4th Annual Tax Thread - 2006

[EagleKeeper]

Originally posted by: ViviTheMage
I downloaded up TaxCut 2006 off of H&R blocks site for a free federal return and I purchased the Minnesota return for 25$ through the program, now it is asking me about Section 178 (Federal Section 178 Expensing) what is its exact purpose...it is actually a little confusing for me to understand.

Also, will I be able to use this version for next year, or will I have to rebuy it and crap? (at least next year I can re-import this stuff if I use taxcut).

I have a few iffy things I did on my tax return, that I was not 100% sure of where it was supposed to be used and stuff, should I talk to a H and R block rep or leave it?

Section 178 has to do with the Amortization of writing of a business lease.

Every year, you must purchase/use a new copy of tax S/W. Upgrades do not exist
This is due to the fact that the rules as well as internal numbers change every year due to changes in the tax laws by Congress.

If you have a complex return, and are not sure of your results, you could go to a tax adviser. Before making that leap, you may wish to review the items in questions and think where they should go. Many entries end up being summed together by the time the information is provided to the IRS. All those worksheets and itemized list end up being merged into a few lines on each schedule.

Only those things that are amortized or percentage limited of some type are affected by being in the incorrect area.
Those

 

[ViviTheMage]

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
I downloaded up TaxCut 2006 off of H&R blocks site for a free federal return and I purchased the Minnesota return for 25$ through the program, now it is asking me about Section 178 (Federal Section 178 Expensing) what is its exact purpose...it is actually a little confusing for me to understand.

Also, will I be able to use this version for next year, or will I have to rebuy it and crap? (at least next year I can re-import this stuff if I use taxcut).

I have a few iffy things I did on my tax return, that I was not 100% sure of where it was supposed to be used and stuff, should I talk to a H and R block rep or leave it?

Section 178 has to do with the Amortization of writing of a business lease.

Every year, you must purchase/use a new copy of tax S/W. Upgrades do not exist
This is due to the fact that the rules as well as internal numbers change every year due to changes in the tax laws by Congress.

If you have a complex return, and are not sure of your results, you could go to a tax adviser. Before making that leap, you may wish to review the items in questions and think where they should go. Many entries end up being summed together by the time the information is provided to the IRS. All those worksheets and itemized list end up being merged into a few lines on each schedule.

Only those things that are amortized or percentage limited of some type are affected by being in the incorrect area.
Those

I did contracting work so I am putting a few things towards that work, insurance, phone bill, few things I bought, etc.

should I just leave it blank?

 

[EagleKeeper]

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
I downloaded up TaxCut 2006 off of H&R blocks site for a free federal return and I purchased the Minnesota return for 25$ through the program, now it is asking me about Section 178 (Federal Section 178 Expensing) what is its exact purpose...it is actually a little confusing for me to understand.

Also, will I be able to use this version for next year, or will I have to rebuy it and crap? (at least next year I can re-import this stuff if I use taxcut).

I have a few iffy things I did on my tax return, that I was not 100% sure of where it was supposed to be used and stuff, should I talk to a H and R block rep or leave it?

Section 178 has to do with the Amortization of writing of a business lease.

Every year, you must purchase/use a new copy of tax S/W. Upgrades do not exist
This is due to the fact that the rules as well as internal numbers change every year due to changes in the tax laws by Congress.

If you have a complex return, and are not sure of your results, you could go to a tax adviser. Before making that leap, you may wish to review the items in questions and think where they should go. Many entries end up being summed together by the time the information is provided to the IRS. All those worksheets and itemized list end up being merged into a few lines on each schedule.

Only those things that are amortized or percentage limited of some type are affected by being in the incorrect area.
Those

I did contracting work so I am putting a few things towards that work, insurance, phone bill, few things I bought, etc.

should I just leave it blank?

If you do not claim those items that are legit, you are giving tax money to Uncle that may not be deserved.

Proportional costs for some items cam be based on the income percentage that they are related to.

 

[jcuadrado]

is it worth spending a $100 or so on an independent Accountant to do my taxes. I've been doing it myself with TurboTax for the last 3 years and have gotten big returns.

I mean do they actually squeeze out more money for you??? My situation is pretty basic.

Married, 1 child, property taxes, stock and saving dividends, child care, etc.

Thanks,

 

[ViviTheMage]

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
I downloaded up TaxCut 2006 off of H&R blocks site for a free federal return and I purchased the Minnesota return for 25$ through the program, now it is asking me about Section 178 (Federal Section 178 Expensing) what is its exact purpose...it is actually a little confusing for me to understand.

Also, will I be able to use this version for next year, or will I have to rebuy it and crap? (at least next year I can re-import this stuff if I use taxcut).

I have a few iffy things I did on my tax return, that I was not 100% sure of where it was supposed to be used and stuff, should I talk to a H and R block rep or leave it?

Section 178 has to do with the Amortization of writing of a business lease.

Every year, you must purchase/use a new copy of tax S/W. Upgrades do not exist
This is due to the fact that the rules as well as internal numbers change every year due to changes in the tax laws by Congress.

If you have a complex return, and are not sure of your results, you could go to a tax adviser. Before making that leap, you may wish to review the items in questions and think where they should go. Many entries end up being summed together by the time the information is provided to the IRS. All those worksheets and itemized list end up being merged into a few lines on each schedule.

Only those things that are amortized or percentage limited of some type are affected by being in the incorrect area.
Those

I did contracting work so I am putting a few things towards that work, insurance, phone bill, few things I bought, etc.

should I just leave it blank?

If you do not claim those items that are legit, you are giving tax money to Uncle that may not be deserved.

Proportional costs for some items cam be based on the income percentage that they are related to.

now this is where I get confused. where am I going to pull these adj or deductions from now?

 

[EagleKeeper]

Originally posted by: jcuadrado
is it worth spending a $100 or so on an independent Accountant to do my taxes. I've been doing it myself with TurboTax for the last 3 years and have gotten big returns.

I mean do they actually squeeze out more money for you??? My situation is pretty basic.

Married, 1 child, property taxes, stock and saving dividends, child care, etc.

Thanks,

Your big return size may be due to under-withholding on your W4.

For the little man, the big accountants are for those that are to lazy to due their taxes, to ignorant to follow instructions or those that have a complex return involving multiple sources of income. The accountants require your time to provided the information organized to them before they can work on it. So what have you really saved? They are charging you for the privilege of entering information that you can do yourself.

The local Wal-Mart type tax booths do not know you, therefore they will be unable to ask question of deductions that might help you.

Accountants for companies are a different story. The returns may be more complex and the owners may not have the time to handle the details.

 

[EagleKeeper]

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage

Originally posted by: EagleKeeper

Originally posted by: ViviTheMage
I downloaded up TaxCut 2006 off of H&R blocks site for a free federal return and I purchased the Minnesota return for 25$ through the program, now it is asking me about Section 178 (Federal Section 178 Expensing) what is its exact purpose...it is actually a little confusing for me to understand.

Also, will I be able to use this version for next year, or will I have to rebuy it and crap? (at least next year I can re-import this stuff if I use taxcut).

I have a few iffy things I did on my tax return, that I was not 100% sure of where it was supposed to be used and stuff, should I talk to a H and R block rep or leave it?

Section 178 has to do with the Amortization of writing of a business lease.

Every year, you must purchase/use a new copy of tax S/W. Upgrades do not exist
This is due to the fact that the rules as well as internal numbers change every year due to changes in the tax laws by Congress.

If you have a complex return, and are not sure of your results, you could go to a tax adviser. Before making that leap, you may wish to review the items in questions and think where they should go. Many entries end up being summed together by the time the information is provided to the IRS. All those worksheets and itemized list end up being merged into a few lines on each schedule.

Only those things that are amortized or percentage limited of some type are affected by being in the incorrect area.
Those

I did contracting work so I am putting a few things towards that work, insurance, phone bill, few things I bought, etc.

should I just leave it blank?

If you do not claim those items that are legit, you are giving tax money to Uncle that may not be deserved.

Proportional costs for some items cam be based on the income percentage that they are related to.

now this is where I get confused. where am I going to pull these adj or deductions from now?

Example:
Phone bill $60 month
Consultant income is 15% of total income.
Phone charges for consultanting 15% of $60 = $9

Some S/W will adjust utilites house insurance mortgage interest, taxes, etc based on square footage percentage of the house used to the consulting.

 

[GTaudiophile]

I need some information on the Wash Sale Rules.

Let's say I had $20,000 growing (slowly) in a bond fund. To speed things up in early April 2006 (before the 15th) I redeemed $15,000 of the fund and reinvested the money in other mutural funds run by the same company, leaving $5,000 in the original bond fund.

Let's say I also took a loss of about $1,500 total when I did the above (Gross Proceeds < Average Cost Basis).

Before I can take the loss, TurboTax is asking me:

Buy the Same Security?

You had a loss of $XXXX.XX on the sale of XXXXX Short-Term Bond Fund.

You may be subject to the wash sale rules if both of the following apply:

- You bought or reinvested dividends in substantially identical securities between March 13, 2006 and May 12, 2006.

- You held these securities (did not sell them as part of this sale).

Do both of these situations apply?

Now the fund did reinvest dividends during that time span and I did not sell them. (Less than two shares were purchased.)

So am I correct in thinking that the wash rules DO apply to me and I cannot take the loss?

 

[ViviTheMage]

but I did that on my Federal already...I thought turbotax would import it for me.
I am confused with how they word everything :

http://vivi.atotchat.org/me/123.JPG

that is a link to what it says.

EDIT : silly me was afraid to press on and press the 'NEXT' button, but I got gutsy and did...and it did indeed have everything all calculated for me!

I am done!!! and if you look back a few pages when I originally posted I would have owed a 400 or so, now I get BACK 400! HAPPY DAYS .

This years goal is to do more contracting work to deduct again!

 

[elmro]

A question for tax gurus:

My father passed away and I received a life insurance check for a large sum (around 50k), which I deposited into my bank account. I didn't get any accompanying forms with the check. How do I represent this when I file my taxes? Is this taxable income?

 

[dionx]

Last year, my mom agreed to help my aunt pay half her mortgage. My aunt said by doings this, she would give half ownership of the house to my mom, which is already done. Also, my aunt agreed to let my mom have all the 2006 mortgage interest be deductible by my mom. However, the substituted Form 1098 that we received is in my aunt's name, not my mom's. Can my mom still legally deduct this even though it isn't in her name?

 

[EagleKeeper]

Originally posted by: elmro
A question for tax gurus:

My father passed away and I received a life insurance check for a large sum (around 50k), which I deposited into my bank account. I didn't get any accompanying forms with the check. How do I represent this when I file my taxes? Is this taxable income?

Not taxable income

 

[EagleKeeper]

Originally posted by: dionx
Last year, my mom agreed to help my aunt pay half her mortgage. My aunt said by doings this, she would give half ownership of the house to my mom, which is already done. Also, my aunt agreed to let my mom have all the 2006 mortgage interest be deductible by my mom. However, the substituted Form 1098 that we received is in my aunt's name, not my mom's. Can my mom still legally deduct this even though it isn't in her name?

The interest can be deduted by your mother as long as there is legal ownership related to the house.

She should keep a copy of the legal sale/sharing paperwork with her copy of the tax return. Note the key word LEGAL. If your mother has no recorded investment in the property, then she can not deduct the interest or taxes.

 

[EagleKeeper]

Originally posted by: GTaudiophile
I need some information on the Wash Sale Rules.

Let's say I had $20,000 growing (slowly) in a bond fund. To speed things up in early April 2006 (before the 15th) I redeemed $15,000 of the fund and reinvested the money in other mutural funds run by the same company, leaving $5,000 in the original bond fund.

Let's say I also took a loss of about $1,500 total when I did the above (Gross Proceeds < Average Cost Basis).

Before I can take the loss, TurboTax is asking me:

Buy the Same Security?

You had a loss of $XXXX.XX on the sale of XXXXX Short-Term Bond Fund.

You may be subject to the wash sale rules if both of the following apply:

- You bought or reinvested dividends in substantially identical securities between March 13, 2006 and May 12, 2006.

- You held these securities (did not sell them as part of this sale).

Do both of these situations apply?

Now the fund did reinvest dividends during that time span and I did not sell them. (Less than two shares were purchased.)

So am I correct in thinking that the wash rules DO apply to me and I cannot take the loss?

My take would be that if you invested the sale proceeds in a non-bond fund, the wash should not apply.

If the sale proceeds went into another bond fund, it would be considered to be a wash.

 

[GTaudiophile]

Thanks for the reply!

 

[dionx]

Thanks EagleKeeper!!

 

[Icepick]

Gift tax question

Would I have to pay taxes on a gift of, say, $23,000 from an in-law? In-law and I are both living in NY State. Would this have to be reported on my state or federal income tax forms?

 

[EagleKeeper]

Originally posted by: Icepick
Gift tax question

Would I have to pay taxes on a gift of, say, $23,000 from an in-law? In-law and I are both living in NY State. Would this have to be reported on my state or federal income tax forms?

If you receive it, it does not get reported on the Federal return.

The in-lawwould be responsible for a gift tax on the Federal side.

Such a gift could be split in two (31 Dec and 1 Jan) to avoid such a tax.
Or the Feds allow $11K per person to be gifted to someone else.

 

[pmoa]

On Form 1040X, Line 23....

I amended my taxes and now my return is higher than my original return. But I already received my money from my original return.

The total is higher, will the IRS send me the difference or send me the full amount again and I cut them a check?

 

[EagleKeeper]

Originally posted by: pmoa
On Form 1040X, Line 23....

I amended my taxes and now my return is higher than my original return. But I already received my money from my original return.

The total is higher, will the IRS send me the difference or send me the full amount again and I cut them a check?

Who knows how the government will work.

Either way, the ammended return paperwork will be processed by a human, who hopefully will use some common sense.

 

[pmoa]

Originally posted by: EagleKeeper

Originally posted by: pmoa
On Form 1040X, Line 23....

I amended my taxes and now my return is higher than my original return. But I already received my money from my original return.

The total is higher, will the IRS send me the difference or send me the full amount again and I cut them a check?

Who knows how the government will work.

Either way, the ammended return paperwork will be processed by a human, who hopefully will use some common sense.

Thanks Eagle!

 

[dirtboy]

Hopefully you can follow this one, because it's a bit convoluted. I realize that I might need to seek a local CPA, but I need some direction to head with it.

In the past my father and I have been partners, but by nature of our business, we were each independent sole proprietors. Since we split all income and expenses, at the end of each year we'd 1099 each other to even it out and split the expenses.

Last year we setup a LLC. Still our income flows to each person. So as checks come in they are deposited into the LLC's checking account, where expenses and salaries are paid. Do note, the LLC is not receiving any 1099 income itself.

At the end of 2006 we wanted to leave a sizeable amount of money in the LLC to fund marketing expenses for 2007.

While we both do our own taxes, my dad said he'd handle the paperwork for the LLC this year, then we'd 1099 each other to split everything just as we have in the past.

One major problem. No income tax has been paid on the money sitting with the LLC right now.

We're trying to figure out a way to avoid it. He thinks we can't, because LLC's are pass-thru on taxes, which I know. However I want to believe there must be a way for money to stay in the company coffers to meet expenses. He thinks we might have to pay taxes on this money, then keep seperate accounting on what money is taxable and has been taxed. I'd like a simpler solution to just keep the money from being taxed so we can deduct expenses against it without having to track taxed/non-taxed.

I came up with the idea that we could each 1099 all our income to the business, have the business account for the expenses, then leave money in the business, however if taxation is pass-thru, I'll owe taxes on the money left anyways.

Otherwise I might as well take this money as income, but then I have to give it back to the business to fund expenses. Then the question is, how do I get a deduction next year for the money I put into it? Argh.

Any ideas on how we can possibly handle this or comments on what we can't do? Any direction will help.

 

[AStar617]

Thanks for doing this for another tax year. :thumbsup:

Sorry if this was already asked, but the search function is useless. Can I deduct my condo fees paid on a rental property if the fee covers the cost of heat and hot water which is technically provided to the tenant?

To that end, am I able to deduct the general special assessments levied by the condo association, even if they weren't for repairs specific to my rental's building (there are multiple residental structures in the complex)?

 

[EagleKeeper]

If you own the rental unit, then any expenses that you pay for relating to the unit is deductible using the Schedule E.

 

[Semidevil]

This is very basic tax question.

I am very new in this, so I really have no idea. I"m planning to take all my paperwork to a professional, but I dont know what I need. I want to at least know some basics when I get there. Here is what I have:

-My W2
-wifes w2
-wifes school tuition
-mortgate paperwork


somethings about me: recently bought a new car, wife had a lot of doctor appointments, dentist appointments, braces.

can I submit these also? if so, how do I do it? Just give reciepts?

I guess my general question is I dont know how tax works, and exactly what can be filed. i,e can credit card bills be filed? what kind of things do people usually file for maximum benifiet?

anyways, if someone can give me some pointers, that'll be great.