4th Annual Tax Thread - 2006

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FP

Diamond Member
Feb 24, 2005
4,568
0
0
Originally posted by: EagleKeeper
Originally posted by: binister
My old company gave me private stock in the company in 99'. They basically gave us a cash bonus, took it back and gave us shares of the company.

I sold the shares back to a current employee this year for 1/50 the price they were sold to me.

How do I claim this loss? There really isn't any paperwork because it was a private party sale.
Without any paperwork showing the "purchase" and "sale"; it would be difficult to claim the loss on the Schedule B.

Well, I did have the physical "shares" that listed the # of shares and the original purchase price. I signed, dated and handed the shares over to the employee when I sold them. I have a scan of the original shares but not the signed/dated shares. The paperwork really isn't needed unless I am audited right?

Where would I claim it on the schedule B? As I was doing my taxes in TurboTax it has told me I need to claim the loss as an ordinary loss on Form 4797 since the sale falls under a section 1244 loss. Anyone know if this is correct?

link

 

spidey07

No Lifer
Aug 4, 2000
65,469
5
76
I know not 2006 related, but should be an easy question.

What changed with 401k plans/employers/HCE for year2007?. According to a memo from my employer federal law says they have to stop the match the match and cap contributions at 12%.
 

Lotheron

Platinum Member
Oct 21, 2002
2,188
2
71
Just a general income tax question: Is there a minimum amount of wage that is required before a 1099 is issued?
 

CupCak3

Golden Member
Nov 11, 2005
1,318
1
81
EagleKeeper: I would like to give you a big thanks for all the work you put into answering everyone's questions! This thread has been quite the long read but well worth it in my option I'm glad to see I'm not the only guy out of college, who married and bought a house!

I have several quick questions:

I read in this thread you can have deductions from getting married. My wife and I married this year, what of these expenses can we deduct from our taxes?

We also bought a house this year, is there anything else we can deduct besides mortgage interest and property taxes? We paid closing costs for the house.

My mortgage is an 80/20. 80 is the mortgage, 20 is a loan from the bank. Can I deduct the interest from the "20" loan off my taxes also?

After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?

We previously rented a house. My move was not mandated by my work but we moved as far as we did because it cut an hour off my drive every day. Could I make the mileage deductible? No moving company though... unless Uncle Sam now lets us itemize blood and sweat


Thank you again for your time and effort!!!



 

dlock13

Platinum Member
Oct 24, 2006
2,806
2
81
I am seventeen going on eighteen in March and am unsure about whether or not I will be getting a tax refund.
So... Will I?
 

pg22

Platinum Member
Feb 9, 2000
2,644
0
76
When you work/earn money abroad....what happens?

I haven't had a job for a few years since I was a full time student, and since 7/1/06 I've been working abroad as an English teacher, making a couple grand per month. I've been getting paid in the foreign currency and I've been paying taxes. So I shouldn't have to pay taxes in the U.S., correct? Since I've never actually filed taxes, I'm not quite sure what should be done. Use good old Turbo Tax and go from there?

The critical point of all this, is that I will be attending law school in the Fall of this year. And that's a loan nightmare. I'm trying to get the ball rolling ASAP so I can fill out all the FAFSA, Stafford, Grad Plus, etc etc etc forms now. Good lord is this a complicated mess.

Any help would be greatly appreciated.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: Slashur
Just a general income tax question: Is there a minimum amount of wage that is required before a 1099 is issued?
No - It is up to the generator of the 1099 to determine when they choose to issue one.

There is a max limit of mic income that can be listed on the 1040 before you have to use the Schedule C.

 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: CupCak3
EagleKeeper: I would like to give you a big thanks for all the work you put into answering everyone's questions! This thread has been quite the long read but well worth it in my option I'm glad to see I'm not the only guy out of college, who married and bought a house!

I have several quick questions:

I read in this thread you can have deductions from getting married. My wife and I married this year, what of these expenses can we deduct from our taxes?

We also bought a house this year, is there anything else we can deduct besides mortgage interest and property taxes? We paid closing costs for the house.

My mortgage is an 80/20. 80 is the mortgage, 20 is a loan from the bank. Can I deduct the interest from the "20" loan off my taxes also?

After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?

We previously rented a house. My move was not mandated by my work but we moved as far as we did because it cut an hour off my drive every day. Could I make the mileage deductible? No moving company though... unless Uncle Sam now lets us itemize blood and sweat


Thank you again for your time and effort!!!
I read in this thread you can have deductions from getting married. My wife and I married this year, what of these expenses can we deduct from our taxes?
Regretfully, you mis-understood my humor related to this question. The person wanted to know what he could do to increase his deductions. My indication implied that getting married and start collecting dependants would help.

If you both are "normal" wage earners, the wedding gets you filing jointly; a higher deduction threshold and a bunch of warm fuzzies. If you had a business, then you may be able to have some of the wedding costs classified as client entertainment.
We also bought a house this year, is there anything else we can deduct besides mortgage interest and property taxes? We paid closing costs for the house.
Look at the closing statement. Anything that has the word tax or is a government related fee is also deductible along with any points.
My mortgage is an 80/20. 80 is the mortgage, 20 is a loan from the bank. Can I deduct the interest from the "20" loan off my taxes also?
All loan interest is deductible.
After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?
Upgrades are not deductible at all unless you are renting the some part of the dwelling to someone else. At that point the Schedule E will come into play.
We previously rented a house. My move was not mandated by my work but we moved as far as we did because it cut an hour off my drive every day. Could I make the mileage deductible? No moving company though... unless Uncle Sam now lets us itemize blood and sweat
Relocation costs are only applicable IF it is for a new employment position. At that point the Form 3903 will come into play.

 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: dlock13
I am seventeen going on eighteen in March and am unsure about whether or not I will be getting a tax refund.
So... Will I?
It will depend if you actually worked and had taxes withheld from your paycheck. You will probably be classifed as a dependant which will also have an impact.

 

BD2003

Lifer
Oct 9, 1999
16,815
1
76
I'm a 2nd bach in college, my parents still send me a good deal of money - is that money considered income that I must report, or a gift?

I still have a P/T job- assuming I make little enough to get pretty much the entire amount withheld back, can the educational credits (hope etc), actually raise my refund above what I actually paid out, or is that the max I can ever receive?

I heard that student loan interest payments can be deducted...how does that apply in my situation?
 

CPA

Elite Member
Nov 19, 2001
30,322
4
0
Originally posted by: pg22
When you work/earn money abroad....what happens?

I haven't had a job for a few years since I was a full time student, and since 7/1/06 I've been working abroad as an English teacher, making a couple grand per month. I've been getting paid in the foreign currency and I've been paying taxes. So I shouldn't have to pay taxes in the U.S., correct? Since I've never actually filed taxes, I'm not quite sure what should be done. Use good old Turbo Tax and go from there?

The critical point of all this, is that I will be attending law school in the Fall of this year. And that's a loan nightmare. I'm trying to get the ball rolling ASAP so I can fill out all the FAFSA, Stafford, Grad Plus, etc etc etc forms now. Good lord is this a complicated mess.

Any help would be greatly appreciated.


If you are a US citizen, all world-wide income is taxable. There are exclusions, but you must have lived in your current country for at least 330 days. Less than that and you should be able to deduct certain expenses, like travel, meals and lodging. Read Publication 54 for more info.
 

CPA

Elite Member
Nov 19, 2001
30,322
4
0
Originally posted by: Slashur
Just a general income tax question: Is there a minimum amount of wage that is required before a 1099 is issued?

$600 is the minimum before a 1099 is legally required to be issued. $0 is the minimum that is legally required to be filed - meaning just because you didn't receive a 1099 doesn;t mean that you don't have to report.
 

CPA

Elite Member
Nov 19, 2001
30,322
4
0
Originally posted by: BD2003
I'm a 2nd bach in college, my parents still send me a good deal of money - is that money considered income that I must report, or a gift?

Gifts are taxable to the giver, not the recipient. Your parents can use the annual gift exclusion and lifetime estate gift exclusion before it becomes taxable to them, though.

I still have a P/T job- assuming I make little enough to get pretty much the entire amount withheld back, can the educational credits (hope etc), actually raise my refund above what I actually paid out, or is that the max I can ever receive?

Yes, they can (Form 8863).
I heard that student loan interest payments can be deducted...how does that apply in my situation?

Studen loan interest is an adjustment to income to get to AGI (line 33 on the 1040).
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: BD2003
I'm a 2nd bach in college, my parents still send me a good deal of money - is that money considered income that I must report, or a gift?

I still have a P/T job- assuming I make little enough to get pretty much the entire amount withheld back, can the educational credits (hope etc), actually raise my refund above what I actually paid out, or is that the max I can ever receive?

I heard that student loan interest payments can be deducted...how does that apply in my situation?
You need to also determine if your parents claim you as an dependant.

 

edprush

Platinum Member
Sep 18, 2000
2,541
0
0
Is there an advantage/disadvantage to claiming zero allowances on my W-4?

I have always claimed zero allowances and had a little extra withheld from each paycheck.

It wouldn't make sense to claim allowances and ALSO have additonal taken out of my checks would it?

Any idea how much an 'allowance' is worth?
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: edprush
Is there an advantage/disadvantage to claiming zero allowances on my W-4?

I have always claimed zero allowances and had a little extra withheld from each paycheck.

It wouldn't make sense to claim allowances and ALSO have additonal taken out of my checks would it?

Any idea how much an 'allowance' is worth?
If you wish to give the government a interest free load; then give them as much as you can afford from each paycheck.

Or take as much as you can legally and stuff it into an interest bearing account (of some type) that you can tap into at the end of the year to pay estimated tax owed.

An allowance = 1 dependant on your 1040 tax form. The value of that dependant is then based on the income bracket that you are in.

 

dlock13

Platinum Member
Oct 24, 2006
2,806
2
81
Originally posted by: EagleKeeper
Originally posted by: dlock13
I am seventeen going on eighteen in March and am unsure about whether or not I will be getting a tax refund.
So... Will I?
It will depend if you actually worked and had taxes withheld from your paycheck. You will probably be classifed as a dependant which will also have an impact.
I did have some taxes withheld. I think in total ~$70 worth. I realize its not a lot. I'm young and its money so at least it helps me anyway it can.
 
Sep 29, 2004
18,656
67
91
ANyone here know about wash sale rules as they pertain to options trading? In particular naked puts? it's an interesting take on the term "signifigantly similar security" and the gov knows the laws are to vague when it comes to options.

PM me if you have a good answer

EDIT:
http://www.fairmark.com/capgain/wash/wsoption.htm
Sounds like the gov still has to clear this up. Been almost 10 years now and its stil lvague terminology on the books. Bottom line is if the new option allows you to participate in the fluctuations in a very similar manner ... it's a wash sale. So, if you have deep in the money options for both transactions, he wash sale rule seems like it would apply.

I usually try to avoid wash sale rules in options whenever possbile .... but when a deal is there, I go for it.
 

CupCak3

Golden Member
Nov 11, 2005
1,318
1
81
Thank you very much for the informative response EagleKeeper!

quote:

--------------------------------------------------------------------------------
After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?
--------------------------------------------------------------------------------

Upgrades are not deductible at all unless you are renting the some part of the dwelling to someone else. At that point the Schedule E will come into play.

Actually I did the dirty deed and read up on Schedule E on the IRS website. If I'm reading correctly, if you live in the rented residence for more than 15 days, you have the same exemptions as not renting the house. (not being able to deduct upgrades) Unless its a duplex with the other unit having a different address. Is this correct?


With student loans, my wife and I have one loan which is not a "government' loan. It is a private student loan through Sallie Mae. Can I deduct the interest from the private student loan from my taxes?

With my job(engineer), I buy a decent amount of reference books. Can I deduct these along with my professional membership?


Thanks again!
 

edro

Lifer
Apr 5, 2002
24,326
68
91
Question:
I bought a house this year in September and have only made 3 payments this year. The interest, tax, closing taxes and fees, etc should not be over the standard deduction.

What household purchases can be deducted? (Upgrades, maintenance, etc.)

I have always heard that you should keep all your receipts for household purchases because they are deductable. But... earlier in this thread, you said they are not, unless you rent out the house (and I am guessing that rental income must be claimed and taxed, so if you were renting out a room, the benefit of admitting it would be nil)

Thanks!
 

iamwiz82

Lifer
Jan 10, 2001
30,772
13
81
There is a tax credit for energy efficient upgrades to your house. I cannot remember the form off the top of my head, though. Things like solar panels, efficient windows, or metal roofs are covered.
 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: CupCak3
Thank you very much for the informative response EagleKeeper!

quote:

--------------------------------------------------------------------------------
After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?
--------------------------------------------------------------------------------

Upgrades are not deductible at all unless you are renting the some part of the dwelling to someone else. At that point the Schedule E will come into play.

Actually I did the dirty deed and read up on Schedule E on the IRS website. If I'm reading correctly, if you live in the rented residence for more than 15 days, you have the same exemptions as not renting the house. (not being able to deduct upgrades) Unless its a duplex with the other unit having a different address. Is this correct?


With student loans, my wife and I have one loan which is not a "government' loan. It is a private student loan through Sallie Mae. Can I deduct the interest from the private student loan from my taxes?

With my job(engineer), I buy a decent amount of reference books. Can I deduct these along with my professional membership?


Thanks again!
Your reading of the Schedule E limitations is correct.

Interest on Student loans is deductible - it does not matter who holds the note.

Books and professional memberships will fall under the Form 2106 which requires Schedule A

 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: iamwiz82
There is a tax credit for energy efficient upgrades to your house. I cannot remember the form off the top of my head, though. Things like solar panels, efficient windows, or metal roofs are covered.
Treasury and IRS Provide Guidance for energy Credits for Homeowners
During 2006, individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns next year. The credit will also be available for purchases in 2007. Manufacturers offering energy efficient items such as insulation or storm windows can assure their customers that their energy efficient items will qualify for the tax credit if certain energy efficiency requirements are met.

A recent tax law change provides a tax credit to improve the energy efficiency of existing homes. The law provides a 10 percent credit for buying qualified energy efficiency improvements. To qualify, a component must meet or exceed the criteria established by the 2000 International Energy Conservation Code (including supplements) and must be installed in the taxpayer?s main home in the United States.

The following items are eligible:

Insulation systems that reduce heat loss/gain
Exterior windows (including skylights)
Exterior doors
Metal roofs (meeting applicable Energy Star requirements).

In addition, the law provides a credit for costs relating to residential energy property expenses. To qualify as residential energy property, the property must meet certification requirements prescribed by the Secretary of the Treasury and must be installed in the taxpayer?s main home in the United States.


The following items are eligible:

$50 for each advanced main air circulating fan
$150 for each qualified natural gas, propane, or oil furnace or hot water boiler
$300 for each item of qualified energy efficient property.

The maximum credit for all taxable years is $500 ? no more than $200 of the credit can be attributable to expenses for windows.


Additionally, the new law makes a credit available to those who add qualified solar panels, solar water heating equipment, or a fuel cell power plant to their homes in the United States. In general, a qualified fuel cell power plant converts a fuel into electricity using electrochemical means, has an electricity?only generation efficiency of more than 30 percent and generates at least 0.5 kilowatts of electricity.

Taxpayers are allowed one credit equal to 30 percent of the qualified investment in a solar panel up to a maximum credit of $2,000, and another equivalent credit for investing in a solar water heating system. No part of either system can be used to heat a pool or hot tub.


Additionally, taxpayers are also allowed a 30 percent tax credit for the purchase of qualified fuel cell power plants. The credit may not exceed $500 for each .5 kilowatt of capacity.

 

EagleKeeper

Discussion Club Moderator<br>Elite Member
Staff member
Oct 30, 2000
42,589
5
0
Originally posted by: edro
Question:
I bought a house this year in September and have only made 3 payments this year. The interest, tax, closing taxes and fees, etc should not be over the standard deduction.

What household purchases can be deducted? (Upgrades, maintenance, etc.)

I have always heard that you should keep all your receipts for household purchases because they are deductable. But... earlier in this thread, you said they are not, unless you rent out the house (and I am guessing that rental income must be claimed and taxed, so if you were renting out a room, the benefit of admitting it would be nil)

Thanks!
No purchases are deductible unless you will expect to make a profit of over $500K when selling the house.

 

CupCak3

Golden Member
Nov 11, 2005
1,318
1
81
Originally posted by: EagleKeeper
Originally posted by: CupCak3
Thank you very much for the informative response EagleKeeper!

quote:

--------------------------------------------------------------------------------
After we bought the house, we did a good deal of work... new roof, painting, updating garage. Total I'd say around 10% or more of my wife's and my total income. Can any of this be deducted?
--------------------------------------------------------------------------------

Upgrades are not deductible at all unless you are renting the some part of the dwelling to someone else. At that point the Schedule E will come into play.

Actually I did the dirty deed and read up on Schedule E on the IRS website. If I'm reading correctly, if you live in the rented residence for more than 15 days, you have the same exemptions as not renting the house. (not being able to deduct upgrades) Unless its a duplex with the other unit having a different address. Is this correct?


With student loans, my wife and I have one loan which is not a "government' loan. It is a private student loan through Sallie Mae. Can I deduct the interest from the private student loan from my taxes?

With my job(engineer), I buy a decent amount of reference books. Can I deduct these along with my professional membership?


Thanks again!
Your reading of the Schedule E limitations is correct.

Interest on Student loans is deductible - it does not matter who holds the note.

Books and professional memberships will fall under the Form 2106 which requires Schedule A


Thank you! Now to search for reciepts
 
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