7th Annual Anandtech Tax Time Thread

[Scarpozzi]

Theft & Casualty loss questions:

So this year, my wife and I moved to a new city. Most of our belongings were in 3 locations. Our storage container was ransacked by someone and we lost a lot of our stuff. (leather sofa/ottoman/chair/patio furniture/lawnmower/weedeater/bedroom furniture/etc)

Unfortunately for us, we didn't have insurance on the unit and we learned a serious lesson. We've been sick over it since it just happened back in October, but alas...what can you do? We've missed the couch, but it certainly makes our new house seem much bigger.

I'm guestinmating that it was somewhere aroun $8-10k lost. I can come up with a list of items that equal $6k easy... It's the stuff we lost that we can't remember that's killing us. A lot of kitchen items and things that were in boxes.

We created a police report, but don't know what all was lost because so much of it was little items that slowly add up to a much larger number. How do you calculate theft losses and what all is accepted? Do all items have to be on the police report? We've not gotten any feedback from the police after filing the initial report, but have called and left messages.

We've already bought new flatware, cookware, a lawn mower, and furniture (bedroom/living room) to replace some of what was stolen.

Thanks,

-Scar

 

[onza]

Theft & Casualty loss questions:

So this year, my wife and I moved to a new city. Most of our belongings were in 3 locations. Our storage container was ransacked by someone and we lost a lot of our stuff. (leather sofa/ottoman/chair/patio furniture/lawnmower/weedeater/bedroom furniture/etc)

Unfortunately for us, we didn't have insurance on the unit and we learned a serious lesson. We've been sick over it since it just happened back in October, but alas...what can you do? We've missed the couch, but it certainly makes our new house seem much bigger.

I'm guestinmating that it was somewhere aroun $8-10k lost. I can come up with a list of items that equal $6k easy... It's the stuff we lost that we can't remember that's killing us. A lot of kitchen items and things that were in boxes.

We created a police report, but don't know what all was lost because so much of it was little items that slowly add up to a much larger number. How do you calculate theft losses and what all is accepted? Do all items have to be on the police report? We've not gotten any feedback from the police after filing the initial report, but have called and left messages.

We've already bought new flatware, cookware, a lawn mower, and furniture (bedroom/living room) to replace some of what was stolen.

Thanks,

-Scar

http://www.irs.gov/taxtopics/tc507.html
Fill out the form 4684 towards the bottom for the year it happened in.

Form http://www.irs.gov/pub/irs-pdf/f4684.pdf
Instructions http://www.irs.gov/pub/irs-pdf/i4684.pdf

 

[CPA]

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!

I assume you received a 1099C. If so, yes there is an exemption for tax on debt forgiveness if you can prove that you were insolvent (Liabilities > Assets, or in other words you have negative net worth) at time of the forgiveness. You will have to file Form 982 or you can send a letter detailing your assets and liabilities.

 

[CPA]

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.

If you aren't going to pay 100% of your tax on time, then you need to request a filing extension. You will still need to pay your tax or what you believe you owe (ie the 80%), then pay the rest when you file your return 6 months later. However, you will have to pay interest and a penalty on the 20% that was paid late. There is no form to delay payment of taxes.

Edit: I forgot to mention, you can avoid the penalty portion if you pay at least 90% of your tax by April 15th. You will still have to pay interest on the remaining 10%. And the form to submit to extend your filing is 4868.

Since you say you can pay by April 15th, I would do just that and then manage better for 2010.

 

[Semidevil]

Is money I gave my ex-wife tax deductible? This is money given voluntairly, not money owed. I'm talking close to 10k or so

 

[bob4432]

got a mail piece about an assessment about some unreported income a few years back. went through the tax info we have and actually never received a w2, so, yes it was accidentally omitted as it was a short term job my wife had and honestly we forgot about it completely, until the assessment mailing.

now, the question is do i talk to the assessor about it or just pay amount + fine/interest or propose some other action? being that we never got a w2 from said company i don't feel we are fully responsible, but said company is now out of biz.

if by paying the whole amount does it make you an "easy target" and the tax man would look more into our past? should i talk to them about getting the fine/interest taken off? is that even an option?

 

[akshatp]

Pretty straightforward tax situation for me, but looking for ways to minimize what I owe:

Married, wife and i both work, for which we both get W-2's
I do a little consulting on the side for which I receive a 1099-MISC (less than $2k)
The only other 1099's I get are 1099-INT
We rent, so no property taxes/mortgage interest

I just ran through TT quickly, and it looks like we owe about $6600. UGH! We have 0 exemptions and 0 deductions on our W-4's, so I dont know why they aren't taking enough tax out of our checks. But thats a different discussion.

We dont have enough to itemize, so since we are taking the standard deduction, am I correct in assuming that there is no other way to cut that number down other than my minor expenses I am showing in the Schedule C?

 

[onza]

Pretty straightforward tax situation for me, but looking for ways to minimize what I owe:

Married, wife and i both work, for which we both get W-2's
I do a little consulting on the side for which I receive a 1099-MISC (less than $2k)
The only other 1099's I get are 1099-INT
We rent, so no property taxes/mortgage interest

I just ran through TT quickly, and it looks like we owe about $6600. UGH! We have 0 exemptions and 0 deductions on our W-4's, so I dont know why they aren't taking enough tax out of our checks. But thats a different discussion.

We dont have enough to itemize, so since we are taking the standard deduction, am I correct in assuming that there is no other way to cut that number down other than my minor expenses I am showing in the Schedule C?

W-2 taxable income?
How much federal withholding?
Any expenses related from the 1099-Misc income you could take?

 

[akshatp]

W-2 taxable income?
How much federal withholding?
Any expenses related from the 1099-Misc income you could take?

136,592 Taxable income (this is including 1099-INT and 1099-MISC)
14,910 federal tax withheld
I had about $100 of expenses related to the 1099-MISC, which are outlined in the Schedule C

 

[amdforever2]

For the earned income tax credit: Does it count income from unemployment insurance (1099-G) reporting form as income and does it count income from 401K cashouts? Also, when it decides whether you are rising, plateauing or decreasing, if I before deductions would be in decreasing but after deductions i am in plateau will I get the plateau amount?

 

[onza]

136,592 Taxable income (this is including 1099-INT and 1099-MISC)
14,910 federal tax withheld
I had about $100 of expenses related to the 1099-MISC, which are outlined in the Schedule C

I just did a calculation and it appears that since you are the 25/28% tax bracket that your federal tax should be around 26k when you make 138k. I think next year it will be similar. So be prepared to adjust your withholding amounts NOW otherwise you will be hit with the same issue again come 2010.

Since you don't own a house and rent you can't deduct anything really on your Sch A. So there's not a whole lot you can do.

edit- do you have cash to contribute to a traditional IRA? If so this would reduce your AGI down.. but you will still have to pay in more than likely. Make sure you contribute for 2009.

 

[CPA]

Is money I gave my ex-wife tax deductible? This is money given voluntairly, not money owed. I'm talking close to 10k or so

Assuming she's not living with you and you're not providing more than 50% of her support, then no you can't deduct it, and I would caution that if the payments are not part of an alimony agreement, then you risk having those monies being considered as a gift, which would be taxable TO YOU!

 

[CPA]

got a mail piece about an assessment about some unreported income a few years back. went through the tax info we have and actually never received a w2, so, yes it was accidentally omitted as it was a short term job my wife had and honestly we forgot about it completely, until the assessment mailing.

now, the question is do i talk to the assessor about it or just pay amount + fine/interest or propose some other action? being that we never got a w2 from said company i don't feel we are fully responsible, but said company is now out of biz.

if by paying the whole amount does it make you an "easy target" and the tax man would look more into our past? should i talk to them about getting the fine/interest taken off? is that even an option?

I would start with a certified letter to them explaining the situation, you may be able to get the penalty forgiven, but probably not the interest. While the biz had a legal requirement to send you a W2, the IRS believes you have the requirement to know what income you earned and report it whether you received a W2 or not.

Paying the whole amount should not open you up to any additional audit, and in fact, if they haven't brought up previous years then they 1) didn't find anything wrong or 2) that filing year is already past the statute of limitations and unless they suspect fraud, cannot re-open that past year.

 

[CPA]

For the earned income tax credit: Does it count income from unemployment insurance (1099-G) reporting form as income and does it count income from 401K cashouts? Also, when it decides whether you are rising, plateauing or decreasing, if I before deductions would be in decreasing but after deductions i am in plateau will I get the plateau amount?

Both matter in terms of meeting the AGI limits, but only earned income determines the actual credit. Also, you must have had earned income to get the credit.

Not sure if I understand your plateau question.

 

[onza]

CPA- I think he's talking about PHASEOUTS. But I could be wrong.

 

[EagleKeeper]

Is money I gave my ex-wife tax deductible? This is money given voluntairly, not money owed. I'm talking close to 10k or so

Assuming she's not living with you and you're not providing more than 50% of her support, then no you can't deduct it, and I would caution that if the payments are not part of an alimony agreement, then you risk having those monies being considered as a gift, which would be taxable TO YOU!

There is a 10K+ limit on gifts from one person to another
Beyond that, the giver is responsbile for a gift tax.

As CPA states, there is no tax benefit for you unless she can be classified as a dependent.

 

[EagleKeeper]

For the earned income tax credit: Does it count income from unemployment insurance (1099-G) reporting form as income and does it count income from 401K cashouts? Also, when it decides whether you are rising, plateauing or decreasing, if I before deductions would be in decreasing but after deductions i am in plateau will I get the plateau amount?

If you are talking about IRS FAX - Earned Income Credit, then it is based on AGI (Adjusted Gross Income)

• Based on your filing status
• Foriegn income (not allowed)
• Investment income (< 3100)
• Earned income (W2, Schedule C)

 

[bignateyk]

I'm kinda confused on this "making work pay credit". I think both my wife and I had our withholding adjusted to account for this, and our income is less than the 150K requirement. Do I need to put $800 into box 8 (1040ez) even if we already had that money withheld?

 

[PhaZe]

I have one for you guys. My dad made a large loan to my cousin to buy a house. They asked the title company to get their lawyers to create the loan documents so that my father has the deed, promissory note, and all that good stuff to make it a legitimate loan ,and to make it clear it is not a gift.

What forms would each have to file so that my father reports the earned interest, and my cousin can report that he has a mortgage?

 

[alkemyst]

Anyway to apply a theft loss outside the normal channel on the tax forms? I took an additional $3571 in loss that was not covered. 10% of my AGI is much more than that.

I am looking at owing $986 this year which isn't too bad considering we made another $9k in income and our interest on our home went down about $6k and our taxes down $700.

 

[chipy]

hi again

i'm confused on Line 10 of the federal tax form f1040... specifically, where it says "offsets of state and local income taxes". i read page 23 of the instructions but still didn't find the answer i was looking for.

are they suggesting i can deduct state and local income taxes from my federal taxes?

thanks again

 

[CPA]

I have one for you guys. My dad made a large loan to my cousin to buy a house. They asked the title company to get their lawyers to create the loan documents so that my father has the deed, promissory note, and all that good stuff to make it a legitimate loan ,and to make it clear it is not a gift.

What forms would each have to file so that my father reports the earned interest, and my cousin can report that he has a mortgage?

Unless he is in the trade or business of real estate loans, he doesn't have to file the normal form 1098. However, interest received is taxable to your dad and interest paid is deductible by your cousin IF the loan is secured by the property - which it seems to be. Your dad can file a form 1098 if he wants, but it's not necessary.

 

[CPA]

hi again

i'm confused on Line 10 of the federal tax form f1040... specifically, where it says "offsets of state and local income taxes". i read page 23 of the instructions but still didn't find the answer i was looking for.

are they suggesting i can deduct state and local income taxes from my federal taxes?

thanks again

Line 10 is for TAXABLE credits and refunds recieved in 2009 related to tax year 2008 (you would have received a 1099-G), it is not a deduction line, rather an income line. There is some convoluted walkthrough you need to do in order to determine if any of your state or local tax refund is taxable. Most aren't.

In order to deduct state and local taxes you paid in 2009, which you can do, you need to itemize and file Schedule A. However, in order to itemize, your schedule A deductions need to be greater than your standard deduction.

 

[CPA]

Anyway to apply a theft loss outside the normal channel on the tax forms? I took an additional $3571 in loss that was not covered. 10% of my AGI is much more than that.

I am looking at owing $986 this year which isn't too bad considering we made another $9k in income and our interest on our home went down about $6k and our taxes down $700.

sorry, not really.

 

[aleckz]

I have a few questions:

I am a dependent under my mother (income around 99k, she paid 26k in state and fed), my father passed away last year in April. From that we have around 30,000 in medical expenses ( co-pays, medication, medical costs, 20&#37; that medical doesn't cover, this doesn't include funeral costs ). What should be filed from these costs?

Along with that I am a full time student, paid 7,700 into the school system not including the cost of books, as I read from this post I should let my mother use the 1098-T and file the cost of books. But my main question is would she be eligible for the Lifetime Learning Credit? I have around 3 semesters left and I live in Nebraska, Sarpy county which I believe is a part of the Midwestern Disaster area. Is she eligible for this credit and what does this credit actually apply to?

One last question. We own our house and we pay taxes on it, ~1300 bi-annually, so ~2600 per year. How should we file this and what category would it fall under?

I appreciate the great information from this thread and I want to thank you fellows for spending time answering our questions.