ATOT's Second Annual Tax Time Thread!

[EagleKeeper]

Originally posted by: dabuddha
Quick (hopefully simple) question.

I've been paying off a loan my wife's father took for my wife's education. The loan was taken in India and I've been paying ~$250 a month since July. Is there any way this can benefit me with my taxes? The loan is in my father in law's name. I'll be the one paying off the full loan.

Gut feeling is no. Your father-in-law is responsible for the loan, not you. Unless you bought the loan from him, it would not count.

Also, it is only interest that counts, not the principle.

The cost of education for your wife can be deducted using the Hope or Lifetime credits.
However, your wife must be a US resident or citizen

 

[EagleKeeper]

Originally posted by: iamwiz82
OK, question for you guys from my Father:

My brother is permenently disabled because of negligence on Ford's behalf. He lives with my parents, but also collects social security. He worked a few days this past year at Ford. His total income is below:

Ford - $1,000 total
SS - $1,600/month

Can my Dad claim him? The SS checks are non-taxable.

Use the dependency test.

Dependency Tests
The following five tests must be met for you to claim an exemption for a dependent.

1. Member of Household or Relationship Test.
2. Citizen or Resident Test.
3. Joint Return Test.
4. Gross Income Test.
5. Support Test.

IRS - FAQ - Pub 501

Disabled dependents. For this gross income test, gross income does not include income received by a permanently and totally disabled individual for services performed at a sheltered workshop. The availability of medical care must be the main reason the individual is at the workshop. Also, the income must come solely from activities at the workshop that are incident to this medical care. A sheltered workshop is a school operated by certain tax-exempt organizations, or by a state, a U.S. possession, a political subdivision of a state or possession, the United States, or the District of Columbia, that provides special instruction or training designed to alleviate the disability of the individual.

Looks like your Dad can claim him as a dependent

 

[BentValve]

Originally posted by: EagleKeeper

Originally posted by: BentValve
In 04' I just barely got into the 15% bracket, I am a single male and let me assure you that I barely got by this year.

I am due for a raise and am fairly certain I will get it but I $2 more an hour will push me right into the low end of the 25% bracket.

I did the math and that $2 equates to me generating around $4000 extra per year and it puts me right about $32,000 ...after taxes id be making a lousy $1100 or so more per year.


I pretty much need $4 more an hour to make any difference in my lifestyle.

I tell you , its enough to off ones self. I live in a small town and wages are poor for mechanics and many other jobs yet cost of living is high.


Any ideas for those of us who are single and right on the low end of the 25% scale?

Get a freelance job that will not pay you W2.
Then you can start deducting expenses.

Drop money into a 401K or IRA. That will save you some $$ and also help keep you below the threshold that you are worried about.

Hey I guess I dont have anything to worry about..I just spoke to a guy @ H&R block and he reminded me that to get into the 25% bracket you have to make around 37000 since its calculated after the 7150 standard deduction.
In other words id have to had made a gross wage of over 37,650 to be in the 25% bracket for 2004.

So that means that for 2005 I can make a gross wage of over 37K and still slip in the 15% tax bracket, right?


This is great news for me, I made a gross wage of $27406 for 2004 and if I ask for $2 more per hour with OT I can probably make around $33K ...yeah Mcd wages to some of you but I can really use an extra $500 a month.

 

[Argo]

When leasing a car, is it better to pay sales tax upfront (as opposed to financing it) so that you can get deduction on your federal return that year? Do you need to itemize to claim sales tax deduction or can you claim it regardless?

I'm sure somebody here knows. Thanks in advance.

P.S. If I'm not mistaken sales tax deduction is new this year, right?

 

[EagleKeeper]

1) Yes the sales tax deducton exists this year.

2) You must itemize (Schedule A) to take advantage of it.

3) One has to choose between the sales tax or income tax deduction. Both are not allowed. The intention was to provide a benefit for those that live in non-income tax states.

4) As long as the sales tax is paid to the state for a vehicle, that is what counts.

If you lived in more than one state, the sales tax tables should be pro-rated.


IRS - FAQ - Pub 600 - Sales Tax

New for 2004, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). You cannot deduct both. Generally, to figure your state and local general sales tax deduction, you can use either your actual expenses or the Optional State Sales Tax Tables contained in this publication.

Actual expenses. Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2004 only if the tax rate was the same as the general sales tax rate. Do not include sales taxes paid on items used in your trade or business.

Rate less than general rate. Sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.

A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Also include any state and local general sales taxes paid for a leased motor vehicle. If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate.

An aircraft, boat, home (including mobile and prefabricated), or home building materials, if the tax rate was the same as the general sales tax rate.

 

[austin316]

When my girlfriend started her job, on her W2 form, she put down that she claims no one (0), not even herself. Each week, in her take home check, will she bring home more or less money than if she would have claimed herself. Also, her tax return. Will it be more than if she claimed herself or less? Plus, is there a chance she could owe the gov't. money?

 

[b0mbrman]

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

Keep the KBB.com printout attacvhed to the donation receipt.

Cool, thanks.

Also, which KBB value do I use? Private Party, Retail, or Trade-in?

 

[imported_Tomato]

Do I need to pay any taxes on the 401k I have set up with my company?

 

[imported_Tomato]

I donated a little over $1,000 of clothes (approximated depreciated value) and $500 of toys to the Salvation Army in 2004. Where should I deduct this, if at all?

 

[EagleKeeper]

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

Keep the KBB.com printout attached to the donation receipt.

Cool, thanks.

Also, which KBB value do I use? Private Party, Retail, or Trade-in?

The one that is the highest value for you!!!

 

[EagleKeeper]

Originally posted by: austin316
When my girlfriend started her job, on her W2 form, she put down that she claims no one (0), not even herself. Each week, in her take home check, will she bring home more or less money than if she would have claimed herself. Also, her tax return. Will it be more than if she claimed herself or less? Plus, is there a chance she could owe the gov't. money?

By claiming 0 on her W4, she is allowing Uncle to take extra money from her paycheck.

When she then files her taxes, most will come back to her.
But she is giving Uncle an interest free loan.

If she wants more each paycheck and less "stolen" from her, then she can up the withhold to one (1).
Upping it to two (2) could generate a tax liability for her at the end of the tax year. It is up to her to decide does she want that. More $$ now and have to send some back to Uncle next year.

 

[EagleKeeper]

Originally posted by: Tomato
Do I need to pay any taxes on the 401k I have set up with my company?

NO!!!
Make sure (if possible) that you are at least contributing the maximum that they will match to.

 

[EagleKeeper]

Originally posted by: Tomato
I donated a little over $1,000 of clothes (approximated depreciated value) and $500 of toys to the Salvation Army in 2004. Where should I deduct this, if at all?

IRS - FAQ - Pub 526 - Charitable Contributions

Schedule A has a charity section.
Over $500 total value will require an additional Form 8283.
Tax S/W will automatically handle it for you.

 

[b0mbrman]

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

Keep the KBB.com printout attached to the donation receipt.

Cool, thanks.

Also, which KBB value do I use? Private Party, Retail, or Trade-in?

The one that is the highest value for you!!!

Nice

The retail value is over 4 times the trade-in value :Q

Does it matter that I probably wouldn't have been able to find a buyer for the car at the retail price?

 

[imported_Tomato]

Originally posted by: EagleKeeper

Originally posted by: Tomato
I donated a little over $1,000 of clothes (approximated depreciated value) and $500 of toys to the Salvation Army in 2004. Where should I deduct this, if at all?

IRS - FAQ - Pub 526 - Charitable Contributions

Schedule A has a charity section.
Over $500 total value will require an additional Form 8283.
Tax S/W will automatically handle it for you.

Thanks EagleKeeper! Will filing online through HR Block be able to provide one/help me do that automatically?

 

[EagleKeeper]

Originally posted by: Tomato

Originally posted by: EagleKeeper

Originally posted by: Tomato
I donated a little over $1,000 of clothes (approximated depreciated value) and $500 of toys to the Salvation Army in 2004. Where should I deduct this, if at all?

IRS - FAQ - Pub 526 - Charitable Contributions

Schedule A has a charity section.
Over $500 total value will require an additional Form 8283.
Tax S/W will automatically handle it for you.

Thanks EagleKeeper! Will filing online through HR Block be able to provide one/help me do that automatically?

I have never used on-line systems, however, the online S/W should handle that for you.

Also, you may wish to determine if the cost of doing it online and then E-filing (if you have to pay for it) is worth the cost/time of your money.

In otherwords, do you wish to pay an extra $10 or to E-file and get your $$ back a couple of weeks earlier vs filing by paper.

 

[EagleKeeper]

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman

Originally posted by: EagleKeeper

Originally posted by: b0mbrman
Hi there. I might have already asked these but...

• I own a 4-plex and live in one of the units. How will the deductions for property tax and interest work?

• I donated a car to charity this year. Which value do I deduct?

Your Schedule E will cover the rental income and expenses.
Easiest way would be to take 3/4 of everything, taxes, interest, and expenses for upkeep + any direct expenses for a rental unit and put them on the Schedule E.

You can then take 1/4 of the taxes and interest on your Schedule A.
For the car, you can use the blue book value for the charity line item on the Schedule A.
Make sure that you keep a copy of what the blue book value shows to prove it if audited.

So besides that KBB.com printout, what other documentation do I need?

Keep the KBB.com printout attached to the donation receipt.

Cool, thanks.

Also, which KBB value do I use? Private Party, Retail, or Trade-in?

The one that is the highest value for you!!!

Nice

The retail value is over 4 times the trade-in value :Q

Does it matter that I probably wouldn't have been able to find a buyer for the car at the retail price?

Youi should have available to you: trade-in, used car sale(on the lot) and private party values.

Remember P.T. Barnum - A sucker is born every minute.
Maybe some one in the IRS would have bought your vehicle from at the list price from a used car lot.

 

[Leejai]

3 things:

1. Bought a house 60 miles away from my work when I had the ability to telecommute. I was promoted, and that took away my ability to work from home, therefore I sold the house w/in the same year. Can this count as "Unforseen Circumstances" or "Changes in place of employement" for selling the house w/in the 2 years required? All can be proven via document from my HR department.

2. Because I sold the house w/in the two years. CA required withholdings of about 3% of the sale price (even though it was a primary residence). A form 593 was given. Can I file that w/ my Federal return as well as prepaid estimated Income State and Local Taxes? If not, it shows I owe the Federal ALOT and I get back even more from the State. If I can, it somewhat evens out, but good news is I don't have to pay a crazy amount to Federal while I wait for the State to give it back

3. On the Buyer's and Seller's Final Statement, which of the following debits are Tax Deductible?

Buyer's Statement:

Adjustments and Loan Fees

Closing Delay Debits
County Tax
Pro-rated Interest on Loan
Appraisal Fee
Credit Report
Tax Service Fee (Bank)
Flood Certification Fee (Bank)
Doc Prep Fee (Bank)
Underwriting Fee (Bank)
Process Fee (lender)
Flood Determination (Bank)
Admin Fee (Bank)

Title/Escrow Fees

Eagle Lender's Policy
BBR - Eagles Owners Policy
Escrow Fee
Loan Tie In Fee
Special Messenger Fee
Notary Fee
Recording Services
Count Doc Transfer Tax
Fire Insurance Premium
New Home PDR to Property Disclosure Services

Seller's Statment: (much shorter)

Title Charges:

Reconveyances

Escrow Charges:

Escrow Fee
Doc Prep Fee
Express Mail
Notary Fees

Misc

Count Tax Collector Proration

As always, thanks for your help!

 

[Leejai]

Also, I just read this in TaxCut, will this suffice to be OK for my first question?

Change in Your Place of Employment
This would apply if the primary reason for the sale of your home is due to a change in the location of place of employment for you, your spouse, a co-owner of the residence, or a person whose principal place of abode is in the same household as the taxpayer.

If audited, the IRS may or may not accept your explanation that such a move is an acceptable reason under the law to let you exclude gain on the sale, but to provide some certainty to the tax laws, temporary regulations adopted in 2004 adopt a safe harbor that will protect you if the new place of employment is at least fifty miles further from the residence sold than was the former place of employment.

If your move is within the safe harbor provision, your move will not be challenged. If your move is not within the safe harbor, you can still claim a partial exclusion if the facts and circumstances indicate that a change of place of employment is the primary reason for the sale of your old home. The IRS will not likely accept your claim that the primary reason for your move is due to change of place of employment if you take a new job that is only a few miles from your old home.

However I switched positions from one allowing me to telecommute from my office 60 miles away to one requiring me to come in.

 

[Reckoner]

I had a question about entering Sales Tax paid for 2004. If I didn't keep all my receipts regarding Sales tax I purchased, but kept my receipt for a car purchase and the sales tax associated with the car, under total sales tax paid for 2004 can I just enter what I paid in sales tax for the car? Or do I really need a complete listing off all the sales tax I paid for the year?

 

[EagleKeeper]

Originally posted by: Leejai
3 things:

1. Bought a house 60 miles away from my work when I had the ability to telecommute. I was promoted, and that took away my ability to work from home, therefore I sold the house w/in the same year. Can this count as "Unforseen Circumstances" or "Changes in place of employement" for selling the house w/in the 2 years required? All can be proven via document from my HR department.

2. Because I sold the house w/in the two years. CA required withholdings of about 3% of the sale price (even though it was a primary residence). A form 593 was given. Can I file that w/ my Federal return as well as prepaid estimated Income State and Local Taxes? If not, it shows I owe the Federal ALOT and I get back even more from the State. If I can, it somewhat evens out, but good news is I don't have to pay a crazy amount to Federal while I wait for the State to give it back

3. On the Buyer's and Seller's Final Statement, which of the following debits are Tax Deductible?

Buyer's Statement:

Adjustments and Loan Fees

Closing Delay Debits
County Tax
Pro-rated Interest on Loan
Appraisal Fee
Credit Report
Tax Service Fee (Bank)
Flood Certification Fee (Bank)
Doc Prep Fee (Bank)
Underwriting Fee (Bank)
Process Fee (lender)
Flood Determination (Bank)
Admin Fee (Bank)

Title/Escrow Fees

Eagle Lender's Policy
BBR - Eagles Owners Policy
Escrow Fee
Loan Tie In Fee
Special Messenger Fee
Notary Fee
Recording Services
Count Doc Transfer Tax
Fire Insurance Premium
New Home PDR to Property Disclosure Services

Seller's Statment: (much shorter)

Title Charges:

Reconveyances

Escrow Charges:

Escrow Fee
Doc Prep Fee
Express Mail
Notary Fees

Misc

Count Tax Collector Proration

As always, thanks for your help!

Question #1 is Yes. change is status of employemnt and more than 50 miles.

Question #2. Beyond my scope.

However, nothing is written in stone that you have to file the Fed and state at the same time. You may not be able to E-file at different times depending on the state and tax S/W used.

Try to file the state ASAP (using paper if needed) and then mail in the Fed papers on the last possible date. Most (not all) states will turn around the refunds within 3-4 weeks on average. You should have a chance then to get the CA money in time to hand it over to the Feds.

Question #3. Those fees that are paid to a government entity or detailed as such will quaility as closing costs that are deductible.

A general rule is that if the description of an item contains the word tax, then the item is deductible.

Anything that states interest or points are classified as such.

Anything that is a fee or service is profit for some-one else at your expense and is not deductible.

A service/fee in the description overrides the word tax.

 

[Leejai]

Thanks Eagle Keeper for your quick response. Noting that Service/Fee in the statements really helps alot.

Another question, I know HOA dues are deductible, but where is it filed, and is 100% of it deductible?

 

[Leejai]

Originally posted by: Leejai
Thanks Eagle Keeper for your quick response. Noting that Service/Fee in the statements really helps alot.

Another question, I know HOA dues are deductible, but where is it filed, and is 100% of it deductible?

Answered my own question:

FROM IRS.GOV:

Homeowners association assessments. You cannot deduct these assessments because the homeowners association, rather than a state or local government, imposes them.

Special Rules for Cooperatives
If you own a cooperative apartment, some special rules apply to you, though you generally receive the same tax treatment as other homeowners. As an owner of a cooperative apartment, you own shares of stock in a corporation that owns or leases housing facilities. You can deduct your share of the corporation's deductible real estate taxes if the cooperative housing corporation meets all of the following conditions.

The corporation has only one class of stock outstanding.

Each stockholder, solely because of ownership of the stock, can live in a house, apartment, or house trailer owned or leased by the corporation.

No stockholder can receive any distribution out of capital, except on a partial or complete liquidation of the corporation.

The tenant-stockholders pay at least 80% of the corporation's gross income for the tax year. For this purpose, gross income means all income received during the entire tax year, including any received before the corporation changed to cooperative ownership.

 

[thahenchman]

In Box 14 of my W-2, I see: CASDI 386.93

What does that mean?

EDIT: never mind I found it, California State Disability Insurance (CASDI) Rates

 

[thahenchman]

Another question, I worked 8-5 from monday to friday for a year.

My wages, tips, other comp. is $29,637.67

My fed. income tax witheld is $3,419.37

My ss wages are $32,494.94

My ss tax withheld is $2,014.69.

My medicare wages and tips is $32,494.94

My medicare tax withheld is $471.18

In 12a, I have a D $2,857.27

And in 14, it says CASDI $386.93

My state income tax is $773.93

I don't have any other income, no purchases, stocks, or anything else. Does anyone have any idea how much my tax return should be? Right now it says I should get about $500 back but that seems kinda low to me.