4th Annual Tax Thread - 2006

[blurredvision]

Originally posted by: EagleKeeper
Depending on your joint income, see the OP for filing options.

Doh! Sorry, didn't even bother to look at the first post, I just started reading on the last page . Thanks.

 

[thehstrybean]

EagleKeeper,

Thanks for the thread. You've made taxes easy to understand (even to a student like me!)

I'm a freshman in college and I've had 3 different jobs. Can I file all my taxes in one e-file?
Second, what can I do to get the most money back? Any secrets for students?

 

[EagleKeeper]

Originally posted by: thehstrybean
EagleKeeper,

Thanks for the thread. You've made taxes easy to understand (even to a student like me!)

I'm a freshman in college and I've had 3 different jobs. Can I file all my taxes in one e-file?
Second, what can I do to get the most money back? Any secrets for students?

The Federal return can be e-filed.

If all the jobs are within the same state, you should be able to e-file those also.

the best way to get the max amount of $$ back is to fill out every entry carefully.
You may be classifed as a dependant - ensure that the tuition credit is taken by your parents if you are classified as a dependant, else by you if you file single.

 

[bwatson283]

I wasn't around for the last 3 years that you did this. This is awesome, good work.

 

[kevbot]

Originally posted by: kevbot
I've heard a few people speak of credits for contributions to IRA's. Can I get credit for contributions to my simple IRA or my Roth IRA?



Yeap, there is a credit for qualified retirement savings contributions (reported on form 8880). You can check out IRS publication 590 or the form itself for the full details, but there are some limitations. If your AGI is over 25k (and you are claiming single filing status; the limits for head of household and married filing jointly are 37.5k and 50k, respectively), you can't take the credit. You also can't take the credit if you were born after 1/1/89, are claimed as a dependent on another's return for 2006 or were a full time student for 5 months during 2006.


Thanks!! Just what I was looking for. I heard a lot of talk, just no details.... until now.

 

[radioouman]

How do I properly claim business mileage on my personal car?

My employer reimburses at $.31 per mile. I asked them for a company car and I was told that one was not available, so I believe that I should be entitled to $.445 per mile. In 2006, I drove 21,000 miles for the business that did not include my commute. (I kept a log in a spreadsheet showing where I drove and when.)
They reimbursed me $6510 over the year, but at the IRS rate, they would have reimbursed me $9345.

I need to know how to claim the difference ($2835). My car is not a car that I bought for the business, it is just mileage on a personal vehicle. Since they did reimburse me something, I can't claim the entire 21000 miles.

Thank you

 

[techfuzz]

radioouman, I believe you'll need to fill out Form 2106. You should be able to deduct the difference between what your business reimbursed you and what the IRS allows per mile.

techfuzz

 

[radioouman]

Originally posted by: techfuzz
radioouman, I believe you'll need to fill out Form 2106. You should be able to deduct the difference between what your business reimbursed you and what the IRS allows per mile.

techfuzz

What can I expect from this? Is it going to be dollar for dollar or some percentage?

 

[EagleKeeper]

You will have to use the Schedule A.

On the Form 2106; you will enter the mileage driven, the amount reimbursed by your employer.

The difference between the IRS value and the employer value will then have 2% of your AGI subtracted and the rest goes against the bottom line of the Schedule A.

Note that the Form 2106 is for all related business expenses, not just mileage.

Tax S/W figures it out nicely for you. The key is that you MUST use the Schedule A (itemization). If you do not enough to itemize, you are out of luck.

 

[ShotgunSteven]

Would a laptop be deductible if it was required for a University class, and you were already deducting tuition, books, et cetera?

 

[EagleKeeper]

Originally posted by: ShotgunSteven
Would a laptop be deductible if it was required for a University class, and you were already deducting tuition, books, et cetera?

IRS FAQ

The cost of a personal computer is generally a personal expense that is not deductible. However, if the school bills everyone, as a condition of attendance or enrollment, for proprietary computer devices and/or software available no where else, then this may qualify as an expense towards either the Lifetime Learning Credit or Hope Credit. For more information, refer to Publication 970">http://www.irs.gov/publications/p970/index.html</a>, Chapters 2 and 3.

With a very minor wiggle room, the answer is NO.

 

[CPA]

Originally posted by: radioouman
How do I properly claim business mileage on my personal car?

My employer reimburses at $.31 per mile. I asked them for a company car and I was told that one was not available, so I believe that I should be entitled to $.445 per mile. In 2006, I drove 21,000 miles for the business that did not include my commute. (I kept a log in a spreadsheet showing where I drove and when.)
They reimbursed me $6510 over the year, but at the IRS rate, they would have reimbursed me $9345.

I need to know how to claim the difference ($2835). My car is not a car that I bought for the business, it is just mileage on a personal vehicle. Since they did reimburse me something, I can't claim the entire 21000 miles.

Thank you

If you are employed by the company, then you take it as an itemized deduction (Schedule A) under the Job Expenses and Miscellaneous deductions section. Unfortunately, you are only allowed to take the amount above 2% of your AGI and you need to have more in itemized deductions than your standard deduction.

 

[ShotgunSteven]

Thanks for recent and past answers, both of you. This thread is even better than cornering a CPA at a party while pretending to be drunk and belligerent. :thumbsup:

 

[Zoblefu]

We had an accountant do our taxes last year... and will again this year. But before it gets that far...

I was supposed to send in estimated taxes this year (4 payments, 1 each quarter)... I only sent in one of those four.

What's going to happen? (Obviously I'll still have to pay what I owe, but what is the penalty for not sending in the estimated taxes early?)

 

[amish]

Originally posted by: Zoblefu
We had an accountant do our taxes last year... and will again this year. But before it gets that far...

I was supposed to send in estimated taxes this year (4 payments, 1 each quarter)... I only sent in one of those four.

What's going to happen? (Obviously I'll still have to pay what I owe, but what is the penalty for not sending in the estimated taxes early?)

underpayment penalty. Text. you will have to file Form 2210.

 

[Zoblefu]

Originally posted by: amish

Originally posted by: Zoblefu
We had an accountant do our taxes last year... and will again this year. But before it gets that far...

I was supposed to send in estimated taxes this year (4 payments, 1 each quarter)... I only sent in one of those four.

What's going to happen? (Obviously I'll still have to pay what I owe, but what is the penalty for not sending in the estimated taxes early?)

underpayment penalty. Text. you will have to file Form 2210.

I also got married this year, so my tax bracket and such could change.

I assume there would only be this penalty if I end up owing a lot still when it gets down to the bottom line? I see from the link you provided that it says something about paying 90% early... so if I've done that then I don't have a penalty, right?

Also, seeing as it's 2007, is it too late to send in another estimated payment now (And do the rest around the beginning of april)?

 

[Parrotheader]

I didn't receive payment for my freelance work until 3Q and 4Q of 2006 (with the majority of it coming in 4Q.) I didn't send in any estimated taxes at the end of 3Q. Can (and should) I send in any estimated taxes for 4Q at this point? Or should I just wait and pay the full amount (including penalty) in April? I ran a quick estimate through our tax software and it looks like the amount due would be well into 4-figures.

I believe you can still technically send them estimated taxes in 'on time' for 4Q if they're postmarked by tomorrow (since today was a federal holiday) so that's the main reason I'm asking.

 

[Squisher]

I'm kinda curious about the tax liability I'll encounter from one of my dependants (granddaughter) receiving monthly Social Security payments of ~$500. I noticed they don't deduct any taxes from the payments.

 

[EagleKeeper]

Originally posted by: Parrotheader
I didn't receive payment for my freelance work until 3Q and 4Q of 2006 (with the majority of it coming in 4Q.) I didn't send in any estimated taxes at the end of 3Q. Can (and should) I send in any estimated taxes for 4Q at this point? Or should I just wait and pay the full amount (including penalty) in April? I ran a quick estimate through our tax software and it looks like the amount due would be well into 4-figures.

I believe you can still technically send them estimated taxes in 'on time' for 4Q if they're postmarked by tomorrow (since today was a federal holiday) so that's the main reason I'm asking.

Best to send it in Tues

 

[Parrotheader]

Thanks. I was leaning toward that.

I did a little more checking and according to the IRS site it sounds like I could theoretically just pay everything before the end of the month and be mostly fine as well.

From IRS.gov
"January payment. If you file your 2006 Form 1040 or Form 1040A by January 31, 2007, and pay the rest of the tax you owe, you do not need to make the payment due on January 15, 2007."

I'll likely send the check tomorrow though. We still don't have my wife's W2s and I can't guarantee I'll have my 1099s and all other forms in place before the end of the month.

 

[Muse]

What tax software are people using? Are most of you people using tax software? For a number of years I've been using Turbotax, but last year I decided I was fed up. Until last year they at least provided free federal efiling, but they stopped doing that and the fee was $15 to efile the federal return. I heard last year that Taxact was providing free efiling of federal and state returns.

How does Taxact compare with Turbotax and where can you get the best deals on it. I have a coupon to get Turbotax at Costco within the next several days for $22, but even so I think it's a bad deal if they gouge people to efile. Maybe I'll use the coupon for TT and mail both returns. Is Taxact easy to use and can you use it to effectively test different scenarios?

Thoughts?

 

[EagleKeeper]

1) if you read the OP, we will not recommend tax S/W. those that are out there are certified by the IRS to do the job when the proper numbers are entered.

Most vendors charge for e-filing unless you pay for their premium version.
The same goes for state taxes.

Use the links at the top to get free filing if you qualify.

 

[dxkj]

Can you write off exotic animals that you purchase for breeding purposes in a small business?

 

[jEnus]

I tried finding the answer, but no luck.

What 1099 form is needed for a small consulting biz I have on the side? There are so many that start out with 1099. Will tax soft. have this as well as sched. C for my deductions? If I purchased a laptop for my business so that I can connect to them from anywhere, as well as doing work for this business, but use it at home for checking email, browsing the internet - can I still deduct all or a part of the cost? Or do I decuct the depreciation?

 

[EagleKeeper]

Originally posted by: dxkj
Can you write off exotic animals that you purchase for breeding purposes in a small business?

This question has already been addressed in a response to Dr. Pizza previously in this thread