9th Annual Tax Thread - 2011

[alkemyst]

AFAIK basis is always based on your possession of the asset. The day you got it in your mitts is the value that is struck.

I am not sure the ramifications of this not being an "arm's length" transaction though, they really seem to be focused on property changing hands between relatives and partners today.

 

[EagleKeeper]

the value of the house in 1994

 

[antef]

Suspect that you have to pay a separate income tax to the municipalities and they are trying to ensure that they get credit from what you paid;

If they require it and you do not provide it; they may recalculate your tax as if you did not pay anything elsewhere and all income was earned under their tax code.

You can always request a copy of what you filed. And take a lesson from the experience. Keep copies all the time.

Yeah, I know...I was just running out of time at this point. Thanks!

 

[Lorax]

Hi, i filed an amendment to my federal taxes yesterday and today discovered i forgot to include my payment (check) for the extra i owed. how would i go about sending it in, or do i just wait for them to come to me?

i saw there's a 1040-v but i'm not sure if that's the right form, and also the instructions to that form tell me to send it to a different IRS center than where my ameneded forms went.

TIA!

 

[Skiddex]

girlfriend is moving in before probable engagement and going to school so she will have student loan money for 'living expenses'.

i can float us both but was thinking that if she pays $xxx/month from her student loan money for 'rent', i can stick that money in other investments for a few years before the loan payments start. do i need to declare this as income or can we consider this a non taxable gift?

 

[EagleKeeper]

Hi, i filed an amendment to my federal taxes yesterday and today discovered i forgot to include my payment (check) for the extra i owed. how would i go about sending it in, or do i just wait for them to come to me?

i saw there's a 1040-v but i'm not sure if that's the right form, and also the instructions to that form tell me to send it to a different IRS center than where my ameneded forms went.

TIA!

Mail to the address on the voucher.

Include SS# on the check

 

[EagleKeeper]

girlfriend is moving in before probable engagement and going to school so she will have student loan money for 'living expenses'.

i can float us both but was thinking that if she pays $xxx/month from her student loan money for 'rent', i can stick that money in other investments for a few years before the loan payments start. do i need to declare this as income or can we consider this a non taxable gift?

Formal contract or sharing expenses.

Your choice.

A third option is you can claim her as a dependent if you are supporting her per IRS rules at end of year.

 

[Mermaidman]

Background: One of my clients includes both my hourly pay as well as travel expense reimbursements on a 1099-misc. I hate this because I have to go through the extra step of deducting the travel expenses on my tax filing.

Scenario: A big chunk of my work in 2011 were actually paid to me by the client in 2012. These payments included $50,000 for my hourly "wage" and $20,000 for the reimubursement of associated travel expenses incurred in 2011, and will go on the 2012 1099-misc. (These are not the actual numbers. )

Possible Problem:
Since the travel expenses were incurred in 2011, I presume that I have to use them as deductions in my 2011 tax filing, even though the client's reimbursements will show up in the 2012 1099-misc. Wouldn't this create an artificially low net income in 2011, and conversely for 2012, my income would be exaggeratedly high?

Will the IRS allow me to "save" my travel deductions for the 2012 filing even though they occurred in 2011? I'm not sure if I'm even asking the correct question, so suggestions appreciated!

 

[spidey07]

Got married in 2010. Her house passes the ownership test (lived in it 3 out of 5 years easily proven). In CY2011 we owned 3 properties (my home, her home, our new home), at end of CY2011 we owned two properties (my home and our home we purchased).

We sold her house in 2011 with capital gain of 100k+. I understand we pay no CG on this gain, but how do I show this? We received no 1098 on the gain, all I have is closing documents on sale of her home/gain.

 

[alkemyst]

getting a 1098, 1099, W2, etc doesn't make a difference really. What you gain, you have gained and what you have paid, you paid.

Save your closing documentation and the original purchase paperwork and you should be ok.

 

[Xcobra]

Background: One of my clients includes both my hourly pay as well as travel expense reimbursements on a 1099-misc. I hate this because I have to go through the extra step of deducting the travel expenses on my tax filing.

Scenario: A big chunk of my work in 2011 were actually paid to me by the client in 2012. These payments included $50,000 for my hourly "wage" and $20,000 for the reimubursement of associated travel expenses incurred in 2011, and will go on the 2012 1099-misc. (These are not the actual numbers. )

Possible Problem:
Since the travel expenses were incurred in 2011, I presume that I have to use them as deductions in my 2011 tax filing, even though the client's reimbursements will show up in the 2012 1099-misc. Wouldn't this create an artificially low net income in 2011, and conversely for 2012, my income would be exaggeratedly high?

Will the IRS allow me to "save" my travel deductions for the 2012 filing even though they occurred in 2011? I'm not sure if I'm even asking the correct question, so suggestions appreciated!

Most, if not all, individual taxpayers are on a calendar year basis. Meaning, any income you receive or deductions you incur during a given year (2011 or whatever) must be recognized on that year's returns. Unless of course, you choose a different fiscal year but that's a whole other topic. To answer your question, all the income and expenses that occurred in 2011 must be reported in 2011.

 

[Xcobra]

Got married in 2010. Her house passes the ownership test (lived in it 3 out of 5 years easily proven). In CY2011 we owned 3 properties (my home, her home, our new home), at end of CY2011 we owned two properties (my home and our home we purchased).

We sold her house in 2011 with capital gain of 100k+. I understand we pay no CG on this gain, but how do I show this? We received no 1098 on the gain, all I have is closing documents on sale of her home/gain.

If you and your wife met the ownership and use test for the property you sold (important!), then you can get the $500K (married filing jointly) exclusion. This transaction MUST be reported. I believe it gets reported on Sch D. Just take the sale proceeds (less commission and selling expenses) less the basis of the property (adding any expenses incurred when you bought it and improvements) and that will result in the gain. Then, on Sch D, the software should automatically know you qualify for the exclusion and will enter a line "Sec 121 Exclusion" as a negative to offset the gain.

 

[duragezic]

So the three major sites to help do taxes is TurboTax, TaxCut, and TaxAct. For students or lower income, TurboTax is awesome via statetaxfreedom.com. You get to use their good interface and file at zero cost. But the first year having a real job, I used TurboTax and got to the end to find they wanted $75! I went to TaxAct the next year and did again this year.

Has anyone used TaxSlayer? I think they're a new one and prices are reasonable.

I had forgotten about them until now but I already used TaxAct this year. When I see the Miesha Tate rocking the advertisement it made me consider trying them.

 

[duragezic]

For me, a fairly simple tax situation it works out to:

TurboTax: $35 Basic Edition + $40 state = $75
TaxCut: $35 Basic Edition + 40 state = $75
TaxAct: $18 Deluxe + state

No comparison really unless the TaxAct interface was terrible (I think it's alright). For $75 or likely less, I'd think I could have it done by a professional. And this year it was even less of a decision as I had two states to file. $115 (TurboTax or TaxCut) vs $36 (TaxAct).

It would be closer if I could use the Free versions (with state would be like $40) but I'm pretty sure that means using 1040EZ. I'm not able to use 1040EZ simply because I want to deduct student loan interest payments, otherwise my tax situation is so simple I'm sure 1040EZ is fine.

 

[Baked]

I opened a Tradition IRA in 2011 and Turbo Tax is telling me I can deduct $5,500 tax credit, but it's asking for a 1099R. I didn't get that from my financial advisor who's handling the IRA for me. What's going on?

Ps. Homebuyer Credit is a load of crap. I checked off all the boxes except the one that says you have to be in the military service on duty for 3 months. I'm like, are you effing kidding me?! Seriously!?

Edit: Ok, I see what happens with the IRA contribution. You only get tax deduction for new contributions during the year, rollover doesn't count.

 

[Xcobra]

So the three major sites to help do taxes is TurboTax, TaxCut, and TaxAct. For students or lower income, TurboTax is awesome via statetaxfreedom.com. You get to use their good interface and file at zero cost. But the first year having a real job, I used TurboTax and got to the end to find they wanted $75! I went to TaxAct the next year and did again this year.

Has anyone used TaxSlayer? I think they're a new one and prices are reasonable.

I had forgotten about them until now but I already used TaxAct this year. When I see the Miesha Tate rocking the advertisement it made me consider trying them.

That's odd. I always pay 14 bucks (fed and one state) with taxact. Maybe it is some sort of promotion or something. Shrug.

 

[EagleKeeper]

More than half the states have their own Tax Form entry directly at no charge.

check into such.

 

[Via]

Is there any problem with not taking a deduction when you're using that year's income level for a specific purpose?

i.e.- if I don't take my mortgage interest deduction this year because it happens to lower my net income below a specific level would it be considered unethical for any reason?

 

[EagleKeeper]

There should be no reason for not taking a authorized deduction.

And also no penalty for not taking one.

 

[Aharami]

capital losses can be claimed on both federal and state, right? my wife works in NY, we both live in NJ. TaxAct automatically filled in capital losses from the federal Q&A into the NJ and NY state deductions. Wondering if I should manually remove them from the state forms or not.

Thanks!

 

[EagleKeeper]

State related question with no advice able to be given

 

[spidey07]

If you and your wife met the ownership and use test for the property you sold (important!), then you can get the $500K (married filing jointly) exclusion. This transaction MUST be reported. I believe it gets reported on Sch D. Just take the sale proceeds (less commission and selling expenses) less the basis of the property (adding any expenses incurred when you bought it and improvements) and that will result in the gain. Then, on Sch D, the software should automatically know you qualify for the exclusion and will enter a line "Sec 121 Exclusion" as a negative to offset the gain.

Got it figured out. Turbo Tax says the IRS doesn't need or want you to claim it (as it's exempt from CG). Haven't checked the forms, but no tax on gain.

 

[Via]

There should be no reason for not taking a authorized deduction.

And also no penalty for not taking one.

I'm self-employed and I need my net income to be at a very specific level this year for a very specific reason.

 

[EagleKeeper]

I'm self-employed and I need my net income to be at a very specific level this year for a very specific reason.

Juggle the Schedule A and Schedule C line item deductions to hit your target.

Once your target is hit; if possible file an amended return (up to 3 years later) to reset the variables.

 

[Xcobra]

I'm self-employed and I need my net income to be at a very specific level this year for a very specific reason.

Interesting why someone would want to give money to the IRS. They won't penalize you for not taking the deductions. As Eagle said, if need be file an amended later on.