7th Annual Anandtech Tax Time Thread

[Fullmetal Chocobo]

Is there any information or resources available regarding VA Chapter 30 / 31 (GI Bill / Voc Rehab) and tax exemptions (i.e. Lifetime Learning Credit)?

I'm trying to find out if I qualify for the LLC, but my school is paid for by the VA. I did get my 1098-T, and section 1 had the amount in it, and section 5 had my "scholarship" amount as well.

 

[onza]

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% 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.

1. Medical Expenses allowed for deduction. Look on page 102, there is a ton of information on what is allowed / disallowed. http://www.irs.gov/pub/irs-pdf/i1040.pdf You can deduct only the part of your medical and dental expenses that exceeds 7.5% of the amount on Form 1040, line 38. So if we do take 99k * 7.5% = 7,425.00 then take your medical expenses of 30k - 7425 = deduction amount 22,575.00. Obviously the number isn't a solid figure but for estimate purposes this shows you the general concept.


2. 05/22/2008 Nebraska: Buffalo, Butler, Colfax, Custer, Dawson, Douglas, Gage, Hamilton, Holt, Jefferson, Kearney, Lancaster, Platte, Richardson, Sarpy, and Saunders.

Picked off this pdf from the IRS site: http://www.irs.gov/pub/irs-pdf/p4492b.pdf

So from your research you are correct. You should let your mom take the 1098 + lifetime learning credit. Since you said you paid 7,700 and you fall into the disaster area you will get back 3080.00 as a education credit.

3. Last question's answer is as follows, put your real estate taxes paid on the Sch A. For most this will include home mortgage interest paid, any state taxes paid and any charitable contributions made for 2009, and this includes any Haiti donations for 2010 as well.

General assumptions.. you are trying to do the tax return for your mom? If so I would just go buy a turbo tax software or something related and follow the step by step guided process they offer. I get the feeling these tax matters are over your head and I would either buy a piece of software or take it to the pros.

 

[alkemyst]

Is there any information or resources available regarding VA Chapter 30 / 31 (GI Bill / Voc Rehab) and tax exemptions (i.e. Lifetime Learning Credit)?

I'm trying to find out if I qualify for the LLC, but my school is paid for by the VA. I did get my 1098-T, and section 1 had the amount in it, and section 5 had my "scholarship" amount as well.

You can't deduct something that someone else paid for.

 

[EagleKeeper]

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.

If you used the schedule A the previous year and deducted your state income tax withheld/payments; then any refund from the state on your income tax paid to the state becomes taxable the following year.

Example:
State tax withheld $3000 and listed on the Schedule A
State tax refund $250 received

The following year; the $250 becomes taxable income to the Feds (not to the state)

The same also applies
If you paid the state $250, for the tax year that you paid, you can deduct (again using the Schedule A) that amount.

What you are doing is excluding the state tax from being taxed by the Fed.
This will only work if you itemize using the Schedule A.

 

[EagleKeeper]

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.

Only if the loss affects business income.

Otherwise you have to follow the Schedule A itemization route

 

[aleckz]

Thanks onza, she normally takes it to a professional. I just wanted to see some of the options that were in front of us.

 

[EagleKeeper]

Thanks onza, she normally takes it to a professional. I just wanted to see some of the options that were in front of us.

Spend the $20-30 that is needed for tax S/W.

See the Hot Deals forum for current Tax S/W deals.

Follow the questionaire and punch in the relevant numbers.
All the questions that you have been asking and the comments from others will be covered by the S/W. Such is required by the Feds for the S/W to be certified.

 

[elwood]

My girlfriend only worked 2 months last year. She definitely made less than $3650. She quit her job and cashed out her 401k which was around $4000 before taxes.

Does her 401k withdrawal count towards her gross income? I'd like to claim her but the rule states only if they made less than $3650. Can i still claim her on my taxes?

 

[Xcobra]

My girlfriend only worked 2 months last year. She definitely made less than $3650. She quit her job and cashed out her 401k which was around $4000 before taxes.

Does her 401k withdrawal count towards her gross income? I'd like to claim her but the rule states only if they made less than $3650. Can i still claim her on my taxes?

That 401k will be taxed and most likely will be assessed the 10% penalty if she doesn't meet the age requirement (59 1/2). So yes she has to report that 4,000 as income.

 

[elwood]

That 401k will be taxed and most likely will be assessed the 10% penalty if she doesn't meet the age requirement (59 1/2). So yes she has to report that 4,000 as income.

It was $4807 with $961 withheld for federal and $96 for state. It comes out to around 20% total withheld.

Seeing this, do you think that she'll owe anymore (10% early withdrawal penalty) than they withheld?

 

[onza]

It was $4807 with $961 withheld for federal and $96 for state. It comes out to around 20% total withheld.

Seeing this, do you think that she'll owe anymore (10% early withdrawal penalty) than they withheld?

If you withdraw early you will get penalized. Did she do any of the following below? If not. Yep 10% penalty.
* You were permanently or totally disabled,
* You were unemployed and paid for health insurance premiums,
* You paid for college expenses for yourself or a dependent,
* You bought a house
* The IRS levied your retirement account to pay off tax debts.

http://www.irs.gov/pub/irs-pdf/i5329.pdf read page 2.

 

[Xcobra]

It was $4807 with $961 withheld for federal and $96 for state. It comes out to around 20% total withheld.

Seeing this, do you think that she'll owe anymore (10% early withdrawal penalty) than they withheld?

This all depends on what tax bracket she falls. Does she have a lot of income from employment. Depending on where she falls, it may or may not be enough for the withholding. But then again, whether you had enough withholdings is a matter of how much your taxable income is based on ALL of your income and the tax on that. As for the 10% penalty, you would pay that with your tax return.

 

[elwood]

This all depends on what tax bracket she falls. Does she have a lot of income from employment. Depending on where she falls, it may or may not be enough for the withholding. But then again, whether you had enough withholdings is a matter of how much your taxable income is based on ALL of your income and the tax on that. As for the 10% penalty, you would pay that with your tax return.

She only worked about 2.5 months last year. She definitely grossed under $3000.

She doesn't meet any of the requirements to bypass the early withdrawal penalty.

 

[msi1337]

thanks to Onza for the help

 

[Xcobra]

She only worked about 2.5 months last year. She definitely grossed under $3000.

She doesn't meet any of the requirements to bypass the early withdrawal penalty.

In that case, depending on other income she is probably looking at a low to no tax at all if she files her own tax return. However, the penalty will still need to paid, thus her refund will be reduced by the penalty. It is my estimate anyways.

 

[Jeff7181]

I was on disability for about 2 months in 2009 and received roughly $2200 in disability (a fraction of my usual salary). How do I report this income since it's not on the W-2 from my employer?

 

[EagleKeeper]

I was on disability for about 2 months in 2009 and received roughly $2200 in disability (a fraction of my usual salary). How do I report this income since it's not on the W-2 from my employer?

IRS FAQ

Much depends on who pays the premiums.

If you do, then it is non taxable.
If your employer does, then it is taxable.

There are detail in the linked IRS web page on how to file if you need to pay taxes on the income.

 

[Engineer]

Quick question:

I know that the IRS doesn't require banks to send a 1099 to you if the amount is less than $10. I've got one account with less than $10 (less than $5 actually) dividends/interest. Do I simply ignore it?

 

[compguy786]

I got my W2 today and started working on it in Turbotax. I am getting $15 from fed and i owe $2 to state....i work for the same company, and last year, i got more of a refund, around $358 for state/fed combined. On turbotax's website, i am getting a refund of $781..which sounds more appropriate...this is weird. I did make more this year, but i should recieve more back too ?

any help would be appreciated !

 

[hclarkjr]

my check was deposited in my checking account Friday morning. :biggrin:

 

[JD50]

Quick question. Last year, my company reimbursed me for around $7,000 in tuition. I'm changing jobs (my last day is this coming Friday) and my company might make me repay them about $5k. Obviously I'm not claining the $7k since my company reimbursed me, but what do I do if I have to pay back any money? Do I claim that next year?

 

[EagleKeeper]

Quick question:

I know that the IRS doesn't require banks to send a 1099 to you if the amount is less than $10. I've got one account with less than $10 (less than $5 actually) dividends/interest. Do I simply ignore it?

If that is the only thing the IRS would chase you on, ignore it if you choose.

 

[EagleKeeper]

I got my W2 today and started working on it in Turbotax. I am getting $15 from fed and i owe $2 to state....i work for the same company, and last year, i got more of a refund, around $358 for state/fed combined. On turbotax's website, i am getting a refund of $781..which sounds more appropriate...this is weird. I did make more this year, but i should recieve more back too ?

any help would be appreciated !

Verify that all entries are the same for both methods.
Line by line on your 1040,1040A or 1040EZ form

 

[EagleKeeper]

Quick question. Last year, my company reimbursed me for around $7,000 in tuition. I'm changing jobs (my last day is this coming Friday) and my company might make me repay them about $5k. Obviously I'm not claining the $7k since my company reimbursed me, but what do I do if I have to pay back any money? Do I claim that next year?

There is nothing to claim for the 2010 tax season.

You can file an ammended return (1040X) for 2009 to claim tuition costs of $5K

 

[alkemyst]

1099 or not you are responsible for the taxes.