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

[new2AMD]

We can not provide guidance in state returns.

I do not know if the state will allow you a different filing status than the Federal.
If your refund went up; what happened to hers?

W/ respect to Federal, filing seperately will affect you in that certain deductions / credits are no longer allowed

I probably asked that wrong. I guess I am more curious as to if there are restrictions to filing separately if we own a home together or other factors like that? It just seems I will pay less tax with MFS as opposed to MFJ if I have a side business I need to pay tax on.

 

[EagleKeeper]

We can not provide guidance in state returns.

I do not know if the state will allow you a different filing status than the Federal.
If your refund went up; what happened to hers?

W/ respect to Federal, filing seperately will affect you in that certain deductions / credits are no longer allowed

I probably asked that wrong. I guess I am more curious as to if there are restrictions to filing separately if we own a home together or other factors like that? It just seems I will pay less tax with MFS as opposed to MFJ if I have a side business I need to pay tax on.

And such is the reason why I advocate having your own offline copy of tax S/W.

You can take a MFJ and easily run MFS tests by duplicating the orignial file and then deleting out the spousal items.

Run the numbers both ways; making sure that you do not take for either of you credits/deductions that you are not allowed when MFS.

Realize that if you itemize; she must also.

 

[The Godfather]

IRS FAQ Forieign Earned Income & Form 255

The Form 255 seems to handle your situation nicely

Thanks so much! Just a question though, do I have to fill it all out? I haven't earned any income outside the US, all I did was purchase overseas. Can you tell me which section is most appropriate?

Thanks again!

 

[EagleKeeper]

Form 255 is for your internal use.

Fill out all that is applicable and follow the instructions on what numbers to place where on the 1040.

You are the only one that can tell what information is going where.

The purchase would be where you indicate expenses on the Form.

 

[KlokWyze]

Went to H&R Block earlier to take advantage of the free 1040EZ, but I need to do the 1040A since I have some unemployment to claim...

What online tax sites are good, but still cheap? I've used Turbo Tax, which ALWAYS seems to end up costing way more than "free" and I've used OLT: On Line Taxes which is cheap, but the interface is piss-poor and a bit confusing.

 

[Eos]

I am an Amazon Associate. Basically, friends and family use my amazon associate id when they visit the site, and when they buy stuff I get a small % of the gross sales. Total income for 2010 was $647.42, with $0 federal income tax withheld.

Married filing jointly with a 1040 form using TurboTax Online, and the first question TT asked after I entered in the "non employee compensation" from box 7 was "How would you describe the reason I got this form 1099-misc?"

I would say "commissions, prizes, bonus, etc", because nothing else really fits. The choices are:

1) self employed
2) Farm income
3) Freelance, consulting work, or independent contractor
4) Side job income
5) None of the above (show more options)

I started this on my own, and began to enter home business info, but I don't think this is correct.

How should I proceed?

 

[Xcobra]

Went to H&R Block earlier to take advantage of the free 1040EZ, but I need to do the 1040A since I have some unemployment to claim...

What online tax sites are good, but still cheap? I've used Turbo Tax, which ALWAYS seems to end up costing way more than "free" and I've used OLT: On Line Taxes which is cheap, but the interface is piss-poor and a bit confusing.

I use TaxAct. Free federal and 15 bucks for one state.

 

[Xcobra]

I probably asked that wrong. I guess I am more curious as to if there are restrictions to filing separately if we own a home together or other factors like that? It just seems I will pay less tax with MFS as opposed to MFJ if I have a side business I need to pay tax on.

As far as I know, you have to file MFJ on NY if you do the same for Federal. Run the tax calculations to see which is better for both, federal and state. Look at your spouse's results as well and take that into account into your tax position.

 

[EagleKeeper]

I probably asked that wrong. I guess I am more curious as to if there are restrictions to filing separately if we own a home together or other factors like that? It just seems I will pay less tax with MFS as opposed to MFJ if I have a side business I need to pay tax on.

As far as I know, you have to file MFJ on NY if you do the same for Federal. Run the tax calculations to see which is better for both, federal and state. Look at your spouse's results as well and take that into account into your tax position.

To expound:
You need to look at both spouses returns.
And also realize that certain items that may be entered on a joint can not be then used for either spouse.

When you use Tax S/W; it has the smarts to alert you on those areas.

 

[EagleKeeper]

I am an Amazon Associate. Basically, friends and family use my amazon associate id when they visit the site, and when they buy stuff I get a small % of the gross sales. Total income for 2010 was $647.42, with $0 federal income tax withheld.

Married filing jointly with a 1040 form using TurboTax Online, and the first question TT asked after I entered in the "non employee compensation" from box 7 was "How would you describe the reason I got this form 1099-misc?"

I would say "commissions, prizes, bonus, etc", because nothing else really fits. The choices are:

1) self employed
2) Farm income
3) Freelance, consulting work, or independent contractor
4) Side job income
5) None of the above (show more options)

I started this on my own, and began to enter home business info, but I don't think this is correct.

How should I proceed?

If you select it as self-employment; you then have the ability to write expenses against the income using the Schedule C.

Treating it as misc income on the 1040 puts you on the hook for Federal/State and 2xSS taxes for that full amount. that conceivably be a tax impact of %40-50 on the amount recieved.

 

[Pardus]

Is TurboTax the way to go, or is it best to use two programs and compare. A lot of local places like H&R Block, Jackson Hewitt, are charging a lot less than they did last year.

It's amusing to see people in Walmart cram them into this little cube to do there taxes with Jackson Hewitt, people are constantly walking by, looking in or standing over listening to what's being said.

 

[EagleKeeper]

Is TurboTax the way to go, or is it best to use two programs and compare. A lot of local places like H&R Block, Jackson Hewitt, are charging a lot less than they did last year.

It's amusing to see people in Walmart cram them into this little cube to do there taxes with Jackson Hewitt, people are constantly walking by, looking in or standing over listening to what's being said.

All S/W has to be certified by the IRS.

HR Block places (kiosks/offices) use the same tax engine that the commercial S/W use; with sust a different user interface at that.

If you get two different numbers, it is usually because a piece of data was misentered between the two of them. Some ask more details than others causing potential oversights - however, one can manually fill in the balnks

 

[boomerang]

I did a complete rollover from a 401K plan to an IRA. Does this amount have to appear on line 15a of Form 1040 with the designation ROLLOVER?

I ask because I've been messing with TurboTax on and off for a week trying to get it to appear. At one point it did, but on line 16a. As icing on the cake, TurboTax seems to think there's a Roth involved (there isn't) and despite my answering no to all the questions pertaining to that, it's not listening. First and last year for TurboTax for me.

I have Form 5498 regarding this transaction so the IRS should know all about it.

Do I need it on 15a or not?

 

[Homerboy]

1099-C forms

I received a 1099-C form from Chase for the cancellation of ~$9,000 it our HELOC loan which was taken out in 2006 to do an addition on our home. I'm reading through the rules on this 1099-C and it seems that since this loan was used for a home improvement, it may not be subject to reporting the 1099-C?

From the TT website:

Does all forgiven mortgage debt qualify for the tax break?
No.

Here are the requirements:

• The debt must be on your primary residence, not a vacation home or rental property.
• The debt forgiven can be up to $2 million. But for married persons filing separate returns, the limit is $1 million.
• Not all canceled mortgage debt qualifies. The mortgage must have been used to acquire or construct your home, or to improve it. It can also be a mortgage that was refinanced, but only up to the amount of the old mortgage principal, just before the refinancing. If you “cashed out” some of your home equity for purposes other than home improvements, such as buying a car, that portion of your forgiven debt is taxable.
• The debt forgiveness occurred on or after Jan. 1, 2007.

 

[Eos]

I am an Amazon Associate. Basically, friends and family use my amazon associate id when they visit the site, and when they buy stuff I get a small % of the gross sales. Total income for 2010 was $647.42, with $0 federal income tax withheld.

Married filing jointly with a 1040 form using TurboTax Online, and the first question TT asked after I entered in the "non employee compensation" from box 7 was "How would you describe the reason I got this form 1099-misc?"

I would say "commissions, prizes, bonus, etc", because nothing else really fits. The choices are:

1) self employed
2) Farm income
3) Freelance, consulting work, or independent contractor
4) Side job income
5) None of the above (show more options)

I started this on my own, and began to enter home business info, but I don't think this is correct.

How should I proceed?

If you select it as self-employment; you then have the ability to write expenses against the income using the Schedule C.

Treating it as misc income on the 1040 puts you on the hook for Federal/State and 2xSS taxes for that full amount. that conceivably be a tax impact of %40-50 on the amount recieved.

Thanks. Self-employed it is!

 

[Raiden256]

Awesome thread!

We purchased energy efficient windows this year. I know they meet the requirements for the $1500 energy tax credit, but can't figure out what documentation will be required with my return. Will they want receipts, energy ratings labels, etc?

Thanks again!

 

[EagleKeeper]

Awesome thread!

We purchased energy efficient windows this year. I know they meet the requirements for the $1500 energy tax credit, but can't figure out what documentation will be required with my return. Will they want receipts, energy ratings labels, etc?

Thanks again!

Form 5695 is that form whre the information must be entered. A quick read indicates no additional info is required to be submitted

 

[kyzen]

My girlfriend and I (I'm male, so this isn't a same-sex thing) registered as domestic partners this year in Colorado, initially for the sake of insurance. Does this enable us to file jointly, or do we need to wait until we actually get married for that?

 

[cirrrocco]

Went to H&R Block earlier to take advantage of the free 1040EZ, but I need to do the 1040A since I have some unemployment to claim...

What online tax sites are good, but still cheap? I've used Turbo Tax, which ALWAYS seems to end up costing way more than "free" and I've used OLT: On Line Taxes which is cheap, but the interface is piss-poor and a bit confusing.

I have been using taxslayer for 5 years now. I believe federal is free and 9.99 for State. Also if your income is less. i guess even State is waived.

 

[EagleKeeper]

My girlfriend and I (I'm male, so this isn't a same-sex thing) registered as domestic partners this year in Colorado, initially for the sake of insurance. Does this enable us to file jointly, or do we need to wait until we actually get married for that?

Uncle currently requires that you have filed the marriage certificate to use joint.

One of you may be able to declare the other as a dependant if your income levels will allow such.

 

[EagleKeeper]

I have been using taxslayer for 5 years now. I believe federal is free and 9.99 for State. Also if your income is less. i guess even State is waived.

Many states have their own filing system. Not all though. those that do, usualy do not require a lot of entryies - majority of entries are from the Federal forms as summation blocks.

 

[Kenazo]

So, here's a question from me, as a Canadian accountant to you guys as US accountants... how does the US tax Canadian sourced dividends received by US individuals?

In Canada these dividends are paid with after-tax corporate dollars. This means that the corp may have paid 30% income tax on the income before it was distributed as a dividend. If you are a Canadian individual you would get a tax credit on your personal return to reflect that and remove the double taxation that would otherwise occur.

Does the US give some credit for the Canadian income tax that would have been paid within the corporation before distributing dividends?

I'm not talking about the additional 15% part XIII withholding tax Canada levies against dividends paid to non-residents, which I'm fairly certain the US has a tax credit to offset.

 

[Zorba]

Okay, this is actually about 2011 taxes. I am going to be building my own house (I will be the general contractor paying with a construction loan) this year. The house will be my primary residence upon completion. Since I will be my own GC, I will be directly paying the sales tax on tons of materials. The sales tax will be in the $10K range.

I know this is assuming that the sales tax write off will be present again next year, but my interpretation of the tax code says that I could take the standard sales tax deduction and then add the house sales tax as "major items." The IRS's website specifically addresses remodels but not specifically new construction.

Also can I deduct the construction loan interest?

Also will I need to issue 1099 to all the sub contractors?

Thanks

 

[EagleKeeper]

Okay, this is actually about 2011 taxes. I am going to be building my own house (I will be the general contractor paying with a construction loan) this year. The house will be my primary residence upon completion. Since I will be my own GC, I will be directly paying the sales tax on tons of materials. The sales tax will be in the $10K range.

I know this is assuming that the sales tax write off will be present again next year, but my interpretation of the tax code says that I could take the standard sales tax deduction and then add the house sales tax as "major items." The IRS's website specifically addresses remodels but not specifically new construction.

Also can I deduct the construction loan interest?

Also will I need to issue 1099 to all the sub contractors?

Thanks

I know this is assuming that the sales tax write off will be present again next year, but my interpretation of the tax code says that I could take the standard sales tax deduction and then add the house sales tax as "major items." The IRS's website specifically addresses remodels but not specifically new construction.

IRS FAQ - Sales Tax Deduction

Taxpayers also may add to the table amount any sales taxes paid on:

• A motor vehicle, but only up to the amount of tax paid at the general sales tax rate; and
• An aircraft, boat, home (including mobile or prefabricated), or home building materials, if the tax rate is the same as the general sales tax rate.

My reading is that you can deducted the sales tax on the building materials in addition to the normal sales tax. No income tax deduction for you though.

Also can I deduct the construction loan interest?
Gut feeling is Yes. /edit - confirmed as yes


Also will I need to issue 1099 to all the sub contractors?
Yes

 

[Homerboy]

1099-C forms

I received a 1099-C form from Chase for the cancellation of ~$9,000 it our HELOC loan which was taken out in 2006 to do an addition on our home. I'm reading through the rules on this 1099-C and it seems that since this loan was used for a home improvement, it may not be subject to reporting the 1099-C?

From the TT website:

Does all forgiven mortgage debt qualify for the tax break?
No.

Here are the requirements:

• The debt must be on your primary residence, not a vacation home or rental property.
• The debt forgiven can be up to $2 million. But for married persons filing separate returns, the limit is $1 million.
• Not all canceled mortgage debt qualifies. The mortgage must have been used to acquire or construct your home, or to improve it. It can also be a mortgage that was refinanced, but only up to the amount of the old mortgage principal, just before the refinancing. If you “cashed out” some of your home equity for purposes other than home improvements, such as buying a car, that portion of your forgiven debt is taxable.
• The debt forgiveness occurred on or after Jan. 1, 2007.

Anyone?