3rd Annual AT Tax Time Thread

[gluck]

Couple of questions:

I have an S-corp with just me as an employee. I have reimbursed my self for gas when I used my car for business use and once for education.
1. I did not include these reimbursements on the payroll considering it tax exempt. Is that the right way?
2. For the education I reimbursements I reimbursed $6000 where as the limit is $5250.
Since I didn't include this in payroll, I was thinking of adding the amoumt over the limit $750 in the wages of the W2. Should I have added the $750 in the payroll and deducted tax on it?
I am filling the 940 and annual reconciliation forms and was wondering what to include as total payments. The amount inclusive of $750 or the amount without it.

Thanks alot!

 

[Dulanic]

Originally posted by: EagleKeeper

Originally posted by: Dulanic
Question: I had a Health Care Spending Account, it was only for $500 this year, does this get entered on my taxes and should I receive a 1099-SA from my spending account to enter on my taxes? Unfortunetely my Health Care Spending Account is out sourced and they have no clue at all, they just kept saying No No, no such form, I can send you a claim form that what you need?

The HCA is before taxes and will show up appropriately on the W2.
You should not need to worry about additional paperwork regarding it.

Hmmm when I was doing TaxCut it asked me specifically if I had a HCA, and when I said yes it asked me to enter the info from my 1099-SA, thats what threw me off.

 

[CPA]

Originally posted by: gluck
Couple of questions:

I have an S-corp with just me as an employee. I have reimbursed my self for gas when I used my car for business use and once for education.
1. I did not include these reimbursements on the payroll considering it tax exempt. Is that the right way?
2. For the education I reimbursements I reimbursed $6000 where as the limit is $5250.
Since I didn't include this in payroll, I was thinking of adding the amoumt over the limit $750 in the wages of the W2. Should I have added the $750 in the payroll and deducted tax on it?
I am filling the 940 and annual reconciliation forms and was wondering what to include as total payments. The amount inclusive of $750 or the amount without it.

Thanks alot!

Since you are an employee, the whole $6000 should be processed as part of payroll, unless you can justify the education costs as being a business expense, which in that case you could opt for a 1099. in either case, you would not net the amount for purposes of the S-Corp. The net would occur when you file your personal taxes. An S-corp files an 1120S and would show the $6000 as expense. You would file your personal showing the $6000 as income and the $5250 (or a portion thereof, depending on your deduction methodology) as a deduction.

I'm not sure what limit you are referring to, though, with the $5250. But it's late and my brain is shutting down.

 

[CPA]

Originally posted by: Dulanic

Originally posted by: EagleKeeper

Originally posted by: Dulanic
Question: I had a Health Care Spending Account, it was only for $500 this year, does this get entered on my taxes and should I receive a 1099-SA from my spending account to enter on my taxes? Unfortunetely my Health Care Spending Account is out sourced and they have no clue at all, they just kept saying No No, no such form, I can send you a claim form that what you need?

The HCA is before taxes and will show up appropriately on the W2.
You should not need to worry about additional paperwork regarding it.

Hmmm when I was doing TaxCut it asked me specifically if I had a HCA, and when I said yes it asked me to enter the info from my 1099-SA, thats what threw me off.

Are you sure you are not confusing an HSA (Healthcare Spending Account) with a Healthcare Flexible Spending Account (FSA)?

HSAs are different from FSAs.

HSAs are are done with pre-tax dollars and are put into a savings account. The have some different rules for eligibility and not many companies offer them yet (they were rolled out in 2004). What's good about them is they earn a rate of return and you keep what you don't use.

FSAs, which sounds like you are in and most companies have, are also done with pre-tax dollars. These are taken in account on your W2 and may be listed in Box 13 (or maybe 14 can't recall). They are a use it or lose it plan and don't earn interest.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

To add to Eaglekeeper, your proof of revenue (not income) would normally be by the receipts you provided your clients. In lieu of receipts you could show bank deposits.

 

[shoRunner]

I am 20 and almost a full time student(first semester wasn't and 2nd semester was) that also has more or less a full time job(20-35hrs a week). I currently live with my parents. They give me no finacial support other than the room I live in, I pay for all my school, food, gas, toiletries etc. What are the monetary qualifications for a dependant? The IRS website says they must pay 50% of my support, anything more specific than this, what exactly qualifies as support.

 

[Dulanic]

Originally posted by: CPA

Originally posted by: Dulanic

Originally posted by: EagleKeeper

Originally posted by: Dulanic
Question: I had a Health Care Spending Account, it was only for $500 this year, does this get entered on my taxes and should I receive a 1099-SA from my spending account to enter on my taxes? Unfortunetely my Health Care Spending Account is out sourced and they have no clue at all, they just kept saying No No, no such form, I can send you a claim form that what you need?

The HCA is before taxes and will show up appropriately on the W2.
You should not need to worry about additional paperwork regarding it.

Hmmm when I was doing TaxCut it asked me specifically if I had a HCA, and when I said yes it asked me to enter the info from my 1099-SA, thats what threw me off.

Are you sure you are not confusing an HSA (Healthcare Spending Account) with a Healthcare Flexible Spending Account (FSA)?

HSAs are different from FSAs.

HSAs are are done with pre-tax dollars and are put into a savings account. The have some different rules for eligibility and not many companies offer them yet (they were rolled out in 2004). What's good about them is they earn a rate of return and you keep what you don't use.

FSAs, which sounds like you are in and most companies have, are also done with pre-tax dollars. These are taken in account on your W2 and may be listed in Box 13 (or maybe 14 can't recall). They are a use it or lose it plan and don't earn interest.

Here is what TurboTax has to say.....

What is an MSA/HSA?
A Medical Savings Account (MSA) or Health Savings Account (HSA) is a tax-exempt trust or custodial account, established by you and your employer, to pay for your qualified medical expenses.

And it asks me this....
Have an HSA or MSA?
Did you have one of the following accounts in 2005?

Medical Savings Account (MSA) or Archer MSA

Medicare Advantage MSA

Health Savings Account (HSA)

None of the above

According to their description I have what their calling a HSA, a tax exempt account setup by me and my employeer that is use it or lose it. If I check HSA it says...

On the following screens enter any medical savings account (MSA) or health savings account (HSA) information as shown on Forms 1099-SA you received for 2005. If you did not have any distributions select Done on the next screen. We will ask for your contributions for 2005 later.

Thats why this whole thing is confusing, maybe it is a turbotax issue? Or are they right and I should get this 1099-SA?

 

[CPA]

Originally posted by: Dulanic

Originally posted by: CPA

Originally posted by: Dulanic

Originally posted by: EagleKeeper

Originally posted by: Dulanic
Question: I had a Health Care Spending Account, it was only for $500 this year, does this get entered on my taxes and should I receive a 1099-SA from my spending account to enter on my taxes? Unfortunetely my Health Care Spending Account is out sourced and they have no clue at all, they just kept saying No No, no such form, I can send you a claim form that what you need?

The HCA is before taxes and will show up appropriately on the W2.
You should not need to worry about additional paperwork regarding it.

Hmmm when I was doing TaxCut it asked me specifically if I had a HCA, and when I said yes it asked me to enter the info from my 1099-SA, thats what threw me off.

Are you sure you are not confusing an HSA (Healthcare Spending Account) with a Healthcare Flexible Spending Account (FSA)?

HSAs are different from FSAs.

HSAs are are done with pre-tax dollars and are put into a savings account. The have some different rules for eligibility and not many companies offer them yet (they were rolled out in 2004). What's good about them is they earn a rate of return and you keep what you don't use.

FSAs, which sounds like you are in and most companies have, are also done with pre-tax dollars. These are taken in account on your W2 and may be listed in Box 13 (or maybe 14 can't recall). They are a use it or lose it plan and don't earn interest.

Here is what TurboTax has to say.....

What is an MSA/HSA?
A Medical Savings Account (MSA) or Health Savings Account (HSA) is a tax-exempt trust or custodial account, established by you and your employer, to pay for your qualified medical expenses.

And it asks me this....
Have an HSA or MSA?
Did you have one of the following accounts in 2005?

Medical Savings Account (MSA) or Archer MSA

Medicare Advantage MSA

Health Savings Account (HSA)

None of the above

According to their description I have what their calling a HSA, a tax exempt account setup by me and my employeer that is use it or lose it. If I check HSA it says...

On the following screens enter any medical savings account (MSA) or health savings account (HSA) information as shown on Forms 1099-SA you received for 2005. If you did not have any distributions select Done on the next screen. We will ask for your contributions for 2005 later.

Thats why this whole thing is confusing, maybe it is a turbotax issue? Or are they right and I should get this 1099-SA?

An HSA is NOT "use it or lose it." And FSA is and that is what you have. Check No for HSA.

 

[CPA]

Originally posted by: shoRunner
I am 20 and almost a full time student(first semester wasn't and 2nd semester was) that also has more or less a full time job(20-35hrs a week). I currently live with my parents. They give me no finacial support other than the room I live in, I pay for all my school, food, gas, toiletries etc. What are the monetary qualifications for a dependant? The IRS website says they must pay 50% of my support, anything more specific than this, what exactly qualifies as support.

Food, shelter, clothing, etc is considered support. You are going to have to ask your parents whether they are claiming you because they could make an easy argument that they provide 50% of your support on rent they save you alone.

 

[shoRunner]

Originally posted by: CPA

Originally posted by: shoRunner
I am 20 and almost a full time student(first semester wasn't and 2nd semester was) that also has more or less a full time job(20-35hrs a week). I currently live with my parents. They give me no finacial support other than the room I live in, I pay for all my school, food, gas, toiletries etc. What are the monetary qualifications for a dependant? The IRS website says they must pay 50% of my support, anything more specific than this, what exactly qualifies as support.

Food, shelter, clothing, etc is considered support. You are going to have to ask your parents whether they are claiming you because they could make an easy argument that they provide 50% of your support on rent they save you alone.

well like most ppl 50% of your money does not go to your rent, and rent does not equal 50% of my support(turbo tax and IRS say find fair market value for your space if it were given to stranger) and it is no where near 50%. They don't pay for my food or clothing either.

 

[CrimsonChaos]

Hello, great thread. Here's my question:

My wife works downtown where she pays $5.00/day for parking. All of dowtown is metered, so she has no choice in this.

Can she deduct this on her taxes -- if so, does she need to have receipts?

 

[SunnyD]

Question: My son is going to a private school (Elementary). What deductions and/or credits should I be looking at? I was thinking Hope and such, however those appear to be for higher ed. only. Suggestions?

 

[dxkj]

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

That seems like it could be easily abused. IE, I sell 1 item on e-bay, report the profit, and write off my laptop, and 2 monitors I bought this year... Im trying to decide if that seems morally wrong.

 

[CPA]

Originally posted by: shoRunner

Originally posted by: CPA

Originally posted by: shoRunner
I am 20 and almost a full time student(first semester wasn't and 2nd semester was) that also has more or less a full time job(20-35hrs a week). I currently live with my parents. They give me no finacial support other than the room I live in, I pay for all my school, food, gas, toiletries etc. What are the monetary qualifications for a dependant? The IRS website says they must pay 50% of my support, anything more specific than this, what exactly qualifies as support.

Food, shelter, clothing, etc is considered support. You are going to have to ask your parents whether they are claiming you because they could make an easy argument that they provide 50% of your support on rent they save you alone.

well like most ppl 50% of your money does not go to your rent, and rent does not equal 50% of my support(turbo tax and IRS say find fair market value for your space if it were given to stranger) and it is no where near 50%. They don't pay for my food or clothing either.

I didn't say 50% of your money goes to rent. I said that of your total support (shelter, food, clothing, transportation,etc.) your parents could argue that the "free rent" alone is 50% of the total cost to support you. Around here, a 1 bedroom apartment goes about $500/month (then add utilities and phone). That's $6000/year for rent, maybe $2k for utilities and phone. Do you spend more than $8k on food, clothing and transportation
per year?

Hey, I'm not trying to argue with you, but if my kids end up living with me during college, I will be claiming them.

 

[CPA]

Originally posted by: CrimsonChaos
Hello, great thread. Here's my question:

My wife works downtown where she pays $5.00/day for parking. All of dowtown is metered, so she has no choice in this.

Can she deduct this on her taxes -- if so, does she need to have receipts?

It would be a miscellaneous itemized deduction. You would have to itemize and you could only claim the amount that is over 2% of your AGI.

 

[CPA]

Originally posted by: SunnyD
Question: My son is going to a private school (Elementary). What deductions and/or credits should I be looking at? I was thinking Hope and such, however those appear to be for higher ed. only. Suggestions?

None that I am aware.

Didn't you ask this question last year?

 

[CPA]

Originally posted by: dxkj

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

That seems like it could be easily abused. IE, I sell 1 item on e-bay, report the profit, and write off my laptop, and 2 monitors I bought this year... Im trying to decide if that seems morally wrong.

The catch is that the IRS will like to see continuing business. If you did it one year, the IRS may hit you in a couple of years for filing hobby expenses as business expenses.

 

[dxkj]

Originally posted by: CPA

Originally posted by: dxkj

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

That seems like it could be easily abused. IE, I sell 1 item on e-bay, report the profit, and write off my laptop, and 2 monitors I bought this year... Im trying to decide if that seems morally wrong.

The catch is that the IRS will like to see continuing business. If you did it one year, the IRS may hit you in a couple of years for filing hobby expenses as business expenses.

I bought a laptop so I could write code while away from home in my spare time to work on web development. Last year I didnt do that much but it will be increasing a lot this year. I worked with a friend on some code that he was paid $1500 for, and he gave me X amount of that. I tried to use schedule C to claim this, and then claim the expense of my laptop, but it started asking me about my business, and the name of my business, etc. Is Schedule C the right way to go about this if I dont have a business yet and just do this stuff freelance?

 

[shoRunner]

Originally posted by: CPA

I didn't say 50% of your money goes to rent. I said that of your total support (shelter, food, clothing, transportation,etc.) your parents could argue that the "free rent" alone is 50% of the total cost to support you. Around here, a 1 bedroom apartment goes about $500/month (then add utilities and phone). That's $6000/year for rent, maybe $2k for utilities and phone. Do you spend more than $8k on food, clothing and transportation
per year?

Hey, I'm not trying to argue with you, but if my kids end up living with me during college, I will be claiming them.

understood, but the difference between them claiming my and them not is about $1600 for me, so my greedy side comes out. under the definition i found with turbo taxe for support it included recreation, transportation, food, clothing, shelter, education. so i easily spent over 15k.

 

[EagleKeeper]

Originally posted by: dxkj

Originally posted by: CPA

Originally posted by: dxkj

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

That seems like it could be easily abused. IE, I sell 1 item on e-bay, report the profit, and write off my laptop, and 2 monitors I bought this year... Im trying to decide if that seems morally wrong.

The catch is that the IRS will like to see continuing business. If you did it one year, the IRS may hit you in a couple of years for filing hobby expenses as business expenses.

I bought a laptop so I could write code while away from home in my spare time to work on web development. Last year I didnt do that much but it will be increasing a lot this year. I worked with a friend on some code that he was paid $1500 for, and he gave me X amount of that. I tried to use schedule C to claim this, and then claim the expense of my laptop, but it started asking me about my business, and the name of my business, etc. Is Schedule C the right way to go about this if I dont have a business yet and just do this stuff freelance?

Schedule C will work just fine.
You do not need to enter a business name - just the purpose of the business via a selectable code and a description that goes in the business name. (For your references)

 

[EagleKeeper]

Originally posted by: shoRunner

Originally posted by: CPA

I didn't say 50% of your money goes to rent. I said that of your total support (shelter, food, clothing, transportation,etc.) your parents could argue that the "free rent" alone is 50% of the total cost to support you. Around here, a 1 bedroom apartment goes about $500/month (then add utilities and phone). That's $6000/year for rent, maybe $2k for utilities and phone. Do you spend more than $8k on food, clothing and transportation
per year?

Hey, I'm not trying to argue with you, but if my kids end up living with me during college, I will be claiming them.

understood, but the difference between them claiming my and them not is about $1600 for me, so my greedy side comes out. under the definition i found with turbo taxe for support it included recreation, transportation, food, clothing, shelter, education. so i easily spent over 15k.

Look at the total income that you made during the year.
Look at what the fair market value of your lodging is.
Do you do have your own cooking facilities; purchase your own food without eating with the family.
Who pays for the electric bill, phone bills, cable, internet, etc.
Do you pay for your vehicle, insurance, etc.
What about health insurance on yourself.

Before you get too greedy; determine the value of you as a dependant to your parents; do what is best for the FAMILY unit while you are a unit.

 

[dxkj]

Originally posted by: EagleKeeper

Originally posted by: dxkj

Originally posted by: CPA

Originally posted by: dxkj

Originally posted by: EagleKeeper

Originally posted by: dxkj
I repaired a few computers this year and built a few computers and wrote some code.

I was paid a few hundred dollars in cash, but I purchsed a few thousand dollars of personal computer equipment. Am i allowed to claim the computer equipment I used (IE a laptop I used to program), or only up to the amount that I earned? Since this was cash earnings how do I prove income/use?

You would use Schedule C to show the income and expenses.
The expenses can exceed the income.
Tax S/W will walk you through that area nicely.

That seems like it could be easily abused. IE, I sell 1 item on e-bay, report the profit, and write off my laptop, and 2 monitors I bought this year... Im trying to decide if that seems morally wrong.

The catch is that the IRS will like to see continuing business. If you did it one year, the IRS may hit you in a couple of years for filing hobby expenses as business expenses.

I bought a laptop so I could write code while away from home in my spare time to work on web development. Last year I didnt do that much but it will be increasing a lot this year. I worked with a friend on some code that he was paid $1500 for, and he gave me X amount of that. I tried to use schedule C to claim this, and then claim the expense of my laptop, but it started asking me about my business, and the name of my business, etc. Is Schedule C the right way to go about this if I dont have a business yet and just do this stuff freelance?

Schedule C will work just fine.
You do not need to enter a business name - just the purpose of the business via a selectable code and a description that goes in the business name. (For your references)

I did that and it told me that I needed to apply for an EIN and i couldnt use my SS instead.

 

[EagleKeeper]

Originally posted by: dxkj

Originally posted by: EagleKeeperSchedule C will work just fine.
You do not need to enter a business name - just the purpose of the business via a selectable code and a description that goes in the business name. (For your references)

I did that and it told me that I needed to apply for an EIN and i couldnt use my SS instead.

Review your initial entries.

Somehow you answered a question incorrectly; thereby triggering the wrong situation being set up.

Delete the Schedule C and try again.

I have never had any sort of problem when I use a Schedule C.

 

[shoRunner]

Originally posted by: EagleKeeper

Look at the total income that you made during the year.
Look at what the fair market value of your lodging is.
Do you do have your own cooking facilities; purchase your own food without eating with the family.
Who pays for the electric bill, phone bills, cable, internet, etc.
Do you pay for your vehicle, insurance, etc.
What about health insurance on yourself.

Before you get too greedy; determine the value of you as a dependant to your parents; do what is best for the FAMILY unit while you are a unit.

i pay for my own food (maybe 2x a month i'll eat with my family), insurance, vehicle, repairs, phone bill, the health insurance they have does not charge extra for having me on it(family plan, i have a younger sister), though i do pay all my own co-pays/deductibles and any other charges that it does not cover. the only thing i do not pay for is rent and utilities, and through no calculation can i get these over 20K a year(approx. what i spent for my own support last year).

i think i could use the money alittle(lot) more than my parents could.

 

[dxkj]

Originally posted by: shoRunner

Originally posted by: EagleKeeper

Look at the total income that you made during the year.
Look at what the fair market value of your lodging is.
Do you do have your own cooking facilities; purchase your own food without eating with the family.
Who pays for the electric bill, phone bills, cable, internet, etc.
Do you pay for your vehicle, insurance, etc.
What about health insurance on yourself.

Before you get too greedy; determine the value of you as a dependant to your parents; do what is best for the FAMILY unit while you are a unit.

i pay for my own food (maybe 2x a month i'll eat with my family), insurance, vehicle, repairs, phone bill, the health insurance they have does not charge extra for having me on it(family plan, i have a younger sister), though i do pay all my own co-pays/deductibles and any other charges that it does not cover. the only thing i do not pay for is rent and utilities, and through no calculation can i get these over 20K a year(approx. what i spent for my own support last year).

i think i could use the money alittle(lot) more than my parents could.

have them check to see how much it would save them on their taxes, if its more than what you would get, then just split it with them for half the year... sounds fair enough