4th Annual Tax Thread - 2006

[EagleKeeper]

/sarcasm
Take a $100 bill, tear it up and flush it down the toilet. (ie. go to a professional)
/end sarcasm

Along with what you identified:

If you purchased the house in 2006 then you will need the closing statement.
Otherwise the interest/taxes paid for 2006 as reported to you.

For the medical expenses, you will have to have them total 7.5% of your total Adjusted Gross Income before they have any impact.

Business related expenses must total 2% of your AGI before they have any impact.
Business related does not cover commuting costs.

Credit card interest does not count.

Collect documentation and/or make a list of warm fuzzys to charity.
$$, and non-$$ items as well as any mileage to support charitable causes

If you live in a state that has income tax, you can not use the sales tax on the vehicle.


Even if you choose to toss away $$ by going to a "professional", download TaxCut (free) and play with it to understand what is required for taxes.

 

[Gravity]

Wife and I lived together in Louisiana all last year. I am the primary earner. She got a job as a teacher in July of 2006. This week she filed for divorce. She wants to file married filing seperately.

This means I cannot itemize my grad school expenses and can't claim her as a deduction. Looks like a $4k tax bill for me.

Can I compel her to file jointly? CAn I claim her as a dependent even though she had gross income for 6 months of the year?

Thanks,

Gravity

 

[EagleKeeper]

Originally posted by: Gravity
Wife and I lived together in Louisiana all last year. I am the primary earner. She got a job as a teacher in July of 2006. This week she filed for divorce. She wants to file married filing seperately.

This means I cannot itemize my grad school expenses and can't claim her as a deduction. Looks like a $4k tax bill for me.

Can I compel her to file jointly? CAn I claim her as a dependent even though she had gross income for 6 months of the year?

Thanks,

Gravity

You can not compell her to file jointly
You can not claim her as a dependent.

You should convince her that the best financial interest is to file jointly for 2006.
If she refuses, document it and use it as leverage for the divorce

 

[Prfstrkr]

I have moved to another state in 2006 to take a new job. My company only paid for moving of household goods from MY residence.

I had to fly back to pick up stuff from my parents' house. Can I claim the airfare as Moving Expenses? Thanks

 

[EagleKeeper]

Originally posted by: Prfstrkr
I have moved to another state in 2006 to take a new job. My company only paid for moving of household goods from MY residence.

I had to fly back to pick up stuff from my parents' house. Can I claim the airfare as Moving Expenses? Thanks

Yes - Form 3903

 

[Prfstrkr]

thanx a lot

 

[gluck]

Can you guys suggest a tax software for doing taxes of S-corp?
Would I need a separate software for personal taxes? Is there one that does both?

I have include mortgage payments and include my K1 from S-corp.

Thanks guys!

 

[EagleKeeper]

Originally posted by: gluck
Can you guys suggest a tax software for doing taxes of S-corp?
Would I need a separate software for personal taxes? Is there one that does both?

I have include mortgage payments and include my K1 from S-corp.

Thanks guys!

TurboTax and TaxCut both have business versions.
Those will also do the personal needs.

 

[sohcrates]

Is there really a max deduction limit?

Just did my wife and I's taxes and we got up to about 35K in itemized deductions and the software told us based on our income that's it. We cant take anymore deductions.

I am having trouble finding a chart online though that matches incomes with deduction levels?

 

[EagleKeeper]

Originally posted by: sohcrates
Is there really a max deduction limit?

Just did my wife and I's taxes and we got up to about 35K in itemized deductions and the software told us based on our income that's it. We cant take anymore deductions.

I am having trouble finding a chart online though that matches incomes with deduction levels?

It may be certain line items for the Schedule A that have income limitations

 

[TraumaRN]

Perhaps a dumb question....I've never e-filed but I plan to this year as I'd rather pay the 40 bucks(taxcut is cheaper for me than turbotax basic of having to do a state filing).

Do I still need to send my W2 into the appropriate agency or when I e-file it does that electronically??

Also I also get taxed by the city of Detroit because I work there, but DONT live there...would that go on my state filing?

 

[EagleKeeper]

Originally posted by: DeathBUA
Perhaps a dumb question....I've never e-filed but I plan to this year as I'd rather pay the 40 bucks(taxcut is cheaper for me than turbotax basic of having to do a state filing).

Do I still need to send my W2 into the appropriate agency or when I e-file it does that electronically??

Also I also get taxed by the city of Detroit because I work there, but DONT live there...would that go on my state filing?

The purpose of E-filing is so you do not have to send paperwork in.

You will need your previous years tax return for the AGI or else you will have to send in 1 document to the Feds.

State tax S/W should handle local taxing authorities for you after you identify the tax authority in a Q&A session.

 

[sohcrates]

can you give us a basic way to calculate your AGI?

it appears to be equal to Box 1 in my W-2 according to software, but i thought it was box 1 minus such things as retirement 401k contributions??

 

[EagleKeeper]

Originally posted by: sohcrates
can you give us a basic way to calculate your AGI?

it appears to be equal to Box 1 in my W-2 according to software, but i thought it was box 1 minus such things as retirement 401k contributions??

AGI is based on all income less allowable income removable items.
There are about 10 line items for income and the same for income removal.

 

[KarmaPolice]

This is more fore a homework question but still confuses the hell out of me. I am researching the tax laws using the CCH network but cant figure this one out. Lets say you are at a store somewhere and something bad happens do you..like you slip and fall on a wet spot. They dont want you to sue so they shower you with gifts...of about 1000-1500 of fair value worth. How would this be recorded? Would it be taxable or be part of income? I looked into Gifts, Bribes, and Compensation, but none of those seem to fit the description correctly.

understand if you dont want to answer...just thought i would give it a shot.

 

[Muse]

Most of my income last year was interest and dividend income. I made a few bucks (less than $500) with a W2 type job and a person I know who runs a very small business hired me on a 1099 basis (sort of like a consultant) to do a few odd job type things. It only came to $240, and I haven't received a 1099 from her. Is she not required to send me a 1099 if the amount was below a certain threshhold? If that's the case, do I not need to report this income? Thanks.

 

[RatDog]

This is kind of a general question. But, it could be considered state related, so I apologize in advance.

Is workplace municipality defined as the A.) mailing address B.)the actual physical location or C.)the address of the employer as shown on a w-2?

For instance the office where I work has a mailing address of City A, but if you look on a map the office is actually physically located within the corporation limits of City B. And since this is a branch office, my w-2 has the address of my employer listed as the headquarters in City C which also happens to be in a different state.

My employer does not take out locality taxes because get this "It was too hard for them to figure out"!!!!!!!

 

[sohcrates]

Are there any real-time tax advantages to making an IRA contribution each year?

One person told me the IRS makes a note that a contribution was made, but does not actually give a deduction or credit on the current years taxes because of this.

Also, can you confirm the IRA limit for 2007 is $4k? Are there any caps on making an IRA contribution if your salary is over a certain limit? (a financial advisor told me i could not make an IRA contribution because of this)

Thanks

edit: i'm talking traditional IRA's, not ROTH

 

[EagleKeeper]

Originally posted by: Muse
Most of my income last year was interest and dividend income. I made a few bucks (less than $500) with a W2 type job and a person I know who runs a very small business hired me on a 1099 basis (sort of like a consultant) to do a few odd job type things. It only came to $240, and I haven't received a 1099 from her. Is she not required to send me a 1099 if the amount was below a certain threshhold? If that's the case, do I not need to report this income? Thanks.

They are not required to send you a 1099

You are required to report the income.
You can use the Schedule C (and expense against the income) or treat the $$ as misc.

 

[EagleKeeper]

Originally posted by: RatDog
This is kind of a general question. But, it could be considered state related, so I apologize in advance.

Is workplace municipality defined as the A.) mailing address B.)the actual physical location or C.)the address of the employer as shown on a w-2?

For instance the office where I work has a mailing address of City A, but if you look on a map the office is actually physically located within the corporation limits of City B. And since this is a branch office, my w-2 has the address of my employer listed as the headquarters in City C which also happens to be in a different state.

My employer does not take out locality taxes because get this "It was too hard for them to figure out"!!!!!!!

Physical work location should be what is used to determine for tax purposes.

If you come up very short on your state taxes because of under withholding and could be assessed a penalty, you need to get your payroll adjusted and/or contact the state tax office to protect yourself from the employer mistake.
Mailing address is just for documentations purposes.

 

[EagleKeeper]

Originally posted by: sohcrates
Are there any real-time tax advantages to making an IRA contribution each year?

One person told me the IRS makes a note that a contribution was made, but does not actually give a deduction or credit on the current years taxes because of this.

Also, can you confirm the IRA limit for 2007 is $4k? Are there any caps on making an IRA contribution if your salary is over a certain limit? (a financial advisor told me i could not make an IRA contribution because of this)

Thanks

edit: i'm talking traditional IRA's, not ROTH

Interest earned within the traditional IRA is not taxed when earned.
Therefore if you use $2K to earn interest outside the plan, you pay taxes on the interest.
If you put the $2k in the plan immediately, the interest that the funds earn is not taxable in the current year.

That is the only benefit of funding the IRA as early as possible.

There are income limits for the IRA and also limitations are affected if you have a pension plan at work.
The details are available on the IRS Web site.

 

[Prfstrkr]

another question.

My name is on my parents' residential house documentations as well as on the Property tax bills we receive annually. The payment check ONLY comes out from my father's checking account though.

Somehow, the property tax of last year does not do my father any benefits, while it could have an effect on my deductions.

Both my dad and I are wondering if I am qualified to claim the property tax as my deductions? Thanks

 

[EagleKeeper]

Originally posted by: Prfstrkr
another question.

My name is on my parents' residential house documentations as well as on the Property tax bills we receive annually. The payment check ONLY comes out from my father's checking account though.

Somehow, the property tax of last year does not do my father any benefits, while it could have an effect on my deductions.

Both my dad and I are wondering if I am qualified to claim the property tax as my deductions? Thanks

If your name is on the government paperwork and you could be liable for the taxes then you could claim the taxes.
However, you may need to show payment of such if audited.
Your parent could gift you the money so you could pay the taxes and keep everything above board.

 

[Prfstrkr]

How do I show the proof of "My parent gifted me the money"?

Thanks

 

[EagleKeeper]

Originally posted by: Prfstrkr
How do I show the proof of "My parent gifted me the money"?

Thanks

That is not your problem.
You just need to show that the money came from your control.
The gifting was an example of how the funds could get to you from your parent.
If can be as simple as them writing you a check for $X. (as long as it is under $11k).
Then you can write a check for the property taxes. You now have a record of payment.