5th Annual Tax Thread - 2007

[Fiveohhh]

I have a question on the "tuition and fees deduction." I'm trying to plan for next year to lower my AGI(need it low enough to qualify for a scholarship). I'm hoping to start a traditional IRA this year and put the max in it but I'll also pay around 8k( after scholarships/grants) in tuition. Can I use $4000(the max I believe) to lower my AGI, and use the other 4k for hope credits?

Thanks

 

[bigbangtech]

Originally posted by: EagleKeeper

Originally posted by: bigbangtech
If someone wants to get up to date with taxes, and paying them, the following questions are weighing on my mind with the April 15th deadline looming.

Let's say 3+ years of taxes not filed or paid due to barely scraping by.

All income from 1099-MISC, only last two years of 1099-MISC statements available

Need to pay estimated for 1/4 of 2008 by April 15th

What should be done first? File extension, then prepare all years and file them?

Or file for 2007 before April 15th, pay estimated for 2008 so far, then prepare missing years?

No judging please, just some advice to get current. I know it's going to take a lot of work to get current

Take care of the current year first. File 2007. Make payment for 2008. Download 1040 and Schedule C forms for 2004, 2005, 2006.
Start from 2004 and work forward.
When you work on any year, keep a sheet of paper handy to jot notes about this that you think may also affect the other years.

If thought relates to a previous year - do not go back to the previous year - continue with the current train of thought. When you finish that form for the year, then go back to the previous year and make the adjustment.

When preparing all the years, did DEEPfor the expenses against the 1099 income.

I read in a post that it is possible to call the IRS and ask them which years are missing, and that they can provide "wage and income transcripts" for those years.

1) Is this basically asking the IRS for 1099's that they may have on file for those years? And is this prudent, should I go to my income sources and just ask for the old 1099's?

2) Since I will be filing 2007 first, should I pay estimated 2008 first, or 2007 first, or both, I may not be able to do both immediately.

3) Or should I pay 2008 estimated and wait for a bill after filing the other missing returns.

I understand this gets complex, but I wanted to get a better idea FIRST before going to a tax pro.

 

[HopJokey]

I recently e-filed my return and by mistake I said I wanted to apply my refund as estimated tax payments for 2008. I want to correct this and get my refund ASAP. Can I file a form 1040X to do so? Thanks.

 

[EagleKeeper]

Originally posted by: HopJokey
I recently e-filed my return and by mistake I said I wanted to apply my refund as estimated tax payments for 2008. I want to correct this and get my refund ASAP. Can I file a form 1040X to do so? Thanks.

Not that I am aware of.

You may try to call your local IRS office to see if they can help you.

If not, you have given Uncle a second interest free loan.

You may wish to adjust your withholding for 2008 to attempt to get some of the pre-payment back early.

 

[EagleKeeper]

Originally posted by: bigbangtech

Originally posted by: EagleKeeper

Originally posted by: bigbangtech
If someone wants to get up to date with taxes, and paying them, the following questions are weighing on my mind with the April 15th deadline looming.

Let's say 3+ years of taxes not filed or paid due to barely scraping by.

All income from 1099-MISC, only last two years of 1099-MISC statements available

Need to pay estimated for 1/4 of 2008 by April 15th

What should be done first? File extension, then prepare all years and file them?

Or file for 2007 before April 15th, pay estimated for 2008 so far, then prepare missing years?

No judging please, just some advice to get current. I know it's going to take a lot of work to get current

Take care of the current year first. File 2007. Make payment for 2008. Download 1040 and Schedule C forms for 2004, 2005, 2006.
Start from 2004 and work forward.
When you work on any year, keep a sheet of paper handy to jot notes about this that you think may also affect the other years.

If thought relates to a previous year - do not go back to the previous year - continue with the current train of thought. When you finish that form for the year, then go back to the previous year and make the adjustment.

When preparing all the years, did DEEPfor the expenses against the 1099 income.

I read in a post that it is possible to call the IRS and ask them which years are missing, and that they can provide "wage and income transcripts" for those years.

1) Is this basically asking the IRS for 1099's that they may have on file for those years? And is this prudent, should I go to my income sources and just ask for the old 1099's?

2) Since I will be filing 2007 first, should I pay estimated 2008 first, or 2007 first, or both, I may not be able to do both immediately.

3) Or should I pay 2008 estimated and wait for a bill after filing the other missing returns.

I understand this gets complex, but I wanted to get a better idea FIRST before going to a tax pro.

A tax pro is only going to be able to do for you what you should be able to do for yourself.

I would file the 2007 first - get that out of the way.
The estimated 2008 can slip - for people that have self-employment income that varies, it does not cause a red flag unless it goes for 2-3 quarters and then one large chunk at the end.

Your missing 1099s may be able to be obtained from the client or your own invoice/bank records. I would recommend this route - it would also be faster.

The IRS could take 6-12 months to obtain that info - they are currently backlogged with the 2007 returns and then having to setup for the economic stimulus checks going out in May-July.

 

[LordSnailz]

Originally posted by: LordSnailz
I know this is last minute but is there a calculator out there that will calculate the reduced roth ira contribution limit? We're filing married jointly and our agi is between the $155k and $166k range and I want to figure out what is the max. allowed we can contribute to our Roth. Thanks!

bumpity!

 

[GTaudiophile]

Does a Non-Resident Alien have to pay self-employment tax???

 

[EagleKeeper]

Originally posted by: Fiveohhh
I have a question on the "tuition and fees deduction." I'm trying to plan for next year to lower my AGI(need it low enough to qualify for a scholarship). I'm hoping to start a traditional IRA this year and put the max in it but I'll also pay around 8k( after scholarships/grants) in tuition. Can I use $4000(the max I believe) to lower my AGI, and use the other 4k for hope credits?

Thanks

Your question is slightly confusing.

Funding the IRA will lower your AGI dollar for dollar.

The Hope Credits will not reduce the AGI but reduces the taxable income (after AGI)

Using the Tuition and Fees will reduce the AGI - however, be sure that you pass the text for it. Pub 970 Page 32

 

[EagleKeeper]

Originally posted by: LordSnailz

Originally posted by: LordSnailz
I know this is last minute but is there a calculator out there that will calculate the reduced roth ira contribution limit? We're filing married jointly and our agi is between the $155k and $166k range and I want to figure out what is the max. allowed we can contribute to our Roth. Thanks!

bumpity!

Tax S/W will tell you - beyond that the IRS will have tables.

IRS Pub590

 

[EagleKeeper]

Originally posted by: GTaudiophile
Does a Non-Resident Alien have to pay self-employment tax???

Much depends on the Visa status

A temp non-resident alien does not have to.

IRS FAQ

Self-Employment Tax
Self-employment tax is the social security and Medicare taxes for individuals who are self-employed. Nonresident aliens are not subject to self-employment tax. Resident aliens must pay self-employment tax under the same rules that apply to U.S. citizens. However, a resident alien employed by an international organization, a foreign government, or a wholly-owned instrumentality of a foreign government is not subject to the self-employment tax on income earned in the United States and outside the United States.

 

[Fiveohhh]

Originally posted by: EagleKeeper

Originally posted by: Fiveohhh
I have a question on the "tuition and fees deduction." I'm trying to plan for next year to lower my AGI(need it low enough to qualify for a scholarship). I'm hoping to start a traditional IRA this year and put the max in it but I'll also pay around 8k( after scholarships/grants) in tuition. Can I use $4000(the max I believe) to lower my AGI, and use the other 4k for hope credits?

Thanks

Your question is slightly confusing.

Funding the IRA will lower your AGI dollar for dollar.

The Hope Credits will not reduce the AGI but reduces the taxable income (after AGI)

Using the Tuition and Fees will reduce the AGI - however, be sure that you pass the text for it. Pbu 970 Page 32

Sorry for the confusion. The main question was: Does the tuition and fees reduce the AGI dollar for dollar? I was also wondering, since the max you can use for tuition and fees is $4000, If I paid $8000 in tuition, can I still use the other $4000 and get the hope credits?

Thanks

 

[HopJokey]

Originally posted by: EagleKeeper

Originally posted by: HopJokey
I recently e-filed my return and by mistake I said I wanted to apply my refund as estimated tax payments for 2008. I want to correct this and get my refund ASAP. Can I file a form 1040X to do so? Thanks.

Not that I am aware of.

You may try to call your local IRS office to see if they can help you.

If not, you have given Uncle a second interest free loan.

You may wish to adjust your withholding for 2008 to attempt to get some of the pre-payment back early.

Ok thanks a lot! I will see if they can help me; if not then an adjustment to withholdings may be in order

 

[QueHuong]

EagleKeeper, in the first quarter of 2007, I was in Massachusetts on an internship and made a certain amount. Afterwards, I moved back to my home state, when preparing my state taxes using TaxCut, my taxable home state income included both my MA. income as well as my home state income. Is that supposed to be right?

 

[EagleKeeper]

Originally posted by: QueHuong
EagleKeeper, in the first quarter of 2007, I was in Massachusetts on an internship and made a certain amount. Afterwards, I moved back to my home state, when preparing my state taxes using TaxCut, my taxable home state income included both my MA. income as well as my home state income. Is that supposed to be right?

I believe you are talking about State income tax not the Federal.

For Federal, it does not matter what state it is earned in.

Some states have a sharing agreement with others (usually neighbors).
Others will require that you put in all income and then indicate that it was out of state.
In those situations, they should will either give you credit on the tax paid out of state or reduce your taxable income by the amount earned out of state.

For Mass income, you will need to file an non-resident income return.

 

[EagleKeeper]

Originally posted by: Fiveohhh

Originally posted by: EagleKeeper

Originally posted by: Fiveohhh
I have a question on the "tuition and fees deduction." I'm trying to plan for next year to lower my AGI(need it low enough to qualify for a scholarship). I'm hoping to start a traditional IRA this year and put the max in it but I'll also pay around 8k( after scholarships/grants) in tuition. Can I use $4000(the max I believe) to lower my AGI, and use the other 4k for hope credits?

Thanks

Your question is slightly confusing.

Funding the IRA will lower your AGI dollar for dollar.

The Hope Credits will not reduce the AGI but reduces the taxable income (after AGI)

Using the Tuition and Fees will reduce the AGI - however, be sure that you pass the text for it. Pbu 970 Page 32

Sorry for the confusion. The main question was: Does the tuition and fees reduce the AGI dollar for dollar? I was also wondering, since the max you can use for tuition and fees is $4000, If I paid $8000 in tuition, can I still use the other $4000 and get the hope credits?

Thanks

The tuition & fees will reduce the AGI on a dollar for dollar basis up to the allowed amount.

However, only ONE tuition type entry can be used per student. If you use the tuition & expenses, you can NOT use the Hope or LLC.

 

[LordSnailz]

Originally posted by: EagleKeeper

Originally posted by: LordSnailz

Originally posted by: LordSnailz
I know this is last minute but is there a calculator out there that will calculate the reduced roth ira contribution limit? We're filing married jointly and our agi is between the $155k and $166k range and I want to figure out what is the max. allowed we can contribute to our Roth. Thanks!

bumpity!

Tax S/W will tell you - beyond that the IRS will have tables.

IRS Pub590

Thanks - I was using TurboTax and the really stupid thing is that they don't you the adjusted limit until the very end. Then you gotta go back and adjust it again.

 

[erwin1978]

The wash sale is confusing.

 

[Fiveohhh]

Originally posted by: EagleKeeper

Originally posted by: Fiveohhh

Originally posted by: EagleKeeper

Originally posted by: Fiveohhh
I have a question on the "tuition and fees deduction." I'm trying to plan for next year to lower my AGI(need it low enough to qualify for a scholarship). I'm hoping to start a traditional IRA this year and put the max in it but I'll also pay around 8k( after scholarships/grants) in tuition. Can I use $4000(the max I believe) to lower my AGI, and use the other 4k for hope credits?

Thanks

Your question is slightly confusing.

Funding the IRA will lower your AGI dollar for dollar.

The Hope Credits will not reduce the AGI but reduces the taxable income (after AGI)

Using the Tuition and Fees will reduce the AGI - however, be sure that you pass the text for it. Pbu 970 Page 32

Sorry for the confusion. The main question was: Does the tuition and fees reduce the AGI dollar for dollar? I was also wondering, since the max you can use for tuition and fees is $4000, If I paid $8000 in tuition, can I still use the other $4000 and get the hope credits?

Thanks

The tuition & fees will reduce the AGI on a dollar for dollar basis up to the allowed amount.

However, only ONE tuition type entry can be used per student. If you use the tuition & expenses, you can NOT use the Hope or LLC.

Thank you!

 

[erwin1978]

A friend has $4000 in net capital losses for 2007. As I understand it any capital loss over $3000 after subtracting capital gains can be rolled over for next year? This mean he can roll over $1000 for next year?

That's not fair. Since he had no capital gains for 2007 $3000 of capital loss is gone to waste. Only $1000 capital loss can be used to offset any capital gains for his 2008 tax return.

Am I getting this right?

 

[Ns1]

Originally posted by: erwin1978
A friend has $4000 in net capital losses for 2007. As I understand it any capital loss over $3000 after subtracting capital gains can be rolled over for next year? This mean he can roll over $1000 for next year?

That's not fair. Since he had no capital gains for 2007 $3000 of capital loss is gone to waste. Only $1000 capital loss can be used to offset any capital gains for his 2008 tax return.

Am I getting this right?

3k capital loss offset against active income. Roll 1k over to next year.

 

[wasssup]

Hopefully some of you tax gurus can school me.

My 1999 Civic EX was stolen over a month ago, at this point I doubt I'll ever see it again. I've been reading into this, and from what I understand if the value of the stolen item is over 10% of your adjusted gross income (AGI), your can claim this and your taxable income is whatever minus the value of the item? Or is it (value of loss)-(0.10 x AGI)?

Example:
Car: $7000
AGI: $50000
Since $7000 > $5000, your taxable income would be $43k?

I know it's not much, but something's better than nothing. Oh and a big F U to lazy assholes who steal cars rather than earn money to buy their own.

 

[Ns1]

Originally posted by: wasssup
Hopefully some of you tax gurus can school me.

My 1999 Civic EX was stolen over a month ago, at this point I doubt I'll ever see it again. I've been reading into this, and from what I understand if the value of the stolen item is over 10% of your adjusted gross income (AGI), your can claim this and your taxable income is whatever minus the value of the item? Or is it (value of loss)-(0.10 x AGI)?

Example:
Car: $7000
AGI: $50000
Since $7000 > $5000, your taxable income would be $43k?

I know it's not much, but something's better than nothing. Oh and a big F U to lazy assholes who steal cars rather than earn money to buy their own.

The formula for the Casualy & Theft Loss deduction is as follows:

(FMV) less (insurance proceeds) = loss - 100 = eligible loss - (10% of AGI) = deductible loss


Car 7k, let's say 5k insurance proceeds, with 45000 AGI

7k - 5k = 2k - 100 = 1900 - (10% *45000 = 4500) = no deductible loss

If no insurance proceeds

7k - 100 = 6900 - (10% * 45000 = 4500) = 2400 deductible loss



Note that if it was stolen a month ago this would be for your 2008 taxes

 

[wasssup]

Thanks Ns1, that was definitely helpful. Unfortunately it looks like I won't be getting much if anything since we're taking AGI into account...

Is this still applicable if my car is recovered as a "shell" (ie. missing engine/transmission/interior/etc)?

 

[Ns1]

Originally posted by: wasssup
Thanks Ns1, that was definitely helpful. Unfortunately it looks like I won't be getting much if anything since we're taking AGI into account...

Is this still applicable if my car is recovered as a "shell" (ie. missing engine/transmission/interior/etc)?

The formula is technically at that point

(Lesser of decrease in FMV or basis) less (insurance proceeds) = loss - 100 = eligible loss - (10% of AGI) = deductible loss

That formula would only work though if you kept the shell and the insurance company paid you the difference.

 

[WolverineGator]

I have a rental property that I want to depreciate less since I've already maxed out the refund I will be getting back from the IRS. I'm using form 4562 to calculate the depreciation value for Schedule E line 20. Is there a way to reduce the depreciation deduction?