9th Annual Tax Thread - 2011

[EagleKeeper]

I feel as if I ask these two same questions every year...

My wife runs a decent business out of the home. She attends shows and exhibits where she has to pay booth fees, and sometimes a flat percentage of her sales at that show. I am not sure what to file these fees under. They are upwards of $2700 for the entire year.

Secondly, I have her gross sales figures for the year. And the sales taxes that she has paid for the year. I'm not sure if I am to subtract the sales tax from the gross or if the sales tax is a separate line item or ???

Thanks in advance.

Shows/exhibit fees should fall under Line 8 - Advertising
Sales tax could fall under line 23

 

[Sid59]

How much difference, if any, can I expect to see filing Married Filing Joint vs Married Filing Seperate.
- Renting, no house
- 2 kids but no childcare expenses

She wants to hire someone, I told her our filing is easy, no point.

 

[akshatp]

We rented out our home starting July of 2011. As of January 2011, the deed was amended to include my name in addition to my parent's names. Main reasoning behind that is they have no income besides SS and wouldnt be able to gain any tax benefit from mortgage interest/prop taxes. The mortgage is solely in my dad's name.

1) Can I deduct mortgage interest paid (how much)
2) Can I deduct taxes paid (how much)
3) Who has to claim the rent income (Approx $20k for 2011)

Should I go to a tax professional or can I do this with Turbo Tax like I have been doing the past few years?

Note: My parents live in another house which we own and all of our names are on that deed also. No mortgage there, but we have an equity line of credit standing at about $70k at the moment.

 

[EagleKeeper]

How much difference, if any, can I expect to see filing Married Filing Joint vs Married Filing Seperate.
- Renting, no house
- 2 kids but no childcare expenses

She wants to hire someone, I told her our filing is easy, no point.

20 min job. Only benefit to MFS is when the smaller income forces a higher tax bracket. Best to use tax S/W to test each option. Also look at how the children play into the picture.

 

[sactoking]

Not really a 2011 tax question (2012 really) but thought it should go here.

As of January 5 or so (so pretty much all of 2012) my wife is self-employed in a multi-member LLC that she and I own. We are both active in the business so passive activity rules do not apply.

I am a salaried worker.

In planning for 2012 and our withholding it looks like there are two possible routes to go:
1) Estimate our SE tax at the end of the year and adjust my salaried withholding to accomodate that. The upside is we won't have to make quarterly payments. The downsides are we might have to make a 4th quarter payment is the business is more successful than anticipated, we'd overpay if the business is less successful than anticipated, and our guaranteed paycheck (mine) will be reduced considerably.
2) Set my salaried withholding to account for just my job and pay the SE tax as business revenue comes in. The upside is we'd be more likely to not be over- or under-withheld but the downside is my daily bookkeeping for the company will be more tedious.

I know this is probably a personal preference item, but does anyone have input on a reccomendation?

 

[EagleKeeper]

We rented out our home starting July of 2011. As of January 2011, the deed was amended to include my name in addition to my parent's names. Main reasoning behind that is they have no income besides SS and wouldnt be able to gain any tax benefit from mortgage interest/prop taxes. The mortgage is solely in my dad's name.

1) Can I deduct mortgage interest paid (how much)
2) Can I deduct taxes paid (how much)
3) Who has to claim the rent income (Approx $20k for 2011)

Should I go to a tax professional or can I do this with Turbo Tax like I have been doing the past few years?

Note: My parents live in another house which we own and all of our names are on that deed also. No mortgage there, but we have an equity line of credit standing at about $70k at the moment.

1) No go - you are not legally responsible
2) Yes - You are on the deed
3) flip a coin

Tax S/W will help you all the way

 

[gorcorps]

Before I go ahead and submit this thing, I want to be sure this sounds right. This is the first time I've filed with a full time job, and I end up having to PAY about 250 federal and get back 150 state (Indiana)

Quick facts:
-single, no dependents
-no extra withholding, just stuck with the default
-Rent deductions, no property/home ownership
-student loan interest, but only about 1200 worth

Anyway, I'm used to getting massive refunds but I think that's just because I was still a student and making diddly squat in part time jobs. Now that I'm firmly into middle class I guess I'm paying taxes now. Would a change in my withholding next year really be worth it?

 

[EagleKeeper]

Before I go ahead and submit this thing, I want to be sure this sounds right. This is the first time I've filed with a full time job, and I end up having to PAY about 250 federal and get back 150 state (Indiana)

Quick facts:
-single, no dependents
-no extra withholding, just stuck with the default
-Rent deductions, no property/home ownership
-student loan interest, but only about 1200 worth

Anyway, I'm used to getting massive refunds but I think that's just because I was still a student and making diddly squat in part time jobs. Now that I'm firmly into middle class I guess I'm paying taxes now. Would a change in my withholding next year really be worth it?

Unless you had part time jobs last year along with a full time job, I am concerned that you are having to pay Federal if you used the standard Single withholding.

The Federal Payroll tables should put you +/- $50.

It is your option to play with the withholding rates. Get it now or later. If you get it now and get to much, then you need to prepare to pay it back at the end of the year or get hit with fees.

 

[gorcorps]

Unless you had part time jobs last year along with a full time job, I am concerned that you are having to pay Federal if you used the standard Single withholding.

The Federal Payroll tables should put you +/- $50.

It is your option to play with the withholding rates. Get it now or later. If you get it now and get to much, then you need to prepare to pay it back at the end of the year or get hit with fees.

I didn't have another job, but I did start this job in 2011 and it included a signing bonus and other bonuses, but those were already taxed. After taking with folks there may be a couple credits I could claim but didn't. I'll have to check again.

 

[akshatp]

1) No go - you are not legally responsible
2) Yes - You are on the deed
3) flip a coin

Tax S/W will help you all the way

Thanks EK. So, I would have to add my name to the mortgage in order to deduct mortgage interest?

 

[EagleKeeper]

Thanks EK. So, I would have to add my name to the mortgage in order to deduct mortgage interest?

Correct

 

[Lotheron]

I was this close to hitting file button as I thought I had had all my W2s/1099s/etc entered but then I remembered about the units that had vested.

The vested units were reported on my W2 as regular pay with taxes deducted and shares were sold to cover the taxes.

I checked on the broker's website, but the 1099 from them will not be sent out until 2/15. Would there be any more information on this that I would have to report on my return over and beyond what has already been reported on the W2? Should I wait for any form from the broker before filing?

I'm guessing if anything it would have to do with the units sold to cover the taxes if there is a leftover dollar amount after the tax burden has be satisfied. I did not sell any more units than that which was required to cover the taxes.

 

[EagleKeeper]

Brokerage fees deduct the profit from sales that you pay taxes on.

 

[SunnyD]

Cliffs version:

- If I file jointly with my wife, the IRS will take and allocate my return to a defaulted student loan she has outstanding. (Long story, doesn't matter - we're attempting to rectify the situation regardless)

- My wife has no income, so after getting the allocation letter, I can file injured spouse and get "most" of the return back. (I had to do this last year)

Should I/can I just skip the middle man and file head of household instead in order to not have to deal with 2 months of waiting for my refund? What ramifications will this have (other than losing her as an exemption/joint deductions)?

 

[EagleKeeper]

Cliffs version:

- If I file jointly with my wife, the IRS will take and allocate my return to a defaulted student loan she has outstanding. (Long story, doesn't matter - we're attempting to rectify the situation regardless)

- My wife has no income, so after getting the allocation letter, I can file injured spouse and get "most" of the return back. (I had to do this last year)

Should I/can I just skip the middle man and file head of household instead in order to not have to deal with 2 months of waiting for my refund? What ramifications will this have (other than losing her as an exemption/joint deductions)?

You can not file as HOH if married & living together

You have to file Jointly or Separately.

When you file Joint, you can also file the injured Spouse paperwork.

Other than that, you have no option if you want the refund quickly.

Depending on how quickly you get the situation straightened out, you may want to delay filing until April or Aug.

 

[SunnyD]

You can not file as HOH if married & living together

You have to file Jointly or Separately.

When you file Joint, you can also file the injured Spouse paperwork.

Other than that, you have no option if you want the refund quickly.

Depending on how quickly you get the situation straightened out, you may want to delay filing until April or Aug.

Err, yeah Single is fine. It doesn't really matter terribly much as my itemized deductions (again, nearly all in my name) are just about the same as the joint standard deduction.

 

[Sepen]

I am asking a question for my daughter, how does the IRS determine who is entitled to claim a child? Quick facts, never married, child has my daughters last name, childs legal address is her residence, they both made about the same amount (under 20k), he lives with my daughter for 4 days (all school days) he lives with his father 3 days (1 school day). He pays no child support of any kind. This so far is verbal agreement on custody but I expect it to go to the courts soon.

Also he told me last week that he is claiming him. Thanks to any.

 

[EagleKeeper]

IRS does not determine.
The parents determine that on their own legally.
If nothing is written down, then it would be the custodial parent - however, practically, it is first come, first served.
Then the IRS will send letters to both parents asking for clarification and legal standing.

The person that they rule against, will have the taxes reworked and a bill issued

 

[mztykal]

Filed joint last year and got a refund. Tried it again this year and the refund is SMALL. Tried it again doing it married but separate and I end up paying and the wife gets a refund.

We both claim 0 and and combined income is only like 95k.

 

[EagleKeeper]

Separately, there are items that can not be claimed by either spouse that file jointly allows.

Withholding adjustments for a complete year (2011); vs handouts/credits from the year(2010) along with the incomes will also have an impact.

 

[Noirish]

assuming you contribute full amount into a 401k plan (2011), how much do you have to earn to be ineligible to contribute to roth ira at the same time?

 

[lokiju]

Settled debt in 2011 and am wondering how I report it if I haven't or do not receive a 1099-C form from them?

More specifically, if I do report it myself, do I need to included the forgiven amount that includes beyond the principal such as (insane) fees that the collection agency attaches to make it seem more scary? Or am I legally only required to report the amount forgiven that's whatever was less off the original/initial principal amount?

Can I or should I report this myself manually if I do not receive a 1099-C from the debt collection agency/law firm I settled with?

 

[hclarkjr]

if anybody did not get their refund and should have by now, the IRS got swamped on the 17th and had to many returns. some got their money and some did not. i just called H&R Block and was told the IRS has setup an 800 number to check for your return 1-800-829-1954

 

[EagleKeeper]

Settled debt in 2011 and am wondering how I report it if I haven't or do not receive a 1099-C form from them?

More specifically, if I do report it myself, do I need to included the forgiven amount that includes beyond the principal such as (insane) fees that the collection agency attaches to make it seem more scary? Or am I legally only required to report the amount forgiven that's whatever was less off the original/initial principal amount?

Can I or should I report this myself manually if I do not receive a 1099-C from the debt collection agency/law firm I settled with?

If you do not get a 1099 by end of Feb - I would not worry about it.
If you get the 1099; then use the numbers that are on it - those are what is being reported.

 

[lokiju]

If you do not get a 1099 by end of Feb - I would not worry about it.
If you get the 1099; then use the numbers that are on it - those are what is being reported.

If I don't file it and find out that the debt holder that forgave an amount did send the 1099-C to the IRS but did not send it to me, what is the risk to me? How screwed will I be? According to what I can determine on the IRS site, the debt holder that forgave the amount is required to send the 1099-C directly to the IRS.