5th Annual Tax Thread - 2007

[EagleKeeper]

Originally posted by: elwood
Two quick questions. I can't figure out what box 14 is for, it says "SEC414 - $1681.90" At first i thought this was my pension contribution (i work for the sheriffs dept.) but i checked online and it shows my total contribution as "$1,379.94". Should i call payroll and see if they can explain?

Another question, since i had my savings account i think at one time i had a total of $75 with a grand total accrued interest of 1cent. When i enter this it drops my refund by $10, why? Can i just leave it out or would they audit me for not showing my 1cent of interest income?


EDIT: My girlfriend has her wages garnished from some old credit card debt. How does this play into income taxes? Does she have to wait for some form from them or will the tax preparer know what to do with this. (she's having her taxes done by a professional, just trying to save her a trip if she needs to wait for a paper or something.)

1) Info in line 14 is usually pre-tax withholdings of some type. You would be best to contact your HR to get clarification of those.

2) Interest under $1 (total) does not need to be reported. If the inclusion of $0.01 is causing a bracket creep; it seems as if you are entering something incorrectly.


3) Good friends to not let GFs go to a tax preparer. Many use the same S/W that you get online or stand alone. If one has close to a High School education and has enough smarts to post a tax related question, they can do taxes using tax S/W for simple/intermediate returns with no problems.

4) Wage garnishmentis just another way of paying a bill. It has nothing to do with taxes.

 

[jds2006]

I worked at 3 different places in 2007. I've received my tax return papers from two of my employers, but have yet to receive the papers form the third employer. I want to file my tax returns as soon as possible so I won't have to wait as long to receive them, so would it be possible for me to just file my tax returns today with what I have now and then file my tax returns later for my third employer when I get the papers from there? Or do I have to do everything at once?

 

[mak16]

Does anyone know how to itemize deduction with a less chance being audited?
I heard CPA knows how to itemize to avoid being audited, I want to find out how they do it. So I could itemize more instead of using standard deduction.

Anyone?

 

[CPA]

Originally posted by: mak16
Does anyone know how to itemize deduction with a less chance being audited?
I heard CPA knows how to itemize to avoid being audited, I want to find out how they do it. So I could itemize more instead of using standard deduction.

Anyone?

I'm not sure what you're talking about and I am a CPA. itemizing is pretty straight forward with the exception of "charitable deductions" and even those are getting tightened up by the IRS. Medical and miscellaneous are two areas that mileage and other unusual type items MAY be able to be deducted, but you better have support.

Unless you have a house and pay property tax, you normally would have no reason to itemize.

 

[CPA]

Originally posted by: jds2006
I worked at 3 different places in 2007. I've received my tax return papers from two of my employers, but have yet to receive the papers form the third employer. I want to file my tax returns as soon as possible so I won't have to wait as long to receive them, so would it be possible for me to just file my tax returns today with what I have now and then file my tax returns later for my third employer when I get the papers from there? Or do I have to do everything at once?

You do everything at once. Also, keep in mind that employers are not required to mail out the W2s until January 31. You are NOT guaranteed any "arrival" date. If your employers filed their W3s (the W2 summary report) and you file without one of the W2s, then the IRS could claim you fraudulently withheld taxable income - because you knew you had another W2 coming. Just be patient and don't risk it.

 

[Casawi]

Possible delay to tax returns. Does this apply to everyone? I just filed my taxes and I am hoping I get my refund in a couple of weeks.

 

[Starbuck1975]

EagleKeeper & Others,

My wife and I married in 2006, and filed jointly for that year, resulting in our receiving small rebates from both our Federal and State returns.

I just finished our 2007 taxes with TurboTax, resulting in our owing $6000 to Federal and $3000 to State. This seems a bit off, considering that we did not witness a substantial rise in income for 2007, and all of our other deductions and sources of income are fairly constant.

The only change is that last year we each contributed $4000 to Roth IRAs. We have yet to do so this year, but I did a "what-if" scenario in TurboTax, and it stated that we are above the income threshhold that permit Roth IRA contributions.

I fear that, although our income didn't rise that significantly, that we crossed so magic line in Tax land that resulted in our getting hit hard this year.

What are the scenarios, if any, that would cause such a discrepancy between 2006 and 2007?

 

[CPA]

Originally posted by: Casawi
Possible delay to tax returns. Does this apply to everyone? I just filed my taxes and I am hoping I get my refund in a couple of weeks.

The rebate and the AMT last-minute fix was bound to cause this type of problem.

 

[CPA]

Originally posted by: Starbuck1975
EagleKeeper & Others,

My wife and I married in 2006, and filed jointly for that year, resulting in our receiving small rebates from both our Federal and State returns.

I just finished our 2007 taxes with TurboTax, resulting in our owing $6000 to Federal and $3000 to State. This seems a bit off, considering that we did not witness a substantial rise in income for 2007, and all of our other deductions and sources of income are fairly constant.

The only change is that last year we each contributed $4000 to Roth IRAs. We have yet to do so this year, but I did a "what-if" scenario in TurboTax, and it stated that we are above the income threshhold that permit Roth IRA contributions.

I fear that, although our income didn't rise that significantly, that we crossed so magic line in Tax land that resulted in our getting hit hard this year.

What are the scenarios, if any, that would cause such a discrepancy between 2006 and 2007?

If you are using tax software, make sure all of the right boxes are checked and info is given. Also, make sure you have the Final Version of your software. Without it, you may be experiencing the outdated AMT calculations. I know mine went from $6K owed to $800 owed once the Final Version of TaxAct was downloaded - which included the AMT fix.

Do you have dependents? Make sure you have their SSN numbers in the software and that you checked them as dependents.

An $8000 contribution, or lack thereof, should not result in a tax increase of $6000.

I would take my last year 1040 and review it line by line with this year's 1040 to see what might be off. I know one year, using TaxAct, I didn't have my kids SSN in. It resulted in the software program not picking them up for exemptions and the child tax credit.

 

[Starbuck1975]

If you are using tax software, make sure all of the right boxes are checked and info is given. Also, make sure you have the Final Version of your software. Without it, you may be experiencing the outdated AMT calculations. I know mine went from $6K owed to $800 owed once the Final Version of TaxAct was downloaded - which included the AMT fix.

Do you have dependents? Make sure you have their SSN numbers in the software and that you checked them as dependents.

An $8000 contribution, or lack thereof, should not result in a tax increase of $6000.

I would take my last year 1040 and review it line by line with this year's 1040 to see what might be off. I know one year, using TaxAct, I didn't have my kids SSN in. It resulted in the software program not picking them up for exemptions and the child tax credit.

CPA, thank you for the response. I cannot find a discrepancy on Turbo Tax. However I did notice one discrepancy on my W2 from last year to this year.

For 2006 I made less money than I did this year, but had more income withheld. My salary went up 5%, but my federal withholdings went down nearly 20%?

I assume something is wrong with my W4 withholdings? I did get married last year, but don't recall changing my W4 withholdings as a result. I believe when I started my current job 3 years ago, I kept my withholdings at zero. I unfortunately will have to wait until Monday where I can then verify my current withholding setting.

Let's assume I did inadvertently or mistakenly change my withholdings from 0 to 1...would that cause such a large discrepancy in my taxes?

 

[foghorn67]

I had a regular job for all of 2007. I also made money on the side that was well under $8000.
If my regular job paid around 50k, can I still not report my side income since it's under $8000?
Or is that intended for people that make under 8k total a year?
thanks.

 

[alkemyst]

You have to claim that ... the $8,000 is based on a person's income, not per job income.

 

[EagleKeeper]

Originally posted by: Starbuck1975

If you are using tax software, make sure all of the right boxes are checked and info is given. Also, make sure you have the Final Version of your software. Without it, you may be experiencing the outdated AMT calculations. I know mine went from $6K owed to $800 owed once the Final Version of TaxAct was downloaded - which included the AMT fix.

Do you have dependents? Make sure you have their SSN numbers in the software and that you checked them as dependents.

An $8000 contribution, or lack thereof, should not result in a tax increase of $6000.

I would take my last year 1040 and review it line by line with this year's 1040 to see what might be off. I know one year, using TaxAct, I didn't have my kids SSN in. It resulted in the software program not picking them up for exemptions and the child tax credit.

CPA, thank you for the response. I cannot find a discrepancy on Turbo Tax. However I did notice one discrepancy on my W2 from last year to this year.

For 2006 I made less money than I did this year, but had more income withheld. My salary went up 5%, but my federal withholdings went down nearly 20%?

I assume something is wrong with my W4 withholdings? I did get married last year, but don't recall changing my W4 withholdings as a result. I believe when I started my current job 3 years ago, I kept my withholdings at zero. I unfortunately will have to wait until Monday where I can then verify my current withholding setting.

Let's assume I did inadvertently or mistakenly change my withholdings from 0 to 1...would that cause such a large discrepancy in my taxes?

Depending on your income level, such a change would cause from $300-$700 in taxes.
Sometimes on your paystub, they will indicate the number of withholdings.

You may wish to pull out paper and pencil and verify your Schedule A and 1040 numbers by hand.

 

[EagleKeeper]

**** Warning - Snapshot of IRS Phishing E-Mail ****

 

[EagleKeeper]

Originally posted by: alkemyst
You have to claim that ... the $8,000 is based on a person's income, not per job income.

The side job should be claimed using the Schedule C.

Attempt to look at any/all related epxenses for the job to reduce the tax hit.

 

[EagleKeeper]

Originally posted by: CPA

Originally posted by: Casawi
Possible delay to tax returns. Does this apply to everyone? I just filed my taxes and I am hoping I get my refund in a couple of weeks.

The rebate and the AMT last-minute fix was bound to cause this type of problem.

The article is talking about the rebate checks that the politicians are using to buy your loyalty.

This is entirely seperate from any refund on your taxes.

Also, for people that need to file for AMT, the filings are delayed until mid Feb.

 

[Starbuck1975]

Depending on your income level, such a change would cause from $300-$700 in taxes.
Sometimes on your paystub, they will indicate the number of withholdings.

You may wish to pull out paper and pencil and verify your Schedule A and 1040 numbers by hand.

I just verified that both my wife and I had zero withholdings on our W4s, so we should have paid enough taxes during the year.

I went through Turbo Tax again...this time I started with just my wife's income, after which we had a rebate from both State and Federal...so her deductions definitely covered her income thresshold.

Once I enter my income, we owe the amounts I previously mentioned.

So, if my W4 is set to zero, how is it that on my W2 this year, I paid less in taxes than my W2 last year. Is it possible that there is an accounting error on my W2, or could it be something else that caused this?

 

[EagleKeeper]

Payroll/HR is not perfect. You may wish to look at your last paystub from 2007 and see if the W2 numbers come close.

Also, did you itemize in '06. If not, then the refunds are not considered income for '07.

 

[foghorn67]

Originally posted by: EagleKeeper

Originally posted by: alkemyst
You have to claim that ... the $8,000 is based on a person's income, not per job income.

The side job should be claimed using the Schedule C.

Attempt to look at any/all related epxenses for the job to reduce the tax hit.

Cool, thanks for the heads up, I got a grip of receipts for this.

 

[EagleKeeper]

Originally posted by: foghorn67

Originally posted by: EagleKeeper

Originally posted by: alkemyst
You have to claim that ... the $8,000 is based on a person's income, not per job income.

The side job should be claimed using the Schedule C.

Attempt to look at any/all related epxenses for the job to reduce the tax hit.

Cool, thanks for the heads up, I got a grip of receipts for this.

Look through previous threads for ideas that are outside the immediate receipt realm.

 

[imported_elwood]

I contribute 5% pre-taxes (i think) to a pension plan and my employer contributes a certain percentage also. How does this play into income taxes? I've pretty much finished filling out the info for my taxes online with turbotax free and i didnt see anything about pension contribution. Just trying to get everything correct before filing!

Thanks for the help, guys!

 

[alkemyst]

Originally posted by: elwood
I contribute 5% pre-taxes (i think) to a pension plan and my employer contributes a certain percentage also. How does this play into income taxes? I've pretty much finished filling out the info for my taxes online with turbotax free and i didnt see anything about pension contribution. Just trying to get everything correct before filing!

Thanks for the help, guys!

How was this noted on your W2?

 

[imported_elwood]

Originally posted by: alkemyst

Originally posted by: elwood
I contribute 5% pre-taxes (i think) to a pension plan and my employer contributes a certain percentage also. How does this play into income taxes? I've pretty much finished filling out the info for my taxes online with turbotax free and i didnt see anything about pension contribution. Just trying to get everything correct before filing!

Thanks for the help, guys!

How was this noted on your W2?

I see nothing about it. Unless it's Box 14: Other which has "SEC414 - $1681.90". I'm going to talk to payroll about it Monday to see exactly what it is.

 

[CPA]

Originally posted by: EagleKeeper

Originally posted by: CPA

Originally posted by: Casawi
Possible delay to tax returns. Does this apply to everyone? I just filed my taxes and I am hoping I get my refund in a couple of weeks.

The rebate and the AMT last-minute fix was bound to cause this type of problem.

The article is talking about the rebate checks that the politicians are using to buy your loyalty.

This is entirely seperate from any refund on your taxes.

Also, for people that need to file for AMT, the filings are delayed until mid Feb.

I understand that, but the US Treasury is going to be cutting the checks and the IRS is the ones who are going to direct the US Treasury on who should receive it. They are going to have to pull the resources from somewhere....

 

[CPA]

Originally posted by: elwood

Originally posted by: alkemyst

Originally posted by: elwood
I contribute 5% pre-taxes (i think) to a pension plan and my employer contributes a certain percentage also. How does this play into income taxes? I've pretty much finished filling out the info for my taxes online with turbotax free and i didnt see anything about pension contribution. Just trying to get everything correct before filing!

Thanks for the help, guys!

How was this noted on your W2?

I see nothing about it. Unless it's Box 14: Other which has "SEC414 - $1681.90". I'm going to talk to payroll about it Monday to see exactly what it is.

Box 14 should represent the Employer's contribution into the pension plan. Are you required to be in the plan?