5th Annual Tax Thread - 2007

[demenion]

Hello,

This is my first year filing taxes...

I've been trying to use the free online filing at HR Block & TaxAct.

Anyway.. I've entered my W2 information.. but I have questions on deductibles (I have never done it before & i'm not sure how the system works)

I purchased a new car in 2007. Would I be able to get any of the sales tax deducted?

New job requires me to commute over 35 miles (each way). Can I deduct costs due to gas/maintenance fees to drive to work?

Thanks.

 

[EagleKeeper]

Originally posted by: demenion
Hello,

This is my first year filing taxes...

I've been trying to use the free online filing at HR Block & TaxAct.

Anyway.. I've entered my W2 information.. but I have questions on deductibles (I have never done it before & i'm not sure how the system works)

I purchased a new car in 2007. Would I be able to get any of the sales tax deducted?

New job requires me to commute over 35 miles (each way). Can I deduct costs due to gas/maintenance fees to drive to work?

Thanks.

Given that your profile states Texas, you may have a chance to deduct the sales tax.
You must itemize. You can take your income and use a tax table from the IRS to determine sales tax dedcution.
Then you can add on the sales taxes paid for large purchases (rule of thumb - cost is over $500)

For those in an income tax state, the same applies - but you have the option of using your state withheld income tax instead of sales tax - not both.

Tax S/W will assit you in this area.

Commuting mileage/costs are not a deduction for a W2 employee.

 

[lupi]

Are medical association fees (job related but not job required) deductible?


On a related note, how about job required but individually paid for continuing training courses?

 

[ss284]

I was issued a 1099 form for the stipend payments I have been receiving through a fellowship program(I work/research part time, and take grad classes as well) . Do I fill out a 1040 form as normal, or are there any deductions I can get other than the lifetime learning credit($2000)?

 

[EagleKeeper]

Originally posted by: lupi
Are medical association fees (job related but not job required) deductible?


On a related note, how about job required but individually paid for continuing training courses?

both would fall under business epxenses

Schedule A (Itemization) with the Form 2106

 

[EagleKeeper]

1040 w/ the LLC


Tax S/W should make it easier for you.

 

[abc]

hi, i'm not sure if this has been covered... donations.


is the whole point basically that for any one entity that you've donated to within the tax yr, you can donate 1x or 1000 times, as long as the total worth of what you've donated to that 1 entity for the tax yr, is <$250.00? if >250.00, reciept needed from that organization.


because i could easily see donating say two organizations in one year.

say, 200.00 to org1 and 200.00 to org2.

both are seperately <250

but if i add them together my total donated for given tax yr becomes >$400.00


i'm wondering if the irs cares to add up all your yearly donations irrespective of how many entities.

 

[ryan256]

Ok... question about my W-2. I'm filing form 1040A, doing them by hand using the adobe forms downloaded from irs.gov, not itemizing deductions (will be next year though, bought house in Dec 07).
Anyways... Box 12 on the W-2 I just don't understand. For box 12A I have C-$25 and box 12B D-$3200. Where do I use these numbers on my 1040A?? Because from what I read on the back of the W-2 it looks like these are just FYI numbers. Or do the come into play when I itemize?

 

[Ns1]

Originally posted by: ryan256
Ok... question about my W-2. I'm filing form 1040A, doing them by hand using the adobe forms downloaded from irs.gov, not itemizing deductions (will be next year though, bought house in Dec 07).
Anyways... Box 12 on the W-2 I just don't understand. For box 12A I have C-$25 and box 12B D-$3200. Where do I use these numbers on my 1040A?? Because from what I read on the back of the W-2 it looks like these are just FYI numbers. Or do the come into play when I itemize?

Code C is is group term life insurance in excess of 50k, no worries.

Code D is elective deferrals to 401k. You can use it to compute the retirement savings credit (aka savers credit) if you qualify (form 8880)

 

[Argo]

Can somebody give me a quick primer on how taxes on mutual funds with divident reinvestment work. Here's the scenario I have to deal with:

T1) Bought 100 shares of mutual fund at $10 a share ($1000)
T2) Received $120 in dividents that got reinvested into 10 additional shares at $12 a share. This was reported individually and taxed.
T3) Sold all 110 shares for $20 a share.

Now how exactly do I report T3 event? Do I report it as 2 individual sale events (one of 100 shares $10 to $20, another of 10 shares $12 to $20).

That seems to make the most sense, since this is what you do with regular multi-acquired shares, however in my case the dividend reinvestment occured 5 times over the holding period, so it seems there might be an easier way.

 

[EagleKeeper]

Originally posted by: Argo
Can somebody give me a quick primer on how taxes on mutual funds with divident reinvestment work. Here's the scenario I have to deal with:

T1) Bought 100 shares of mutual fund at $10 a share ($1000)
T2) Received $120 in dividents that got reinvested into 10 additional shares at $12 a share. This was reported individually and taxed.
T3) Sold all 110 shares for $20 a share.

Now how exactly do I report T3 event? Do I report it as 2 individual sale events (one of 100 shares $10 to $20, another of 10 shares $12 to $20).

That seems to make the most sense, since this is what you do with regular multi-acquired shares, however in my case the dividend reinvestment occured 5 times over the holding period, so it seems there might be an easier way.

You can report it as one sale providing you calculate that proper average base cost.

Or treat each purchase as a basis of cost against that sale price. Each dividend distribution acts as a purchase (taking into account the price at the time and the taxes paid on the dividend)

 

[Leejai]

I currently receive both W2s, 1099s, and Schedule K's.

I'm wondering if the losses from the 1099's and schedule k's (business) spill over into my personal income via W2? 1099s and some business expenses are to my sole proprietorship. Schedule Ks are from an LLC of which I'm a managing director.

E.G.

W2 80k
1099 16k
Schedule k : depreciation loss of 20k

Business expenses (auto/travel/meals/pc,etc..) 30k

FYI, first year in business if that makes a difference. and second year with schedule k.

Thanks much in advance.

 

[EagleKeeper]

See CPA post below on the LLC issue. - I mishandled the question.

The expenses that are not related to the W2 can be taken against the personal income.

 

[lupi]

If you submit electronically using a PIN signature, do you still turn in a paper copy?

 

[GTaudiophile]

I am helping a colleague do his taxes. He is a Polish citizen and must complete a 1040NR. He held three jobs in 2007, only one of which gave him a real W2. The other two he has to declare income on two different Schedule C forms. I assume, when it comes to entering his "Business Income or Loss" on Line 13 of 1040NR, I enter the sum of the income from both Schedule C forms? And when it comes to enter "Net Profit" on Line 2 of Schedule SE, I enter the sum of profits from both Schedule C forms?

Schedule C says that I have to complete one form for each business.

 

[Leejai]

Originally posted by: EagleKeeper
Because the LLC does not feed directly to you, the LLC takes the loss, not you.

The expenses that are not related to the W2 can be taken against the personal income.

Thanks Eagle Keeper, so based on that, my total income in my example would be:

W2 80K + 1099 16K - Expenses 30K = 66K

And the Schedule K for the LLC affects only the LLC and not my personal income.

Did I get that right?

 

[ChaoZ]

I just read that in order for a security to be a capital asset you have to classify it as such. So when you buy stocks using Scottrade or something, how do you classify them as investments so you can claim capital gains?

 

[CPA]

Originally posted by: ChaoZ
I just read that in order for a security to be a capital asset you have to classify it as such. So when you buy stocks using Scottrade or something, how do you classify them as investments so you can claim capital gains?

Classified as opposed to what? Can you link this article?

 

[CPA]

Originally posted by: Leejai

Originally posted by: EagleKeeper
Because the LLC does not feed directly to you, the LLC takes the loss, not you.

The expenses that are not related to the W2 can be taken against the personal income.

Thanks Eagle Keeper, so based on that, my total income in my example would be:

W2 80K + 1099 16K - Expenses 30K = 66K

And the Schedule K for the LLC affects only the LLC and not my personal income.

Did I get that right?

No. The IRS doesn't recognize an LLC as a tax-filing entity (such as a Corporation or Partnership). If you are filing a Schedule K-1, then you are a partnership in the IRS' eyes and any income from that partnership is taxable to you personally. The only time LLC income would not impact you personally is if you filed your LLC as a Corporation.

 

[Leejai]

Originally posted by: CPA

Originally posted by: Leejai

Originally posted by: EagleKeeper
Because the LLC does not feed directly to you, the LLC takes the loss, not you.

The expenses that are not related to the W2 can be taken against the personal income.

Thanks Eagle Keeper, so based on that, my total income in my example would be:

W2 80K + 1099 16K - Expenses 30K = 66K

And the Schedule K for the LLC affects only the LLC and not my personal income.

Did I get that right?

No. The IRS doesn't recognize an LLC as a tax-filing entity (such as a Corporation or Partnership). If you are filing a Schedule K-1, then you are a partnership in the IRS' eyes and any income from that partnership is taxable to you personally. The only time LLC income would not impact you personally is if you filed your LLC as a Corporation.

CPA, you are correct in that I'm filing a schedule K-1. The LLC is for a real estate in which we've depreciation "losses". So let's say depreciation (after taking in income, etc...) results in a loss of 10k.

I'm assuming that because I'm taxable for income, I can take the losses as well?

W2 80K + 1099 16K - Expenses 30K - K-1 10K = 56K

Right now?

 

[EagleKeeper]

Originally posted by: lupi
If you submit electronically using a PIN signature, do you still turn in a paper copy?

No

 

[EagleKeeper]

Originally posted by: GTaudiophile
I am helping a colleague do his taxes. He is a Polish citizen and must complete a 1040NR. He held three jobs in 2007, only one of which gave him a real W2. The other two he has to declare income on two different Schedule C forms. I assume, when it comes to entering his "Business Income or Loss" on Line 13 of 1040NR, I enter the sum of the income from both Schedule C forms? And when it comes to enter "Net Profit" on Line 2 of Schedule SE, I enter the sum of profits from both Schedule C forms?

Schedule C says that I have to complete one form for each business.

Your understanding is correct.

The totals of the Schedule C go onthe proper line for the 1040 or 1040NR

Make sure that he takes advantage of the Schedule C expenses

 

[ShotgunSteven]

How many years back can you still file for if you are owed a refund?

If the address you would send the paperwork to has changed since that tax year, do you send it to the old address or the new address?

 

[CPA]

Originally posted by: Leejai

Originally posted by: CPA

Originally posted by: Leejai

Originally posted by: EagleKeeper
Because the LLC does not feed directly to you, the LLC takes the loss, not you.

The expenses that are not related to the W2 can be taken against the personal income.

Thanks Eagle Keeper, so based on that, my total income in my example would be:

W2 80K + 1099 16K - Expenses 30K = 66K

And the Schedule K for the LLC affects only the LLC and not my personal income.

Did I get that right?

No. The IRS doesn't recognize an LLC as a tax-filing entity (such as a Corporation or Partnership). If you are filing a Schedule K-1, then you are a partnership in the IRS' eyes and any income from that partnership is taxable to you personally. The only time LLC income would not impact you personally is if you filed your LLC as a Corporation.

CPA, you are correct in that I'm filing a schedule K-1. The LLC is for a real estate in which we've depreciation "losses". So let's say depreciation (after taking in income, etc...) results in a loss of 10k.

I'm assuming that because I'm taxable for income, I can take the losses as well?

W2 80K + 1099 16K - Expenses 30K - K-1 10K = 56K

Right now?

Yes. Technically, you file a Form 1065 (Schedule K-1). Then your non-passive gains(losses) get transferred to 1040 Schedule E. After that, it gets transferred to Line 17 on a 1040.

 

[CPA]

Originally posted by: ShotgunSteven
How many years back can you still file for if you are owed a refund?

If the address you would send the paperwork to has changed since that tax year, do you send it to the old address or the new address?

3 years. I'm not sure I understand your second question. did your address change?