4th Annual Tax Thread - 2006

[imported_griffis]

I am getting married in July of this year and we have a new two month old son and I am buying a house which I will close on in June of this year. My fiance does not work, so I am the primary person for income of the family and it will stay that way for the year. For this year's W-4 withholding purposes, can I change my status from Single claiming 0 to Married claiming 0 since I will be married by the end of the year? If so, will this hurt me any as far as taxes go? Any help is appreciated, let me know if I was not clear. Thanks!

 

[EagleKeeper]

Originally posted by: griffis
I am getting married in July of this year and we have a new two month old son and I am buying a house which I will close on in June of this year. My fiance does not work, so I am the primary person for income of the family and it will stay that way for the year. For this year's W-4 withholding purposes, can I change my status from Single claiming 0 to Married claiming 0 since I will be married by the end of the year? If so, will this hurt me any as far as taxes go? Any help is appreciated, let me know if I was not clear. Thanks!

the number claimed on the W4 is what is relevant to the withholding system.

You can easily claim 4 and still expect some type of refund.

You, the wife and child = 3. Because the child is young, there are additional credits that kick in to at least equal an additional exemption (+1 = 4). Next year, you can look at the deductions caused by the house (taxes/interest) and then bump an extra exemption or two to help during the year and reduce the tax overpayment.

 

[Nithin]

hi eagle,
thanks a lot for all the work.

my question is about state filing. my wife and i filed a joint federal return. her income is from Illinois and mine is from California.


When I file my california state tax, I have to pay tax on only my income correct? How do I deduct her out-of-state income from the federal total when I file my California state tax?

I didn't see anything on the 540. Do I have to file some other forms?

Thanks a lot,
Nithin.

 

[imported_griffis]

So changing my withholding status now before I am even married will not hurt me? Didn't realized I can claim that many withholdings and still receive some type of refund.

 

[EagleKeeper]

Originally posted by: Nithin
hi eagle,
thanks a lot for all the work.

my question is about state filing. my wife and i filed a joint federal return. her income is from Illinois and mine is from California.


When I file my california state tax, I have to pay tax on only my income correct? How do I deduct her out-of-state income from the federal total when I file my California state tax?

I didn't see anything on the 540. Do I have to file some other forms?

Thanks a lot,
Nithin.

Both states may have a location to identify out of state income.

Beyond that we can not help you with details on state taxes.

 

[EagleKeeper]

Originally posted by: griffis
So changing my withholding status now before I am even married will not hurt me? Didn't realized I can claim that many withholdings and still receive some type of refund.

For 2007 that is the result of the math equation that I showed you.

Depending on the working status of your fiancee, you may want to determine in which best interst to the family block is it to claim the child as a dependent and the claimer filing as Head of Household.

That combination will equate to 3 exemptions

 

[imported_griffis]

Head of household will not work though since we are getting this married this year correct?

 

[EagleKeeper]

Originally posted by: griffis
Head of household will not work though since we are getting this married this year correct?

Married filing jointly is usually a better situation than Head of Household.

The HOH recommendation was strictly for the years that the child existed and there was an income disparity.

 

[imported_griffis]

great, thanks for all the help. I know you guys put alot of work into this evey year!!

 

[Icepick]

I was told that I can claim money spent on a nanny on my tax return. Is there a limit to the amount we can report? The reason I ask is that my wife was disabled due to an injury and we had to hire a nanny to baby sit the children full time for over four months and we spent quite a bit (thousands $$). I'm wondering if I can get a lot of it back in the form of a tax refund.

 

[EagleKeeper]

Originally posted by: Icepick
I was told that I can claim money spent on a nanny on my tax return. Is there a limit to the amount we can report? The reason I ask is that my wife was disabled due to an injury and we had to hire a nanny to baby sit the children full time for over four months and we spent quite a bit (thousands $$). I'm wondering if I can get a lot of it back in the form of a tax refund.

1) If the nanny was an employee, you can write off her costs. You are also responsible for her SS taxes and should have withheld Federal taxes.

2) If the nanny was a contractor/part time type, you can look at the Dependant care.
The amount of credit is based on total income as well as each taxpayers' income.

In either case, you will need the SS# of the nanny or the Employer ID(EIN) of the Nanny service.

 

[bucwylde23]

I bought a house in 2006.

We went through SunTrust and the Virginia Housing Development Authority subsidized (I guess that is the right word for it) our loan.

We have 2 mortgages through suntrust.

I received a form 1098 Substitute for both of my Suntrust loans. I also received a Form 1098 from the Virginia Housing Development Authority.

Do I deduct mortgage interest and plug in the points paid numbers from ALL three forms? This is the only part of doing my own taxes that is confusing me. Once I finish this I should be done.

If anyone can help me that would be GREAT!

 

[EagleKeeper]

Originally posted by: chrisg22
I bought a house in 2006.

We went through SunTrust and the Virginia Housing Development Authority subsidized (I guess that is the right word for it) our loan.

We have 2 mortgages through suntrust.

I received a form 1098 Substitute for both of my Suntrust loans. I also received a Form 1098 from the Virginia Housing Development Authority.

Do I deduct mortgage interest and plug in the points paid numbers from ALL three forms? This is the only part of doing my own taxes that is confusing me. Once I finish this I should be done.

If anyone can help me that would be GREAT!

You are on the proper track.

Interest gets recorded in the proper line on the Schedule A
There is a line item for points.
There is also a line item for property taxes.

Because you purchased the place in 2006, there will be some closing costs that can also be deducted this year. Look at your closing statement for anything that has the word Tax or government fees. Those can also be deducted for 2006 only.

 

[bucwylde23]

Originally posted by: EagleKeeper

Originally posted by: chrisg22
I bought a house in 2006.

We went through SunTrust and the Virginia Housing Development Authority subsidized (I guess that is the right word for it) our loan.

We have 2 mortgages through suntrust.

I received a form 1098 Substitute for both of my Suntrust loans. I also received a Form 1098 from the Virginia Housing Development Authority.

Do I deduct mortgage interest and plug in the points paid numbers from ALL three forms? This is the only part of doing my own taxes that is confusing me. Once I finish this I should be done.

If anyone can help me that would be GREAT!

You are on the proper track.

Interest gets recorded in the proper line on the Schedule A
There is a line item for points.
There is also a line item for property taxes.

Because you purchased the place in 2006, there will be some closing costs that can also be deducted this year. Look at your closing statement for anything that has the word Tax or government fees. Those can also be deducted for 2006 only.

thanks for the help! it really is a great thing you guys do here.

Using turbo tax online, I had to input 2 separate lines for my two 1098 Substitute forms I received from SunTrust.

I inputed the Interest, and the points paid.
Are you saying that I need to add a third line for the 1098 the VHDA sent me as well and input the interest/points paid listed there as well??

I just don't understand why the VHDA sent me a form when I'm actually paying SunTrust.

I think I also filled in somewhere else the amount of Taxes paid as a deduction.(I don't have it here with me at work)

this is my first year doing it on my own, so far so good except for this issue.

 

[EagleKeeper]

Originally posted by: chrisg22

Originally posted by: EagleKeeper

Originally posted by: chrisg22
I bought a house in 2006.

We went through SunTrust and the Virginia Housing Development Authority subsidized (I guess that is the right word for it) our loan.

We have 2 mortgages through suntrust.

I received a form 1098 Substitute for both of my Suntrust loans. I also received a Form 1098 from the Virginia Housing Development Authority.

Do I deduct mortgage interest and plug in the points paid numbers from ALL three forms? This is the only part of doing my own taxes that is confusing me. Once I finish this I should be done.

If anyone can help me that would be GREAT!

You are on the proper track.

Interest gets recorded in the proper line on the Schedule A
There is a line item for points.
There is also a line item for property taxes.

Because you purchased the place in 2006, there will be some closing costs that can also be deducted this year. Look at your closing statement for anything that has the word Tax or government fees. Those can also be deducted for 2006 only.

thanks for the help! it really is a great thing you guys do here.

Using turbo tax online, I had to input 2 separate lines for my two 1098 Substitute forms I received from SunTrust.

I inputed the Interest, and the points paid.
Are you saying that I need to add a third line for the 1098 the VHDA sent me as well and input the interest/points paid listed there as well??

I just don't understand why the VHDA sent me a form when I'm actually paying SunTrust.

I think I also filled in somewhere else the amount of Taxes paid as a deduction.(I don't have it here with me at work)

this is my first year doing it on my own, so far so good except for this issue.

Check if the VHDA numbers are the same as a SunTrust 1098. If the numbers are different, either call VHDA and ask for clarification and/or then create a third line for them as needed.

The extra closing costs that are government fees/taxes can be entered as "points" or property taxes.

You need to make sure that you have the property taxes seperate from the State income tax and personal property tax. All show up on the Schedule A.

 

[Squisher]

When I was using Turbo tax I entered the amounts off of my wife's W-2s and Turbo Tax said that her employer withheld too much social security and Medicare tax for the amount she made and said to contact her employer and ask for a form for reimbursement.

Unfortunately I didn't write all this down and now I'm having problems trying to get Turbo Tax to show this alert again.

Do you know what this form is called that she's suppose to ask her employer for and is there some formula to find out if Turbo Tax was correct?

BTW-this wasn't an overpayment because she made over $94K, this was just a mistake by her employer.

 

[experttech]

I just filed my taxes thru TaxAct. In box 14 of my W2 theres an entry which says "TXREL" for $3995

I dont know what it means and where to enter it, so I skipped this. Any idea what this could be? I think its the taxes I paid for relocation.

I hope I didn't lose much

 

[UCDAggies]

For head of household does a Q.R have to be a mother, father, grandparents, son, daughter, brother, or sister?

 

[scootermaster]

I'm a graduate student, and I got a 1098-T. Box one is empty, but box 2 has some numbers. (So do boxes 4 and 5, although TaxCut never asked for those). I had an accountant re-do my taxes in previous years and claim me some real dollars because of this, but I'm back to doing it myself (breakup with the girlfriend/accountant). My school pays for my tuition, but that's not exactly "employer reiumbursement", is it? TaxCut wants to know where the money in box 2 came from. If I put in "other income" I get a nice return. Is this Kosher?

Also, the number on the back, for "Adjustment to prior year tuition" is quite large. Do I do anything with that number?

Sorry for being vague. I can give more specifics if needed.

Thanks, if anyone can provide any help!

 

[statik213]

Originally posted by: scootermaster
I'm a graduate student, and I got a 1098-T. Box one is empty, but box 2 has some numbers. (So do boxes 4 and 5, although TaxCut never asked for those). I had an accountant re-do my taxes in previous years and claim me some real dollars because of this, but I'm back to doing it myself (breakup with the girlfriend/accountant). My school pays for my tuition, but that's not exactly "employer reiumbursement", is it? TaxCut wants to know where the money in box 2 came from. If I put in "other income" I get a nice return. Is this Kosher?

Also, the number on the back, for "Adjustment to prior year tuition" is quite large. Do I do anything with that number?

Sorry for being vague. I can give more specifics if needed.

Thanks, if anyone can provide any help!

I have a similiar question.... In turbotax when I enter my education expenses I put in 23k for my wife's tuition and subtract her grant for around 8k.
So, the 16k that was paid came out of school-loans and wasn't money that we paid. Is it OK to list the 23k (box 2 from 1098-T) under tuition related expenses?

I did not do this in my 2005 taxes 'cos she didn't get a grant then and we did not recieve a 1098-T. Can I get anything back from '05?

This thread rocks!

 

[EagleKeeper]

Originally posted by: Squisher
When I was using Turbo tax I entered the amounts off of my wife's W-2s and Turbo Tax said that her employer withheld too much social security and Medicare tax for the amount she made and said to contact her employer and ask for a form for reimbursement.

Unfortunately I didn't write all this down and now I'm having problems trying to get Turbo Tax to show this alert again.

Do you know what this form is called that she's suppose to ask her employer for and is there some formula to find out if Turbo Tax was correct?

BTW-this wasn't an overpayment because she made over $94K, this was just a mistake by her employer.

IRS Pub 505
Page 45 - Excess Social Security or Railroad Retirement Tax Withholding

 

[imported_griffis]

Originally posted by: EagleKeeper

Originally posted by: griffis
So changing my withholding status now before I am even married will not hurt me? Didn't realized I can claim that many withholdings and still receive some type of refund.

For 2007 that is the result of the math equation that I showed you.

Depending on the working status of your fiancee, you may want to determine in which best interst to the family block is it to claim the child as a dependent and the claimer filing as Head of Household.

That combination will equate to 3 exemptions

Just to follow-up on this, just want to make sure I am ok. If I change my withholding status on my paycheck today to show that I am married, even though I will not be until July, there is nothing wrong with that correct?

 

[EagleKeeper]

Originally posted by: experttech
I just filed my taxes thru TaxAct. In box 14 of my W2 theres an entry which says "TXREL" for $3995

I dont know what it means and where to enter it, so I skipped this. Any idea what this could be? I think its the taxes I paid for relocation.

I hope I didn't lose much

If you choose not to enter data that was requested for Line 14, then it is your decision to donate.

You can always research and then file an ammeded return (1040X) if you want.

 

[EagleKeeper]

Originally posted by: griffis

Originally posted by: EagleKeeper

Originally posted by: griffis
So changing my withholding status now before I am even married will not hurt me? Didn't realized I can claim that many withholdings and still receive some type of refund.

For 2007 that is the result of the math equation that I showed you.

Depending on the working status of your fiancee, you may want to determine in which best interst to the family block is it to claim the child as a dependent and the claimer filing as Head of Household.

That combination will equate to 3 exemptions

Just to follow-up on this, just want to make sure I am ok. If I change my withholding status on my paycheck today to show that I am married, even though I will not be until July, there is nothing wrong with that correct?

You are correct. If your maritial situation does not change then you may be asking for too much to be withheld and you will either need to pay some upfront taxes before Dec 31 or potentially face a penalty if the amount withheld is less than 1K of the total tax due.

Tax status looks at what exists as of Dec 31 (Jan 1 for births) - not transitions during the year.

 

[imported_griffis]

Originally posted by: EagleKeeper

Originally posted by: griffis

Originally posted by: EagleKeeper

Originally posted by: griffis
So changing my withholding status now before I am even married will not hurt me? Didn't realized I can claim that many withholdings and still receive some type of refund.

For 2007 that is the result of the math equation that I showed you.

Depending on the working status of your fiancee, you may want to determine in which best interst to the family block is it to claim the child as a dependent and the claimer filing as Head of Household.

That combination will equate to 3 exemptions

Just to follow-up on this, just want to make sure I am ok. If I change my withholding status on my paycheck today to show that I am married, even though I will not be until July, there is nothing wrong with that correct?

You are correct. If your maritial situation does not change then you may be asking for too much to be withheld and you will either need to pay some upfront taxes before Dec 31 or potentially face a penalty if the amount withheld is less than 1K of the total tax due.

Tax status looks at what exists as of Dec 31 (Jan 1 for births) - not transitions during the year.

Great, as long as we get married we are ok, haha. No worries everything is mostly paid for, thanks for all of your help again!