4th Annual Tax Thread - 2006

[SarcasticDwarf]

I got my W2 in for some work I did as an internship (now over) through my university. Boxes 2,3,4,5,6, and 9 are all zero, meaning they withheld nothing. It does look like they withheld $6.20 for state income tax. I earned approx $1200. Now, how badly am I screwed? I know I earned about 4-5k from another job that did withhold, so I would assume my refund would just be a lot smaller?

 

[EagleKeeper]

Until you crunch the numbers, any speculation would generate disapointment

 

[SarcasticDwarf]

Originally posted by: EagleKeeper
Until you crunch the numbers, any speculation would generate disapointment

I take it I will need to now get tax software? I was planning on doing it all myself this year as TurboTax w/schedule C (sole proprietership business) is $90. Or will the IRS just figure it out automatically when it is submitted?

 

[shawn130c]

It?s my first time filing taxes and my first job so bear with me.

Background:

I intern at a local IT Support/Consulting company through my high schools ROP (Work Experience) program. I choose to work a certain amount of hours free each week in exchange for class credit. Since it is unpaid i am not required to work holidays unless it is paid.

Since I had a winter break and some other major holidays off, I decided to do some work for them. They told me they would make me an independent contractor, so I could set my own times and have other clients along with them. I agreed to this and started working for them for two weeks (December 26, 2006 to January 6, 2007) Also I did some more work for them in January (only about 13 hours).

Near late January they gave me a check (about $840 for 70 hours) for all my work for them. Now since I am an independent contractor I have to pay taxes, since they were not withheld from my check. So here are my questions from the research I have done:

Here a little more tax background

State of Residence: California
Age: 17
DOB: Feb. 9, 1989
And my Parents claim me as a dependent
Also I don?t have any expenses that I can claim.

1. Do I have to file taxes or do I wait until I file 2007 taxes, since I was paid in 2007?

2. What are all the forms I have to submit to the IRS. Is it just the 1040 Schedule C-EZ and that is it for the year, assuming I have to pay taxes.
Also I don?t have to file a 1040 Schedule SE because I am 17 and people under the age of 18 are exempt from self-employment tax right. But if I file my taxes after my 18th birthday does that make me have to pay an SE tax or am I still exempt?

3. Also since I made more than $600 my client has to submit a 1099-MISC and also give me a copy right?

4. Also in my research I did read something about independent contractors have to pay taxes quarterly, are they just talking about the Federal Quarterly Estimated Tax Payments or something else.
If they are talking about the Federal Quarterly Estimated Tax Payments, I don?t have to worry about it since I don?t owe more then $1000.

5. Also I know you guys don?t deal with State taxes, but I have done some research and it appears that I don?t make enough so I don?t have to file state taxes, is that all I have to do or do I have to submit some kind of form.

TIA for any assistance.

 

[dxkj]

Quick one

My wife has an assistanceship through school. The professor has a grant for research, and pays her monthly.

For some reason she made almost 13k and only 116 was taken out... is this because she was paid for grant money, or from working at a school? The state got 260$ tax..... I entered her W2 on some tax software and it subtracted $1700 from our return...

Does this sound right or does this need filed some other way?

 

[EagleKeeper]

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper
Until you crunch the numbers, any speculation would generate disappointment

I take it I will need to now get tax software? I was planning on doing it all myself this year as TurboTax w/schedule C (sole proprietorship business) is $90. Or will the IRS just figure it out automatically when it is submitted?

1) You never need tax S/W; it just makes it easier
2) Unless you have independent income of 1099, you will not need or be able to use Schedule C
3) The IRS will never figure out your taxes for you until you provide all the numbers.

People that have the smarts to finish High School should have the smarts to figure out how to do a simple 1040A or 1040EZ

/sarcasm - that may be why it was labeled EZ

 

[EagleKeeper]

Originally posted by: shawn130c
It?s my first time filing taxes and my first job so bear with me.

Background:

I intern at a local IT Support/Consulting company through my high schools ROP (Work Experience) program. I choose to work a certain amount of hours free each week in exchange for class credit. Since it is unpaid i am not required to work holidays unless it is paid.

Since I had a winter break and some other major holidays off, I decided to do some work for them. They told me they would make me an independent contractor, so I could set my own times and have other clients along with them. I agreed to this and started working for them for two weeks (December 26, 2006 to January 6, 2007) Also I did some more work for them in January (only about 13 hours).

Near late January they gave me a check (about $840 for 70 hours) for all my work for them. Now since I am an independent contractor I have to pay taxes, since they were not withheld from my check. So here are my questions from the research I have done:

Here a little more tax background

State of Residence: California
Age: 17
DOB: Feb. 9, 1989
And my Parents claim me as a dependent
Also I don?t have any expenses that I can claim.

1. Do I have to file taxes or do I wait until I file 2007 taxes, since I was paid in 2007?

2. What are all the forms I have to submit to the IRS. Is it just the 1040 Schedule C-EZ and that is it for the year, assuming I have to pay taxes.
Also I don?t have to file a 1040 Schedule SE because I am 17 and people under the age of 18 are exempt from self-employment tax right. But if I file my taxes after my 18th birthday does that make me have to pay an SE tax or am I still exempt?

3. Also since I made more than $600 my client has to submit a 1099-MISC and also give me a copy right?

4. Also in my research I did read something about independent contractors have to pay taxes quarterly, are they just talking about the Federal Quarterly Estimated Tax Payments or something else.
If they are talking about the Federal Quarterly Estimated Tax Payments, I don?t have to worry about it since I don?t owe more then $1000.

5. Also I know you guys don?t deal with State taxes, but I have done some research and it appears that I don?t make enough so I don?t have to file state taxes, is that all I have to do or do I have to submit some kind of form.

TIA for any assistance.

1) If the company sends you a 1099 for the work done in 2006, you should file taxes for 2006

2) It is your age on 31 Dec of the tax year that determines the exemption, not the filing date.

3) Your clients should provide you with a 1099. It is still your responsiblity to file either way.

4) The Federal Tax should be paid quarterly if you expect to have Federal taxes due of more than $1000. For 2006, you are safe. If you get more work under the same conditions, you will need to monitor your situation closely. What you could do is use tax S/W and play a what if game to determine at what income vs expenses you will need to
worry about the Federal Quarterly tax.

5) If you file Federal Taxes, it is best to also file State, even though nothing is owed. The Staes and Feds exchange info. If you know you will not owe any State tax, file by paper, it does not make any sense to pay for State Tax S/W.

 

[EagleKeeper]

Originally posted by: dxkj
Quick one

My wife has an assistanceship through school. The professor has a grant for research, and pays her monthly.

For some reason she made almost 13k and only 116 was taken out... is this because she was paid for grant money, or from working at a school? The state got 260$ tax..... I entered her W2 on some tax software and it subtracted $1700 from our return...

Does this sound right or does this need filed some other way?

1) Verify that she actually was paid $13K - that is about $250/wk take home. What is the $116 label as?

2) Operating under the premise that you entered all the amounts correctly and along with and codes on the W2 as requested; then if they did not withhold the proper amount of taxes, you, as a family unit, are responsible for them anyhow.

She should talk to the payroll people that handle the funds at the school to determine what type of W4 records thay have on her and make the proper adjustments.

Even though the payroll people may have fouled up, it is still her responsibilty to ensure that the numbers are reasonable.

 

[mztykal]

Um my CPA is on vacation and I'm attempting to do my taxes myself this year. So far I've come to the realization that my job this year put down "2" as exemptions instead of "1". I figured they're taking the same 26% out of my check for state and federal taxes.

How badly am I screwed? Would I end up paying? I have no other income or investments this year. Is claiming "2" when it's only yourself gonna kick me in the ass in the end? Thanks again!

 

[EagleKeeper]

Originally posted by: mztykal
Um my CPA is on vacation and I'm attempting to do my taxes myself this year. So far I've come to the realization that my job this year put down "2" as exemptions instead of "1". I figured they're taking the same 26% out of my check for state and federal taxes.

How badly am I screwed? Would I end up paying? I have no other income or investments this year. Is claiming "2" when it's only yourself gonna kick me in the ass in the end? Thanks again!

You will probably end up paying - Depending on your income level, you may be under the penalty threshhold.

You can determine what the difference is in taxes withheld; and then start putting that difference aside until the end of the calendar year. On 31 Dec write a check to Uncle with that amount. You will have earned interest on those funds unstead of giving Uncle a free loan over the year.

If you are single with no other income, investments; there should be no reason why you are donating money to a CPA other than being lazy. Write a check for the same amount that you pay the CPA to the United Way and use your thinking cap to to your own taxes.

/end of lecture

 

[mztykal]

Damn I figured I was gonna end up paying. So why're they taking out 26% of my check if I end up paying more on top of that to them.

That's kinda whack. Oh I had the CPA for awhile cus of investments and stocks that I had.

Not lazy, just too much work with everything else. This year it's just one job and one form to fill out. Gonna do it myself.

So I guess having my employer change it to "1" was a good idea as long as they change it, huh?

 

[EagleKeeper]

They is your employer. It may not be just the Federal Government that the 26% gets forwarded to.

Look at your paystub to see the breakdown. Everyone is greedy for your money, even you.

 

[dxkj]

Originally posted by: EagleKeeper

Originally posted by: dxkj
Quick one

My wife has an assistanceship through school. The professor has a grant for research, and pays her monthly.

For some reason she made almost 13k and only 116 was taken out... is this because she was paid for grant money, or from working at a school? The state got 260$ tax..... I entered her W2 on some tax software and it subtracted $1700 from our return...

Does this sound right or does this need filed some other way?

1) Verify that she actually was paid $13K - that is about $250/wk take home. What is the $116 label as?

2) Operating under the premise that you entered all the amounts correctly and along with and codes on the W2 as requested; then if they did not withhold the proper amount of taxes, you, as a family unit, are responsible for them anyhow.

She should talk to the payroll people that handle the funds at the school to determine what type of W4 records thay have on her and make the proper adjustments.

Even though the payroll people may have fouled up, it is still her responsibilty to ensure that the numbers are reasonable.

She did make a little over 1k a month
the 116 was listed as federal income tax
we talked to the payroll people last year because she worked for them for a few months and we saw the same tax issue. The payroll said she had 1 exemption listed. or whatever it is called.

calling them today

 

[techfuzz]

The only time a 1099-G (from your state for last year's refund) is applicable is when you itemized your previous year's federal return right?

techfuzz

 

[SarcasticDwarf]

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper
Until you crunch the numbers, any speculation would generate disappointment

I take it I will need to now get tax software? I was planning on doing it all myself this year as TurboTax w/schedule C (sole proprietorship business) is $90. Or will the IRS just figure it out automatically when it is submitted?

1) You never need tax S/W; it just makes it easier
2) Unless you have independent income of 1099, you will not need or be able to use Schedule C
3) The IRS will never figure out your taxes for you until you provide all the numbers.

People that have the smarts to finish High School should have the smarts to figure out how to do a simple 1040A or 1040EZ

/sarcasm - that may be why it was labeled EZ

1) Not everyone is a CPA. Tax software greatly helps when you have somewhat complex taxes as it helps you avoid making errors. The IRS instructions are NOT clear all the time, and tax software often helps with that. It should also be kept in mind that most people on this forum are younger, meaning they do not have a lot of experience with doing their taxes.

2) As I already mentioned, I have a sole proprietorship. Every single thing I have ever seen indicates I do need to do a 1040+C.

3) What I was asking was is there anything that I need to do other than just provide the numbers? Based on what I had seen, they will just automatically deduct what I owe from my refund. I was just needing to know if that was the case.



Oh, and feel free to stop acting like taxes are the easiest thing in the world. I suppose you assume that people are supposed to know about exactly what qualifies as a section 179 deduction and when is best to use it, or what the tax implications are of using contract labor located outside of the country for work inside this country. Sorry, it just does not work that way. Sure, 20 years from now when I have done my taxes dozens of times, I will probably be comfortable doing them in an hour. Until then, it is a learning process.

 

[EagleKeeper]

Originally posted by: techfuzz
The only time a 1099-G (from your state for last year's refund) is applicable is when you itemized your previous year's federal return right?

techfuzz

Correct

 

[EagleKeeper]

Originally posted by: dxkj

Originally posted by: EagleKeeper

Originally posted by: dxkj
Quick one

My wife has an assistanceship through school. The professor has a grant for research, and pays her monthly.

For some reason she made almost 13k and only 116 was taken out... is this because she was paid for grant money, or from working at a school? The state got 260$ tax..... I entered her W2 on some tax software and it subtracted $1700 from our return...

Does this sound right or does this need filed some other way?

1) Verify that she actually was paid $13K - that is about $250/wk take home. What is the $116 label as?

2) Operating under the premise that you entered all the amounts correctly and along with and codes on the W2 as requested; then if they did not withhold the proper amount of taxes, you, as a family unit, are responsible for them anyhow.

She should talk to the payroll people that handle the funds at the school to determine what type of W4 records thay have on her and make the proper adjustments.

Even though the payroll people may have fouled up, it is still her responsibilty to ensure that the numbers are reasonable.

She did make a little over 1k a month
the 116 was listed as federal income tax
we talked to the payroll people last year because she worked for them for a few months and we saw the same tax issue. The payroll said she had 1 exemption listed. or whatever it is called.

calling them today

The amount of tax withheld seems reasonable with a W4 exemption of 1.

What is your withholding set at?

A married couple should be able to handle a withholding level each at one unless there is a large income difference. In that case, one should decrease the W4 exemptions by what ever is needed to balance out.

 

[EagleKeeper]

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper

Originally posted by: SarcasticDwarf

Originally posted by: EagleKeeper
Until you crunch the numbers, any speculation would generate disappointment

I take it I will need to now get tax software? I was planning on doing it all myself this year as TurboTax w/schedule C (sole proprietorship business) is $90. Or will the IRS just figure it out automatically when it is submitted?

1) You never need tax S/W; it just makes it easier
2) Unless you have independent income of 1099, you will not need or be able to use Schedule C
3) The IRS will never figure out your taxes for you until you provide all the numbers.

People that have the smarts to finish High School should have the smarts to figure out how to do a simple 1040A or 1040EZ

/sarcasm - that may be why it was labeled EZ

1) Not everyone is a CPA. Tax software greatly helps when you have somewhat complex taxes as it helps you avoid making errors. The IRS instructions are NOT clear all the time, and tax software often helps with that. It should also be kept in mind that most people on this forum are younger, meaning they do not have a lot of experience with doing their taxes.

2) As I already mentioned, I have a sole proprietorship. Every single thing I have ever seen indicates I do need to do a 1040+C.

3) What I was asking was is there anything that I need to do other than just provide the numbers? Based on what I had seen, they will just automatically deduct what I owe from my refund. I was just needing to know if that was the case.



Oh, and feel free to stop acting like taxes are the easiest thing in the world. I suppose you assume that people are supposed to know about exactly what qualifies as a section 179 deduction and when is best to use it, or what the tax implications are of using contract labor located outside of the country for work inside this country. Sorry, it just does not work that way. Sure, 20 years from now when I have done my taxes dozens of times, I will probably be comfortable doing them in an hour. Until then, it is a learning process.

Lets both of us tone it down.

My original comments were started from what little, inadequate info that you provided.

I got my W2 in for some work I did as an internship (now over) through my university. Boxes 2,3,4,5,6, and 9 are all zero, meaning they withheld nothing. It does look like they withheld $6.20 for state income tax. I earned approx $1200. Now, how badly am I screwed? I know I earned about 4-5k from another job that did withhold, so I would assume my refund would just be a lot smaller?

This indicates that you had two W2s coming to you. At this point, nothing was stated about independent income.

Now you change/expand the information provided

I take it I will need to now get tax software? I was planning on doing it all myself this year as TurboTax w/schedule C (sole proprietorship business) is $90. Or will the IRS just figure it out automatically when it is submitted?

Now in additional to the above W2, are you indicating an income of $90 from the business. or the cost of the S/W is $90?



For income less than $300 - you do not need to use the Schedule C if the income is from a self-employed (or sole ownership/proprietorship). The benefit of using the Schedule C is that you can write off expenses related to the generation of such income.

If you fill out the 1040 up through the AGI (Adjusted Gross Income); first page of the 1040, the IRS may do the calculations based on the number of exemptions you have entered and also use the standard deduction. The Schedule C must be filled out in order to determine the AGI.

Note that the IRS will not try to get you the best deal.

From the AGI on the start of the second page (w/ exception of the 1040EZ), it should be a 5-10 minute effort to subtract 3-4 numbers from the AGI to determine the relevant taxable income.

Use the tax tables to look up the relevant tax.

Then subtract that tax from the sum of what was withheld and you have what is owed or being refunded.

Simple taxes based on Wages alone are not complex. That is my point. People with a High School education should be able to follow the instructions needed for the 1040A or 1040EZ.

Expanding into using Schedules and Forms requires much more effort and this is where asking for help and using the Tax S/W for guidance/assistance can be benificial.

 

[Mayfriday0529]

Here is a question. My company places under box 14 of our W-2 a S125 which is meant for what you paid to health purposes or flexible spending.
We got W2's last week, I had all my school tax information so I filled that same night.
Today my company is telling us that the payroll company made a mistake and forgot to add that piece of information on our W2's and that we will be getting new copies tomorrow.
Will that have any ramifications for me?

 

[EagleKeeper]

Originally posted by: Jnetty99
Here is a question. My company places under box 14 of our W-2 a S125 which is meant for what you paid to health purposes or flexible spending.
We got W2's last week, I had all my school tax information so I filled that same night.
Today my company is telling us that the payroll company made a mistake and forgot to add that piece of information on our W2's and that we will be getting new copies tomorrow.
Will that have any ramifications for me?

Recalcultae with the new information.

If the numbers for the AGI, tax owed or tax paid do not change, then no worries.

If any of those three key items change, you will have to file a 1040X.

If you are using tax S/W make a backup copy of your tax file before playing with the numbers.

If you are using online S/W, start a dummy account and re-enter the same info that you did previously.

 

[techfuzz]

Slightly off topic, but I'm curious... What do tax professionals (like those at your local H&R Block office) do the other ~8 months of the year?

techfuzz

 

[BChico]

I just started in consulting, thus traveling 100%. Can you give me some insight into how state tax returns are divided up, and what the process is of paying my taxes then.

I received 3 W-2s, one for NJ(where I live, didnt work), NY(home office), and IL(work travel). I am assuming federal taxes get filed the same as usual. Do I just have to file 3 state returns then?

Thanks,
Brad

 

[EagleKeeper]

Originally posted by: BChico
I just started in consulting, thus traveling 100%. Can you give me some insight into how state tax returns are divided up, and what the process is of paying my taxes then.

I received 3 W-2s, one for NJ(where I live, didn't work), NY(home office), and IL(work travel). I am assuming federal taxes get filed the same as usual. Do I just have to file 3 state returns then?

Thanks,
Brad

Most firms will withhold taxes based on your work location.
If you were working at a consistent location, then taxes could be withheld. Much depends on the reciprocal agreements each state has.

You should not have taxes withheld for the home office unless you were working out of there in some capacity.

You may be able to file NJ only and get credit for any other states.

Good Luck.

State tax S/W will make it easy - however, it can get expensive.

This is generalization - as noted in the OP, state taxes are off limits.

 

[BChico]

Thanks for the info.

 

[brtspears2]

Turbo Tax says "In California, you can deduct the vehicle license fee (VLF) portion of your registration fee. This amount is on your registration renewal notice."

If I purchased a new car in 2006, do I get to deduct what I paid at the time of purchase for registration?