4th Annual Tax Thread - 2006

[EagleKeeper]

Originally posted by: aldamon
I started IRAs today for me and my wife and arranged for funding. Should I wait a few days before submitting my return at TaxAct or can I do it right now?

Arranging for funding is not actually funding.

Youi can file your 2006 taxes and claim the IRA when the funds are ACTUALLY IN THE ACCOUNT

 

[EagleKeeper]

Originally posted by: Parrotheader
I did a rough draft of my taxes back in January and thought I had everything fairly well tied-up. But I just realized a 1099 from a company I did some freelance for is wrong (the number is actually too low by a considerable sum.) I know I need to contact the company, but what's the best way to remedy that this late in the game? I noticed there's a checkbox at the top that says "Corrected (if checked)" but I wasn't sure what the procedure is for that.

If the 1099 does not indicate that taxes were withheld, you should have the proper numbers available to yourself (you did detect the descrepency).

You will need to adjust your Scheudle C with the proper number from either
0) File with what you have and then file an ammended 1040X with the proper number later.
1) Your records forthe proper number
2) What the company/client tells you is the proper number via phone or mail if in time
3) File for an extension, (to avoid penalty/interest) pay any estimated tax due and then file by 15 Aug, the 1040 with the proper numbers.

 

[EagleKeeper]

Originally posted by: Slew Foot
Crap, I sent in my return already but now my Dad gives me notice that a joint account we had has dividends in my name that I didn't include. How exactly do I fill out to 1040x form? DO all the dividends (Ordinary, qualified, and capital gain) go onto line 6?

You should do another return like what was submitted with the proper dividend numbers located, calculated and filled in in the proper form.

then you compare the two returns and fill in the 1040X with the numbers requested from each return (original and amended/new).
At the bottom of the 1040X you will need to fill in an apology to the IRS for wasting their time.

If you used tax S/W on a home computer, this is very easy. Make a copy of the return file and then modify the original with the proper info. Then do a side by side printout comparison.

I do not know how the online S/W will handle the 1040X.

If you did everything by hand, then just recalculate the dividend section and the 1040 changes and enter them into the 1040X as described above along with the apology.

 

[aldamon]

Originally posted by: EagleKeeper

Originally posted by: aldamon
I started IRAs today for me and my wife and arranged for funding. Should I wait a few days before submitting my return at TaxAct or can I do it right now?

Arranging for funding is not actually funding.

Youi can file your 2006 taxes and claim the IRA when the funds are ACTUALLY IN THE ACCOUNT

The money is already available to trade in both accounts, but technically hasn't settled yet. I'll just wait a few days for everything to clear just to be sure. Thanks.

 

[RagingBITCH]

Alright...tried filing my taxes online last week...it came back and said it was rejected b/c the IRS already has a return using my SSN. :| They said to mail in a copy of my return with a letter stating that the other return is invalid, and my SSN was compromised. Did I need to include any evidence (copy of DL, SSN card, etc) with that letter?

(Checked my credit and nothing out of the ordinary there)

 

[Slew Foot]

Originally posted by: EagleKeeper

Originally posted by: Slew Foot
Crap, I sent in my return already but now my Dad gives me notice that a joint account we had has dividends in my name that I didn't include. How exactly do I fill out to 1040x form? DO all the dividends (Ordinary, qualified, and capital gain) go onto line 6?

You should do another return like what was submitted with the proper dividend numbers located, calculated and filled in in the proper form.

then you compare the two returns and fill in the 1040X with the numbers requested from each return (original and amended/new).
At the bottom of the 1040X you will need to fill in an apology to the IRS for wasting their time.

If you used tax S/W on a home computer, this is very easy. Make a copy of the return file and then modify the original with the proper info. Then do a side by side printout comparison.

I do not know how the online S/W will handle the 1040X.

If you did everything by hand, then just recalculate the dividend section and the 1040 changes and enter them into the 1040X as described above along with the apology.

So what exactly do I need to send in? Just the 1040x, or the 1040x with the adjusted entire return again?

 

[Linflas]

My mother sold the house she and my father bought in 1968 last summer. My father passed away in 1994 and from what we understand the cost basis of the house is stepped up to what it was worth when he passed away in 1994. Since this is in Northern Virginia the house sold for a lot more than the current $250,000 exemption and my mother being retired with little income is looking to not pay anymore tax than she is legally obligated to pay. From everything we see about the only way to lower the taxable amount is to calculate the value of all the improvements they made to the house over the 38 years they lived in it. My question is are the improvements done prior to my fathers death in 1994 included in the stepped up basis or can they be added to that stepped up basis?

 

[Ns1]

Originally posted by: KoolAidKid
I am trying to figure out what I can deduct as unreimbursed business expenses. Here is the situation. My wife and I were on a business trip for 6 months. During this time we received the federal per diem rate for lodging, meals, and incidental expenses, 7 days a week for 6 months. We drove our personal autos while we were there and were not reimbursed for this. Which of the following items are an appropriate deduction?

-Security features installed in our home because we were going to be leaving it unattended for 6 months (e.g., alarm system, motion-sensing lights)
-Lawn maintenance while on business travel (had to pay someone to do it, would do it myself otherwise)
-Business clothes that we were forced to purchase to meet the dress code of the business trip site
-Mileage for all miles traveled during the 6 month period, including miles traveled to and from my house to the business trip site

Thanks in advance!

-Security features installed in our home because we were going to be leaving it unattended for 6 months (e.g., alarm system, motion-sensing lights)
No; while smart not necessary, would never pass an IRS audit
-Lawn maintenance while on business travel (had to pay someone to do it, would do it myself otherwise)
No, same as above.

-Business clothes that we were forced to purchase to meet the dress code of the business trip site
Yes
-Mileage for all miles traveled during the 6 month period, including miles traveled to and from my house to the business trip site
You can deduct whatever mileage in excess of your normal trip to work. ie if it took you 20 miles to get to work normally and now takes you 130, you can deduct 110 miles

 

[Ns1]

Originally posted by: Linflas
My mother sold the house she and my father bought in 1968 last summer. My father passed away in 1994 and from what we understand the cost basis of the house is stepped up to what it was worth when he passed away in 1994. Since this is in Northern Virginia the house sold for a lot more than the current $250,000 exemption and my mother being retired with little income is looking to not pay anymore tax than she is legally obligated to pay. From everything we see about the only way to lower the taxable amount is to calculate the value of all the improvements they made to the house over the 38 years they lived in it. My question is are the improvements done prior to my fathers death in 1994 included in the stepped up basis or can they be added to that stepped up basis?

No, they should have been included in the fair market value of the property in 1994.
Ref: IRS publication 523

//Edit

And, even if that were the case, you would have to depreciate the household improvements over their useful life, which, after 38 years, is probably nothing

 

[Sheepathon]

I just found out today that my parents had set up an UTMA for me 3-4 years ago (UTMA is under my social security #) and did a full redemption last year for a loss because the funds didn't exactly do that well (I think it was a couple thousand). My mom got the paperwork back from her accountant today and said her accountant told her to give me the paperwork and have me file it as a loss for the year 2006. I am 22, graduated college last June, and started work in Jan 07, but since this redemption was taken in 2006 and the SSN on the account is mine, supposedly I can report it as a 2006 loss so that when I file my 2007 tax return next year, I can get some kind of deduction from the IRS for tax year 2007. As far as I know, I did not have any taxable compensation for the year 2006.

I'm not sure where I'm supposed to go from here or what to do. Any pointers, please? Do I just go online somewhere to file an empty tax return with the exception of this loss...?

 

[Muse]

I am outright owner of the house I live in (no mortgage), a very old house (almost 100 years). During the 2nd WW, there was a housing crunch here and many houses were officially divided into two units, including mine. The process from an administrative and zoning perspective was done with an application for and approval of a city regulated "use permit." By virtue of this, the house was until last summer still officially divided into upper and lower units, even though the upstairs kitchen hasn't been used as a kitchen for decades.

I qualified for a no interest loan through my city's housing department in conjunction with a federal program, but the city officials told me that I had to have the house officially changed back into a single family dwelling or their hands were tied in releasing the allocated funds.

So, during the summer of 2006 I applied for a use permit with the city to initiate the change. I had to have all my neighbors sign a document saying they were cool with it, put a big sign in front of the house, fill out documents and pay a big fee to the city (over $1300), and then give my neighbors a big window of time to complain, if they had a mind to and then wait for the city's decision. At the end of the summer, the house was officially declared a single family dwelling. Is there any way I can factor my out of pocket costs into my taxes?

 

[UCDAggies]

If you own a small business and have close family members who own a small business. You can do income sharing to minimize how much taxes you pay. A little tip I learned in my tax class.

 

[Sensai]

Pondering to purchase just the Taxcut State version. Will it allow me to print two different completed profiles to mail in?

 

[Slew Foot]

Originally posted by: Slew Foot

Originally posted by: EagleKeeper

Originally posted by: Slew Foot
Crap, I sent in my return already but now my Dad gives me notice that a joint account we had has dividends in my name that I didn't include. How exactly do I fill out to 1040x form? DO all the dividends (Ordinary, qualified, and capital gain) go onto line 6?

You should do another return like what was submitted with the proper dividend numbers located, calculated and filled in in the proper form.

then you compare the two returns and fill in the 1040X with the numbers requested from each return (original and amended/new).
At the bottom of the 1040X you will need to fill in an apology to the IRS for wasting their time.

If you used tax S/W on a home computer, this is very easy. Make a copy of the return file and then modify the original with the proper info. Then do a side by side printout comparison.

I do not know how the online S/W will handle the 1040X.

If you did everything by hand, then just recalculate the dividend section and the 1040 changes and enter them into the 1040X as described above along with the apology.

So what exactly do I need to send in? Just the 1040x, or the 1040x with the adjusted entire return again?

Bump for an answer, and just to complicate things, I received my refunds via DD already, but with this 1040x, I end up owing a little bit. Do I write a check for the refund amount + the amount I owe now?

 

[udonoogen]

hello. i know charitable contributions are eligible for federal deductions. i am going through taxact and it's asking me for charitable contributions for state (california). i know that ya'll dont answer state-specific questions, but *in general* can you put in charitable contributions for both federal/state or does entering it in one disallow entering it in the other? i paid for jk lasser's tax tips and they haven't shed light on it at all (it just explains the tax law, not if i can enter it twice):

Charitable Qualified Contributions - Your California deduction may be different from your federal deduction. California limits the amount of your deduction to 50% of your adjusted gross income.

 

[EagleKeeper]

Originally posted by: RagingBITCH
Alright...tried filing my taxes online last week...it came back and said it was rejected b/c the IRS already has a return using my SSN. :| They said to mail in a copy of my return with a letter stating that the other return is invalid, and my SSN was compromised. Did I need to include any evidence (copy of DL, SSN card, etc) with that letter?

(Checked my credit and nothing out of the ordinary there)

The IRS will take your information and end up requuresting a presonal visit from all the used your SS#.

It may have been a typo on someones part or it could be that when you "sold" you SS# to an illegal many years ago, they are still using it. There could easily be multiple people using your SS#, but only one filed.

You could check your SS# records with the SS administration.

 

[EagleKeeper]

Originally posted by: Slew Foot

Originally posted by: EagleKeeper

Originally posted by: Slew Foot
Crap, I sent in my return already but now my Dad gives me notice that a joint account we had has dividends in my name that I didn't include. How exactly do I fill out to 1040x form? DO all the dividends (Ordinary, qualified, and capital gain) go onto line 6?

You should do another return like what was submitted with the proper dividend numbers located, calculated and filled in in the proper form.

then you compare the two returns and fill in the 1040X with the numbers requested from each return (original and amended/new).
At the bottom of the 1040X you will need to fill in an apology to the IRS for wasting their time.

If you used tax S/W on a home computer, this is very easy. Make a copy of the return file and then modify the original with the proper info. Then do a side by side printout comparison.

I do not know how the online S/W will handle the 1040X.

If you did everything by hand, then just recalculate the dividend section and the 1040 changes and enter them into the 1040X as described above along with the apology.

So what exactly do I need to send in? Just the 1040x, or the 1040x with the adjusted entire return again?

1040X with the papers supporting documents for the dividend changes.

Enclose a check of the overall difference (refund + amount owed) with the 1040X paperwork.

 

[EagleKeeper]

Originally posted by: Sheepathon
I just found out today that my parents had set up an UTMA for me 3-4 years ago (UTMA is under my social security #) and did a full redemption last year for a loss because the funds didn't exactly do that well (I think it was a couple thousand). My mom got the paperwork back from her accountant today and said her accountant told her to give me the paperwork and have me file it as a loss for the year 2006. I am 22, graduated college last June, and started work in Jan 07, but since this redemption was taken in 2006 and the SSN on the account is mine, supposedly I can report it as a 2006 loss so that when I file my 2007 tax return next year, I can get some kind of deduction from the IRS for tax year 2007. As far as I know, I did not have any taxable compensation for the year 2006.

I'm not sure where I'm supposed to go from here or what to do. Any pointers, please? Do I just go online somewhere to file an empty tax return with the exception of this loss...?

Up to $3000 in capital losses can be charged off against your income.
Amounts of loss greater than that amount can be rolled over to the next year.
If you do not use/need the full $3000, it is "lost"

 

[EagleKeeper]

Originally posted by: Muse
I am outright owner of the house I live in (no mortgage), a very old house (almost 100 years). During the 2nd WW, there was a housing crunch here and many houses were officially divided into two units, including mine. The process from an administrative and zoning perspective was done with an application for and approval of a city regulated "use permit." By virtue of this, the house was until last summer still officially divided into upper and lower units, even though the upstairs kitchen hasn't been used as a kitchen for decades.

I qualified for a no interest loan through my city's housing department in conjunction with a federal program, but the city officials told me that I had to have the house officially changed back into a single family dwelling or their hands were tied in releasing the allocated funds.

So, during the summer of 2006 I applied for a use permit with the city to initiate the change. I had to have all my neighbors sign a document saying they were cool with it, put a big sign in front of the house, fill out documents and pay a big fee to the city (over $1300), and then give my neighbors a big window of time to complain, if they had a mind to and then wait for the city's decision. At the end of the summer, the house was officially declared a single family dwelling. Is there any way I can factor my out of pocket costs into my taxes?

Those costs can be used against the cost basis when you sell the place. They do not factor into your taxes for 2006.

 

[EagleKeeper]

Originally posted by: UCDAggies
If you own a small business and have close family members who own a small business. You can do income sharing to minimize how much taxes you pay. A little tip I learned in my tax class.

And it is completely illegal.

Each business has it's own income and expenses.

The way the business is structured determines if the business or the owners are taxed on the profits from the business.

Anything done to shift the tax burden is called tax avoidance and the IRS is very happy to levy fines on people that try to do so and also on people that setup such mechanisms to have it done.

 

[EagleKeeper]

Originally posted by: udonoogen
hello. i know charitable contributions are eligible for federal deductions. i am going through taxact and it's asking me for charitable contributions for state (california). i know that ya'll dont answer state-specific questions, but *in general* can you put in charitable contributions for both federal/state or does entering it in one disallow entering it in the other? i paid for jk lasser's tax tips and they haven't shed light on it at all (it just explains the tax law, not if i can enter it twice):

Charitable Qualified Contributions - Your California deduction may be different from your federal deduction. California limits the amount of your deduction to 50% of your adjusted gross income.

Some Federal deductions may not be allowed for a state and reverse.

You wouild have to look into the CA rules for Charitable deductions.

 

[udonoogen]

Originally posted by: EagleKeeper

Originally posted by: udonoogen
hello. i know charitable contributions are eligible for federal deductions. i am going through taxact and it's asking me for charitable contributions for state (california). i know that ya'll dont answer state-specific questions, but *in general* can you put in charitable contributions for both federal/state or does entering it in one disallow entering it in the other? i paid for jk lasser's tax tips and they haven't shed light on it at all (it just explains the tax law, not if i can enter it twice):

Charitable Qualified Contributions - Your California deduction may be different from your federal deduction. California limits the amount of your deduction to 50% of your adjusted gross income.

Some Federal deductions may not be allowed for a state and reverse.

You wouild have to look into the CA rules for Charitable deductions.

after thinking it over, it makes sense now. federal tax law is less restrictive than california tax law but this restriction doesn't affect me unless i give to charity more than 50% of my adjusted gross income.

thank you for your help!

 

[archiloco]

started an llc but it was inactive all year do i need to report anything???

 

[EagleKeeper]

Originally posted by: Sensai
Pondering to purchase just the Taxcut State version. Will it allow me to print two different completed profiles to mail in?

Yes

I use the TaxCut w/ State to support multiple family members
I have createed a profile for each person and am able to import each unique profile from the previous year to save re-entry of static info.

 

[EagleKeeper]

Originally posted by: archiloco
started an llc but it was inactive all year do i need to report anything???

It would be better for it to report no income. Waste the stamp.