5th Annual Tax Thread - 2007

[EagleKeeper]

Originally posted by: cKGunslinger

Originally posted by: EagleKeeper
The minimum income threshold where Federal Income Taxes apply is usually around 8K.

Above that some tax would be due. However, the income level above K could be reduced by certain credits.

If you are due a refund, you do not have to file. Uncle has no problem with free money, just like you have none.

Here's a Q:

Me, wife, 2 kids, mortgage, student loans, itemized > standard deductions. After all is said and done, I think my taxable income gets reduced down to ~$45k

We always filed jointly. This year, she will have earned ~$5K in income, but will have paid no taxes whatsoever on it. I'm not sure if she's even getting a W2.

Since I have all our other tax info loaded up in TT-Online, it's showing a ~$1500 rebate. When we tack on her estimated earnings, that drops to about $700 refund.

Would there be any other method of filing to get rid of that drop? File separately, giving me all the deductions? Anything like that? I didn't see an option in TurboTax to model that kind of "what if" scenario..

that is a problem with the online S/W - inability to manipulate what- ifs.

Filing separately will allow here to avoid the taxes. You need to determine if the loss of her exemption will offset the additional income drop.

 

[HardcoreRobot]

The GF and I bought a house in the middle of last year. Couple questions revolving around that... we opened an ING Electric account to pay our mortgages / bills from. Who has to report the interest. Our contributions to the account are equal (so our expenditures are guaranteed to be split). I opened the account, then added her as a joint account owner, but I am listed as the Primary holder and she the Secondary, if that has any impact.

How do we each claim the interest and other deductible amounts? All the payments have come from our joint account. Once we get all our tax forms, can we each claim half the amount? We are both listed on both mortgages (we did 80/15).

Ill probably have more questions later... thanks!

 

[alkemyst]

Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

 

[alkemyst]

Originally posted by: CPA

Originally posted by: Cal166

Originally posted by: CPA

Originally posted by: Cal166
I have a side job (1099) and once in a while my co-worker and I go out to lunch/dinner to discuss some projects and what not. Could I write that off as a business expense?

yup.

Thanks,

One more, with all my transactions done by credit card, say if I get audited, would my credit card statements be sufficient prove?

Thanks

A receipt is the support, but if everything is small, then an auditor may not care.

QFT, if it's minor amounts comparatively then it may not matter. However; a CC statement will not show what the meal was and without proof of what transpired they may decide not to accept them as costs should you be audited.

As a 1099 worker in the past, records are extremely important as you are in a pool with tons of people making up tax pictures that simply are false.

 

[alkemyst]

Originally posted by: Xcobra

Originally posted by: CPA

Originally posted by: Xcobra
Quick question for you here from a first timer:

Well my parents are divorcing (im 21)...my mother moved to NY, my father is still here in california. He has a house all to himself. I live off-campus on my own, he nor my mother provides ZERO support for my schooling or expenses at all. I get financial aid. Question is, would I still be called "dependent" even though I clearly depend on myself?

Also (again, california) i have no idea what form to file? suggestions.

If they provided zero support, then by definition they cannot claim you as a dependent.

so given that they provided zero support, even though im a student under 25, they still cant claim me as a dependent?

They can claim you as a dependent...nothing will stop that. However; if they are not supporting you then that is where there could be trouble.

I have seen this many times, even when the person has moved out and is living on their own. The parent(s) still want that write off and expect it wrongly.

I would talk to your parents and make sure everyone is on the same page.

 

[alkemyst]

Originally posted by: steppinthrax

Originally posted by: EagleKeeper

Originally posted by: steppinthrax
I guess I have a question regarding Legal fees or attorney fees. My wife had some immigration troubles where she had to leave the US and return. In the process of this we've paid some money to an attorney and had to pay the cost of a plane ticket and visa processing fees needed in conjunction for her legal immigration problem. Is there any method of justification that this can be written off.

None that I am aware of.

It was a personal choice, not an business related choice.

Sorry for stating it bluntly, but that is the way the IRS would look at it.

But legal fees in general (those paid to an attorney) can be deducted. From what I understand.

Could you just put it down and then when (if) you get audited you simply try to defend it. Considering she is my wife and I had to pay these moneys to clear her name.

Not true in general at all, I am not sure where you heard legal fees can be written off usually. Attorney fees that can be written off are very outlined, otherwise IRS would fund a bunch of legal nonsense.

I went through immigration processes with an attorney and there is nothing I could have written off. Your attorney may be able to shed some light on anything of the process you went through that may be a write off though.

You can always 'claim' whatever you want on your taxes. In an audit situation though, they are simply going to explain it to you the right way and require you to pay for your mistake along with a penalty. This can come back to bite you for years and during that time everything accrues interest against you.

 

[alkemyst]

Originally posted by: CPA

Originally posted by: Maximus96
I have a question about child care expenses. My wife and I currently pay my wife's mother to take care of our 2-year-old and 6-month-old daughters during the day. I figured the total payment made to her this year is $6300.00. However, most of these payment were cash and a couple was thru bank transfers. Is this something I can claim as a credit? If so, how much credit can I claim?

Thanks so much!

You can claim it as part of Schedule 2441 - Child and Dependent Care Credit. It will be limited by the ceiling and/or your annual income. But, be careful, you will have to include your mother's name, address and SSN. She will, then, have to file this as income. Now, she may not have to pay any taxes on it depending on her individual situation, but you need to talk to her to make sure she files. The IRS can and many times will crosscheck to see if the provider you listed reported income. She will have to file a Schedule C.

Especially relatives.

 

[CPA]

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

don't forget your sales tax deduction and charitable contributions (I'm sure you know about that one).

 

[iamwiz82]

Originally posted by: CPA

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

don't forget your sales tax deduction and charitable contributions (I'm sure you know about that one).

Did the IRS tighten the charitable contributions this year? I thought I read last year that they were going to make it much tougher this year. I have pictures and an inventory of what we donated, I normally use "Its Deductible" for valuation.

 

[EagleKeeper]

Originally posted by: minendo
Back in 2006 I left my job to move to another company. At this time I rolled over my 401k into a Vanguard Rollover IRA. During the 2007 year I maxed out my contributions to the IRA, but also withdrew a hefty amount in order to payoff some debt. I have a 1099-R that shows the amount I withdrew and the amount of Federal Tax I paid, but I am interested to know how this will be figured into my overall taxes (federal and state) and if I will incur any penalties?

If you have the withdrawn funds covered within a set time frame (I think 90 days), there should be no additional 10% penarly.

Otherwise when you do the taxes, there is a line item for withdrawls and a line item for taxes paid on the withdrawl.

The taxes paid at withdrawl time will be counted just like withholding is.
The same as the amount withdrawn - it is calculated as income.

 

[EagleKeeper]

Originally posted by: iamwiz82

Originally posted by: CPA

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

don't forget your sales tax deduction and charitable contributions (I'm sure you know about that one).

Did the IRS tighten the charitable contributions this year? I thought I read last year that they were going to make it much tougher this year. I have pictures and an inventory of what we donated, I normally use "Its Deductible" for valuation.

Chariitble contributions that will end up being resold to provide funds now have to be claimed at the resale value, not the "retail value"

 

[EagleKeeper]

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

If your house was intended to be rented from Aug through December, then you could expense the depreciation and all the nonclosing costs that normally are not able to be written off as interest or taxes.

 

[EagleKeeper]

Originally posted by: HardcoreRobot
The GF and I bought a house in the middle of last year. Couple questions revolving around that... we opened an ING Electric account to pay our mortgages / bills from. Who has to report the interest. Our contributions to the account are equal (so our expenditures are guaranteed to be split). I opened the account, then added her as a joint account owner, but I am listed as the Primary holder and she the Secondary, if that has any impact.

How do we each claim the interest and other deductible amounts? All the payments have come from our joint account. Once we get all our tax forms, can we each claim half the amount? We are both listed on both mortgages (we did 80/15).

Ill probably have more questions later... thanks!

You can each report half the expenses (taxes/interest/etc) or have a statement that allows each to claim the full share on alternating years.

Look at the numbers to which will benefit the family unit as a whole.

 

[vrbaba]

Do you share tax return preparation software (TT, Taxcut, etc)? If none of the share-es are e-filing, can you install and work on it on 2 different computers and snail mail it?

 

[EagleKeeper]

Originally posted by: vrbaba
Do you share tax return preparation software (TT, Taxcut, etc)? If none of the share-es are e-filing, can you install and work on it on 2 different computers and snail mail it?

Most tax S/W will allow up to 4-5 e-files per install.
I have not detected any limit on actual returns that can be worked on per install.

The only problem is that once you install a state, you can not install a second state without paying a download fee. The installations will only allow one state per CD install. I would expect that the download installs will ahve thesame limitations.

Disclaimer:
I do not test this multiple usage against TaxCut and Turbo tax every year; however, having used both over the past 10 yers equally, what is noticed on one was also the same on the other.

 

[minendo]

Originally posted by: EagleKeeper

Originally posted by: minendo
Back in 2006 I left my job to move to another company. At this time I rolled over my 401k into a Vanguard Rollover IRA. During the 2007 year I maxed out my contributions to the IRA, but also withdrew a hefty amount in order to payoff some debt. I have a 1099-R that shows the amount I withdrew and the amount of Federal Tax I paid, but I am interested to know how this will be figured into my overall taxes (federal and state) and if I will incur any penalties?

If you have the withdrawn funds covered within a set time frame (I think 90 days), there should be no additional 10% penarly.

Otherwise when you do the taxes, there is a line item for withdrawls and a line item for taxes paid on the withdrawl.

The taxes paid at withdrawl time will be counted just like withholding is.
The same as the amount withdrawn - it is calculated as income.

It actually looks like there is no penalty since a majority of the funds were pulled to cover education expenses. I already paid 25% in Federal Taxes and it looks like that may have covered it. Thanks for teh response.

 

[cirrrocco]

Quick Question

details abt me
1. Here on work visa
2. Single
3. Share house with couple of other IT people [House not mine]


tax Question.

I maintain a couple of websites. Now I spend about 5-10 hours a week updating the website. Can this effort be quantified to reduce my AGI for the year.

Also the website doesnt have a tax id or something...any adsense revenue flows to my SSN which is not more than $200 an year..What type of activities can I use to reduce my AGI

I havent started my tax stuff yet, but will come up with more questions later..thnx much

btw my AGI should be in the upper 70's or 80's.

 

[alkemyst]

Originally posted by: EagleKeeper

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

If your house was intended to be rented from Aug through December, then you could expense the depreciation and all the nonclosing costs that normally are not able to be written off as interest or taxes.

I did well at closing, walked away with the house, my taxes/insurance covered for the year, and three credit cards paid off.

It was a bad market for sellers. I still probably paid a little too much.

 

[alkemyst]

Originally posted by: CPA

Originally posted by: alkemyst
Still waiting on my W2's but it's not looking good. I bought a house later in the year than I thought (First payment in August)...taxes and interest total to right at $10k.

Need to figure out some more writeoffs or my house was of no benefit this year and I withheld the min. allowed. I would love getting out of stroking a check *again* in April.

My W2's from both our employers are due on Jan 28th.

don't forget your sales tax deduction and charitable contributions (I'm sure you know about that one).

I thought sales tax deduction was over. I will need to look it up again.

 

[jds2006]

my dad wants me to file my tax returns with his because he thinks that we'll get more money back if we do that. is what he's saying true?

also, what websites can i file my tax returns with? i made less than $8k last year so I think I qualify for one of these free filing websites... but I don't know which ones use.

thanks.

 

[alkemyst]

First how old are you and is your father supporting you. If you are a minor and/or he is; let him claim you (based on an income of less than $700 a month, someone must be supporting you)

Providing you are an adult and/or supporting yourself with loans or savings, I'd just do a quick 1040 EZ or turbo tax and see what you get back. If your dad agrees to stroke you a check for that, file with him.

What I used to see happen in these situations is the kid gets screwed esp when they are footing their own expenses for college already and on loans. If you are a student you can claim Hope for the first two years and LLC for the rest of them.

 

[jds2006]

Originally posted by: alkemyst
First how old are you and is your father supporting you. If you are a minor and/or he is; let him claim you (based on an income of less than $700 a month, someone must be supporting you)

Providing you are an adult and/or supporting yourself with loans or savings, I'd just do a quick 1040 EZ or turbo tax and see what you get back. If your dad agrees to stroke you a check for that, file with him.

What I used to see happen in these situations is the kid gets screwed esp when they are footing their own expenses for college already and on loans. If you are a student you can claim Hope for the first two years and LLC for the rest of them.

I'm a 19 year old college student and my father does help me with my rent and tuition.

 

[cirrrocco]

Originally posted by: jds2006


also, what websites can i file my tax returns with? i made less than $8k last year so I think I qualify for one of these free filing websites... but I don't know which ones use.

thanks.

I think taxslayer.com has a free filing

 

[BUTCH1]

Hello, my question is: My wife didn't work at all last year, do I claim her as a Dependant
and file as married/jointly? Thanks in advance..

 

[EagleKeeper]

Originally posted by: cirrrocco
Quick Question

details abt me
1. Here on work visa
2. Single
3. Share house with couple of other IT people [House not mine]


tax Question.

I maintain a couple of websites. Now I spend about 5-10 hours a week updating the website. Can this effort be quantified to reduce my AGI for the year.

Also the website doesnt have a tax id or something...any adsense revenue flows to my SSN which is not more than $200 an year..What type of activities can I use to reduce my AGI

I havent started my tax stuff yet, but will come up with more questions later..thnx much

btw my AGI should be in the upper 70's or 80's.

Your labor on the Web sites does not count.

If you choose to declare the income from the website(s) on your taxes (use the Schedule C), then you can also deduct related expenses to the website site(s) against the income.

The amount of expenses CAN exceed the income from the sites.