6th Annual Anandtech Tax Time Thread

[SunnyD]

Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

 

[supaidaaman]

I decided to go to H&R block today because my taxes seemed a tad more difficult this year.

Ive got a w-2 and a 1099 with a massive portion of my net income. I also moved to a new state and didnt quite know if taxcut would be able to do that...

Anyway...H&R pushed through a few buttons and entered in my deductions...and they totally avoided the multiple state thing.

H&R quoted me $285 at the end. I said I needed to go home and find more deductions because I was getting destroyed on my personal business tax.

I guess I expected them to do something "magical" that I wouldnt know how to do...but in the end, its just like having someone do turbotax while you sit there and watch.

...meh

 

[EagleKeeper]

Originally posted by: supaidaaman
I decided to go to H&R block today because my taxes seemed a tad more difficult this year.

Ive got a w-2 and a 1099 with a massive portion of my net income. I also moved to a new state and didnt quite know if taxcut would be able to do that...

Anyway...H&R pushed through a few buttons and entered in my deductions...and they totally avoided the multiple state thing.

H&R quoted me $285 at the end. I said I needed to go home and find more deductions because I was getting destroyed on my personal business tax.

I guess I expected them to do something "magical" that I wouldnt know how to do...but in the end, its just like having someone do turbotax while you sit there and watch.

...meh

You are preaching to the choir.

H&R block offices use their version of TaxCut - the internal engine is the same, just the UI is different.

Those people work with what you provide them; they are not trained/capable of digging up extras on you. Their ads are designed for people who do not have the time or understand of the basic tax requirements.

 

[EagleKeeper]

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

 

[SunnyD]

Originally posted by: EagleKeeper

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

4 kids, child tax credit. That swallows up what... $4,000 in tax liability right there? I have a few other things like student loan interest deductions for both myself and my wife, along with no additional income.

It's kind of weird honestly... but hey. The other question - since I'm already at "15", would changing it to "16" still red flag the change?

 

[CPA]

Originally posted by: SunnyD

Originally posted by: EagleKeeper

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

4 kids, child tax credit. That swallows up what... $4,000 in tax liability right there? I have a few other things like student loan interest deductions for both myself and my wife, along with no additional income.

It's kind of weird honestly... but hey. The other question - since I'm already at "15", would changing it to "16" still red flag the change?

red flag who? what? The IRS has no clue of your withholdings throughout the year, if that's what you're getting at.

 

[CPA]

Originally posted by: lebe0024
For the past 3 years I've used H&R Block's taxcut online. It was okay. But I will not use them again for the following reasons:
1) They're considerably more expensive than taxact.
2) They're reciprocity form was completely wrong. Attempts to notify them of this ended in utter failure.
3) My one "free" assistance resulted in waiting on the phone for an hour and a half, and I never got the assistance.
4) Doesn't seem to work with firefox.

This year I tried taxact, and it was awesome. And cheap. And the reciprocity form worked great. And it works in firefox. So here's one recommendation for TaxAct. I also computed my federal taxes manually and it came out with the exact same amount as taxact.

I have used TaxAct since the first year they developed it (when it was ONLY FREE). The first year I had some email conversations with the company's founder/president about a couple of issues I had. The are the cheapest and the most user friendly, I believe.

 

[SunnyD]

Originally posted by: CPA

Originally posted by: SunnyD

Originally posted by: EagleKeeper

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

4 kids, child tax credit. That swallows up what... $4,000 in tax liability right there? I have a few other things like student loan interest deductions for both myself and my wife, along with no additional income.

It's kind of weird honestly... but hey. The other question - since I'm already at "15", would changing it to "16" still red flag the change?

red flag who? what? The IRS has no clue of your withholdings throughout the year, if that's what you're getting at.

From what I've read, for the folks that change over 10, the IRS can and does review it, responding to the employer in some cases to CHANGE their withholdings to whatever the IRS says, and not allow further changes.

 

[ElFenix]

i have a SEP IRA. i am an employee, not the employer. what do i have to show on my 1040 for that?

 

[CPA]

Originally posted by: SunnyD

Originally posted by: CPA

Originally posted by: SunnyD

Originally posted by: EagleKeeper

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

4 kids, child tax credit. That swallows up what... $4,000 in tax liability right there? I have a few other things like student loan interest deductions for both myself and my wife, along with no additional income.

It's kind of weird honestly... but hey. The other question - since I'm already at "15", would changing it to "16" still red flag the change?

red flag who? what? The IRS has no clue of your withholdings throughout the year, if that's what you're getting at.

From what I've read, for the folks that change over 10, the IRS can and does review it, responding to the employer in some cases to CHANGE their withholdings to whatever the IRS says, and not allow further changes.

Where did your read that, I would be quit interested. I have never heard this and I work very closely with the payroll department in my company (Fortune 150 company). The IRS will many time have agents housed at large corporations, but they have bigger issues to deal with than the withholdings of some employees.

 

[EagleKeeper]

Originally posted by: SunnyD

Originally posted by: EagleKeeper

Originally posted by: SunnyD
Question - I did the W-4 calculator on the IRS website, and it says I've already paid in enough for the year (and will actually get it all back) and suggests I change my exemptions to "16". I'm currently at "15", and it seems to be a pretty hefty chunk of change that will get taken out over the course of the year. Is "16" basically "exempt" or something?

For each exemption that you have on the W4, it equates to about $3K in income that will not be taxed.

16 may be a magic number - however, 9 is more critical.
When more than 9 is declared, the company must notify the IRS. That will usually set a flag for a recheck.

It is difficult to see how in 5 weeks you have paid enough taxes for the whole year, unless you are going to stop working the last 3 quarters of the year.

You may be misinterpreting what the numbers are telling you.

4 kids, child tax credit. That swallows up what... $4,000 in tax liability right there? I have a few other things like student loan interest deductions for both myself and my wife, along with no additional income.

It's kind of weird honestly... but hey. The other question - since I'm already at "15", would changing it to "16" still red flag the change?

4 Kids = 12K in income.

Wife & you = 7K income

Now you have credit for about 20K of income before taxes should be paid plus you will have the loan interest. Loan interest usually requires some income to pay it though.
Are you not expecting to earn more than 25K this year?

 

[hx009]

I'm not sure if it was answered (this thread is really long) but for the first time I find myself owing (~$1000). I don't have a retirement account of any kind at this time.. so my question is: Can I open a IRA (Roth or standard) right now (Feb '09) and dump the max into it from my savings and count it against 2008? Will it bring down my income enough to at least have me not owe? I know that depends on other variables, but just in the general sense does a retirement account max contribution impact the bottom line enough to bother I guess?

 

[JDub02]

According to TaxCut, my wife and I owe ~$1k to the fed (fortunately we're getting back $500 from VA). Is there any way I can reduce my 2008 tax liability now that we're in 2009? I know that previous years, tax software would give me options of where I could stick money now (IRA's, etc.) and have it count towards the previous year. Can I still do that? I switched to TaxCut this year from TurboTax because we get a discount on it at work. I think I might go redo my return in TurboTax anyway ... not a big fan of the TaxCut.

Thanks.

 

[JDub02]

Originally posted by: hx009
I'm not sure if it was answered (this thread is really long) but for the first time I find myself owing (~$1000). I don't have a retirement account of any kind at this time.. so my question is: Can I open a IRA (Roth or standard) right now (Feb '09) and dump the max into it from my savings and count it against 2008? Will it bring down my income enough to at least have me not owe? I know that depends on other variables, but just in the general sense does a retirement account max contribution impact the bottom line enough to bother I guess?

I guess my question is the same as this one. Sucks owing more money to the government.

I know Roth IRA won't do it because that's all "after tax" money, meaning you pay income tax on it now, but it grows and you withdraw from it tax free.

 

[JDub02]

Originally posted by: hx009
I'm not sure if it was answered (this thread is really long) but for the first time I find myself owing (~$1000). I don't have a retirement account of any kind at this time.. so my question is: Can I open a IRA (Roth or standard) right now (Feb '09) and dump the max into it from my savings and count it against 2008? Will it bring down my income enough to at least have me not owe? I know that depends on other variables, but just in the general sense does a retirement account max contribution impact the bottom line enough to bother I guess?

From the intarwebs, looks like you have until 4/15/2009 or until you file your return to open and contribute to an IRA and still claim it on your 2008 return.

Can a professional confirm this?

What are the contribution limits for myself or my wife and how would they affect my return? I tried plugging numbers into TaxCut and it looks like $1500/each is not showing up with any "non-qualifying" contributions. I started with 2500 for myself and wound up with a chunk that it wouldn't let me write off.

 

[Turin39789]

After tuition reimbursement and scholarships, my wife and I both have about ~$1700 of tuition to deduct.

We both have almost identical income. We got married in the fall, no dependents, renters, planning on taking the standard deduction.

Is there any reason that we should consider married filing separate? I ran one tax program as joint, and then switched it to separate at the end and it came out with a larger deduction on state, but I can't duplicate the results on a different software package. I'm thinking the first one made a mistake, because if we file fed as married joint my new understanding is that we can't deduct tuition at all, anywhere.

 

[JTsyo]

Anyone here with a HSBC Direct account? get your interest information for taxes in the mail? Didn't see anything in the online account to download it from. Didn't have much in there, maybe $10 in interest.

 

[Stiganator]

..

 

[CPA]

Originally posted by: JDub02

Originally posted by: hx009
I'm not sure if it was answered (this thread is really long) but for the first time I find myself owing (~$1000). I don't have a retirement account of any kind at this time.. so my question is: Can I open a IRA (Roth or standard) right now (Feb '09) and dump the max into it from my savings and count it against 2008? Will it bring down my income enough to at least have me not owe? I know that depends on other variables, but just in the general sense does a retirement account max contribution impact the bottom line enough to bother I guess?

From the intarwebs, looks like you have until 4/15/2009 or until you file your return to open and contribute to an IRA and still claim it on your 2008 return.

Can a professional confirm this?

What are the contribution limits for myself or my wife and how would they affect my return? I tried plugging numbers into TaxCut and it looks like $1500/each is not showing up with any "non-qualifying" contributions. I started with 2500 for myself and wound up with a chunk that it wouldn't let me write off.

You are correct. The reduction of income however will only have the effect of your effective tax rate. So, if your effective tax rate is 25%, you will only save $250 of tax if you deposited $1000.

Depending on your income you can contribute up to $5K for 2008.

 

[Stiganator]

..

 

[Ktulu]

During last years tax season we received a 1098T way after I already filed our taxes. How can I file it this year? Can I just include it along side all our other stuff (w2's, 1099's) for 2008?

 

[CPA]

Originally posted by: Ktulu
During last years tax season we received a 1098T way after I already filed our taxes. How can I file it this year? Can I just include it along side all our other stuff (w2's, 1099's) for 2008?

If it relates to 2007 (actually says 2007 on the 1098T) then you need to file a 1040X for 2007.

 

[Ktulu]

Originally posted by: CPA

Originally posted by: Ktulu
During last years tax season we received a 1098T way after I already filed our taxes. How can I file it this year? Can I just include it along side all our other stuff (w2's, 1099's) for 2008?

If it relates to 2007 (actually says 2007 on the 1098T) then you need to file a 1040X for 2007.

Yup, it's a 2007 1098T. I'll go pull that form up. Thanks for the quick response. :thumbsup:

 

[Praetor]

Quick question, I'm over at my mom's house trying to do her taxes for the first time, she's always taken them to H&R Block previously.

In past years, she's been able to claim my 27 y/o sister as a dependent because she wasn't able to work and my mom supported her 100%.

Last year, she started to work and made just over $1,000. TurboTax seems to think that she can claim my sister again this year. But where do I put in my sister's W-2? Do I enter it on my mom's tax return or do I file a separate one just for my sister?

 

[JDub02]

Originally posted by: CPA

Originally posted by: JDub02

Originally posted by: hx009
I'm not sure if it was answered (this thread is really long) but for the first time I find myself owing (~$1000). I don't have a retirement account of any kind at this time.. so my question is: Can I open a IRA (Roth or standard) right now (Feb '09) and dump the max into it from my savings and count it against 2008? Will it bring down my income enough to at least have me not owe? I know that depends on other variables, but just in the general sense does a retirement account max contribution impact the bottom line enough to bother I guess?

From the intarwebs, looks like you have until 4/15/2009 or until you file your return to open and contribute to an IRA and still claim it on your 2008 return.

Can a professional confirm this?

What are the contribution limits for myself or my wife and how would they affect my return? I tried plugging numbers into TaxCut and it looks like $1500/each is not showing up with any "non-qualifying" contributions. I started with 2500 for myself and wound up with a chunk that it wouldn't let me write off.

You are correct. The reduction of income however will only have the effect of your effective tax rate. So, if your effective tax rate is 25%, you will only save $250 of tax if you deposited $1000.

Depending on your income you can contribute up to $5K for 2008.

According to TurboTax and TaxCut, my wife and I can only contribute $1550 each tax-deferred since we were both covered under a retirement plan at work. Still, since we're in the 25% bracket, that's basically an instant 25% return since we'd have to shell out that money to Uncle Sam. Looks like I'll be calling someone tomorrow to open up an IRA with $3100.