4th Annual Tax Thread - 2006

[EagleKeeper]

Originally posted by: cw42
I'll be graduating college in the next year, and need to learn how to take care of my finances/budget once I move into my own place and work full-time. At this point, it seems like I plan on living in NJ and commuting to NY to work. Right now i'm trying to get an idea of how much money i'd take home by using this calculator: http://www.paycheckcity.com/copaycycle/netpaycalculator.asp

I'm not sure how accurate it is. From there, i'd get a better idea of how much rent I can afford, save, etc... Anyways, if I live in NJ and commute to NYC to work - do I have to pay any kind of special taxes?

As stated in the OP, we are not equipped to handle state tax questions.
Tolls & Parking that you pay for commuting are NOT deductible.

I can tell you that Tax S/w does not like to handle crossing state boundaries.

 

[EagleKeeper]

Originally posted by: Drakkon
I moved up in a tax bracket at the end of 2005...this included a 401k which i contributed to extensively because of the extra income. I donut have a house. I have no school loans. I have a car loan and thats it. In the past i filed simply online. I punched in all my data this year (work already gave me my w2 and bank provided me statements) and i guess because i didn't change my allowances? I'm getting raped. Is it worth it to go to a tax pro and get this looked at?
sorry if this has already been asked in some way...i read through a buncha responses but didn't see anything that quite fit...thanks for doing this though after all i read through I'm prepared for when i (hopefully) get a house this year

No house, no Dependants leaves you only really state income tax and charity to itemize with. No real help there.

If your extra income is not W2, then you can try the Schedule C route to reduce to tax hit by finding expenses to write off against the extra income.

A Tax pro will charge you to tell you what you have already figured out.
They can manipulate numbers but, without the "evidence", the only thing that can be done is tell the IRS lies.

 

[EagleKeeper]

Originally posted by: Malak
Just out of curiousity, when are boxes 1, 3, and 5 different on your W-2 form?

some income is not taxed for SS or Medicare or Federal.
Also, there are limits on the SS income that is taxable.

 

[fbrdphreak]

I may get married soon: how does that affect my filing for next year? I wouldn't have been "married" for the whole year, does that matter?

 

[EagleKeeper]

Originally posted by: fbrdphreak
I may get married soon: how does that affect my filing for next year? I wouldn't have been "married" for the whole year, does that matter?

It will allow to you file jointly and include your spouse's income with yours.
You do not have to file jointly; you can file as seperate - when you get your paperwork in order, then you (couple) can determine what is best.

As long as you are married on 31 Dec, that is all that counts.

 

[Ferocious]

n/m

 

[fbrdphreak]

Originally posted by: EagleKeeper

Originally posted by: fbrdphreak
I may get married soon: how does that affect my filing for next year? I wouldn't have been "married" for the whole year, does that matter?

It will allow to you file jointly and include your spouse's income with yours.
You do not have to file jointly; you can file as seperate - when you get your paperwork in order, then you (couple) can determine what is best.

As long as you are married on 31 Dec, that is all that counts.

Thanks!!

 

[Narmer]

If I get a 1099-G "Statement of Tax Overpayment", what can I do to make that beneficial to me? That document simply states that this is a notice, and it's not a bill or a refund. How can I include it in my tax form?

 

[EagleKeeper]

en thThe 1099-G from the State may be due to a tax refund from your state income tax.
If so, and you itemized last year taxes, it is entered as income on your 1040 for this year.

If you did not itemize last year, then it is not needed for this year.


If the 1099-G is not from the state, then you have not provided enough details to be advised.

 

[Narmer]

Originally posted by: EagleKeeper
en thThe 1099-G from the State may be due to a tax refund from your state income tax.
If so, and you itemized last year taxes, it is entered as income on your 1040 for this year.

If you did not itemize last year, then it is not needed for this year.


If the 1099-G is not from the state, then you have not provided enough details to be advised.

It is from the state. Are you saying I have to re-enter the given amount on the 1099-G form as income? Is that beneficial to me?

Oh, another question. If I got injured on the job and was out for 3 months, where do I put that info? Will they ask about it? I know the question is rough but I want to get a heads up when my W2 comes in.

 

[EagleKeeper]

Narmer

If you itemized last year, you will have to enter the amount of the 1099-G as a income tax refund. there is a line item for that.


Being injured has no bearing on the income unless you receive some special type of income.

If so, whoever was responsible for the payments will send you paperwork and instructions if it is not already included in the W2 from the employer.

 

[Narmer]

Originally posted by: EagleKeeper
Narmer

If you itemied last year, you will have to enter the amount of the 1099-G as a income tax refund. there is a line item for that.


Being injured has no bearing on the income unless you receive some special type of income.

If so, whoever was responsible for the payments will send you paperwork and instructions if it is not already included in the W2 from the employer.

Thank you very much. Your service here is very much appreciated.

 

[Bateluer]

Can I deduct the cost of college text books? If so, how is that done? Is it rolled into the Hope Credit with tuition, ie, just adding tuition costs and text book costs together?

 

[EagleKeeper]

Originally posted by: Bateluer
Can I deduct the cost of college text books? If so, how is that done? Is it rolled into the Hope Credit with tuition, ie, just adding tuition costs and text book costs together?

Textbooks and other support items are NOT able to be rolled into the tuition unless it is done within the tuition bill itself

 

[Bateluer]

Originally posted by: EagleKeeper

Originally posted by: Bateluer
Can I deduct the cost of college text books? If so, how is that done? Is it rolled into the Hope Credit with tuition, ie, just adding tuition costs and text book costs together?

Textbooks and other support items are NOT able to be rolled into the tuition unless it is done within the tuition bill itself

Dang, the text books in this case were separate expenses.

 

[chrisms]

I sold about $8000 of stock with about $3000 of that being profit. I was technically independent for the majority of last year, although my parents will likely file me as a dependent as I am one now and they are paying my tuition. With independent status I had an income (including the stocks) of about $12,000-$15,000 last year.

My question is- am I going to pay significantly higher tax on my stock profits if I am filed as a dependent on my parents taxes?

 

[EagleKeeper]

Originally posted by: chrisms
I sold about $8000 of stock with about $3000 of that being profit. I was technically independent for the majority of last year, although my parents will likely file me as a dependent as I am one now and they are paying my tuition. With independent status I had an income (including the stocks) of about $12,000-$15,000 last year.

My question is- am I going to pay significantly higher tax on my stock profits if I am filed as a dependent on my parents taxes?

Not as a higher tax rate; however, being a dependant will increase the amount of taxable income for you. Your deduction is much less.

 

[chrisms]

Originally posted by: EagleKeeper

Originally posted by: chrisms
I sold about $8000 of stock with about $3000 of that being profit. I was technically independent for the majority of last year, although my parents will likely file me as a dependent as I am one now and they are paying my tuition. With independent status I had an income (including the stocks) of about $12,000-$15,000 last year.

My question is- am I going to pay significantly higher tax on my stock profits if I am filed as a dependent on my parents taxes?

Not as a higher tax rate; however, being a dependant will increase the amount of taxable income for you. Your deduction is much less.

So... yes? I don't think I have a choice anyway, my parents are paying for everything now and will claim me as a dependent whether I really was or not. I just wanted to know if I should expect to be owing some money come tax time and it seems as though I will.

Thanks for the help.

 

[CPA]

Originally posted by: chrisms

Originally posted by: EagleKeeper

Originally posted by: chrisms
I sold about $8000 of stock with about $3000 of that being profit. I was technically independent for the majority of last year, although my parents will likely file me as a dependent as I am one now and they are paying my tuition. With independent status I had an income (including the stocks) of about $12,000-$15,000 last year.

My question is- am I going to pay significantly higher tax on my stock profits if I am filed as a dependent on my parents taxes?

Not as a higher tax rate; however, being a dependant will increase the amount of taxable income for you. Your deduction is much less.

So... yes? I don't think I have a choice anyway, my parents are paying for everything now and will claim me as a dependent whether I really was or not. I just wanted to know if I should expect to be owing some money come tax time and it seems as though I will.

Thanks for the help.

Just make sure you subtract the expenses of your sale from your profit - not that it will help a lot.

 

[jEnus]

Originally posted by: EagleKeeper

Originally posted by: 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 deduct the depreciation?

If you are receiving the 1099 from a client, then it is their responsibility.

Your responsibility is to use the Schedule C for your business deductions.
If you purchase equipment that is not used 100% for work related, then you must adjust the expensing of it proportionally. Usually, the laptop will show as a one time expense.
Tax s/w will assist you with such matters.

Neg then on 1099 - I thought I would have to supply that for myself. How/what form do I report earnings I make from consulting biz?

Thanks.

 

[gluck]

First of all - Great job all of you who contribute towards enlightening us.
Second: My problem
I incorporated last year (S-Corp) (only one share holder - me) and have been doing everything through checks or cards. No cash receipts. Should I be able to file a return through any of the business softwares? If so please suggest me a nice software so that I could do both my personal and business taxes.

A question on the expenses. Does end of year mean all that is in the account is the final figure?
I did not get the last two checks for my invoices in dec. I deposited them in Jan. Will that be a part of the firm's income last year.
Similarly some of the bills credit card/internet etc. were paid in the new year so do I deduct those or not?
I wrote a check to a contractor who has deposited the check in the bank. Should I subtract the amount as my check was dated in Dec?

I will appreciate all responses.

Thanks guys.

 

[EagleKeeper]

Originally posted by: jEnus

Originally posted by: EagleKeeper

Originally posted by: 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 deduct the depreciation?

If you are receiving the 1099 from a client, then it is their responsibility.

Your responsibility is to use the Schedule C for your business deductions.
If you purchase equipment that is not used 100% for work related, then you must adjust the expensing of it proportionally. Usually, the laptop will show as a one time expense.
Tax s/w will assist you with such matters.

Neg then on 1099 - I thought I would have to supply that for myself. How/what form do I report earnings I make from consulting biz?

Thanks.

Schedule C is used for your income as well as expenses

 

[EagleKeeper]

Originally posted by: gluck
First of all - Great job all of you who contribute towards enlightening us.
Second: My problem
I incorporated last year (S-Corp) (only one share holder - me) and have been doing everything through checks or cards. No cash receipts. Should I be able to file a return through any of the business softwares? If so please suggest me a nice software so that I could do both my personal and business taxes.

A question on the expenses. Does end of year mean all that is in the account is the final figure?
I did not get the last two checks for my invoices in dec. I deposited them in Jan. Will that be a part of the firm's income last year.
Similarly some of the bills credit card/internet etc. were paid in the new year so do I deduct those or not?
I wrote a check to a contractor who has deposited the check in the bank. Should I subtract the amount as my check was dated in Dec?

I will appreciate all responses.

Thanks guys.

IRS S Corp

Expenses count when the payment was made.
Income counts when you receive payment, not when invoiced.

Net Income for S Corps is passed straight through to the share holders.


Because it is only you, you will have all the income on your 1040 and may need to use the Schedule E.

 

[jfall]

I really feel like I do not have a handle on my taxes this year. If anyone could offer me any assistance or point me in any direction I would really, really appreciate it.

I'm a Canadian Citizen, living in Canada. 100% of the work I do is remote work for a web hosting company based in the USA. They claim me as an independent contractor and send me checks.

What steps should I take to ensure that I am filing my taxes properly in Canada and/or the US (if necessary)? Was I suppose to register a business name or tell the Canadian and/or US government that I am an independent contractor in some way? As it stands right now, neither government has any idea what I am doing. Canada just sent me T1 special tax package this year based on the previous year when I was actually working for a Canadian company.

 

[EagleKeeper]

Originally posted by: jfall
I really feel like I do not have a handle on my taxes this year. If anyone could offer me any assistance or point me in any direction I would really, really appreciate it.

I'm a Canadian Citizen, living in Canada. 100% of the work I do is remote work for a web hosting company based in the USA. They claim me as an independent contractor and send me checks.

What steps should I take to ensure that I am filing my taxes properly in Canada and/or the US (if necessary)? Was I suppose to register a business name or tell the Canadian and/or US government that I am an independent contractor in some way? As it stands right now, neither government has any idea what I am doing. Canada just sent me T1 special tax package this year based on the previous year when I was actually working for a Canadian company.

The best we can do is point you to http://www.irs.gov/publications/p597/ar01.html

I would expect that the client should send you some paperwork showing funds paid.