7th Annual Anandtech Tax Time Thread

[EagleKeeper]

second question, does it seem odd to you that Turbotax is telling me that we would be better off MFS for a childless couple, standard deduction, some student interest and property tax deduction, and a small amount of charitable contributions. I don't think we are at all abnormal in our incomes or deductions, yet this is the second year Turbotax shows a refund doing MFS but owing doing MFJ. I thought MFJ was by far the most common unless you have weird details.

If there is a large income gap, one can benefit by having one partner claim all the deductions and the other not.

Note: that both must either use the Schedule A or neither - one can not cherry pick on that.

 

[TUKIN18S]

Thanks guys for doing this again!

1. My wife and I had a baby girl in June of 09. Are we able to deduct the uninsured costs associated with the birthing expenses? I read something earlier in the thread about a 7% medical rule and I couldn't find anything on the web about that.

2. After the birth of our daughter my wife was on short term disability. Is there any paperwork we should be looking out for in regards to that, since we already got her W2s?

3. Daycare - I'm confused about the Child Care deductions. We paid just about 1600 in daycare expenses. What is the benefit of claiming this? Is there an income limit?

Thanks again!

 

[MikeyIs4Dcats]

If there is a large income gap, one can benefit by having one partner claim all the deductions and the other not.

Note: that both must either use the Schedule A or neither - one can not cherry pick on that.

there is about $14k difference between us....would that be large enough?

 

[Jeff7181]

Very confusing question here but i'll try to answer it.
I would look here.
http://www.irs.gov/newsroom/article/0,,id=215791,00.html
http://www.irs.gov/newsroom/article/0,,id=204671,00.html for the general points.

Not sure where you are coming up with the 4,000 dollar amount but I suppose if the condo is worth 40,000 then 10% of that ='s 4,000. If the house/condo you are going to purchase is more than 80,000 you can qualify for the full 8000.00 credit.

Okay so here's the confusing part of your question. The credit will show towards the bottom of the 2nd page of your 1040. It's a credit so lets say you have a 100.00 refund for example, your total refund will be 4,100.00 IF the condo you purchase is 40,000. If it was an 80,000.00 condo your refund will be 100 + 8,000 = 8100.

So lets say you OWE 100.00, and the condo you purchase is going to be 40,000. Your refund would be 4,000 - 100 = 3900 refund.

Hope you are following me up to this point lol.. but here's the catch. You will have to paper file your WHOLE return because the IRS set new guidelines to minimize fraud. You will need to include a copy of your drivers license / closing statement in addition to all the other forms related.

Good luck.

That's exactly what I wanted to know. Thanks.

 

[nanette1985]

My college son has a 1098-T but his college takes forever to get the info to the student.

My income this year was extremely low. I filled out TurboTax with estimates of what his numbers might be. It turns out that because of my low income, his financial aid and tuition/info expenses aren't going to make any difference to the taxes - I don't have any taxes to get a tax deduction from the education expenses.

Is it okay to file without including the information on the 1098-T, if it doesn't effect the tax situation? I could sure use the refund/EIC money as soon as possible - last year his school didn't get the info available until mid-march.

According to TurboTax he doesn't qualify for the American Opportunity Tax Credit, but the reason it gave is that my income is over $90K. I wish! But, is there any way to find out if he really does qualify for something?

As always, incredible gratitude and thank you's for your help!

 

[EagleKeeper]

My college son has a 1098-T but his college takes forever to get the info to the student.

My income this year was extremely low. I filled out TurboTax with estimates of what his numbers might be. It turns out that because of my low income, his financial aid and tuition/info expenses aren't going to make any difference to the taxes - I don't have any taxes to get a tax deduction from the education expenses.

Is it okay to file without including the information on the 1098-T, if it doesn't effect the tax situation? I could sure use the refund/EIC money as soon as possible - last year his school didn't get the info available until mid-march.

According to TurboTax he doesn't qualify for the American Opportunity Tax Credit, but the reason it gave is that my income is over $90K. I wish! But, is there any way to find out if he really does qualify for something?

As always, incredible gratitude and thank you's for your help!

You do not need to file using the college paperwork if it will not help you.

If your income is over 90K, yet there are no taxes paid; something may be entered improperly unless you have high losses on investments or most of the income is tax exempt. Double check your entries to see what is causing TT to think that you have a different income than you believe

Even if the funds would be of benefit, there is no foul in filing with the accurate information you have on hand and then file a 1040X to account for the 1098T

 

[EagleKeeper]

there is about $14k difference between us....would that be large enough?

A 14K difference could push another bracket for you.
If you are near the high end that could be a 10% differential.

There are to many variables to speculate based on the income and tax withheld along with other line items that could have an impact.

Best thing is to look at the two scenarios and see where the summations of line items cause a difference that explains what you are observing..

 

[EagleKeeper]

Thanks guys for doing this again!

1. My wife and I had a baby girl in June of 09. Are we able to deduct the uninsured costs associated with the birthing expenses? I read something earlier in the thread about a 7% medical rule and I couldn't find anything on the web about that.

2. After the birth of our daughter my wife was on short term disability. Is there any paperwork we should be looking out for in regards to that, since we already got her W2s?

3. Daycare - I'm confused about the Child Care deductions. We paid just about 1600 in daycare expenses. What is the benefit of claiming this? Is there an income limit?

Thanks again!

1) You have to use the Schedule A. Then expenses over 7% of your Adjusted Gross Income can be written off. those expenses can include uninsured expenses that you pay for as well as the cost of insurance and deductibles.

2) Short term disability is not usually taxable. If so; it will be indicated on the W2 from the employer.

3) Child care deduction is limited to 5K. This is indicated on Form 2441. It is subject to income limitation based on the lesser income of you or your spouse.
You essentially deduct the child care expenses up to $5K from your taxable income.

 

[ProgressiveAthe]

I did some tuturing of my coworker children, and made around $300 last year. Do I need to include this in my taxes, I am thinking no because they won't be able to find out. You only need to report income the government can findout about.

 

[Homerboy]

I did some tuturing of my coworker children, and made around $300 last year. Do I need to include this in my taxes, I am thinking no because they won't be able to find out. You only need to report income the government can findout about.

Technically you "need to".
Should you? Hells no.

 

[TrueBlueLS]

You will have to paper file your WHOLE return because the IRS set new guidelines to minimize fraud. You will need to include a copy of your drivers license / closing statement in addition to all the other forms related.

Good luck.

Crap... I really hope a copy of the drivers license isn't necessary. I just went off of TurboTax's website and sent my W2s, 1040, Schedule L, 5405, HUD-1 Settlement Statement, and Schedule M out in the mail yesterday.

 

[onza]

Crap... I really hope a copy of the drivers license isn't necessary. I just went off of TurboTax's website and sent my W2s, 1040, Schedule L, 5405, HUD-1 Settlement Statement, and Schedule M out in the mail yesterday.

To be honest you will be fine. I was at a continuing education class a few weeks ago and they recommended drivers licenses as well because of prior cases of fraud the IRS was noticing.

For purchasers of conventional homes, a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties' names and signatures, property address, sales price and date of purchase.

http://www.irs.gov/newsroom/article/0,,id=204671,00.html

Go to the 2nd page and fine the "What To Attach to Your Return" section.
Here are the instructions - http://www.irs.gov/pub/irs-pdf/i5405.pdf

 

[EagleKeeper]

Many honest title companies will request a copy of your DL at closing to ensure that everything is on the up and up.

If Uncle wants the DL copy; they will then send a request for it.

 

[EagleKeeper]

I did some tuturing of my coworker children, and made around $300 last year. Do I need to include this in my taxes, I am thinking no because they won't be able to find out. You only need to report income the government can findout about.

IF you choose to report it, use the Schedule C and also determine any related direct and indirect expenses that you might have incurred w/ respect to generating the income.

You may discover, that your "overhead" exceeds the income.
That would leave you with a net loss that can then reduce your taxable wage income.

Example
Gross taxable wages $30,000

Tutoring Income $300
Tutoring Expenses $450 (materails, food, transportation, communications,
etc)
Tutoring Profit (-$150)

Taxable Income $29,850

 

[supaidaaman]

I was married in 2009 and have some questions:

-I made roughly 3x what my wife made, should we file jointly?

-I also have freelance income from a 1099. Can I itemize deductions for my business and take our standard deduction for filing jointly?

-I have a roth ira from work, do I have to do anything with that or is all that info written on my work W2 they sent me?

 

[EagleKeeper]

Answers are bolded

I was married in 2009 and have some questions:

-I made roughly 3x what my wife made, should we file jointly?
Test which will work best.
Note that if one files the Schedule A, the other must also.

-I also have freelance income from a 1099. Can I itemize deductions for my business and take our standard deduction for filing jointly?
Use of the Schedule C does not require use of the Schedule A

-I have a roth ira from work, do I have to do anything with that or is all that info written on my work W2 they sent me?
Nothing needs to be done

 

[Ricemarine]

This is my first time filing taxes so I would like to be sure I did things right.

I made $9k this year (college student working part time, WA), got my w-2 from my employer, and filed using Turbotax's free edition as a dependent. After finishing everything, I should have a return of ~$450.

Now questions of concern are:
- Should I have filed separately or were there any other alternatives possible?
- Does anything from the 1098T affect the way I should have filled out my form? My parents paid for two quarters in 2009 (now I'm on loans).
- Do my parents need any of my financial information since I filed separately (W-2?)?

My parents usually go to H&R Block to do their taxes, so they don't know too much in regards to taxes.

 

[EagleKeeper]

This is my first time filing taxes so I would like to be sure I did things right.

I made $9k this year (college student working part time, WA), got my w-2 from my employer, and filed using Turbotax's free edition as a dependent. After finishing everything, I should have a return of ~$450.

Now questions of concern are:
- Should I have filed separately or were there any other alternatives possible?
- Does anything from the 1098T affect the way I should have filled out my form? My parents paid for two quarters in 2009 (now I'm on loans).
- Do my parents need any of my financial information since I filed separately (W-2?)?

My parents usually go to H&R Block to do their taxes, so they don't know too much in regards to taxes.

I would expect that by you filing as a dependant, it will be best for the family unit.

You parents taxable income is probably much greater than yours.
Therefore the deductions of you and the tuition is more valuable to them.

Your parents do not need your financial info - they will need the 1098-T from the school.

And convince your parents to look at doing the taxes themselves. Tax S/W will prompt you for everything that the H&R Block/Hewitt peopele will ask. H&R block actually use the same S/W that they sell in stores.

 

[chipy]

thanks in advance to all who contribute to this thread. my situation follows:

1) i bought 53 shares in X corporation on 05/19/2006 @ $18
2) i bought 50 shares in X corporation on 08/28/2009 @ $20.28
3) i sold 51 shares in X corporation on 12/08/2009 @ $20.06
--------------------------------------------------------------
4) i sold 52 shares in X corporation on 01/07/2010 @ $20.39

i know that the 52 shares i sold this year won't be an issue for my 2009 tax return but what about the ones i sold in December? how do i know if i made a profit and what that was since I bought at 2 different prices? thanks again!

 

[onza]

thanks in advance to all who contribute to this thread. my situation follows:

1) i bought 53 shares in X corporation on 05/19/2006 @ $18
2) i bought 50 shares in X corporation on 08/28/2009 @ $20.28
3) i sold 51 shares in X corporation on 12/08/2009 @ $20.06
--------------------------------------------------------------
4) i sold 52 shares in X corporation on 01/07/2010 @ $20.39

i know that the 52 shares i sold this year won't be an issue for my 2009 tax return but what about the ones i sold in December? how do i know if i made a profit and what that was since I bought at 2 different prices? thanks again!

.........cost basis ..sale price ..profit(loss)
2009 918.00 ..1,023.06 ...105.06 ..Long term

2010 1,050.00 ..1,060.28 ...10.28 ..Short term

 

[chipy]

thanks onza, greatly appreciated!

 

[RMSistight]

I've used Turbotax and pretty much know what I need to do. My question is this:

I plan on making an IRA contribution of $2000 into my account. But I don't have $2k right now to do so. Is it possible to file my taxes now to get my tax refund saying that I made a $2k IRA contribution, then make the contribution later on or before April 15th or actually make a $2k contribution now then file my tax return? I kinda would like my tax refund now.

Also, I'm a contractor at my current job so I didn't participate in a 401k.

 

[CPA]

I've used Turbotax and pretty much know what I need to do. My question is this:

I plan on making an IRA contribution of $2000 into my account. But I don't have $2k right now to do so. Is it possible to file my taxes now to get my tax refund saying that I made a $2k IRA contribution, then make the contribution later on or before April 15th or actually make a $2k contribution now then file my tax return? I kinda would like my tax refund now.

Also, I'm a contractor at my current job so I didn't participate in a 401k.

Yes, you can use your refund to contribute to the filing's tax year and claim it on your 2009 taxes. You can do this two ways. One is to designate your refund to be paid to your IRA account. Us form 8888 to do this - probably the cleanest method. The other is to just insure that you paid the amount before the current filing year's due date - April 15th.

One thing to make sure you do, let your account custodian know what year you want the contribution to apply to. If you don't, chances are they will apply it to the current year (2010).

 

[msw1382]

Well my taxes are don but I have a question for the gurus.

In 2009 I settled on a bad debt. I owed 3,100 but settled for $500. I recieved the form in the mail (cant recall the #) showing the amount that remained. I reported the $2,600-ish as income on my return but I read something a while ago that I forgot while I was filing.

Am I correct in saying that if my assets are less than I owe I do not need to claim that written off debt as income? I wouldn't really mind, but the tax on this 2,600 is a decent amount.

Thanks for the help!

 

[manlymatt83]

Here's my question: Last year was my first year being a contractor, and I don't think I saved enough taxes =( I paid off much of my debt, but also took two months off towards the end of last year where I was sort of expecting to make that back. Long story short - I know this was a mistake, and I'm doing better for this year, but I'm wondering - if I can only pay about 80% of the taxes I owe by April 15th, and then can pay the rest by say, May 15th, will the IRS bite my head off, or just charge major interest?

EDIT: For what it's worth, I can make the April 15th deadline if needed.