5th Annual Tax Thread - 2007

[Joemonkey]

What the heck is this crap from turbotax?

You have listed localities in boxes 18 through 20 on form w-2 that create more than 4 state listings

I have 5 localities, but they ALL list KY as the state...

Three W2's...

W2 1 = city 1 and county 1
W2 2 = city 2
W2 3 = city 3 and county 3

why the heck would that keep me from e-filing?

 

[SarcasticDwarf]

nm

 

[alkemyst]

Originally posted by: Joemonkey
What the heck is this crap from turbotax?

You have listed localities in boxes 18 through 20 on form w-2 that create more than 4 state listings

I have 5 localities, but they ALL list KY as the state...

Three W2's...

W2 1 = city 1 and county 1
W2 2 = city 2
W2 3 = city 3 and county 3

why the heck would that keep me from e-filing?

This is not the topic to complain about the software. You may have a rare situation they didn't account for.

 

[alkemyst]

Originally posted by: BaNzaiDags

Originally posted by: EagleKeeper

Originally posted by: BaNzaiDags
Question:
Last year I spent $45k in home renovations, the only place that i see where I can deduct the money i spent is the building material costs... am i missing something?

(I remodeled kitchen, bathroom, removed walls, paint ,electrical, drywall.. new doors/moldings/casing/floors. nothing that would go toward energy star rebates. )

so if i did deduct the building materials only, how do i get totals for material if i paid contractor by the job as a flat fee where materials where included in the bid, I have a receipts but it doesn't specify what is the material cost and what is labor.

The only thing that would be deductible is new energy reduction improvements.
Material costs are not deductible. Depending on your state, the sales tax could be used instead of income tax for Schedule A.

Unless this is an investment property - then everything is allowed.

This is our residence and not a investment property. I live in Washington State. Turbo tax does give me the option to deduct matierial costs sales tax...so I assume I can do that?

He said you can't

 

[alkemyst]

Originally posted by: steppinthrax

Originally posted by: EagleKeeper

Originally posted by: steppinthrax
Just a little question regarding medical expenses. Do Medical Expenses include those paid to an HMO insurance company though your employer? Example, money is deducted from my paycheck for Health insurance.

I'm assuming NOT in my case since when I got my W-4 my employer backed out my Box 1 with my medical expenses. Is this what is supposed to be done?

The premiums that YOU pay are deductible on the Schedule A along with any other health care costs.

Note theese costs must exceed 7.5% of your income to have any effect.

But when I got my w-4 my box 1 included my total income minus medical premiums paid. I can still deduct those medical premiums. That sounds like double dipping. Since they were already taken out to reduce your tax anyway?

it doesn't work that way as there are rules applied to it. Using simple tax software would show this.

 

[sandmanwake]

Due to unexpected circumstances, my income for 2007 ended up being such that I cannot contribute the full $4k to my Roth IRA for 2007. Turbotax says I must withdraw $1040 of the contributions I made in Jan '07. I plan on recharacterizing the $1040 + the earnings on it to a traditional IRA, but I'm not sure if I'm calculating the amount to recharacterize correctly. Could someone double check? Thanks.

Nevermind, found the IRS publication with the formula, which was different from the one I found on another website. I think I should go with the one provided by the IRS since I'm no Wesley Snipes. If anyone else needs it:

http://www.irs.gov/pub/irs-pdf/p590.pdf

Search for "How do you recharacterize"

 

[redgtxdi]

Originally posted by: EagleKeeper

Not to point fingers but I would suspect that you are doing something wrong within your filings/calcualtions. (Overlooking a key item somewhere?)

30 Million Californians file taxes; probably a good 1000+ here on AT and not one has complained abouit the situation that you described.

Thanks for the feedback! Believe it or not, it's quite accurate. I've used Turbo Tax for the last 6 years and all's well. (I posted the Q over at TurboTax forums, so we'll see what they say).

I have another question though regarding W-2's........

My employer uses boxes 19 and 20 (local tax boxes) to record CASDI (California State Disability Insurance) listing the amount in 19 and the name in 20.

My wife's employer leaves those blank and uses box 14 (labeled 'other') to record the amount & name ($xxx.xx -- CA SDI). Anything unusual about either method??

TIA!!

 

[krunchykrome]

I just wanted to come in and express my relief and happiness. In the past, I've always done my taxes manually, on paper with a pen. This year, I decided to pick up turbotax deluxe for $39.99. I finished both my state and federal returns in 20 minutes. What a relief. Last year, I remember my taxes taking me a few hours, and my fiancee's taxes took me about four hours.

I didn't have the time or energy to do it manually this year; I'll be using turbotax next year as well.

 

[cpals]

My brother-in-law and his wife live with my wife's parents for all of 2007. His wife had a 3 year old kid when they got married in April 2007 (he hasn't filed for custody or anything special like that). They also had a baby in October of last year.

Due to their income not being that great, I suggested them looking into having my wife's father claim the kids since the tax benefit would be much greater. My question is can my wife's father claim both the kids or only the one that was born while they were married?

Thanks.

 

[Hayabusa Rider]

I refinanced my mortgage and paid about $4300 in points. I received a tax document that I paid 0 points. WTH? I assume that's and error.

 

[alkemyst]

Well if you paid points and they show you didn't, I'd call them up. However, was that statement from the original bank or the one that the refi was sold to? Usually you will receive two statements for the first year of any new loan. One for the 1 - 2 months the original bank had the load and then another from the company the original bank sold the loan too.

 

[EagleKeeper]

Originally posted by: redgtxdi

Originally posted by: EagleKeeper

Not to point fingers but I would suspect that you are doing something wrong within your filings/calcualtions. (Overlooking a key item somewhere?)

30 Million Californians file taxes; probably a good 1000+ here on AT and not one has complained abouit the situation that you described.

Thanks for the feedback! Believe it or not, it's quite accurate. I've used Turbo Tax for the last 6 years and all's well. (I posted the Q over at TurboTax forums, so we'll see what they say).

I have another question though regarding W-2's........

My employer uses boxes 19 and 20 (local tax boxes) to record CASDI (California State Disability Insurance) listing the amount in 19 and the name in 20.

My wife's employer leaves those blank and uses box 14 (labeled 'other') to record the amount & name ($xxx.xx -- CA SDI). Anything unusual about either method??

TIA!!

State tax related items are usually beyond our scope.

 

[EagleKeeper]

Originally posted by: cpals
My brother-in-law and his wife live with my wife's parents for all of 2007. His wife had a 3 year old kid when they got married in April 2007 (he hasn't filed for custody or anything special like that). They also had a baby in October of last year.

Due to their income not being that great, I suggested them looking into having my wife's father claim the kids since the tax benefit would be much greater. My question is can my wife's father claim both the kids or only the one that was born while they were married?

Thanks.

Only the blood grandchild can be claimed until legal custody is established.

Having both children may enhance the additional credits for the parents.

Using tax s/w on a computer (vs online) allows these types of what if scenarios to be done quickly to see the overall benefit to the household.

 

[redgtxdi]

Originally posted by: EagleKeeper
State tax related items are usually beyond our scope.

OK, well thanks for the feedback anyway.....I appreciate the work you've done here ever year in our tax threads! :thumbsup:

 

[alkemyst]

Originally posted by: cpals
My brother-in-law and his wife live with my wife's parents for all of 2007. His wife had a 3 year old kid when they got married in April 2007 (he hasn't filed for custody or anything special like that). They also had a baby in October of last year.

Due to their income not being that great, I suggested them looking into having my wife's father claim the kids since the tax benefit would be much greater. My question is can my wife's father claim both the kids or only the one that was born while they were married?

Thanks.

Well her father's relationship doesn't chenge that with her children. So that is a moot point.

However, there is pretty clear Qualifying Child/Relative questions.

A Qualifying Child is:

your child, step child, adopted/foster child, sibling or a descendant of one of these like a grand kid or nephew/niece.

They have to live at least half the year and you support more than 50% of their care.

They have to be under 19 (24 if a full-time student), or they can be as old or even older than the taxpayer if they are totally disabled.

The tie-breaker tests side with the taxpayer with the highest ADJUSTED gross income. However; you can't say it's 50/50 and then have two people claim the dependent.

I do not think that the grandparent can claim there own children here at all unless they meet the Qualifying child test above.

If you brother-in-law and sister are income earners, it's probably going to cost them to allow your grandfather to claim the kids.

 

[cpals]

Originally posted by: alkemyst

Originally posted by: cpals
My brother-in-law and his wife live with my wife's parents for all of 2007. His wife had a 3 year old kid when they got married in April 2007 (he hasn't filed for custody or anything special like that). They also had a baby in October of last year.

Due to their income not being that great, I suggested them looking into having my wife's father claim the kids since the tax benefit would be much greater. My question is can my wife's father claim both the kids or only the one that was born while they were married?

Thanks.

Well her father's relationship doesn't chenge that with her children. So that is a moot point.

However, there is pretty clear Qualifying Child/Relative questions.

A Qualifying Child is:

your child, step child, adopted/foster child, sibling or a descendant of one of these like a grand kid or nephew/niece.

They have to live at least half the year and you support more than 50% of their care.

They have to be under 19 (24 if a full-time student), or they can be as old or even older than the taxpayer if they are totally disabled.

The tie-breaker tests side with the taxpayer with the highest ADJUSTED gross income. However; you can't say it's 50/50 and then have two people claim the dependent.

I do not think that the grandparent can claim there own children here at all unless they meet the Qualifying child test above.

If you brother-in-law and sister are income earners, it's probably going to cost them to allow your grandfather to claim the kids.

The children lived with their grandparents all of 2007. They are mainly supported by the grandparents as my brother-in-law is out of work right now and his wife was the main earner in their family. However, she only earned around 9,000 and since she put three dependants for her job (for whatever crazy reason) she is only getting around $500 back this year. That is the reason I was wondering about the grandparents claiming the kids.

 

[TheWart]

Okay, great advice here!

Quick question: I just turned 23 and live in VA working for the govt. I moved here at the end of August, living at school (Jan-May of 2007) and then at home (June-August 2007) before that. I was under the impression that I am *not* a dependent...is this correct? I guess I was a dependent for half of 2007, but I am confused as to what to put. Also, if I am a dependent of my parents, I still file my own fed and VA state tax returns, correct? Can I claim 1 exemption like I was going to? Also, what should I do if I had a small student job from Jan-May which I was getting paid for (and had taxes withheld) but I don't remember how much for....I can guestimate, but I completely forgot about it since it was not a lot (like less than $1k over those months). Do I need to contact the school and see if they have something on file showing how much I was paid and how much taxes they took out?


Thanks for your help!

 

[bondboy]

I started doing my taxes this year, and found out I over contributed to my Roth IRA. So to avoid a 6% penalty on the excess amount, I have to take it out plus the earnings.

1. How do I know what the earnings were from that excess portion of my Roth?

2. If I take out the excess amount + earnings, will the earnings be taxed as regular income for 08? Will I be subject to the 10% early withdrawal penalty since I'm under 59.5?

3. Are there any other options for handling excess contributions to Roth?

Thanks for the advice!

 

[alkemyst]

Originally posted by: cpals

Originally posted by: alkemyst

Originally posted by: cpals
My brother-in-law and his wife live with my wife's parents for all of 2007. His wife had a 3 year old kid when they got married in April 2007 (he hasn't filed for custody or anything special like that). They also had a baby in October of last year.

Due to their income not being that great, I suggested them looking into having my wife's father claim the kids since the tax benefit would be much greater. My question is can my wife's father claim both the kids or only the one that was born while they were married?

Thanks.

Well her father's relationship doesn't chenge that with her children. So that is a moot point.

However, there is pretty clear Qualifying Child/Relative questions.

A Qualifying Child is:

your child, step child, adopted/foster child, sibling or a descendant of one of these like a grand kid or nephew/niece.

They have to live at least half the year and you support more than 50% of their care.

They have to be under 19 (24 if a full-time student), or they can be as old or even older than the taxpayer if they are totally disabled.

The tie-breaker tests side with the taxpayer with the highest ADJUSTED gross income. However; you can't say it's 50/50 and then have two people claim the dependent.

I do not think that the grandparent can claim there own children here at all unless they meet the Qualifying child test above.

If you brother-in-law and sister are income earners, it's probably going to cost them to allow your grandfather to claim the kids.

The children lived with their grandparents all of 2007. They are mainly supported by the grandparents as my brother-in-law is out of work right now and his wife was the main earner in their family. However, she only earned around 9,000 and since she put three dependants for her job (for whatever crazy reason) she is only getting around $500 back this year. That is the reason I was wondering about the grandparents claiming the kids.

I was confused by your explaination...however if the kids are not blood related to the grandparents they more than likely can't claim them.

The booklets clearly outline Qualifying Child and Qualifying Relative. If they don't qualify the mother would be probably owing money if she is only getting back $500 with them. She cannot claim them as well nor use them for tax advantages.

 

[rasczak]

is it possible to deduct health insurance premiums? I had to pay for my family's health insurance out of my own pocket. no employer health program was available.

 

[EagleKeeper]

Originally posted by: TheWart
Okay, great advice here!

Quick question: I just turned 23 and live in VA working for the govt. I moved here at the end of August, living at school (Jan-May of 2007) and then at home (June-August 2007) before that. I was under the impression that I am *not* a dependent...is this correct? I guess I was a dependent for half of 2007, but I am confused as to what to put. Also, if I am a dependent of my parents, I still file my own fed and VA state tax returns, correct? Can I claim 1 exemption like I was going to? Also, what should I do if I had a small student job from Jan-May which I was getting paid for (and had taxes withheld) but I don't remember how much for....I can guestimate, but I completely forgot about it since it was not a lot (like less than $1k over those months). Do I need to contact the school and see if they have something on file showing how much I was paid and how much taxes they took out?


Thanks for your help!

You and your parents need to determine how to classify yourself.
From the IRS POV, you can be claimed as a dependant - you were in school and under 24.

If they claim you, then you need to file as Dependant status for Fed and state returns.
If they do not claim you, then you can file as single.
You need to include ALL income that your earned in 2007. Employer(s) should send you W2 forms this week. If you feel that they have the correct address and have not received by mid week - contact them.

If you file as single and you moved from your parent home to a new place for work, then you may be elgivle for the moving expenses form 3903.

 

[EagleKeeper]

Originally posted by: jpbelauskas
is it possible to deduct health insurance premiums? I had to pay for my family's health insurance out of my own pocket. no employer health program was available.

If you file the Schedule A, they fall under medical expenses. Note the amounts of medical expenses must exceed 7.5% of your income to have an effect.

 

[rasczak]

Originally posted by: EagleKeeper

Originally posted by: jpbelauskas
is it possible to deduct health insurance premiums? I had to pay for my family's health insurance out of my own pocket. no employer health program was available.

If you file the Schedule A, they fall under medical expenses. Note the amounts of medical expenses must exceed 7.5% of your income to have an effect.

7.5% of agi = 3,800
amount of premiums less other medical expenses, (i.e daughter had pulpotomy done = 1158.00) was $7588.00

so i would be able to deduct at least 3788 for my taxes correct?

 

[EagleKeeper]

Originally posted by: jpbelauskas

Originally posted by: EagleKeeper

Originally posted by: jpbelauskas
is it possible to deduct health insurance premiums? I had to pay for my family's health insurance out of my own pocket. no employer health program was available.

If you file the Schedule A, they fall under medical expenses. Note the amounts of medical expenses must exceed 7.5% of your income to have an effect.

7.5% of agi = 3,800
amount of premiums less other medical expenses, (i.e daughter had pulpotomy done = 1158.00) was $7588.00

so i would be able to deduct at least 3788 for my taxes correct?

If I read this correctly, you estimate that you spend 7588 in medical related expenses in 2007.
7.5% of your AGI is 3800.

Therefore you have $7588-$3800 = $3788 that will have an impact on the Medical line of the
Schedule A.

 

[CPA]

Originally posted by: bondboy
I started doing my taxes this year, and found out I over contributed to my Roth IRA. So to avoid a 6% penalty on the excess amount, I have to take it out plus the earnings.

1. How do I know what the earnings were from that excess portion of my Roth?

2. If I take out the excess amount + earnings, will the earnings be taxed as regular income for 08? Will I be subject to the 10% early withdrawal penalty since I'm under 59.5?

3. Are there any other options for handling excess contributions to Roth?

Thanks for the advice!

1. Your Roth administrator should be able to help you determine the amount of earnings for each investment.

2. The earnings are taxed in 2007. You need to withdraw them before April 15th. Yes, you will incur the 10% penalty on the earnings.

3. You could roll over your excess contributions (and earnings attributed to them) to a traditional IRA. That is the only other solution, and may not be the best for you.

Here's a good website explaining it all.