5th Annual Tax Thread - 2007

[Scouzer]

So what percentages did you guys finally pay? I paid 22.9% here in Canada this year. Pretty decent.

 

[Ns1]

Originally posted by: Scouzer
So what percentages did you guys finally pay? I paid 22.9% here in Canada this year. Pretty decent.

0 baby. lifetime learning credit FTW

 

[abc]

Question about the economic stimulus pkg.

If i claim my parent as dependent on my taxes, my parent then does not qualify for the stimulus payment.

I can choose then, not to claim my parent.

I should go the route that is worth more for either of us.


How much is claiming an elderly parent worth in tax deduction actually.

will it be worth more than $300?


The amt the parent is worth as a dependent I think, depends on my tax bracket?

 

[MotionMan]

Long time listener, first time caller...


My uncle lent a friend a large amount of money that was to be invested in the friends business. That was many years ago. The business has gone nowhere, but that is another story.

For some reason, my uncles tax adviser, kinda out of nowhere after many years, had him claim the loan on his 2006 taxes (I just learned about this). I assume he means as a bad debt. I believe he only listed the original loan amount but not any of the interest that has accrued since then.

Does that mean that the loan has been wiped out such that the friend does not have to repay it, or can my uncle still collect on it and adjust his taxes in some way when he recovers the money? If he is SOL on the original loan, can he still collect on the interest?

Thanks.

MotionMan

 

[EagleKeeper]

Originally posted by: abc
Question about the economic stimulus pkg.

If i claim my parent as dependent on my taxes, my parent then does not qualify for the stimulus payment.

I can choose then, not to claim my parent.

I should go the route that is worth more for either of us.


How much is claiming an elderly parent worth in tax deduction actually.

will it be worth more than $300?


The amt the parent is worth as a dependent I think, depends on my tax bracket?

You are correct - it is best to run the numbers and see what the end result will be.

 

[EagleKeeper]

Originally posted by: MotionMan
Long time listener, first time caller...


My uncle lent a friend a large amount of money that was to be invested in the friends business. That was many years ago. The business has gone nowhere, but that is another story.

For some reason, my uncles tax adviser, kinda out of nowhere after many years, had him claim the loan on his 2006 taxes (I just learned about this). I assume he means as a bad debt. I believe he only listed the original loan amount but not any of the interest that has accrued since then.

Does that mean that the loan has been wiped out such that the friend does not have to repay it, or can my uncle still collect on it and adjust his taxes in some way when he recovers the money? If he is SOL on the original loan, can he still collect on the interest?

Thanks.

MotionMan

Bad debts can be written off via the Schedule A.

If the funds are eventually paid, then it becomes misc income that must be declared when received. If declared as misc income, rgualr taxes rules on the misc income will apply. If the amoutns is large, it can be declared on the Schedule C and any expenses related to recovering the income can be deducted.

Any interest received should also be declared as misc income or using the Schedule B.

 

[Squisher]

Easy question:

The wife got two W-2s in the mail, one with her income then another with some off-the-wall amount. About 2 weeks later we get a Corrected W-2 showing that the off-the-wall W-2 to be corrected to $0.

Because I'm mailing the return, do I have to include all three of her W-2s or just the one with the real amount?

 

[T9D]

Can someone tell me how I can carry over a business loss into next year? Do I just file normal and then add the loss to next year?

I bought 2 properties and then sold the one off for it's fair price. But until I sell the next one off it's going to look like a loss. Plus some stock market loss. So it's going to look like I made nothing and lost a lot of money this year. Anyway I'd like to carry it over and write all that off next year.

 

[Ns1]

Originally posted by: v1001
Can someone tell me how I can carry over a business loss into next year? Do I just file normal and then add the loss to next year?

I bought 2 properties and then sold the one off for it's fair price. But until I sell the next one off it's going to look like a loss. Plus some stock market loss. So it's going to look like I made nothing and lost a lot of money this year. Anyway I'd like to carry it over and write all that off next year.

? Do you have a 'business' or are these just houses you're flipping?

Assuming they're capital assets, you're going to be able to offset 3k in losses against your regular income. The rest will be carried forward (forever IIRC), offsetting other capital gains OR offsetting regular income (limited to 3k per year)

Originally posted by: Squisher
Easy question:

The wife got two W-2s in the mail, one with her income then another with some off-the-wall amount. About 2 weeks later we get a Corrected W-2 showing that the off-the-wall W-2 to be corrected to $0.

Because I'm mailing the return, do I have to include all three of her W-2s or just the one with the real amount?

I would just mail the real one

 

[MotionMan]

Originally posted by: EagleKeeper

Originally posted by: MotionMan
Long time listener, first time caller...


My uncle lent a friend a large amount of money that was to be invested in the friends business. That was many years ago. The business has gone nowhere, but that is another story.

For some reason, my uncles tax adviser, kinda out of nowhere after many years, had him claim the loan on his 2006 taxes (I just learned about this). I assume he means as a bad debt. I believe he only listed the original loan amount but not any of the interest that has accrued since then.

Does that mean that the loan has been wiped out such that the friend does not have to repay it, or can my uncle still collect on it and adjust his taxes in some way when he recovers the money? If he is SOL on the original loan, can he still collect on the interest?

Thanks.

MotionMan

Bad debts can be written off via the Schedule A.

If the funds are eventually paid, then it becomes misc income that must be declared when received. If declared as misc income, rgualr taxes rules on the misc income will apply. If the amoutns is large, it can be declared on the Schedule C and any expenses related to recovering the income can be deducted.

Any interest received should also be declared as misc income or using the Schedule B.

Thank you very much for the information!

MotionMan

 

[T9D]

? Do you have a 'business' or are these just houses you're flipping?

Assuming they're capital assets, you're going to be able to offset 3k in losses against your regular income. The rest will be carried forward (forever IIRC), offsetting other capital gains OR offsetting regular income (limited to 3k per year)

This is my business. I flip them and also I have a bunch of rentals that I rent out. I do not have any other income.

I bought some land together that I was going to do something with but am not going to now with how bad the market is. Best to just stay away from the market right now. For some reason we just basically split the cost on the titles. I sold off the 1/3 acre for what it was worth. But now it's going to look like a huge loss until I sell the large portion of land.

It's going to look like an $88,000 loss for now. So you are telling me I can only write off $3000 a year?? Geez thats going to take forever. That can't be right.

 

[Ns1]

Originally posted by: v1001

? Do you have a 'business' or are these just houses you're flipping?

Assuming they're capital assets, you're going to be able to offset 3k in losses against your regular income. The rest will be carried forward (forever IIRC), offsetting other capital gains OR offsetting regular income (limited to 3k per year)

This is my business. I flip them and also I have a bunch of rentals that I rent out. I do not have any other income.

I bought some land together that I was going to do something with but am not going to now with how bad the market is. Best to just stay away from the market right now. For some reason we just basically split the cost on the titles. I sold off the 1/3 acre for what it was worth. But now it's going to look like a huge loss until I sell the large portion of land.

It's going to look like an $88,000 loss for now. So you are telling me I can only write off $3000 a year?? Geez thats going to take forever. That can't be right.

Are you a real estate professional? A real estate professional is defined as s
- More than 50% of the taxpayer's personal services during the year are performed in real property businesses AND
- the taxpayer performs more than 750 hours of services in real property businesses during the year

IF you meet those requirements, then you can offset your losses against active income.

If you DON'T meet those requirements and you "actively participate", which it sounds like you do, then you can deduct 25k against active income. The excess would be carried forward indefinitely as an unused passive loss.

 

[Maximus96]

Currently, my W4 withholding is 5. My wife is set to 1 I believe. This year we end up with a $6k refund after all out deductions and credits. I don?t like that. What should our withhold be in order to minimize the refund or make a *very* small payment.

 

[Ns1]

Originally posted by: Maximus96
Currently, my W4 withholding is 5. My wife is set to 1 I believe. This year we end up with a $6k refund after all out deductions and credits. I don?t like that. What should our withhold be in order to minimize the refund or make a *very* small payment.

See here

http://www.irs.gov/individuals...le/0,,id=96196,00.html

 

[IronWing]

Originally posted by: ironwing
I sent in my paper return more than seven weeks ago. It was a very simple 1040 with standard deduction and a 5695 energy credit form. Should I be worried that I haven't heard boo out of the IRS or received a refund yet (direct deposit)? The state refund came in over a month ago.

Update: I received a paper check this week. Apparently the bank rejected the direct deposit request. I went back and checked the account number and it was correct on the tax form so there must have been a data entry error on the part of the IRS. All is well.

 

[zhwu]

I have a question regarding my ESPP (employee stock purchase plan) sales.

I quit a job in 2006 and sold all the EPSS stock for that company in 2007. According to the statement for that transaction, there are some qualified dispositions (for share I held 2 years or longer) and some Disqualified dispositions (shares I held less than 2 years)

I did some research and most of the online sources say that company is suppose to report all those Disqualified sales on my W-2 for 2007. However, I did not receive a W-2 from that company for 2007 (since I quit in 2006 and did not work for them at all in 2007)

Do I suppose to receive a W-2 from that company? (the amount should be low, less than $500 by my estimate) Also, if I can?t get a W-2 from that company on time (Their local HR department is normally clueless and I doubt I can find a local HR person who can even understand the problem), can I report these disqualified sales as qualified sales? I figure I would pay IRS tax for this amount anyway, either as ordinary income (if reported on W-2) or as short term investment gains (if I don't have them on W-2 then my reported purchased price would be $500 lower) Not really sure if IRS would really care since they get my tax either way?

 

[Ilmater]

So... my parents gave me $15k after my grandmother died. They wanted me to put it into a CD and use it as a downpayment on a home. Instead, I used it to pay off debt (which was the better option, according to both me and my financial advisor). However, my mom does my taxes, and now she's asking me to give her the interest from the CD to put on my taxes.

I plan on lying to her because I really don't want to mess with it, but my question is this:

If I tell her that I have like $350 in interest from this thing and she reports it, will the income tax come back from the IRS with an error? Will it tell her that I shouldn't have that income?

Answers to your obvious questions:

1) She does my taxes because she's a partner in a CPA firm... it's what she does for a living. Why would I pay someone else?
2) I lie because my mom has no debt and never has. She has zero desire for material things and never spends a dime on herself. To her, debt is a sin worse than murder, and she can't comprehend it.

 

[Yossarian]

Section 179 deduction question--I bought a computer to use to work from home. It's used 80% for business. I don't have a home office. Is there any reason I shouldn't take it as a 179 deduction instead of a regular 5-year depreciation? I'd rather get the full deduction now but don't want to bend any rules.

 

[d33pt]

I bought a home in 2007. On the closing statement I have the following fees. Can I deduct both as points paid?

Loan Origination Fee to Mortgage Broker Company
Loan Discount Fee to Lender

How about other fees like these:
Appraisal
Mortgage Processing fee

Generally, what fees can be deducted from this statement?

Thanks.

 

[EagleKeeper]

Originally posted by: zhwu
I have a question regarding my ESPP (employee stock purchase plan) sales.

I quit a job in 2006 and sold all the EPSS stock for that company in 2007. According to the statement for that transaction, there are some qualified dispositions (for share I held 2 years or longer) and some Disqualified dispositions (shares I held less than 2 years)

I did some research and most of the online sources say that company is suppose to report all those Disqualified sales on my W-2 for 2007. However, I did not receive a W-2 from that company for 2007 (since I quit in 2006 and did not work for them at all in 2007)

Do I suppose to receive a W-2 from that company? (the amount should be low, less than $500 by my estimate) Also, if I can?t get a W-2 from that company on time (Their local HR department is normally clueless and I doubt I can find a local HR person who can even understand the problem), can I report these disqualified sales as qualified sales? I figure I would pay IRS tax for this amount anyway, either as ordinary income (if reported on W-2) or as short term investment gains (if I don't have them on W-2 then my reported purchased price would be $500 lower) Not really sure if IRS would really care since they get my tax either way?

If the local company HR can not help you, get on the line to the corporate.

Or contact the local IRS office for guidance.

You may need to file an extension and just a snd check to the IRS based on your best estimate on how the paperwork should be reported.

 

[EagleKeeper]

Originally posted by: Yossarian
Section 179 deduction question--I bought a computer to use to work from home. It's used 80% for business. I don't have a home office. Is there any reason I shouldn't take it as a 179 deduction instead of a regular 5-year depreciation? I'd rather get the full deduction now but don't want to bend any rules.

Are you filing using the Schedule C for business income. If so, you can use the 179 deduction.

If no Schedule C, then you would have to use the Form 2106 and the Schedule A

 

[EagleKeeper]

Originally posted by: d33pt
I bought a home in 2007. On the closing statement I have the following fees. Can I deduct both as points paid?

Loan Origination Fee to Mortgage Broker Company
Loan Discount Fee to Lender

How about other fees like these:
Appraisal
Mortgage Processing fee

Generally, what fees can be deducted from this statement?

Thanks.

The loan fees are the points - those can be deducted.
Anything else that states "Fee" is not unless it shows being paid to a government entity.

Also anything that states the word "Tax" can be deducted as if it were points.

 

[aceO07]

I just moved to a different state last year. Left old job at end of May and began new job starting August in a new state.

Are there any special considerations I should take note of when I do taxes? Are there any deductions that I can take? Do I need receipts for moving expenses?

I basically complete taxes for both states right? And let previous state know that I moved on the forms?

 

[Yossarian]

Originally posted by: EagleKeeper

Originally posted by: Yossarian
Section 179 deduction question--I bought a computer to use to work from home. It's used 80% for business. I don't have a home office. Is there any reason I shouldn't take it as a 179 deduction instead of a regular 5-year depreciation? I'd rather get the full deduction now but don't want to bend any rules.

Are you filing using the Schedule C for business income. If so, you can use the 179 deduction.

If no Schedule C, then you would have to use the Form 2106 and the Schedule A

Ok thanks. No Schedule C, so I don't know why turbotax presented this as an option.

 

[mav451]

Interest Income:

This is my very first year filing taxes, so I used the free version of TurboTax (which looks like it uses 1040EZ). I got through everything and e-filed i Sunday morning only to realize this afternoon that I forgot to include the interest from my checking account.

That interest is $18.94. I don't remember getting a 1099 form for that and based on hearsay (both from bank and friends), they said that <$100 it didn't have to be filed. So I didn't think anything of it. But now, that I've been reading online, it seems that the limit is far lower - $10? Now I'm shitting my pants - am I gonna get audited?

I'm gonna call the IRS line later when I get home from work, but am I really getting stressed out. I've been looking up the Amended Tax Return (1040X) form in the meantime and preparing for the worst.