quarter 2005 payments.

2005 was a good year for income (haven?t figured expenses yet) and we will have paid more than 100% of our 2004 tax liability by 1/15/2006, but will get hit with a huge underpayment PLUS having to come up with the first quarter payment for 2006 all on April 17, 2006!!! Then we have to make the second quarter payment only TWO months later in June 15, 2006.

I hate paying taxes on half my income before I earned it. If receipts are low in May and June how do I annualize so I only pay on what I have collected as of that quarter. Is the Turbo Tax Quarterly Estimator the answer?

One September 15 years ago we had to send most of our bank balance to cover the third quarter payment, because deadbeats we did work for over the summer hadn't paid us yet.

Do I have to figure my income & expenses every three months to annualize? Help.

 

[EagleKeeper]

I usally take 25% of the gross income per quarter and send it in.

Not what is billed, but what is paid by clients.

 

[ViperVin2]

I am still new, young, and stupid to these tax games, but I had a general question. I know a person making about $109k/yr and his yearly taxes rank up to almost $40k. Is that normal? That seems really high to me, having nearly 40% of your income vanish into taxes.

 

[EagleKeeper]

At that income level, figure

27% Federal
7% SS
4-9% State

 

[Generator]

Originally posted by: lein
Hopefully I can make my parents lives a little easier with these questions:

I am a college student and have received a lot of scholarships. It covers almost all of my tution and housing. So far, I think I do not have to pay taxes on the scholarship that paid for the tution, but I do have to pay taxes on the rest (housing, meal plan, etc.). Am I correct?

I live in Texas, but go to school in MO. There is no state tax in TX, but there is state tax in MO. Since my official residence is in TX, am I correct in saying that I do not have to file state returns in MO?

I am 18. Do I have to file my own returns, or can I still be claimed as a dependent under my parents?

Also, any other insight/tips you have for a college student would be greatly appreciated.

Thanks a lot

Yes, you will have to pay taxes on room and board. You can remain a dependent of your parents until the age of 24 as long as you maintain a full-time student status even if you made millions of dollars. If your scholarships go above 3,200 I believe you will have to file. You don't have a personal exemption because you're a dependent, but you should still have a standard deduction of either 5,000 or 800 depending upon if your scholarships are considered earned or unearned income.

I had to answer this one, reminds me of to many tests questions. I would double check the unearned standard deduction because there a little more to it.

 

[HomeAppraiser]

IRS Form 2210 and Schedule AI are difficult to understand. Turbo Tax walks you through filling it out for LAST year, but I need to figure out how to correctly pay as I go. I don't want to do it wrong all year then get hit with a penalty in 2007. Quicken, Turbo Tax Quarterly Estimator, or any programs set up for this. Thanks for enduring my ignorance on the subject

 

[abc]

question. if due to a personal injury outside of work i
was allowed by employer to work from home while healing.

this required a computer that was not bought for work but ended up being so to VPN.

can its cost be written off to any extent and under what terms?/forms?

would things be more difficult for this tax yr, the yr the work from home was done,
if the pc and all related hardware was bought 2 yrs ago.


would it be easier just to buy a computer this yr.


would things like broadband bills, electric bills, be includeable.


how about doc visits, the car service costs to and from, the $30.00 co-pays, deductible?

not out right I think? some 2% Fed thing?

 

[Al Neri]

Originally posted by: Don Rodriguez
Where's the best spot where I can learn how to set up a LLC, SCorp or any other type of corporation? There is only 1 share in the company (myself) with the possibility of adding no more than 4 people in the long run.

 

[lastig21]

I leased a new car this year. Are the taxes paid deductible?

I am required to have a car for my job. I am reimbursed for mileage, but rarely keep track of my mileage. I would guess that I use the car for 50% work/50% personal. Are there any deductions I can take for the lease payments without proof of mileage?

 

[jlbenedict]

Quick question:

I'm the sole provider of my family (wife and myself). My wife did not work this past year, so do I still file a joint return, with the obvious being her income would be $0?
Or is there any other way that would benefit myself best ?

Thanks!

 

[HomeAppraiser]

Originally posted by: jlbenedict
Quick question:

I'm the sole provider of my family (wife and myself). My wife did not work this past year, so do I still file a joint return, with the obvious being her income would be $0?
Or is there any other way that would benefit myself best ?

Thanks!

Turn Java off in your browser to see the article from The Motley Fool.

 

[CPA]

Originally posted by: dababus
Hey CPA,

I have a quick question, "What is the subject of the so called "income-tax"?"

Thanks.

huh?

 

[CPA]

Originally posted by: Trey22

Originally posted by: The_Wildcard
If I want to deduct my donations to various charities this year (with reciepts for proof), will I need to itemize my deductions? Donations would total to about $100-150

Which federal and state (california) form should I use if I wanted to deduct those donations?

Similar question (gave donations, live in CA)... I've given approximately $2400 to church this year, and only have the cancelled checks (no receipts).

Is it an either/or situation when it comes to itemizing deductions vs taking the standard deduction?

Yes.

 

[CPA]

Originally posted by: lastig21
I leased a new car this year. Are the taxes paid deductible?

I am required to have a car for my job. I am reimbursed for mileage, but rarely keep track of my mileage. I would guess that I use the car for 50% work/50% personal. Are there any deductions I can take for the lease payments without proof of mileage?

Generally, no, unless you are self-employed, but....

You can itemize your auto expense on schedule A as part of miscellaneous itemized deductions. there is a 2% floor to meet first, though, and any amount that was reimbursed by your company can not be included as an itemized deduction.

 

[CPA]

Originally posted by: HomeAppraiser
IRS Form 2210 and Schedule AI are difficult to understand. Turbo Tax walks you through filling it out for LAST year, but I need to figure out how to correctly pay as I go. I don't want to do it wrong all year then get hit with a penalty in 2007. Quicken, Turbo Tax Quarterly Estimator, or any programs set up for this. Thanks for enduring my ignorance on the subject

From the Instructions to 2210:

Because Form 2210 is complicated, we strongly encourage you to let us figure the penalty. If you owe it, we will send you a bill. And as long as you file your return by April 15, 2005, we will not charge you interest on the penalty if by the date specified on the
bill.

Even the IRS admits it's tough to figure out. Let them do the work.

 

[jlmadyson]

Hi, my wife and I recieved a check this year from her new company in which we moved to another state for tranporting possesions and tranporting the family. If I'm reading correctly this is not considered taxable income. Can you confirm. Thanks.

 

[CPA]

Originally posted by: jlmadyson
Hi, my wife and I recieved a check this year from her new company in which we moved to another state for tranporting possesions and tranporting the family. If I'm reading correctly this is not considered taxable income. Can you confirm. Thanks.

If it for reimbursement of actual moving expenses then generally no. More technically, if the company includes it on her W2 (good possibility since it is relocation costs), then you would just offset it with an amount for moving expenses (line 26). Any excess is taxable income to you.