7th Annual Anandtech Tax Time Thread

[MichaelD]

My wife does not work and has no income. Is it more beneficial for me to file Jointly or as Head of Household? Thank you to all of our resident tax experts for doing this thread every year. You guys are awesome! :thumbsup:

 

[onza]

My wife does not work and has no income. Is it more beneficial for me to file Jointly or as Head of Household? Thank you to all of our resident tax experts for doing this thread every year. You guys are awesome! :thumbsup:

You may be able to file as head of household if you meet all the following requirements.

1. You are unmarried or “considered unmarried” on the last day of the year.
2. You paid more than half the cost of keeping up a home for the year.
3. A “qualifying person” (wife) lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. See Special rule for parent , later, under Qualifying Person .

These are the general rules. Click here for more details!

 

[onza]

Where can I find 2008 Schedule D form?

I got an AUR from the IRS regarding some of my stock information. It says to enclose supporting information such as a 1099-B form and a filled out Schedule D. Since it was for the 2008 tax year I assume it's a 2008 Schedule D form...

Scroll to 1040 Schedule D

 

[EagleKeeper]

My wife does not work and has no income. Is it more beneficial for me to file Jointly or as Head of Household? Thank you to all of our resident tax experts for doing this thread every year. You guys are awesome! :thumbsup:

Your wife can qualify you as Head Of Household.

She can not be claimed as a dependant though if you file as HOH.

Recommend that you run the numbers both ways (Joint and HOH) and see what comes out best for you.

 

[EagleKeeper]

I have been working part time for a marketing company and recently realized that they have a strange way of computing pay. The pay rate that they quote me varies by job between $10 and $17 per hour. When I look at the detailed breakdown of the pay paperwork they list my pay as minimum wage and the rest as "mileage" pay. So if my pay rate for a particular job is $10, it is listed as hourly rate $7.25 and mileage pay $2.75. If my pay for another job is $15 it still lists my hourly rate as $7.25 and mileage as $7.75. This is without regard as to any actual miles that I drive. This seems to me like this is just a way to avoid paying social security and other tax. Does anyone know if this is legal?

It sure looks like a way of them deferring/avoiding taxes on your income by claiming mileage and also making it more difficult for you when it comes time to figure out your taxes.

You can deduct the mileage by miles at the business rate - however, you must itemize and lose 2% of your gross income against the mileage expense.

If you work 8 hrs:

• At the $2.75 mileage rate, that is $22.
  Requires that you drove roughly 40 miles round trip to the site in order to break even on expenses
  
• At the $7.25 mileage rate, that is $58.
  Requires that you drove roughly 110 miles round trip to the site in order to break even on expenses.

Much will also depend on how they break out the costs come W2 time.

If it shows only the $7.75 per hour labor on the W2, then you both come out ahead and you can plead "mea culpa" if the IRS questions you. Also, the company would be on the hook for generating improper records.

It it shows a different (higher) number which accounts for the mileage; then you need to see if they have accounted for payroll taxes on the extra amount.

If they have not accounted for payroll taxes; then if you can not itemize the expenses to break even (as per the above example); you need to prepare to pay the extra difference on the taxable income.

How you wish to handle their end of the payroll taxes is up to you. You can ignore it; complain to their accounting and/or notify the IRS.

 

[EagleKeeper]

Just for a little clarification, on the whole credit/loan thing from 2008. We closed on our house in Sept '08. When we filed our '08 taxes, we took advantage of the credit/loan to pay off unexpected hospital bills.

I see it specifically noted that people that took advantage of this in 2009 can change it to a credit. Any chance of that happening for those of us that purchased in 2008 and took advantage of it then?

The 2008 use was a loan not a credit.

The only silver lining is that the paid hospital bills can be itemized on the Schedule A as medical expenses less the 7% rule.

 

[CPA]

Dang! I didn't even know the thread was up yet. Thanks EagleKeeper.

 

[tjaisv]

When is the earliest one can e-file? When does the IRS start processing e-filed returns? And when will the first refunds be direct deposited?

 

[rudeguy]

I collected unemployment this year. Is the first $2500 tax free and can I still deduct that if I take the standard deduction?

 

[Raiden256]

Here's one:

We have owned our current home (now for sale) for seven years. We closed on a new primary residence on Dec 22. We entered into the contract for this new home back in October, before the updated first time / long time homeowners credit was signed into law. Will we be able to to take advantage of the $6500 credit?

i.e. Does eligibility for the new law look at when you're under contract or when you close?

 

[EagleKeeper]

Here's one:

We have owned our current home (now for sale) for seven years. We closed on a new primary residence on Dec 22. We entered into the contract for this new home back in October, before the updated first time / long time homeowners credit was signed into law. Will we be able to to take advantage of the $6500 credit?

i.e. Does eligibility for the new law look at when you're under contract or when you close?

Closure date is the key.

Unless the closure comes after the 2010 deadline and the contract was entered before the 2010 contract deadline

 

[EagleKeeper]

When is the earliest one can e-file? When does the IRS start processing e-filed returns? And when will the first refunds be direct deposited?

The IRS has usually been set up to accept efiles around the 15th of January.

If you try to efile before they are setup, the efile attempt will be rejected.

 

[EagleKeeper]

I collected unemployment this year. Is the first $2500 tax free and can I still deduct that if I take the standard deduction?

IRS FAQ _ Unemployment

Under the American Recovery and Reinvestment Act (ARRA), the first $2,400 of unemployment benefits an individual receives in 2009 are tax free. This provision applies only to benefits received in 2009: Normally, unemployment benefits are taxable

 

[MichaelD]

You may be able to file as head of household if you meet all the following requirements.

1. You are unmarried or “considered unmarried” on the last day of the year.
2. You paid more than half the cost of keeping up a home for the year.
3. A “qualifying person” (wife) lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. See Special rule for parent , later, under Qualifying Person .

These are the general rules. Click here for more details!

Your wife can qualify you as Head Of Household.

She can not be claimed as a dependant though if you file as HOH.

Recommend that you run the numbers both ways (Joint and HOH) and see what comes out best for you.

Thanks very much, Gents. I guess I can't file as HoH due to the "You must be unmarried on the last day of the year" rule. What kind of crappy IRS rule is THAT?! I guess that's a built-in "out" for the "living together" folks that don't qualify to file as married. Oh well!

Thanks again for the awesome service/info you're providing for AT members.

 

[JEDI]

How much can you put down in the charity deduction box w/o receipts and no IRS red flags? One of Turbo Tax's deduction maximizers implied $300?

 

[EagleKeeper]

How much can you put down in the charity deduction box w/o receipts and no IRS red flags? One of Turbo Tax's deduction maximizers implied $300?

Only the IRS knows what will trigger their red flags.

A person should be able to drop $5 in the collection plate each week and make small cash donations to multiple social charities without fearing the IRS hand on their shoulder

 

[Kelemvor]

Question regarding when you pay your Property Tax and when you can deduct.
We normally pay our Prop taxes before the end of the year so we can claim that amount on our taxes. If we pay it after Jan 1, then we have to claim it on the following year.

This might vary by state (I'm in WI) but figured I'd ask anyway...

Question is, what happens if I pay this years after Jan 1 and then pay next years before Dec 31. Can I claim both amounts or can you not do that?

Also, what if we make installments and I pay the first amount before Dec31 and the rest after Jan 1. I assume I can only claim the amount I actually paid this year and then the rest next year but again, what if I pay next year's before Dec31 again?

Thanks.

 

[EagleKeeper]

Question regarding when you pay your Property Tax and when you can deduct.
We normally pay our Prop taxes before the end of the year so we can claim that amount on our taxes. If we pay it after Jan 1, then we have to claim it on the following year.

This might vary by state (I'm in WI) but figured I'd ask anyway...

Question is, what happens if I pay this years after Jan 1 and then pay next years before Dec 31. Can I claim both amounts or can you not do that?
This is perfectly acceptable and allowed by the IRS. It allows you to take advantage when normal deductions may not make the cutoff limits for the Schedule A

Also, what if we make installments and I pay the first amount before Dec31 and the rest after Jan 1. I assume I can only claim the amount I actually paid this year and then the rest next year but again, what if I pay next year's before Dec31 again?
The date that you make a tax payment is the year that that payment can be applied as a deduction against that year's taxes

Thanks.

Answers are bolded inside the quote

 

[overst33r]

Scroll to 1040 Schedule D

Thanks.

I can't believe I missed it.

 

[dullard]

Thanks for doing this thread year after year. I'll ask my once yearly question.

My sister is setting up a charitiable organization (providing school books and teacher training to poor, rural children in Africa). She has gone twice in the past, using grants and donations. But, now she wants it to be official. She applied for a tax ID number for her charity but she hasn't received the number yet (she expects it in a few weeks).

I make donations every other year (to play the standard/itemized deduction game). To help her organization, I need to either donate in the next two days or wait until 2011. If I donated money today, just before she got the tax ID number for her charity, can I deduct that donation?

 

[EagleKeeper]

Thanks for doing this thread year after year. I'll ask my once yearly question.

My sister is setting up a charitiable organization (providing school books and teacher training to poor, rural children in Africa). She has gone twice in the past, using grants and donations. But, now she wants it to be official. She applied for a tax ID number for her charity but she hasn't received the number yet (she expects it in a few weeks).

I make donations every other year (to play the standard/itemized deduction game). To help her organization, I need to either donate in the next two days or wait until 2011. If I donated money today, just before she got the tax ID number for her charity, can I deduct that donation?

Your donation is based on intent and date.
Make sure she provides you with a back dated reciept (with the Tax ID on it) acknowledging that date & amount of the donation.

 

[richardycc]

can I write off the commissions I paid for all the trading I did in my IRA account?

 

[EagleKeeper]

can I write off the commissions I paid for all the trading I did in my IRA account?

When you start to withdraw from the account; you can deduct the proportional commisions related to the withdrawl

 

[CPA]

Thanks very much, Gents. I guess I can't file as HoH due to the "You must be unmarried on the last day of the year" rule. What kind of crappy IRS rule is THAT?! I guess that's a built-in "out" for the "living together" folks that don't qualify to file as married. Oh well!

Thanks again for the awesome service/info you're providing for AT members.

Hey, now that you are remarried get back at the IRS:

1) Conceive child with new wife.
2) Make sure to conceive so that it's born late December.
3) Get full full exemption and child credit even though the kid has only been around for a few days.
4) PROFIT!

 

[CPA]

Your donation is based on intent and date.
Make sure she provides you with a back dated reciept (with the Tax ID on it) acknowledging that date & amount of the donation.

If the donation is not much, you won't have worry too much about getting the receipt timely. It will only be needed in case of audit. Usually, IRS does not require you to provide Tax ID info for the charity you gave money to. You can also use your dated check as proof of giving.