Well boys and girls it's that time of year again. While at times the thousands of regs and tens of thousands of cumbersome forms, worksheets and pages of codes seem infuriating, deep down you all know you love it. Whether it's keeping things in order all year for a quick mid-February filing or a knuckle-clenching, bullet sweating the current April 15th midnight filing, when you've finally filed it's better than sex! So, without further delay, we give you:
<The 6th Annual Anandtech Tax Time Thread!!!
First order of business, the legal mumbo jumbo:
Secondly, this is important people:
If the below saves one ATOT member from being a sucker, it will be worth the typing:
If you E-File, the provider will inform you of the estimated time to have a refund issued.
If you mail, allow a minimum of an extra 2 weeks for a refund to be processed.
A good rule is to allow an extra additional week in addition to above, for each month that you delay filing.
Allow an extra week if the funds are being mailed to you instead of being direct deposit.
Now, if you're an ambitious one, you can always trudge through the IRS website for help
Oh, and again please, try not to PM us or any of the other responders unless you are asked to. Instead, post your question here for all to see, because chances are there is another member with a similar issue. The Mods have been requested to lock any/all other threads that show up dealing with tax issues.
---------------------------------------------------------------------------------------------
Okay, moving on. This thread is NOT intended to:
Note: CPA and I have not had a chance to do much research on the changes. Most will be just a echo of what has been discovered that was not specific for a given year.
I am also very busy this year , so may not be responding to questions as fast as in the previous years. However, we have good knowledgeable people that will help to fill in the gaps.
Special Items/Credits
Those that did not get the Stimulus check in the spring of '08 MAY be able to file for it on the 2008 tax form.
Students:
Hope Credit is for tuition for the first 2 years of college. = 50%
Lifetime Learning Credit is for any other type of educational advancement. = 20%
Note: If your parents claim you as a dependent, they get the Credits, no matter who pays the tuition.
Books, laptops, etc do not qualify. Those would have to be entered as expenses on the Form 2106 for those that use Schedule A.
Comparison of the Educational Credits
Lifetime Learning Credit..................................................... Hope Credit
Up to $2,000 credit per return............................................ Up to $1,800 credit per eligible student
Available for all years of postsecondary education................ Available ONLY until the first 2 years of post-
and for courses to acquire or improve job ......................... secondary education are completed
Available for an unlimited number of years......................... Available ONLY for 2 years per eligible student
Student does not need to be pursuing a degree................... Student must be pursuing an undergraduate degree
or other recognized education credential ............................ or other recognized education credential
Available for one or more courses ..................................... Student must be enrolled at least half time
....................................................................................... for at least one academic period beginning during the year
Felony drug conviction rule does not apply.......................... No felony drug conviction on student's record
For Midwestern students, the Hope Limits are higher due to the disaster areas.
No Double Benefit Allowed
You cannot do any of the following:
Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses.
Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student.
Claim a lifetime learning credit and a Hope credit based on the same qualified education expenses.
Claim a lifetime learning credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). See Coordination With Hope and Lifetime Learning Credits in chapter 7 (Coverdell ESA) and chapter 8 (QTP).
Claim a credit based on qualified education expenses paid with a tax-free scholarship, grant, or employer-provided educational assistance. See Adjustments to Qualified Education Expenses, later.
For those of you who enjoy torturing yourself, We present the IRS Web Site. However, this site has most of the answers also.
Previous ATOT Tax Threads
2003
2004
2005
2006
2007
The two sites below have restrictions on their usage and any returns must be started through above links for them to be considered for no charge.
they are not available until mid-January
Federal/Intuit Tax Freedom
State/Intuit Tax Freedom
TaxAct states free filing using their online version for Federal.
H&R Block Product Comparison Chart: (not an endorsement)
Chart
All the three main biggies (TurboTax, TaxCut and TaxAct) do the job. Each has slightly different user interfaces and their quirks/irritations. They continually look at the competition and attempt to match them in features the following year. All three area able to import datafiles from each other.
All three have state filing. However, if you have multiple states to work with, you MUST purchase a copy for each state that you need to work with. And some will not handle multiple states easily; which you will not know until after you shell out the extra $$:disgust:
Some IRS and other Tax Links may not be fully operational until mid January '08 or later
Okay, now that that stuff is out of the way, let's get to some helpful insight.
Deadlines (midnight of the date listed for filing deadlines)
W2 - Companies are required to have your W2 POSTMARKED by January 31st. It is NOT required that you have it in your hands by that date. Let's dispel that myth please.
If you do not receive it by mid February; for ex-employers, call the employer and ask for a copy to be Faxed to you. For current employers, contact your HR department.
1099 - Companies are required to have your W2 POSTMARKED by January 31st. It is NOT required that you have it in your hands by that date. If you do not receive it by mid February, call the employer and ask for a copy to be Faxed to you. Note: 1099s do not have to be sent to you. Individuals that could receive a 1099 are responsible for tracking their own income.
Corporate return (S-Corps and other Corporations) ? Monday, March 16, 2009 ?
Sole Proprietorship return (normal, LLC or otherwise) - Wed, April 15, 2009
Partnership return (normal, LLC or otherwise) - Wed, April 15, 2009
Individual return (1040, 1040A or otherwise) - Wed, April 15, 2009
IRS FAQ Index - contains links for below areas
IRS Procedures
Filing Requirements/Status/Dependents/Exemptions
Itemized Deductions/Standard Deductions
Interest/Dividends/Other Types of Income
Pensions and Annuities
Social Security Income
Child Care Credit/Other Credits
Earned Income Tax Credit
Estimated Tax
Capital Gains, Losses/Sale of Home
Sale or Trade of Business, Depreciation, Rentals
Small Business/Self-Employed/Other Business
Aliens and U.S. Citizens Living Abroad
Electronic Filing (e-file)
Magnetic Media Filers
Other (Alternative Minimum Tax, Estates, Trusts, Tax Shelters, State Tax Inquiries)
Individual Retirement Arrangements (IRAs)
Well, sorry for the long post, but just like the IRS code, it takes a lot to do something simple.
Currently, online Free Filing via IRS is delayed (this may affect any electronic filing) until 16th January 2009
The below number may have been increased, I have not researched it
The AMT in anticipated for adjustment - Congress has not yet determined what will be done and it may be retroactive. This could require filing an ammended 1040X if you are hasty and fully under the AMT headache.
PMI is deductable if issued after 2006
Some tidbits from previous years.
Dependants:
Significant others are able to be declared as a dependent if you provide the support according to the IRS guidelines. (I personally feel that this is a loophole, however, take advantage of it as you desire - I would not push it with multiple SO at the same time ...)
SO's children are now allowed based on a IRS notice of 3/08. This can also be used retroactivly for the past 3 years.
You are a dependent of your parents if you are under 18 (24 if in school) unless:
You have stood on your own for more than 6 months. Just because you paid for your tuition costs does not mean that you are not a dependent.
Your parents have the option of not declaring you and letting you stand on your own.
If you cover more than 50% TOTAL of living expenses for a "legal" (per IRS definition +/- two generations) relative they can be declared as a dependent.
1099
If you get paid with a 1099, you have the option of filing it with your 1040/1040A under misc income or using the Schedule C. Use of the Schedule C (requires a 1040) and allows you to write off expenses directly and some portion indirectly related to that income before taxes. Previous tax threads provided guidance on items that could be used as expenses in on capacity or another.
Income earned via a 1099 is also subject to the self employment tax as well as the normal expected W2 type taxes.
Mileage
Commuting between two jobs is.
Mileage to/from school while working (if the education if not primary - ie it supports work) is a deductible expense on the Form 2106 (which requires 1040 and Schedule A).
If school can be considered as supportive of business income, the tuition, fees, books and mileage become a business expense on the Schedule C. Otherwise use the 2106
You can not claim mileage and expenses on the same vehicle.
Moving
Expenses incurred when changing work locations (for any reason) if the location meets the distance test of 50 miles is filed on the Form 3903 and does NOT require a schedule A.
Sales tax is still allowed as an itemized deduction this year. While it can be a little complicated, the main points of this deduction are:
a. Publication 600 is the main reference for this deduction and contains the tables for those of us who didn't keep your receipts all year long.
b. Anyone who itemized can take it, regardless of what state you are in, BUT, if you live in a state with local/state income tax you have to choose to use the sales tax or income tax deduction. You CAN'T have both.
Sales Tax Table
Interest Reporting
You are responsible to report interest /dividends over $1.
The payee is responsible for providing you a 1099 form when the payment is over $10.
Business Expense writeoffs.
Unless your have Self Employment income (use the Schedule C) expenses must fall under the Form 2106 using the Schedule A (Itemizations)
Expenses for clothing is not deductible, unless those items can not be worn out in public for normal use and/or private functions.
If you have to wear a suit for work, you can not deductthe cost of the suit and dry cleaning.
If you have a military uniform, it is deductible.
[/quote]
Now, let the questions begin.
<The 6th Annual Anandtech Tax Time Thread!!!
First order of business, the legal mumbo jumbo:
Secondly, this is important people:
If the below saves one ATOT member from being a sucker, it will be worth the typing:
If you E-File, the provider will inform you of the estimated time to have a refund issued.
If you mail, allow a minimum of an extra 2 weeks for a refund to be processed.
A good rule is to allow an extra additional week in addition to above, for each month that you delay filing.
Allow an extra week if the funds are being mailed to you instead of being direct deposit.
Now, if you're an ambitious one, you can always trudge through the IRS website for help
Oh, and again please, try not to PM us or any of the other responders unless you are asked to. Instead, post your question here for all to see, because chances are there is another member with a similar issue. The Mods have been requested to lock any/all other threads that show up dealing with tax issues.
---------------------------------------------------------------------------------------------
Okay, moving on. This thread is NOT intended to:
Note: CPA and I have not had a chance to do much research on the changes. Most will be just a echo of what has been discovered that was not specific for a given year.
I am also very busy this year , so may not be responding to questions as fast as in the previous years. However, we have good knowledgeable people that will help to fill in the gaps.
Special Items/Credits
Those that did not get the Stimulus check in the spring of '08 MAY be able to file for it on the 2008 tax form.
Students:
Hope Credit is for tuition for the first 2 years of college. = 50%
Lifetime Learning Credit is for any other type of educational advancement. = 20%
Note: If your parents claim you as a dependent, they get the Credits, no matter who pays the tuition.
Books, laptops, etc do not qualify. Those would have to be entered as expenses on the Form 2106 for those that use Schedule A.
Comparison of the Educational Credits
Lifetime Learning Credit..................................................... Hope Credit
Up to $2,000 credit per return............................................ Up to $1,800 credit per eligible student
Available for all years of postsecondary education................ Available ONLY until the first 2 years of post-
and for courses to acquire or improve job ......................... secondary education are completed
Available for an unlimited number of years......................... Available ONLY for 2 years per eligible student
Student does not need to be pursuing a degree................... Student must be pursuing an undergraduate degree
or other recognized education credential ............................ or other recognized education credential
Available for one or more courses ..................................... Student must be enrolled at least half time
....................................................................................... for at least one academic period beginning during the year
Felony drug conviction rule does not apply.......................... No felony drug conviction on student's record
For Midwestern students, the Hope Limits are higher due to the disaster areas.
No Double Benefit Allowed
You cannot do any of the following:
Deduct higher education expenses on your income tax return (as, for example, a business expense) and also claim a lifetime learning credit based on those same expenses.
Claim a lifetime learning credit in the same year that you are claiming a tuition and fees deduction for the same student.
Claim a lifetime learning credit and a Hope credit based on the same qualified education expenses.
Claim a lifetime learning credit based on the same expenses used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or qualified tuition program (QTP). See Coordination With Hope and Lifetime Learning Credits in chapter 7 (Coverdell ESA) and chapter 8 (QTP).
Claim a credit based on qualified education expenses paid with a tax-free scholarship, grant, or employer-provided educational assistance. See Adjustments to Qualified Education Expenses, later.
For those of you who enjoy torturing yourself, We present the IRS Web Site. However, this site has most of the answers also.
Previous ATOT Tax Threads
2003
2004
2005
2006
2007
The two sites below have restrictions on their usage and any returns must be started through above links for them to be considered for no charge.
they are not available until mid-January
Federal/Intuit Tax Freedom
State/Intuit Tax Freedom
TaxAct states free filing using their online version for Federal.
H&R Block Product Comparison Chart: (not an endorsement)
Chart
All the three main biggies (TurboTax, TaxCut and TaxAct) do the job. Each has slightly different user interfaces and their quirks/irritations. They continually look at the competition and attempt to match them in features the following year. All three area able to import datafiles from each other.
All three have state filing. However, if you have multiple states to work with, you MUST purchase a copy for each state that you need to work with. And some will not handle multiple states easily; which you will not know until after you shell out the extra $$:disgust:
Some IRS and other Tax Links may not be fully operational until mid January '08 or later
Okay, now that that stuff is out of the way, let's get to some helpful insight.
Deadlines (midnight of the date listed for filing deadlines)
W2 - Companies are required to have your W2 POSTMARKED by January 31st. It is NOT required that you have it in your hands by that date. Let's dispel that myth please.
If you do not receive it by mid February; for ex-employers, call the employer and ask for a copy to be Faxed to you. For current employers, contact your HR department.
1099 - Companies are required to have your W2 POSTMARKED by January 31st. It is NOT required that you have it in your hands by that date. If you do not receive it by mid February, call the employer and ask for a copy to be Faxed to you. Note: 1099s do not have to be sent to you. Individuals that could receive a 1099 are responsible for tracking their own income.
Corporate return (S-Corps and other Corporations) ? Monday, March 16, 2009 ?
Sole Proprietorship return (normal, LLC or otherwise) - Wed, April 15, 2009
Partnership return (normal, LLC or otherwise) - Wed, April 15, 2009
Individual return (1040, 1040A or otherwise) - Wed, April 15, 2009
IRS FAQ Index - contains links for below areas
IRS Procedures
Filing Requirements/Status/Dependents/Exemptions
Itemized Deductions/Standard Deductions
Interest/Dividends/Other Types of Income
Pensions and Annuities
Social Security Income
Child Care Credit/Other Credits
Earned Income Tax Credit
Estimated Tax
Capital Gains, Losses/Sale of Home
Sale or Trade of Business, Depreciation, Rentals
Small Business/Self-Employed/Other Business
Aliens and U.S. Citizens Living Abroad
Electronic Filing (e-file)
Magnetic Media Filers
Other (Alternative Minimum Tax, Estates, Trusts, Tax Shelters, State Tax Inquiries)
Individual Retirement Arrangements (IRAs)
Well, sorry for the long post, but just like the IRS code, it takes a lot to do something simple.
Currently, online Free Filing via IRS is delayed (this may affect any electronic filing) until 16th January 2009
The below number may have been increased, I have not researched it
The AMT in anticipated for adjustment - Congress has not yet determined what will be done and it may be retroactive. This could require filing an ammended 1040X if you are hasty and fully under the AMT headache.
PMI is deductable if issued after 2006
Some tidbits from previous years.
Dependants:
Significant others are able to be declared as a dependent if you provide the support according to the IRS guidelines. (I personally feel that this is a loophole, however, take advantage of it as you desire - I would not push it with multiple SO at the same time ...)
SO's children are now allowed based on a IRS notice of 3/08. This can also be used retroactivly for the past 3 years.
You are a dependent of your parents if you are under 18 (24 if in school) unless:
You have stood on your own for more than 6 months. Just because you paid for your tuition costs does not mean that you are not a dependent.
Your parents have the option of not declaring you and letting you stand on your own.
If you cover more than 50% TOTAL of living expenses for a "legal" (per IRS definition +/- two generations) relative they can be declared as a dependent.
1099
If you get paid with a 1099, you have the option of filing it with your 1040/1040A under misc income or using the Schedule C. Use of the Schedule C (requires a 1040) and allows you to write off expenses directly and some portion indirectly related to that income before taxes. Previous tax threads provided guidance on items that could be used as expenses in on capacity or another.
Income earned via a 1099 is also subject to the self employment tax as well as the normal expected W2 type taxes.
Mileage
Commuting is not deductible expenses.
Commuting between two jobs is.
Mileage to/from school while working (if the education if not primary - ie it supports work) is a deductible expense on the Form 2106 (which requires 1040 and Schedule A).
If school can be considered as supportive of business income, the tuition, fees, books and mileage become a business expense on the Schedule C. Otherwise use the 2106
You can not claim mileage and expenses on the same vehicle.
Moving
Expenses incurred when changing work locations (for any reason) if the location meets the distance test of 50 miles is filed on the Form 3903 and does NOT require a schedule A.
Sales tax is still allowed as an itemized deduction this year. While it can be a little complicated, the main points of this deduction are:
a. Publication 600 is the main reference for this deduction and contains the tables for those of us who didn't keep your receipts all year long.
b. Anyone who itemized can take it, regardless of what state you are in, BUT, if you live in a state with local/state income tax you have to choose to use the sales tax or income tax deduction. You CAN'T have both.
Sales Tax Table
Interest Reporting
You are responsible to report interest /dividends over $1.
The payee is responsible for providing you a 1099 form when the payment is over $10.
Business Expense writeoffs.
Unless your have Self Employment income (use the Schedule C) expenses must fall under the Form 2106 using the Schedule A (Itemizations)
Expenses for clothing is not deductible, unless those items can not be worn out in public for normal use and/or private functions.
If you have to wear a suit for work, you can not deductthe cost of the suit and dry cleaning.
If you have a military uniform, it is deductible.
[/quote]
Now, let the questions begin.