8th Annual Anandtech Tax Time Thread (OP Updated 14th Jan)

[Xcobra]

Can you guys confirm that the sales tax deduction is in this year as nothing I've read say it was extended. I've been looking into it heavily as I live in a state with no income tax.

Are you talking about the car sales tax deduction? The sales tax or income tax deduction has been an option for a while as far as I know and it still is.

 

[chalmers]

Hopefully this isn't too off topic from the thread but I think it's fairly relevant. I just got my Bachelor's in Accounting in September and was just offered a job at a small CPA firm which does tax returns for small businesses and high net worth individuals.

I took one tax class last spring that I remember fairly well. I'm going to be trained by one of the partners in the firm, but is there anything I can do as far as research goes to prepare myself for the job?

Thanks.

 

[Xcobra]

Hopefully this isn't too off topic from the thread but I think it's fairly relevant. I just got my Bachelor's in Accounting in September and was just offered a job at a small CPA firm which does tax returns for small businesses and high net worth individuals.

I took one tax class last spring that I remember fairly well. I'm going to be trained by one of the partners in the firm, but is there anything I can do as far as research goes to prepare myself for the job?

Thanks.

This really shouldn't be posted here. However, to answer your question, I wouldn't bother. Everything you do you will learn in workplace.

 

[EagleKeeper]

What should I do if lil rudeguy's mom tries to claim his as a dependent? He lives with me full time and maybe spent a total of 7 nights at her house this past year.

There is no order or custody for either of us.

Initially for tax returns, it is first come first serve.

When the IRS sees the second return come in claiming the child; they will reject the second as a dependant and then forward a letter to both parents asking for clarification.

as Xcobra stated, it will be best to get a written understanding of who claims the child to avoid problems down the road.

 

[dquan97]

This is the eight year for the thread. The beer fund is still dry :whiste:

Really? Maybe my contributions are being redirected to the Mod's WoW fund?

 

[JEDI]

I owned some Lucent stock via employee stock purchase program @ 15% discount back around 2001. Bought ~$10k worth like $500 now.
i never sold and eventually completely forgot about it

Since then Lucent merged w/alcatel around 2004.
then they switched brokrage firms this year. i get a letter from the brokrage firm saying they can send me the balance of my acct or for $75 annual fee they'll keep the stocks. i sold.

Here's the problem:
How do i know what my basis is for losses?
i dont have any records from 10yrs ago. the brokrage firm doesnt have any info since Lucent switched to Alcatels brokrage firm when they merged.

 

[Spacehead]

Is it true that the IRS is not mailing any forms or booklets this year? I never received any notice about it.

http://forums.anandtech.com/showthread.php?t=2119928

 

[EagleKeeper]

Is it true that the IRS is not mailing any forms or booklets this year? I never received any notice about it.

http://forums.anandtech.com/showthread.php?t=2119928

This is correct - you will be able to download everything from their website as needed.

Some other public facilities MAY have the forms; or you can visit your local
IRS office for them.

 

[EagleKeeper]

I owned some Lucent stock via employee stock purchase program @ 15% discount back around 2001. Bought ~$10k worth like $500 now.
i never sold and eventually completely forgot about it

Since then Lucent merged w/alcatel around 2004.
then they switched brokrage firms this year. i get a letter from the brokrage firm saying they can send me the balance of my acct or for $75 annual fee they'll keep the stocks. i sold.

Here's the problem:
How do i know what my basis is for losses?
i dont have any records from 10yrs ago. the brokrage firm doesnt have any info since Lucent switched to Alcatels brokrage firm when they merged.

1) The IRS feels that it is your responsiblity to keep track of your investments.

/lecture

If you know how many shares were sold and that all those shares were purchased in a given year, you can look up the purchase price at the end of each quarter. This is when most employee purchases take place.

taking into account 15% of that price would tell you the cost/share to you.

How many shares were purchased is a bigger problem. You can estimate that an equal amount were purchased for all 4 quarters or divide by the overall time frame that stocks were being purchased..

Once you figure out your cost, # shares and dates; you need to use the Schedule D.

Note that you can only utilize 3K worth of losses each year against personal income. The rest rolls over to the next year when you can offset another 3000. This happens until all losses have been clear out.

 

[JEDI]

1) The IRS feels that it is your responsiblity to keep track of your investments.

/lecture

If you know how many shares were sold and that all those shares were purchased in a given year, you can look up the purchase price at the end of each quarter. This is when most employee purchases take place.

taking into account 15% of that price would tell you the cost/share to you.

How many shares were purchased is a bigger problem. You can estimate that an equal amount were purchased for all 4 quarters or divide by the overall time frame that stocks were being purchased..

Once you figure out your cost, # shares and dates; you need to use the Schedule D.

Note that you can only utilize 3K worth of losses each year against personal income. The rest rolls over to the next year when you can offset another 3000. This happens until all losses have been clear out.

ahhh.. i can estimate?
no need to have hard proof like official lucent documentation for purchase price and date?

ie: i dont know if purchases were made end of quarter, end of month, or weekely? i can just guess end of quarter for ease?

what do you mean divide by the overall time frame that stocks were being purchased?

 

[Jadow]

I just took mine and my wife's last pay stub of 2010 and figured we're going to owe about $4000 dollars!

A lot of credits and deductions that we had in 2009 aren't there for 2010.

We both withhold 0 and I even take an extra $25 out and still we're going to owe!

Suckage.

 

[mwtgg]

I just took mine and my wife's last pay stub of 2010 and figured we're going to owe about $4000 dollars!

A lot of credits and deductions that we had in 2009 aren't there for 2010.

We both withhold 0 and I even take an extra $25 out and still we're going to owe!

Suckage.

What do you mean aren't there? They don't exist anymore or you're not eligible for them anymore?

 

[EagleKeeper]

I just took mine and my wife's last pay stub of 2010 and figured we're going to owe about $4000 dollars!

A lot of credits and deductions that we had in 2009 aren't there for 2010.

We both withhold 0 and I even take an extra $25 out and still we're going to owe!

Suckage.

I suspect that you have a missing number or something entered incorrectly.

Both withholding at 0 should never create a taxing issue unles you have interest/capital gains.

The only types of credits/deductions that I can see expiring are the educational credit (out of school or transitioning), make work and the first time housing credit.

Children are still in the system, so is sales tax.

Most tax S/W and forms need to be updated based on the last second tax changes/retentions by Congress.
The IRS needs to update their forms and tax people need to rework their stuff to account for the changes over the previously expiring tax credits.

Please list the items that you think are causing you grief.

 

[EagleKeeper]

I owned some Lucent stock via employee stock purchase program @ 15% discount back around 2001. Bought ~$10k worth like $500 now.
i never sold and eventually completely forgot about it

Since then Lucent merged w/alcatel around 2004.
then they switched brokrage firms this year. i get a letter from the brokrage firm saying they can send me the balance of my acct or for $75 annual fee they'll keep the stocks. i sold.

Here's the problem:
How do i know what my basis is for losses?
i dont have any records from 10yrs ago. the brokrage firm doesnt have any info since Lucent switched to Alcatels brokrage firm when they merged.

1) The IRS feels that it is your responsiblity to keep track of your investments.

/lecture

If you know how many shares were sold and that all those shares were purchased in a given year, you can look up the purchase price at the end of each quarter. This is when most employee purchases take place.

taking into account 15% of that price would tell you the cost/share to you.

How many shares were purchased is a bigger problem. You can estimate that an equal amount were purchased for all 4 quarters or divide by the overall time frame that stocks were being purchased..

Once you figure out your cost, # shares and dates; you need to use the Schedule D.

Note that you can only utilize 3K worth of losses each year against personal income. The rest rolls over to the next year when you can offset another 3000. This happens until all losses have been clear out.

ahhh.. i can estimate?
no need to have hard proof like official lucent documentation for purchase price and date?

ie: i dont know if purchases were made end of quarter, end of month, or weekely? i can just guess end of quarter for ease?

what do you mean divide by the overall time frame that stocks were being purchased?

Officially, you can not estimate - you should have the exact numbers. However, given that you can not locate such, a best attempt to figure out what they might be (estimate) is you next choice. Make sure that it is a good faith to get you out of trouble.

If the employer can not provide you with the purchase data and # shares; then you need to figure out a best guess.

Most employee purchases are made near the end of a quarter, which is why I suggested using that as a date.

Hopefully you should know how many quarters that you were participating in the plan. I would also expect that your income level did not change much during that period; therefore the amount of shares purchased was fairly consistent each time.

So letting X be eqaul to the number of quarters that you were participating and Y being the number of shares that you accumulated; then Z = Y/X as the number of shares picked up per quarter.

Use the following Yahoo Finance link to find the prices at the end of each quarter.
Link

Take Z * share price *0.85 to get the base price you estimate you paid for each share that quarter.

For each quarter you will have to have a line item in the Schedule D.
You know what the sale price was so you can figure out the capital gain/loss for shares purchased each quarter.

 

[bruceb]

I will be in a similar boat, probably owing around $2K ... Home eq loan interest is going down as it nears it's end, so less deductions and more in Gains, Interest, Dividends, Tax Free interest, all of which have some affect. Also with hold at 0 exemption thru the year.

 

[Turin39789]

Finally going to have some mortgage interest to deduct this year, and a baby to write off, but my burning question now has to do with my retirement savings.

My new job doesn't match on my 401k at all, so I didn't sign up for the company 401k in june and just stuck the money in a separate bank account. I had intended to go with a roth or traditional ira with vanguard close to the end of the year once my commissions worked out and I knew my final salary, but the December baby distracted me. Do I still have any options? Still have two old 401ks from previous employers sitting out there, havent figured out on converting them yet. Did well for myself this year compared to last year, but provided I manage not to get fired 2011 should be better this year and I will probably have some income in a higher bracket.

 

[Aikouka]

I don't think it's possible, but I'd rather ask than ignore it. When I moved in February, I continued to pay rent on my previous apartment... is there any way to consider that a moving deduction?

I know my U-Haul will count, but I don't think the $1600 or so will beat my default deduction anyway.

 

[EagleKeeper]

Finally going to have some mortgage interest to deduct this year, and a baby to write off, but my burning question now has to do with my retirement savings.

My new job doesn't match on my 401k at all, so I didn't sign up for the company 401k in june and just stuck the money in a separate bank account. I had intended to go with a roth or traditional ira with vanguard close to the end of the year once my commissions worked out and I knew my final salary, but the December baby distracted me. Do I still have any options? Still have two old 401ks from previous employers sitting out there, havent figured out on converting them yet. Did well for myself this year compared to last year, but provided I manage not to get fired 2011 should be better this year and I will probably have some income in a higher bracket.

You can create and/or fund a 2009 IRA up until April 15.

Have the employer send the 401K funds directly to the IRA manager. That avoids any taxes/fees being assessed (by you touching the funds).

The other 401Ks can also be transfered the same way.

Only the 401Ks amounts funded in 2009 can be claimed for 2009 even if you consolidate them all into one account.

 

[EagleKeeper]

I don't think it's possible, but I'd rather ask than ignore it. When I moved in February, I continued to pay rent on my previous apartment... is there any way to consider that a moving deduction?

I know my U-Haul will count, but I don't think the $1600 or so will beat my default deduction anyway.

If you want to get creative, the rent could be considered as storage of your property until the move.

If audited, I would suspect that the IRS would only allow you to deduct the costs of a storage facility ($100/month) and the cost of moving items into/out of the facility.

Whether the "storage" would get flagged also depends on how long it took for the move to happen. IRS usually expects 1 month at each end of the actual move at the most for you to store the gear and find a noew place.

 

[SunnyD]

K, quick questions...

#1 - I've always been using the standard deductions because frankly, outside of my wife and kids I've never had anything worth itemizing. This year features kid #5 and purchasing a house. What will itemizing gain me overall?

#2 - Again, 5 dependent children. How many CREDITS do I get out of that? (If I recall correctly, Child Tax Credit caps out at ~2 or 3 kids, so basically the rest are beneficial for...? Deductions only, right?)

 

[EagleKeeper]

K, quick questions...

#1 - I've always been using the standard deductions because frankly, outside of my wife and kids I've never had anything worth itemizing. This year features kid #5 and purchasing a house. What will itemizing gain me overall?

#2 - Again, 5 dependent children. How many CREDITS do I get out of that? (If I recall correctly, Child Tax Credit caps out at ~2 or 3 kids, so basically the rest are beneficial for...? Deductions only, right?)

The purchase of the house may help; Much depends on what month you purchased the house. That will address the benefit of interest and taxes for the Schedule A

Items listed as fees/taxes/points will be able to be itemized on the Schedule A.
Interest/Taxes are self explanatory.

What itemization will gain you is a lot of effort/sweat resulting in the potential to lower the amount of taxable income. Until you do so; you do not know what it can accomplish.

The child care credit caps out at 3 (as you realized). The added benefit is terms of exemptions ($3k+/child). There is also an age limit on the kids - having the young ones may allow you access to the additional credits that the older ones do not.


Tax S/W will assist you in handling the kids situation properly; plus guide you with the Schedule A

 

[Juked07]

Haven't given a thought to taxes yet (only worked over the summer, single, should be easy).

I just saw this thread though and wanted to say I think it's awesome that ATOT helps out like this. Almost the total opposite of the neffing down below =D

 

[EagleKeeper]

Haven't given a thought to taxes yet (only worked over the summer, single, should be easy).

I just saw this thread though and wanted to say I think it's awesome that ATOT helps out like this. Almost the total opposite of the neffing down below =D

Even professional Neffers need to ask for help at times :whiste:

 

[CPA]

K, quick questions...

#1 - I've always been using the standard deductions because frankly, outside of my wife and kids I've never had anything worth itemizing. This year features kid #5 and purchasing a house. What will itemizing gain me overall?

#2 - Again, 5 dependent children. How many CREDITS do I get out of that? (If I recall correctly, Child Tax Credit caps out at ~2 or 3 kids, so basically the rest are beneficial for...? Deductions only, right?)

What EK said, BUT there is not limit on the number of kids for the CHILD TAX CREDIT. There is, however, an income limit on the child tax credits. There is a limit to the Child Care credit as EK points out.

 

[CPA]

I owned some Lucent stock via employee stock purchase program @ 15% discount back around 2001. Bought ~$10k worth like $500 now.
i never sold and eventually completely forgot about it

Since then Lucent merged w/alcatel around 2004.
then they switched brokrage firms this year. i get a letter from the brokrage firm saying they can send me the balance of my acct or for $75 annual fee they'll keep the stocks. i sold.

Here's the problem:
How do i know what my basis is for losses?
i dont have any records from 10yrs ago. the brokrage firm doesnt have any info since Lucent switched to Alcatels brokrage firm when they merged.

If you don't have your purchase records, you can average the cost basis based on when you believe the purchases were made.