4th Annual Tax Thread - 2006

[UCDAggies]

Is someone who lives with me for a full year, and my dependent, but not releated to me, qualify me for HH.

 

[EagleKeeper]

Originally posted by: UCDAggies
Is someone who lives with me for a full year, and my dependent, but not releated to me, qualify me for HH.

This question was previously answered related to a SO.

Link to how a dependent is classified is in the OP also.

 

[EagleKeeper]

Originally posted by: Shame
Any idea how to report honorarium. It was $500.00 via checks with no taxes dedected either.

Edit: They didn't send a 1099 and I am using Turbotax.

Misc Income

 

[LordSnailz]

hopefully, it's still not too late ... I'm filling out my taxes through turbo tax and one issue I ran into was my IRA. It looks like I over contributed to my Roth IRA last year, once I realized it, the next day, I withdrew the money, ~$220.

Now that I'm doing my taxes this year, it's flagging it as I took money out from my roth ira early. My question is, what is the penalty around this and it the problem 'fixed'?

Thanks in adv, really appreciate the help.

 

[SurgicalShark]

Hello Tax Guys,
I would appreciate if you could answer my question.

I was a student on F-1 visa (non-resident alien for visa purposes BUT resident alien for tax purposes) until September 2006. Then I moved to work visa H-1 in October.
So my question is which form should I fill?

1- 1040 NR (NREZ) or 1040 (EZ) and
2- Can I claim lifelong learning credits since I paid fees while I was F-1 student and have been US long enough to be treated as resident alien for tax purposes?

I understand if I fill 1040 NR then I can not get lifelong learning credit, this question will arise only when I am filling 1040 EZ or 1040 or 1040A.
Thanks,
SS.

 

[cthulhu]

Hello Tax Gurus.

I don't understand the tax from recapture of education credits part of line 28 of 1040a.

You may owe this tax if (a) you claimed an education credit in an earlier year, and (b) either tax-free educational assistance or a refund of qualified expenses was received in 2006 for the student. See Form 8863 for more details.

I've taken the lifetime learning credit for my wife in previous years including 2005. I don't understand the part b. We did not receive any tax free assistance last year. Does the refund refer to the credit received from the 2005 taxes?

I've looked at the form 8863. However, all I see are directions for filling for either the hope or lifetime learning credits.

Any help would be much appreciated.

 

[EagleKeeper]

Originally posted by: cthulhu
Hello Tax Gurus.

I don't understand the tax from recapture of education credits part of line 28 of 1040a.

You may owe this tax if (a) you claimed an education credit in an earlier year, and (b) either tax-free educational assistance or a refund of qualified expenses was received in 2006 for the student. See Form 8863 for more details.

I've taken the lifetime learning credit for my wife in previous years including 2005. I don't understand the part b. We did not receive any tax free assistance last year. Does the refund refer to the credit received from the 2005 taxes?

I've looked at the form 8863. However, all I see are directions for filling for either the hope or lifetime learning credits.

Any help would be much appreciated.

If you recieved tax free assistance for tuition costs in the following year or the school gave you some refund/credit afterwards; you must payback some of the credit. that you took in the previous year

 

[cthulhu]

Originally posted by: EagleKeeper

Originally posted by: cthulhu
Hello Tax Gurus.

I don't understand the tax from recapture of education credits part of line 28 of 1040a.

You may owe this tax if (a) you claimed an education credit in an earlier year, and (b) either tax-free educational assistance or a refund of qualified expenses was received in 2006 for the student. See Form 8863 for more details.

I've taken the lifetime learning credit for my wife in previous years including 2005. I don't understand the part b. We did not receive any tax free assistance last year. Does the refund refer to the credit received from the 2005 taxes?

I've looked at the form 8863. However, all I see are directions for filling for either the hope or lifetime learning credits.

Any help would be much appreciated.

If you recieved tax free assistance for tuition costs in the following year or the school gave you some refund/credit afterwards; you must payback some of the credit. that you took in the previous year

Thanks Eaglekeeper. I thought you weren't gonna be back till Monday? Thanks for dropping by before.

 

[EagleKeeper]

Originally posted by: LordSnailz
hopefully, it's still not too late ... I'm filling out my taxes through turbo tax and one issue I ran into was my IRA. It looks like I over contributed to my Roth IRA last year, once I realized it, the next day, I withdrew the money, ~$220.

Now that I'm doing my taxes this year, it's flagging it as I took money out from my roth ira early. My question is, what is the penalty around this and it the problem 'fixed'?

Thanks in adv, really appreciate the help.

1) You have found flaws in TT and other S/W. I ran into such a problem back in 2000.

2) You can either accept the flaw in TT and have the excessive list and be penaltized or

3) Enter the proper number ignoring the overpayment that was rewithdrawn

4) Either way I would not file electronically and submit a statement to the IRS explaining the situation and let them handle any issues.

 

[her209]

I have an two issues:

1) I have an investment account through Scottrade. When I import the transactions for 2006, only the proceeds are being reported, i.e. no cost basis were imported, and thus it looks like I have wayyy more capital gains than I should. I manually entered the cost basis information. No too bad, only six. Did anyone with a Scottrade account run into the same issue?

2) I have one transaction where I purchased 64 shares of Stock A. A couple weeks later, I purchased 62 additional shares of Stock A. A couple days after that, I sold all 126 shares. However, Scottrade exectued the sell in two lots, one of 93 shares and the other 33 shares. It was imported as such into Turbo Tax. When I manually entered the cost basis information discussed in Issue #1, I applied the first 64 shares of the first purchase lot plus 29 shares of the second purchased lot to the 93 shares. The remaining 33 shares were then assigned to the 33 shares sold. The reason it was done this way was because Turbo Tax requires that the number of shares be the same. Will this be a problem for the IRS?

Thanks in advance.

EDITED: For clarity.

 

[IntrinsicValue]

Originally posted by: her209
I have an two issues:

1) I have an investment account through Scottrade. When I import the transactions for 2006, only the proceeds are being reported, i.e. no cost basis were imported, and thus it looks like I have wayyy more capital gains than I should. I manually entered the cost basis information. No too bad, only six. Did anyone with a Scottrade account run into the same issue?

2) I have one transaction where I purchased 64 shares of Stock A. A couple weeks later, I purchased 62 additional shares of Stock A. A couple days after that, I sold all 126 shares. However, Scottrade exectued the sell in two lots, one of 93 shares and the other 33 shares. It was imported as such into Turbo Tax. When I manually entered the cost basis information discussed in Issue #1, I applied the first 64 shares of the first purchase lot plus 29 shares of the second purchased lot to the 93 shares. The remaining 33 shares were then assigned to the 33 shares sold. The reason it was done this way was because Turbo Tax requires that the number of shares be the same. Will this be a problem for the IRS?

Thanks in advance.

EDITED: For clarity.

her209,

1. Yes I had the same problem. Allegedly they are going to issue amended 1099's, and are recommending you file for an extention until the new ones are sent. I don't know how valid this information is.

2. Sorry, not a tax guru. I'd guess it wouldn't be a problem, but better to wait to hear from one the tax people in the thread. BUT, just FYI - TurboTax says "If you are sellnig shares of stock that you bought at different prices, and you cannot determine which shares you sold, you should consider the first shares purchased as the first shares sold (FIFO approach)".

 

[IntrinsicValue]

PARKING QUESTION:

Anyone know if expenses for parking are tax-deductible? I'm referring to parking in a garage where I work -- so it's a daily expense (like $5/day).

If so, do I need to have receipts, or are the parking-stubs enough -- or do I just have to fill out some form?

Edit:

Nevermind, found the answer in the IRS Publication 17, Chapter 28 (Car Expenses) - Transporation Expenses / Parking Fees, states : "Fees you pay to park your car at your place of business are nondeductible communicating expenses. You can, however, deduct business-related parking fees when visiting a customer or client."

 

[Caveman]

I trade options; just straight puts and calls... I've got about 60 trades this year... I use Turbo Tax Premier. What's the best way (which form)
to enter all these trades?

 

[Muse]

Working in my Turbotax it seems that the more I contribute to my Roth IRA, the more taxes I owe. I don't comprehend that. To make a contribution I have to do it from some funding source, a source that I've already paid taxes on. In other words, my contribution to my Roth IRA is after-tax funding. So, why would my payment to the government in taxes increase if I make a contribution?
What am I missing here? To fund it I have to transfer funds from my mutual fund and/or write a check on my checking account. Why is my tax liability increased because I choose to invest in my Roth IRA instead of use the money for something else?

Is this a flaw in TT or am I misunderstanding what TT is saying. It's asking me if I'm making a "regular contribution to my Roth IRA." I really don't understand that. There's nothing regular about my Roth IRA contributions. For one thing, the limit has been increasing by fits and starts. At the end of the year (usually around tax time) I make a contribution.

- - - - - -
Also, the last day to file is 4/17 this year. Why is that? Is monday a holiday? Are the banks and stock exchanges open? I need to know because to make a Roth IRA contribution over $2000 or so, I will have to sell some of my mutual fund and want to know when the transaction will clear.

 

[LordSnailz]

Originally posted by: EagleKeeper

Originally posted by: LordSnailz
hopefully, it's still not too late ... I'm filling out my taxes through turbo tax and one issue I ran into was my IRA. It looks like I over contributed to my Roth IRA last year, once I realized it, the next day, I withdrew the money, ~$220.

Now that I'm doing my taxes this year, it's flagging it as I took money out from my roth ira early. My question is, what is the penalty around this and it the problem 'fixed'?

Thanks in adv, really appreciate the help.

1) You have found flaws in TT and other S/W. I ran into such a problem back in 2000.

2) You can either accept the flaw in TT and have the excessive list and be penaltized or

3) Enter the proper number ignoring the overpayment that was rewithdrawn

4) Either way I would not file electronically and submit a statement to the IRS explaining the situation and let them handle any issues.

Hey thanks for the reply. I'm usually not this slow but this weekend was just horrible, 2 days straight of moving with very little sleep.

I over contributed to my 2005 Roth IRA, but did not catch the problem till after 1 day after taxes were due in 2006.

Should TT still flag it then? If so, you suggested that I do not file electronically, once I"m done, I can just print it out and remove the pages that reference the to the overpayment and withdrawal? There as a withdrawal but I'm not sure what the implications are if it was only for one day. thanks again.

 

[EagleKeeper]

Originally posted by: her209
I have an two issues:

1) I have an investment account through Scottrade. When I import the transactions for 2006, only the proceeds are being reported, i.e. no cost basis were imported, and thus it looks like I have wayyy more capital gains than I should. I manually entered the cost basis information. No too bad, only six. Did anyone with a Scottrade account run into the same issue?

2) I have one transaction where I purchased 64 shares of Stock A. A couple weeks later, I purchased 62 additional shares of Stock A. A couple days after that, I sold all 126 shares. However, Scottrade executed the sell in two lots, one of 93 shares and the other 33 shares. It was imported as such into Turbo Tax. When I manually entered the cost basis information discussed in Issue #1, I applied the first 64 shares of the first purchase lot plus 29 shares of the second purchased lot to the 93 shares. The remaining 33 shares were then assigned to the 33 shares sold. The reason it was done this way was because Turbo Tax requires that the number of shares be the same. Will this be a problem for the IRS?

Thanks in advance.

EDITED: For clarity.

Given the way TT is importing the data, it would be better if you entered the information manually for both problems. With only 6 trades, it should not take more than a few minutes. You already have the info readily available.

 

[EagleKeeper]

Originally posted by: IntrinsicValue
PARKING QUESTION:

Anyone know if expenses for parking are tax-deductible? I'm referring to parking in a garage where I work -- so it's a daily expense (like $5/day).

If so, do I need to have receipts, or are the parking-stubs enough -- or do I just have to fill out some form?

No - unless you are parking for business purposes - customer or client. Then the parking fees would go on the Form 2106/Schedule A or the Schedule C.

 

[EagleKeeper]

Originally posted by: Caveman
I trade options; just straight puts and calls... I've got about 60 trades this year... I use Turbo Tax Premier. What's the best way (which form)
to enter all these trades?

Schedule D

 

[EagleKeeper]

Originally posted by: Muse
Working in my Turbotax it seems that the more I contribute to my Roth IRA, the more taxes I owe. I don't comprehend that. To make a contribution I have to do it from some funding source, a source that I've already paid taxes on. In other words, my contribution to my Roth IRA is after-tax funding. So, why would my payment to the government in taxes increase if I make a contribution?
What am I missing here? To fund it I have to transfer funds from my mutual fund and/or write a check on my checking account. Why is my tax liability increased because I choose to invest in my Roth IRA instead of use the money for something else?

Is this a flaw in TT or am I misunderstanding what TT is saying. It's asking me if I'm making a "regular contribution to my Roth IRA." I really don't understand that. There's nothing regular about my Roth IRA contributions. For one thing, the limit has been increasing by fits and starts. At the end of the year (usually around tax time) I make a contribution.

- - - - - -
Also, the last day to file is 4/17 this year. Why is that? Is Monday a holiday? Are the banks and stock exchanges open? I need to know because to make a Roth IRA contribution over $2000 or so, I will have to sell some of my mutual fund and want to know when the transaction will clear.

Answer to the 4/17 question is in the OP and is due to politics.

IRS FAQ - Roth IRA

TT may be checking to see if money was moved from a deductible source and confusing the items.

If your Roth is within the guidelines, then do not even report it to the tax S/W.

It is the financial institution that is supposed to report it to the IRS, not you

 

[EagleKeeper]

Originally posted by: LordSnailz

Originally posted by: EagleKeeper

Originally posted by: LordSnailz
hopefully, it's still not too late ... I'm filling out my taxes through turbo tax and one issue I ran into was my IRA. It looks like I over contributed to my Roth IRA last year, once I realized it, the next day, I withdrew the money, ~$220.

Now that I'm doing my taxes this year, it's flagging it as I took money out from my roth ira early. My question is, what is the penalty around this and it the problem 'fixed'?

Thanks in adv, really appreciate the help.

1) You have found flaws in TT and other S/W. I ran into such a problem back in 2000.

2) You can either accept the flaw in TT and have the excessive list and be penaltized or

3) Enter the proper number ignoring the overpayment that was rewithdrawn

4) Either way I would not file electronically and submit a statement to the IRS explaining the situation and let them handle any issues.

Hey thanks for the reply. I'm usually not this slow but this weekend was just horrible, 2 days straight of moving with very little sleep.

I over contributed to my 2005 Roth IRA, but did not catch the problem till after 1 day after taxes were due in 2006.

Should TT still flag it then? If so, you suggested that I do not file electronically, once I"m done, I can just print it out and remove the pages that reference the to the overpayment and withdrawal? There as a withdrawal but I'm not sure what the implications are if it was only for one day. thanks again.

See comment above regarding the Roth IRA.

If you already filed, you will need to file an 1040X to straighten up the problem.

 

[Al Neri]

I submitted my return (efile) about 2 weeks ago. What is the usual turnaround for my refund at this point? Last year i got it in 2 weeks, but I filed in early Feb. :-\

 

[EagleKeeper]

Originally posted by: Don Rodriguez
I submitted my return (efile) about 2 weeks ago. What is the usual turnaround for my refund at this point? Last year i got it in 2 weeks, but I filed in early Feb. :-\

E-file shold take 2-3 Fridays
Paper couild take 6-8 weeks

 

[Al Neri]

Even at this point, so close to to the 15th? That's awesome.

Thanks Eaglekeeper!

 

[Muse]

Originally posted by: EagleKeeper

Originally posted by: Muse
Working in my Turbotax it seems that the more I contribute to my Roth IRA, the more taxes I owe. I don't comprehend that. To make a contribution I have to do it from some funding source, a source that I've already paid taxes on. In other words, my contribution to my Roth IRA is after-tax funding. So, why would my payment to the government in taxes increase if I make a contribution?
What am I missing here? To fund it I have to transfer funds from my mutual fund and/or write a check on my checking account. Why is my tax liability increased because I choose to invest in my Roth IRA instead of use the money for something else?

Is this a flaw in TT or am I misunderstanding what TT is saying. It's asking me if I'm making a "regular contribution to my Roth IRA." I really don't understand that. There's nothing regular about my Roth IRA contributions. For one thing, the limit has been increasing by fits and starts. At the end of the year (usually around tax time) I make a contribution.

- - - - - -
Also, the last day to file is 4/17 this year. Why is that? Is Monday a holiday? Are the banks and stock exchanges open? I need to know because to make a Roth IRA contribution over $2000 or so, I will have to sell some of my mutual fund and want to know when the transaction will clear.

Answer to the 4/17 question is in the OP and is due to politics.

IRS FAQ - Roth IRA

TT may be checking to see if money was moved from a deductible source and confusing the items.

If your Roth is within the guidelines, then do not even report it to the tax S/W.

It is the financial institution that is supposed to report it to the IRS, not you

Right on! I don't know how TT got this. I thought it was asking me about my Roth IRA contributions solely for the benefit (?) of tracking my total contributions. I really don't need that because I track them myself (keep my own data). So, yeah, I'll just ignore that bit and make my contribution. Thanks so much for the help!!!

Originally posted by: EagleKeeper

See comment above regarding the Roth IRA.

If you already filed, you will need to file an 1040X to straighten up the problem.

I have not filed yet! I decided to wait until you answered this. Thanks Eaglekeeper!

 

[Kelemvor]

Can't e-file if I donated to GoodWill?

I'm using TaxCut and when I got to the eFile stage, it says I can't efile because the 8283 form for itemized deductions of non-cash donations is too big. We went to GoodWill many times during the year and since each entry is dated, it lists a total of 18 donations. The form only has boxes for 5.

Any way around this so I coudl eFile and still claim all my itemized stuff? This pisses me off since I bought the version that includes 3FIling for $30 extra and now can't use it.