9th Annual Tax Thread - 2011

[SLCentral]

First, go to the TT system and verify that the IRS has not rejected your return (stupid errors)

If no rejection message, then it is best to call the 800 # and talk to a live person then.

Nope, no rejections from TT. I've tried calling the 800 number a couple of times, but hang up after being on hold for an hour. Any easier way to get in touch?

 

[alkemyst]

This isn't as much a question as a comment but......

Anybody else a little ticked that some companies get until march 15 to get their 1099's to us? My taxes are basically done except for a couple of 1099's that I have to wait for. I do well with my witholdings allowing the govt to owe me just a little back. However, I don't like the fact that, not only do they get to hold my money throughout the year interest free already, but now they get to hang onto it for a few extra months in the new tax year as well.

Anybody else being given a few extra months to do stuff at their job just because of the current economic environment? I didn't think so.

I am not so concerned about interest free holding as the time line.

It's going to take more than a month to get a best case answer for those working many jobs.

 

[Ken g6]

OK, here's the deal. At some time in the past my parents put me as joint owner (joint tenancy with rights of survivorship) on some stock. (So that's 3 people in total.) Now, they've been paying the entire tax amount in the past, which may have been wrong, but I'm not delving into it since I haven't had enough income to pay taxes for the last two years. This year I have to file a return, so I'd like to sort this out. Two questions:

(1) Since I have never seen any of the dividend money - it all goes to my parents' account - do I owe any taxes? If so, is it proportional? (On 1/3 of the dividends?) Edit: And where do I list the income? (See next question.)
(2) It so happens this company is Canadian. Some Canadian taxes were paid. (<$300) If I owe taxes on 1/3 of the income, can I file for 1/3 of the Foreign Tax Credit (F1040 line 47) without filing Form 1116? (If it's complicated, I'd be happy just to skip that tax credit.)

Thanks for reading!

TL;DR: I got some Canadian stock dividends JTWROS with my parents. What do I put on my income taxes?

 

[EagleKeeper]

First, go to the TT system and verify that the IRS has not rejected your return (stupid errors)

If no rejection message, then it is best to call the 800 # and talk to a live person then.

Nope, no rejections from TT. I've tried calling the 800 number a couple of times, but hang up after being on hold for an hour. Any easier way to get in touch?

1) In person visit to a local IRS office (scary but one has been known to make it out alive in one piece when it is voluntarily)

2) Send a certified letter to the IRS asking for status, explaining that your status is unavailable according to the IRS instructions.

3) Call your local Congressional representative and ask them to intervene to find out why there is no status update.

 

[EagleKeeper]

OK, here's the deal. At some time in the past my parents put me as joint owner (joint tenancy with rights of survivorship) on some stock. (So that's 3 people in total.) Now, they've been paying the entire tax amount in the past, which may have been wrong, but I'm not delving into it since I haven't had enough income to pay taxes for the last two years. This year I have to file a return, so I'd like to sort this out. Two questions:

(1) Since I have never seen any of the dividend money - it all goes to my parents' account - do I owe any taxes? If so, is it proportional? (On 1/3 of the dividends?) Edit: And where do I list the income? (See next question.)
(2) It so happens this company is Canadian. Some Canadian taxes were paid. (<$300) If I owe taxes on 1/3 of the income, can I file for 1/3 of the Foreign Tax Credit (F1040 line 47) without filing Form 1116? (If it's complicated, I'd be happy just to skip that tax credit.)

Thanks for reading!

TL;DR: I got some Canadian stock dividends JTWROS with my parents. What do I put on my income taxes?

Schedule B covers dividend income. You should claim the proportional amount.

If you do not received the income and do not get a 1099 for the dividends; then there is nothing to file on it.

Easiest answer for the Foreign Tax is to let the Tax S/W do the job and see what it outputs.

Detailed answer, is the I personally do not know and would recommend researching the IRS site for the actual answer if you do not want to let the professional S/W do it for you.

 

[Ken g6]

If you do not received the income and do not get a 1099 for the dividends; then there is nothing to file on it.

My parents got a 1099 with their names and my name on it.

Easiest answer for the Foreign Tax is to let the Tax S/W do the job and see what it outputs.

My goal posting here was to avoid paying a professional. :$

 

[EagleKeeper]

My parents got a 1099 with their names and my name on it. My goal posting here was to avoid paying a professional. :$

Tax S/W is not meaning a tax professional. You can utilizeTurboTax, TaxCut or TaxAct to enter the info and see what the output is.
Spend an hour and see what the overall results look like w/ respect to the foreign income.

While your name may be on the 1099, is your SS on it? If not, then the parents are being reported as receiving the income and not you.

I recommend that you call the company and ensure that they are not sending a 1099 for you and it has been mis-directed (wrong address).

If the company is not sending out a 1099 - then you are in the clear and can ignore the overall issue

 

[richardycc]

what a different a kid makes, I am getting $2k more back because of a kid. but kinda disappointed that I only got $600 back for the $8000+ daycare money. And it's too late to open a flexible spending account for daycare for this year, anything I can do to maximize my refund this year?

 

[Ken g6]

While your name may be on the 1099, is your SS on it? If not, then the parents are being reported as receiving the income and not you.

Woot! It's just my Dad, not me. Thanks!

I recommend that you call the company and ensure that they are not sending a 1099 for you and it has been mis-directed (wrong address).

Nobody's actually complained that I wasn't including this. I think I'll probably leave well-enough alone.

 

[EagleKeeper]

what a different a kid makes, I am getting $2k more back because of a kid. but kinda disappointed that I only got $600 back for the $8000+ daycare money. And it's too late to open a flexible spending account for daycare for this year, anything I can do to maximize my refund this year?

Reduce your exemptions will increase the withholding which will increase the refund.

Or look at how to increase the credits and deductions.
IRA and 401K maximization.

 

[EagleKeeper]

Nobody's actually complained that I wasn't including this. I think I'll probably leave well-enough alone.

If this situation has existed for past 5 years; no 1099 and you have filed independent of parents, then you seem to be clear.

It takes that amount of time for cross referencing of reported income.

 

[alkemyst]

Tax S/W is not meaning a tax professional. You can utilizeTurboTax, TaxCut or TaxAct to enter the info and see what the output is.
Spend an hour and see what the overall results look like w/ respect to the foreign income.

While your name may be on the 1099, is your SS on it? If not, then the parents are being reported as receiving the income and not you.

I recommend that you call the company and ensure that they are not sending a 1099 for you and it has been mis-directed (wrong address).

If the company is not sending out a 1099 - then you are in the clear and can ignore the overall issue

These kinds of things are slippery slopes and much of what I have experienced is those 'gaining' the amounts have to claim them and those taking the 'losses' pay them.

What happens much of the time is you have the group all doing the write offs and one or two claiming the income.

It tends to put you in line for an audit.

Being you have no income, what is it saying you'd owe on this? Are your parent's supporting you in some way and looking for you to dilute their penalties?

 

[Gibson486]

I got a 1099 g since I was unemployed for some of last year. The thing is they do not withheld wages, So, how do you take care of these with the tax return? I am guessing I can no longer do the free federal file at more at most tax websites?

 

[EagleKeeper]

I got a 1099 g since I was unemployed for some of last year. The thing is they do not withheld wages, So, how do you take care of these with the tax return? I am guessing I can no longer do the free federal file at more at most tax websites?

When you first go to the free tax websites, they will ask screening questions. At that point, they will tell you that you are not qualified or recommend that you "upgrade". The upgrade option is to get you to pay for services that are optional.

TaxAct has no restrictions, I do not think that HR Block has income type restrictions based on 1099

 

[GTaudiophile]

Here is an interesting situation for you.

I am trying to advise a Polish friend who is self-employed and files under Schedule C and SE.

For 120 days in 2011, he had a J2 Visa (non-resident alien with working privileges). This is the Visa he's had for the past few years and has filed under 1040NR. For 90 days, he had an H4 Visa (non-resident visitor without working privileges). During this time he did not work. For the final 90 days of 2011, he had a H1B Visa (resident alien with working privileges). Such resident aliens are to file a normal 1040.

Since he ended the year with an H1B, I assume he files a 1040.

Is this correct or does he have to file both a 1040NR for Jan-Jun and a 1040 for Oct-Dec?

Thanks for the advice!

 

[alkemyst]

There is a big misconception on visas and tax filing. H1B candidates should file almost always because they are here sponsored to work.

The other classifications may or may not be working. There is a form they have to file out each year regardless if they worked or not. If they did work they are required to file taxes.

I'd say he'd file the 1040 for his current status for the year. I haven't known of anyone ever filing two returns even though it may be beneficial. 100% of the income they made would need to be accounted for on it for the entire year.

edit: I was assuming you were talking 1040NR-EZ and 1040NR, not the regular 1040 you may be.

There is a 'test' you can do and I think more than likely they will be using the 1040NR.

From: http://www.learn4good.com/jobs/us_income_tax_returns_refunds_back.htm
Detailed rules regarding the "substantial presence" test are explained in Publication 519 and in the Instructions for Form 1040NR-EZ or Form 1040NR. H-1B scholars who were nonresident taxpayers for part of a year and resident taxpayers for part of a year, including the years of arrival and departure, should file as dual status taxpayers.

 

[GTaudiophile]

I am still not too sure how to file as dual status. Will look at that.

Let me break it down again:

6 months of the year = non-resident alien worker = Earned $X
3 months of the year = non-resident alien non-worker = Earned $0
3 months of the year = resident alien worker = Earned $Y

So far his plan was to file a single 1040, declaring his entire self-employment income for 2011 (Sum of X and Y) on Schedule C and paying SE and income taxes accordingly. He paid EST. taxes throughout the 9 months of the year he was legally able to work.

 

[Xcobra]

I am still not too sure how to file as dual status. Will look at that.

Let me break it down again:

6 months of the year = non-resident alien worker = Earned $X
3 months of the year = non-resident alien non-worker = Earned $0
3 months of the year = resident alien worker = Earned $Y

So far his plan was to file a single 1040, declaring his entire self-employment income for 2011 (Sum of X and Y) on Schedule C and paying SE and income taxes accordingly. He paid EST. taxes throughout the 9 months of the year he was legally able to work.

Correct me if I am wrong but I believe you become a resident if you exceed 183 days in the US during the year. Your residency begins the day you entered the US. However, I think that the days under a J-2 visa do not count towards those 183. You get a few years to file as NR. The income is still taxed as a NR but does not affect his residency. Depending how many years he filed as NR and what his status is under the visa, he may be a dual status for 2011 with residency beginning after he was no longer under J-2.

Ahh here you go:

http://www.irs.gov/businesses/small/international/article/0,,id=129390,00.html

 

[alkemyst]

He will need to take the test outlined. More than likely it will be a 1040NR

The test should get you on the right path. They will probably need to be the one to answer these questions, although you seem to have a lot more insight into their situation than most would.

H1B is for sponsored work. Not sure how self-employment falls into the visa statuses. I do know you must have another H1 visa for any work (as an employee) outside your sponsor.

I work in a LLC on H-1B. Recently the company has planned to issue units (stocks) which makes me a member in LLC. That makes me self-employed, can I do that?
If you are a partner in the company, you will have a problem with the H-1. An H-1 is only for employees. If you do not meet the test of an employee your H-1 is in jeopardy. It would not be a problem if you owned shares in a public company as your employee status would not be jeopardized.

 

[GTaudiophile]

To my knowledge, he passes the Substantial Presence Test

must wait 2 years before counting 183 days; however if the J or Q alien has been present in the U.S. during any part of 2 of the prior 6 calendar years in F, J, M, or Q status, then he is not an exempt individual for the current year, and he must count days in the current year toward the substantial presence test;

 

[Xcobra]

To my knowledge, he passes the Substantial Presence Test

must wait 2 years before counting 183 days; however if the J or Q alien has been present in the U.S. during any part of 2 of the prior 6 calendar years in F, J, M, or Q status, then he is not an exempt individual for the current year, and he must count days in the current year toward the substantial presence test;

You probably have better background but it sounds like he is going to be a regular 1040 depending when he got into the US in 2011. He'll need to report everything. But at least he can get the standard deduction.

 

[GTaudiophile]

I will also add that his taxes are quite basic. His only income is self-employment income.

-He declares business profit on Schedule C.
-Calculates his SE tax and SE tax deduction (1/2 SE tax) on Form SE.
-1040 calculates his AGI (income minus 1/2 SE tax deduction).
-Minus Standard Deduction
-Minus Exemption (1)
-Income Tax assessment
-Plus SE Tax
-Minus Est. taxes paid in 2011
-Final tax assessment

 

[jlee]

Apparently TurboTax doesn't have a free e-file anymore without deleting all the info they've kindly stored for me over the last few years...is it worth $20 federal + $28 state, or should I find another site or program? I have nothing complicated - just W2's, 1099's, and moving expenses.

 

[EagleKeeper]

Apparently TurboTax doesn't have a free e-file anymore without deleting all the info they've kindly stored for me over the last few years...is it worth $20 federal + $28 state, or should I find another site or program? I have nothing complicated - just W2's, 1099's, and moving expenses.

None of the Tax sites have "free" recovery anymore.

Look around for Tax S/W for the PC
Both offer Free Fed and 1 state for $25-40

Price depends on vendor and where you purchase it from.

At end of Jan, I got Staples to price match Walmart for HR Block $25 and then applied a 15% coupon on that price.

 

[Xcobra]

Apparently TurboTax doesn't have a free e-file anymore without deleting all the info they've kindly stored for me over the last few years...is it worth $20 federal + $28 state, or should I find another site or program? I have nothing complicated - just W2's, 1099's, and moving expenses.

Ummm, I used taxact; always have. And their price for Fed and one State return has always been around 14 bucks. Maybe because I am a repeat customer? Might be worth checking them out.