6th Annual Anandtech Tax Time Thread

[zhwu]

A question with excess traditional IRA contributions from previous tax year (2007):

Due to some unexpected income hike in 2007 (sold 5 years worth of ESPP stock purchase that year), it pushed up my total income for 2007 and I couldn't contribute the full $4000 traditional IRA amount (deposited way before I did my 2007 tax return) due to my higher than expected income in 2007. So, I filed a 8606 form for $1800 nondeductible Traditional IRA contributions in 2007 tax return and never withdrawed any them.

Now for tax year 2008, how should I deal with the $1800 on form 8606 (from 2007)? I have not contributed any money to 2008 traditional IRA so far but I would like to do so. Does this mean my upper limit for 2008 traditional IRA (under age of 50)would be $5000 - $1800 = $3200? (I assume I would get tax credit for that excess $1800 I contributed in 2007 this time?)


Thanks

 

[CPA]

Originally posted by: lykaon78
Health Savings Account Question:

Basic's
My wife's employer offers a health insurance plan that includes a health savings account.

In 2008 her employer contributed $1,000 and we contributed an extra $1,500.

On her W-2 her employer reported $2500 in box 12a using a code of W. According to some W-2 instructions I found on irs.gov the "W" code is used for "W?Employer contributions to your Health Savings Account.
Report on Form 8889, Health Savings Accounts (HSAs)".

Two questions:
1. Did my wife's employer mis-report their contribution?
2. Does this impact our return?

1. No. IRS requires all contributions (employee and employer) from a 125 cafeteria plan to be shown like that.
2. No. Just report the total amount of contributions on form 8889. The codes are for reference only.

 

[CPA]

Originally posted by: zhwu
A question with excess traditional IRA contributions from previous tax year (2007):

Due to some unexpected income hike in 2007 (sold 5 years worth of ESPP stock purchase that year), it pushed up my total income for 2007 and I couldn't contribute the full $4000 traditional IRA amount (deposited way before I did my 2007 tax return) due to my higher than expected income in 2007. So, I filed a 8606 form for $1800 nondeductible Traditional IRA contributions in 2007 tax return and never withdrawed any them.

Now for tax year 2008, how should I deal with the $1800 on form 8606 (from 2007)? I have not contributed any money to 2008 traditional IRA so far but I would like to do so. Does this mean my upper limit for 2008 traditional IRA (under age of 50)would be $5000 - $1800 = $3200? (I assume I would get tax credit for that excess $1800 I contributed in 2007 this time?)


Thanks

You might want to seek someone local on this, but my thinking is that you should have filed a 1040x for 2007 because you would have to discount the overage and pay penalty. You may also have to pay penalty in 2008 if you have not yet pulled your money out. I'll look a little further into it, however.

 

[Paratus]

Not sure if anyone would know the answer to this but were hurricane Ike victims last year with substantial losses from the storm.

Do insurance pay outs count as taxable income?

Are there any deductions I should be taking?

Any help ould be appreciated.

posted via Palm Life Drive

 

[CPA]

Originally posted by: Paratus
Not sure if anyone would know the answer to this but were hurricane Ike victims last year with substantial losses from the storm.

Do insurance pay outs count as taxable income?

Are there any deductions I should be taking?

Any help ould be appreciated.

posted via Palm Life Drive

No, insurance payments do not count as taxable income. However, they are counted when calculating you casualty losses. So, if you incurred casualty losses of 1K, you would subtract your insurance proceeds, then subtract $100 deductible and 10% income floor. The remaining you would be able to claim as an itemized deduction.

The IRS extended the 2007 filing deadline for Ike victims until January 2009. I'm not aware of any other deductions or filing extensions for 2008 tax year.

 

[erwin1978]

I live in NY and I've been claiming the NY City School Tax Credit for the last few tax years. I get about $150 check in the mail from this credit, which is great. Can't complain. My question is why is NYC giving this free money to me? I don't recall ever paying a school tax. Someone please clarify this for me. I would appreciate it. I've been confused for years with regards to this. The internet doesn't give much info about this tax credit.

 

[TrueBlueLS]

I know I'm going to be told to search, but I don't have the time before work. My real estate agent told me that if two single people are buying a new house, that they'd both qualify for the $8,000 stimulus credit. Is there any truth to this?

 

[jiggahertz]

I am doing a kitchen remodel and have heard from a couple people they were able to claim a tax (credit/deduction ?) when they installed flooring made from recycled materials (bamboo). I've found info on energy efficient tax credits for appliances, windows, etc. but nothing specifically for using recycled materials in a renovation. Does anyone know if any such tax incentive exists?

 

[EagleKeeper]

Originally posted by: TrueBlueLS
I know I'm going to be told to search, but I don't have the time before work. My real estate agent told me that if two single people are buying a new house, that they'd both qualify for the $8,000 stimulus credit. Is there any truth to this?

You have to declare if another person (other than spouse) has an interest in the property and how much. That affects your numbers for the credit.

So unless you falify the IRS form, you both can not claim the 8K credit for the same property.

 

[Starbuck1975]

Quick question on 401k contributions. The 401k limit for 2009 is $16,500. What happens if your contributions exceed this $16,500 limit? Is there a penalty, or does the limit simply set the threshhold for the tax benefit?

What is the typical recommendation...keep your contributions at or below the limit, or does it make sense to exceed the limit if you can?

 

[CPA]

Originally posted by: jiggahertz
I am doing a kitchen remodel and have heard from a couple people they were able to claim a tax (credit/deduction ?) when they installed flooring made from recycled materials (bamboo). I've found info on energy efficient tax credits for appliances, windows, etc. but nothing specifically for using recycled materials in a renovation. Does anyone know if any such tax incentive exists?

That seems a stretch of the Federal energy efficient tax credits. There is some language about sustainable products, so maybe that is what they are interpreting. But the law specifies what can, and sometimes can't, be considered for the credit. Recycled materials nor flooring are considered to meet the requirement.

 

[EagleKeeper]

Originally posted by: erwin1978
I live in NY and I've been claiming the NY City School Tax Credit for the last few tax years. I get about $150 check in the mail from this credit, which is great. Can't complain. My question is why is NYC giving this free money to me? I don't recall ever paying a school tax. Someone please clarify this for me. I would appreciate it. I've been confused for years with regards to this. The internet doesn't give much info about this tax credit.

This may have something to do compenstation for the extra high tax rates in the NYC burroughs

 

[LiLRiceBoi]

If someone over 50 has made 401K contributions and would like to make additional contributions to an IRA, what are the income limits for the contribution to be deductible (MFJ)? I know in the past, it there was a 3000 limit to contributions, but i'm not sure what the income limit was to quality.

Another question, if MFJ and taxpayer (us citizen) is living overseas, working for a US company, 366 days, does not pay foreign tax in that country, this qualifies for foreign earned income exclusion?

 

[T9D]

I need help on this one

I'm self employed. But My Business was real estate. So selling a property would be filed under Capitol Gains Schedule D correct?

Well then what do I fill in for my Schedule C (Profit or Loss From Business)? Those Capitol Gains are also my business profits.

I can't fill them both out because I'd be double paying. But since 1099's get sent in for my properties isn't the IRS going expect to see them itemized on Schedule D?

Do I just throw out my Schedule D (capitol gains sheet) and only fill in my Business Sheet (schedule C)?

 

[imported_elwood]

This might not be the correct place to post this but it might save me a lot of hassle come next tax season!

My girlfriend has a 401k/profit sharing account with her previous employer that she wants to cash out. I know, she should absolutely not touch it and maybe roll it over. But its hers and she wants to cash out.

So anyway, she has a little under $5k in there. Now, i know the 20% is standard withholding plus the 10% early withdrawal fee. When withdrawing, i can change the percentage of the amount to withhold. The default is 20%. Should i go higher than 30% to make sure all taxes (state (LA)) are covered?

P.S. I'm positive that she'll make under $30k this year.

 

[ivan2]

question:

is there a limit on how much money I can move from my 401k account to my IRA account per year? considering that i move it quickly (less than 90 days), what complications will arise in my next year's tax return?

 

[Crucial]

Question:Wife has an LLC that she is the sole member of. We are using turbo tax home and business to try and file her biz and our personal taxes. She uses Quickbooks 2006 to do her business accounting.

I have a few questions.

First, We are listing her expenses. She bought about $10,000 worth of camera equipment in 2008. From my research it looks like this can be listed under the section 179 and we can deduct the entire amount this year instead of depreciating it. The question I have after that is if she bought a camera, lenses and other camera parts can that all be lumped under one entry or should it all be itemized? She bought the stuff in 2 or 3 separate purchases all made in 2008.

Second, we bought about $211 worth of computer upgrades. I'm assuming this can just be expensed under misc instead of listing it as an asset?

Third, She is a photographer and receives retainers for future projects. Whats the best way to invoice that in quickbooks? Should we create one invoice for the actual event date and enter a partial payment on the invoice for the retainer? Or should we be invoicing the retainer separately? We are running into problems with reporting her income for the last year properly because quickbooks is lumping the retainers in with 2009's income because of the invoice date even though the payment was made in 2008.

I thank you for any help.

 

[PowerEngineer]

Oh, I am angry! :disgust:

I just updated TaxCut and it appears to have completely wiped out my virtually completed return!

 

[Mermaidman]

Question

My client pays a flat-rate meal per diem regardless of actual meal expenses. Do I have to pay taxes on the difference? I've "profited" about $700 this year so far. (Yes, I know this thread is for TY2008 . . . )

 

[QueHuong]

I'm using TaxCut to do my taxes.

In 2008, I went to college and lived in Ohio for most of the year. I then got a job in NY and am living here permanently.

In TaxCut, do I report I'm a part-year resident of both states? It also asks me to specify where my residence is...would that be NY since that's where I live now and part of 2008? Or would it be OH, which was where I live for the majority of 2008? Thank you for the help!

 

[EagleKeeper]

Originally posted by: QueHuong
I'm using TaxCut to do my taxes.

In 2008, I went to college and lived in Ohio for most of the year. I then got a job in NY and am living here permanently.

In TaxCut, do I report I'm a part-year resident of both states? It also asks me to specify where my residence is...would that be NY since that's where I live now and part of 2008? Or would it be OH, which was where I live for the majority of 2008? Thank you for the help!

This is more for state than Federal taxes.

You have left college and moved to NY for full time employment. That should be your place of residence.

Be aware that most Tax S/W will not cross states and also require you to purchase two copies of the state info.

If the Federal is worked on first; many times, you can then install the tax S/W on seperate systems and install the unique state on each system working from the pure Fed file

NOTE: I am not recommending this, just stating that I discovered this a few years ago.

 

[EagleKeeper]

Originally posted by: Mermaidman
Question

My client pays a flat-rate meal per diem regardless of actual meal expenses. Do I have to pay taxes on the difference? I've "profited" about $700 this year so far. (Yes, I know this thread is for TY2008 . . . )

You are allowed to expense based on the per diem also.

Therefore , no additional tax is owed.

 

[EagleKeeper]

Originally posted by: PowerEngineer

Oh, I am angry! :disgust:

I just updated TaxCut and it appears to have completely wiped out my virtually completed return!

As with any system, only backup what you can not afford to replace.

 

[EagleKeeper]

Originally posted by: Crucial
Question:Wife has an LLC that she is the sole member of. We are using turbo tax home and business to try and file her biz and our personal taxes. She uses Quickbooks 2006 to do her business accounting.

I have a few questions.

First, We are listing her expenses. She bought about $10,000 worth of camera equipment in 2008. From my research it looks like this can be listed under the section 179 and we can deduct the entire amount this year instead of depreciating it. The question I have after that is if she bought a camera, lenses and other camera parts can that all be lumped under one entry or should it all be itemized? She bought the stuff in 2 or 3 separate purchases all made in 2008.

Second, we bought about $211 worth of computer upgrades. I'm assuming this can just be expensed under misc instead of listing it as an asset?

Third, She is a photographer and receives retainers for future projects. Whats the best way to invoice that in quickbooks? Should we create one invoice for the actual event date and enter a partial payment on the invoice for the retainer? Or should we be invoicing the retainer separately? We are running into problems with reporting her income for the last year properly because quickbooks is lumping the retainers in with 2009's income because of the invoice date even though the payment was made in 2008.

I thank you for any help.

When the numbers are sent to the IRS, they are summed up. The worksheets allow you to track the indivigual items. It is for your convienence that the itemization is done to allow you to see each item and determine if you have overlooked an entry.

You can expense the computer upgrades off as misc for the business or office equipment/supplies.

 

[razor2025]

I have quick question.

I used the Turbotax Online edition to do my free return and free e-file. I didn't catch that the return didn't include the Form 8880 before I hit the submit button for E-file. After the return was sent, the software actually applied Form 8880 to my return. I paid $9 for what I owe on the return without Form 8880. With the Form 8880 in calculation, I'm actually suppose to get refunded $391. Should I simply resubmit an amended return with 1040x and a Form 8880 in the mail?

I've also noticed that the return I did for 2007 with TaxCut software made the same mistake. I should be able to do a similar amended return right? Thanks for your help.