ATOT's Second Annual Tax Time Thread!

[Insane3D]

Originally posted by: EagleKeeper


As long as you did not get your income from Taxachusetts, free e-file is the way to go.

God no. I try to avoid even going there...nevermind working there.

*shudder*

 

[Aves]

Originally posted by: EagleKeeper

Originally posted by: aves2k
If I'm married but my wife hasn't worked in 2004 would I be "Married Filing Seperately"?

No - filing Seperately is only when you are living apart of have incomes and deductions, that would be benificial tax wise, to declare them seperately

So then I would do "Married Filing Jointly" even though she doesn't work?

 

[EagleKeeper]

Originally posted by: woowoo
CPA
Thank you for starting this thread

I was recently told that "Video Production" is now considerd manufacturing for private contractors(1099).
This would be a higher deduction on the self employment forms
Do you know where on the IRS website that I could find out more on this?
I have searched the IRS site to no avail......

Use the search critera video only.

There are some links that discuss business handling of this item.


Most times gossip is just that - gossip . If gossip sounds authorative, it is best to get a source for it.

 

[EagleKeeper]

Originally posted by: aves2k

Originally posted by: EagleKeeper

Originally posted by: aves2k
If I'm married but my wife hasn't worked in 2004 would I be "Married Filing Seperately"?

No - filing Seperately is only when you are living apart of have incomes and deductions, that would be benificial tax wise, to declare them seperately

So then I would do "Married Filing Jointly" even though she doesn't work?

That would be best. Also, be prepared to give her 100% of any refund. She has earned it.

 

[EagleKeeper]

Originally posted by: xospec1alk

Originally posted by: amish

business use of car.

first, i have a question. do you travel from your home to a job site, and is that job site a permanent one or temporary?

second, is the car used for anything other than on the job travel? if so, only the costs associated to those miles can be deducted.

ok, lets say that it is a temporary job site and for the sake of ease you only use the car for business travel. you can deduct all the costs associated with the car one of two ways. the standard mileage rate of 37.5 cents or the actual costs (with receipts) of maintaining the vehicle. you have a possiblity to get a larger deduction by using actual costs but the standard rate is much easier.

now, you have to worry about which type of reimbursement plan your employer uses. if they use an accountable plan everything is written down and you are fully reimbursed. since you didn't mention anthing like this i am going to assume that they use a non-accountable plan.

If your employer uses a non?accountable plan to reimburse you for the expenses, the reimbursements should be included in your wages. Your employer will combine the amount of any reimbursement or other expense allowance paid to you under a non?accountable plan with your wages, salary, or other compensation and report the total on your Form W?2. Your employee business expenses may be deductible as an itemized deduction.

ok, now we go on to the filing that you must do in order to claim the deduction.

Generally, if you are an employee, to deduct your car expenses including expenses that exceed reimbursement under an accountable plan, you must complete Form 2106 or Form 2106-EZ and itemize your deductions on Schedule A of Form 1040. Your expenses will be subject to the 2% of adjusted gross income limit.

unfortunately i am not too sure on what to say about your vehicle maybe another member will comment on it. anyways, hope this helps.

amish

i travel from home to the temporary job site. and its used mainly for commuting to and from the job site, but i take it out on weekends occasionally...so i can deduct maintenance expenses also? like oil changes and whatever?

im not sure what the accountable/non-accountable plan is....usually what happens is we send them the computed roundtrip mileage + tolls, and they will reimburse us based on 15 cents a mile in the "expense" section of the paycheck. i guess i'll have to look at the W2 once that comes in...

and does that mean that i can get the 20 or so cents that i should be getting per mile? all this tax talk is confusing hehe.

Vehicle expenses for the Form 2106 let you determine a percentage of expenses and depreciation of a business use vehicle. the percentage is based on business mileage vs actual mileage.

That percentage then applies to all expenses regarding the vehicle.

You will determine the expenses for the vehicle (mileage or actual) figure out the percentage that is business related, deduct what was re-embursed and then file for the difference.

Note that there will also be a 2% overhead against your actual income along with the fact that you must be itemizing using Schedule A

 

[xospec1alk]

Originally posted by: EagleKeeper

Vehicle expenses for the Form 2106 let you determine a percentage of expenses and depreciation of a business use vehicle. the percentage is based on business mileage vs actual mileage.

That percentage then applies to all expenses regarding the vehicle.

You will determine the expenses for the vehicle (mileage or actual) figure out the percentage that is business related, deduct what was re-embursed and then file for the difference.

Note that there will also be a 2% overhead against your actual income along with the fact that you must be itemizing using Schedule A

can you explain the 2% overhead? i was reading the link that amish posted and there was a lot of mention about 2% something or other, what does it mean, and how does it affect me? and the fact that the expenses show up as a seperate item on my paystub, does that mean it will be added onto my gross income and taxed?

 

[EagleKeeper]

Originally posted by: DougK62
I have a simple mortage interest question. I bought my house in May of last year and paid about $2500 last year in mortgage interest on the note. I'm trying to get a good guess as to how much of this I'll get back. Do I get all of this? A percentage? Is there other factors that weigh heavily on this?

Thank you.

Accounting for the extras paid at closing, figure you will get credit against your taxes the same percentage as your tax bracket. Next year it will be less.
Not having your profile visible, I can not account for the possiblitily of state income tax affecting the bottom line on the Schedule A.
All the deductible closing costs and taxes will need to be put on the Schedule A.

Example Only.
If your tax bracket is 25%, then you should have about $600, coming from the house interest, credited against your tax liability after accounting for the Schedule A deduction.

 

[EagleKeeper]

Originally posted by: xospec1alk

Originally posted by: EagleKeeper

Vehicle expenses for the Form 2106 let you determine a percentage of expenses and depreciation of a business use vehicle. the percentage is based on business mileage vs actual mileage.

That percentage then applies to all expenses regarding the vehicle.

You will determine the expenses for the vehicle (mileage or actual) figure out the percentage that is business related, deduct what was re-embursed and then file for the difference.

Note that there will also be a 2% overhead against your actual income along with the fact that you must be itemizing using Schedule A

can you explain the 2% overhead? i was reading the link that amish posted and there was a lot of mention about 2% something or other, what does it mean, and how does it affect me? and the fact that the expenses show up as a seperate item on my paystub, does that mean it will be added onto my gross income and taxed?

It is possible that the re-embursements will become taxable, depending on how they are coded on the W2.

Uncle assumes that you should cover some of the costs for the priviledge of working your fingers off to support others.

Therefore, he wants you to take all business expenses that you incur and swallow (or bend over and take it) an amount equal to 2% of your gross income before you can ask for tax relief.


Example Only:

Your gross income is $40,000
You have business expenses of $1500.
Uncle expects you to absorb 40,000 * 0.02 = $800 of that cost.
Now you have only $700 that can be claimed against your taxable income via the Schedule A

 

[xospec1alk]

Originally posted by: EagleKeeper

It is possible that the re-embursements will become taxable, depending on how they are coded on the W2.

Uncle assumes that you should cover some of the costs for the priviledge of working your fingers off to support others.

Therefore, he wants you to take all business expenses that you incur and swallow (or bend over and take it) an amount equal to 2% of your gross income before you can ask for tax relief.


Example Only:

Your gross income is $40,000
You have business expenses of $1500.
Uncle expects you to absorb 40,000 * 0.02 = $800 of that cost.
Now you have only $700 that can be claimed against your taxable income via the Schedule A

:Q !!! thats messed up...

 

[EagleKeeper]

Originally posted by: xospec1alk

Originally posted by: EagleKeeper

It is possible that the re-embursements will become taxable, depending on how they are coded on the W2.

Uncle assumes that you should cover some of the costs for the priviledge of working your fingers off to support others.

Therefore, he wants you to take all business expenses that you incur and swallow (or bend over and take it) an amount equal to 2% of your gross income before you can ask for tax relief.


Example Only:

Your gross income is $40,000
You have business expenses of $1500.
Uncle expects you to absorb 40,000 * 0.02 = $800 of that cost.
Now you have only $700 that can be claimed against your taxable income via the Schedule A

:Q !!! thats messed up...

That is why you need to ensure that your employer does not include re-embursements as taxable income.
Moving expense re-embursements to a new job have to be flagged by tax law.
Business expense re-embursements do not have to be.

Remember the people who write the tax laws make sure that they do not have to apply to them.

 

[amish]

Originally posted by: xospec1alk

*SNIP*

i travel from home to the temporary job site. and its used mainly for commuting to and from the job site, but i take it out on weekends occasionally...so i can deduct maintenance expenses also? like oil changes and whatever?

im not sure what the accountable/non-accountable plan is....usually what happens is we send them the computed roundtrip mileage + tolls, and they will reimburse us based on 15 cents a mile in the "expense" section of the paycheck. i guess i'll have to look at the W2 once that comes in...

and does that mean that i can get the 20 or so cents that i should be getting per mile? all this tax talk is confusing hehe.

yes, you can deduct maintenance expenses also but only if you use the actual cost method. the standard mileage rate takes maintenance into account for its rate.

the accountable/non-accountable plan that your company uses can be described by what they do for your travel. from the info that you put down it sounds like they use the non-accountable plan. all this means is that you can use your business travel for a deduction.

as for your other question, you will need to file form 2106. to fill out the form correctly you will need to look at your W-2 and see if the reimbursements that you received from your employer were included in box 1 or another part of the W-2. you will first figure out the correct vehicle expense by either using the standard mile or actual method. then you will subtract any reimbursement that you received that was not included in box 1 of your W-2. if the reimbursement is greater than the vehicle expense than that amount must be put into your income and you will have no deduction. if the amount of reimbursement is less than the vehicle expense than the difference will be your deduction.

hope this explains it a little better.

Edit: d'oh eaglekeeper beat me to it.

 

[slycat]

Originally posted by: Nuriko

Originally posted by: slycat
Bought and sold a house last year(bought in july, sold in september). Made a little loss due to a $25k renovation bill. Would i be required to send the bill to IRS? Any complications in tax filing that i should be careful of?...i am trying out taxcut software(state and deluxe) so i wanna do taxes my myself.

thanks.

Question, did you intend to flip it, hold onto it as a rental or use it as a personal residence when you first bought it? And depending, how did you finance it. Is the loss an actual cash loss or a paper loss? You can do different things depending on which way you did it. And you don't necessarily have to send the IRS the bills, just keep good records in case of an audit.

But as far as tax treatment, again depending on what sort of renovations (I'm assuming more than just a new coat of paint and cleaning), you add the costs to your basis and then subtract the sale price from your adjusted basis to get a short term capital loss, which goes on your schedule D and can be used against your capital gains and to the limit of $3k, against ordinary income (ex: 80k house, + 25k renovations, and you sold it for 100k, you have 5k of short term capital losses, and if you didn't have any other capital gains, you could deduct 3k of the loss against your ordinary income and carry the other 2k forword; of course, this is a very simple example, without depreciation and other costs).

Confused, does my 'intention' factor into how much taxes i owe? Lets say i got a house for $650k. Closing costs around $10k. It was supposed to be my primary residence but i chickened out and instead decided to sell it. But before that i put in $25k to renovate the kitchen, front, yard, painting..etc. I then resold the house for $700k. However, due to commisions, i still ended up with a loss overall. In such a scenario, would it be relatively easy to file taxes by myself(layman) with taxcut or i need to go to a professional.

 

[EagleKeeper]

Originally posted by: slycat
Confused, does my 'intention' factor into how much taxes i owe? Lets say i got a house for $650k. Closing costs around $10k. It was supposed to be my primary residence but i chickened out and instead decided to sell it. But before that i put in $25k to renovate the kitchen, front, yard, painting..etc. I then resold the house for $700k. However, due to commisions, i still ended up with a loss overall. In such a scenario, would it be relatively easy to file taxes by myself(layman) with taxcut or i need to go to a professional.

The intention factor is:
a) Was the purchase/sale to be treated as a business
b) Was the property to be used as a rental
c) Was the property your primary residense.

Each option has different tax issues and forms to use.

You can use the tax S/W to easily handle the last two.

Regarding option C:
If the property was a paper loss, then you can not treat the loss as such.

Regarding option B:
You can have a rental depreciation & expenses losses that can carry forward year by year against your regular tax liability until used up. You could purchase the unit with the intent to rent it and then resell it at a later date.
Without income from the rental showing for any of the years that you claim it, will raise a red flag with the IRS.

Regarding option A:
I will pass on that feedback. Others may have suggestions.

 

[elektrolokomotive]

Originally posted by: amish

Originally posted by: bunker
Okay..I'll start the bidding!

Moved this year because of work, what's included in "moving expenses" that I can write off? I've got the moving company, and gas to drive my vehicles up, what am I missing? Can I deduct meals, flights my wife took to come and house hunt with me, etc..?

first, did your work already reimburse you for any of your moving expenses? if so, that amount is not tax deductable.

second, do you meet the requirements? did you move 50 mile or more, and (if you are an employee) will you work 39 weeks out of the next 12 months after the move. if you are self employeed you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you move. If you haven't met the time test by the date your 2004 tax return is due, you may still deduct your moving expenses on your 2004 return as long as you expect to meet the time test.

third, meals are not deductable.

fourth, If you meet the requirements, you can deduct the reasonable expenses of moving your household goods and personal effects to your new home. You can also deduct the expenses of traveling to your new home, including your lodging expenses.

your wife's expenses should be included in your deduction, but not the hunting itself only the moving. reasonable expenses are the packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home.

fifth, if you did this all by car you can deduct the expenses to your car. you can use the actual amounts that you have, such as gas, or you can use the 14 cent a mile standard mileage rate.

hope this helps.

amish

EDIT: almost forgot this, you can deduct expenses for only one trip to your new home for yourself and members of your household. However, all of you do not have to travel together or at the same time.

I'm kind of in the same position: I moved most of our stuff from Chicago to Seattle back in May '04. But due to some child custody issues, my wife remains there until it's resolved (indeterminate time). Will I be able to deduct the additional moving expenses in the year she actually makes it out here with the kids? Also, should we file jointly?

 

[CPA]

Originally posted by: jpsmoney
Wow, I can't believe you have time to do this as a CPA this time of the year. My cpa friends drop off the face of the earth about now. Cheers to you!

I'm not a tax accountant, I work in industry accounting, so my work is all year long, not Jan-Apr.

 

[CPA]

Originally posted by: Insane3D
Quick question on e-filing. I used Turbo Tax's online version last year, and as of now, I'm probably going to use it again this year. I don't itemize, and when I file, it's usually using the 1040EZ form and I get my refund. What is the cheapest way to e-file a 1040EZ type return? Turbo Tax online seems to be $20, and TaxCut online is $30...anything cheaper out there?

Tele-file, it's free.

 

[CPA]

Originally posted by: TechBoyJK
Here's my question. I worked only as an independant contract partimte for 2004. I made about $15,000 for the year. I spent alot of money in gas getting to and from the project, etc. What is the cap on the amount of gas expense I can claim? What else can I claim? What forms do I need to fill out?

You can take "actual" expenses (maint, lease payments/depreciation, gas, tolls, registration costs, etc.) or take the per mileage rate of 36.5 cents. It's your choice.

 

[CPA]

Originally posted by: DougK62
I have a simple mortage interest question. I bought my house in May of last year and paid about $2500 last year in mortgage interest on the note. I'm trying to get a good guess as to how much of this I'll get back. Do I get all of this? A percentage? Is there other factors that weigh heavily on this?

Thank you.

It's an itemized deduction, you may get some, all or none depending on your overall tax situation.

 

[CPA]

Originally posted by: xospec1alk

Originally posted by: EagleKeeper

It is possible that the re-embursements will become taxable, depending on how they are coded on the W2.

Uncle assumes that you should cover some of the costs for the priviledge of working your fingers off to support others.

Therefore, he wants you to take all business expenses that you incur and swallow (or bend over and take it) an amount equal to 2% of your gross income before you can ask for tax relief.


Example Only:

Your gross income is $40,000
You have business expenses of $1500.
Uncle expects you to absorb 40,000 * 0.02 = $800 of that cost.
Now you have only $700 that can be claimed against your taxable income via the Schedule A

:Q !!! thats messed up...

medical expenses have a 7.5% rate.

 

[Insane3D]

Originally posted by: CPA

Originally posted by: Insane3D
Quick question on e-filing. I used Turbo Tax's online version last year, and as of now, I'm probably going to use it again this year. I don't itemize, and when I file, it's usually using the 1040EZ form and I get my refund. What is the cheapest way to e-file a 1040EZ type return? Turbo Tax online seems to be $20, and TaxCut online is $30...anything cheaper out there?

Tele-file, it's free.

Nah, e-filing is something I prefer to do, and I usually get my refund an average of 2 weeks earlier. I may just pay the $20 for TT online...

The telephone is so....90's.

 

[CPA]

Originally posted by: AmigaMan
I sold some stock options (cashless exercise) around November 2004. A part of the stock option agreement said that if my company merged or was bought out by another (which happened in Oct. 2004) my options would vest 100%. I made a small profit off the sale (~$5,000) and was wondering what my tax liabilities are going to be? Will I owe capital gains taxes? I've heard of something called the alternate minimum tax or something, will I be subject to it and if so, what is it? Thanks!

Assuming these were Non-Qualified Stock Options (NQS), then your employer should have put these on your W-2. The only thing you will need to worry about then is taking the "cost" (commissions/fees) as a loss on schedule B.

Alternative Minimum Tax (AMT) is assessed using a very complicated formula. Any good software program should be calculating this automatically to see if you fall in that category.

 

[slycat]

Originally posted by: EagleKeeper
The intention factor is:
a) Was the purchase/sale to be treated as a business
b) Was the property to be used as a rental
c) Was the property your primary residense.

Each option has different tax issues and forms to use.

You can use the tax S/W to easily handle the last two.

Regarding option C:
If the property was a paper loss, then you can not treat the loss as such.

Regarding option B:
You can have a rental depreciation & expenses losses that can carry forward year by year against your regular tax liability until used up. You could purchase the unit with the intent to rent it and then resell it at a later date.
Without income from the rental showing for any of the years that you claim it, will raise a red flag with the IRS.

Regarding option A:
I will pass on that feedback. Others may have suggestions.

it was bought as a Pprimary residence. I don't understand your response on C. I just wanna make sure i don't have to pay taxes on it since i made no money...whats a paper loss? sorry, i'm such a tax noob.

 

[CPA]

Originally posted by: slycat

Originally posted by: EagleKeeper
The intention factor is:
a) Was the purchase/sale to be treated as a business
b) Was the property to be used as a rental
c) Was the property your primary residense.

Each option has different tax issues and forms to use.

You can use the tax S/W to easily handle the last two.

Regarding option C:
If the property was a paper loss, then you can not treat the loss as such.

Regarding option B:
You can have a rental depreciation & expenses losses that can carry forward year by year against your regular tax liability until used up. You could purchase the unit with the intent to rent it and then resell it at a later date.
Without income from the rental showing for any of the years that you claim it, will raise a red flag with the IRS.

Regarding option A:
I will pass on that feedback. Others may have suggestions.

it was bought as a Pprimary residence. I don't understand your response on C. I just wanna make sure i don't have to pay taxes on it since i made no money...whats a paper loss? sorry, i'm such a tax noob.

You cannot report a loss on the sale of your primary residence.

 

[EagleKeeper]

Originally posted by: slycat

Originally posted by: EagleKeeper
The intention factor is:
a) Was the purchase/sale to be treated as a business
b) Was the property to be used as a rental
c) Was the property your primary residense.

Each option has different tax issues and forms to use.

You can use the tax S/W to easily handle the last two.

Regarding option C:
If the property was a paper loss, then you can not treat the loss as such.

Regarding option B:
You can have a rental depreciation & expenses losses that can carry forward year by year against your regular tax liability until used up. You could purchase the unit with the intent to rent it and then resell it at a later date.
Without income from the rental showing for any of the years that you claim it, will raise a red flag with the IRS.

Regarding option A:
I will pass on that feedback. Others may have suggestions.

it was bought as a primary residence. I don't understand your response on C. I just wanna make sure i don't have to pay taxes on it since i made no money...whats a paper loss? sorry, i'm such a tax noob.

You will not have to pay any taxes regarding the primary residence (until you have an obscene capital gain). However, you can not deduct your loss.
That is why I mentioned the rental option. those losses/expenses can be deducted.

Paper loss is where you lose money if you actually were to sell.
The term may have come about when people would look at the newspaper to see what their stock investments were doing. When the stock was down, they would figure out what they had lost. However, until they actually sold, it was not a loss.

Example:
You buy a stock at $20.
It currently is showing $15.

That was considered to be a paper loss of $5.

However, until you sell it, you actually do not have a loss.

 

[EagleKeeper]

Originally posted by: elektrolokomotive

Originally posted by: amish

Originally posted by: bunker
Okay..I'll start the bidding!

Moved this year because of work, what's included in "moving expenses" that I can write off? I've got the moving company, and gas to drive my vehicles up, what am I missing? Can I deduct meals, flights my wife took to come and house hunt with me, etc..?

first, did your work already reimburse you for any of your moving expenses? if so, that amount is not tax deductable.

second, do you meet the requirements? did you move 50 mile or more, and (if you are an employee) will you work 39 weeks out of the next 12 months after the move. if you are self employeed you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months after you move. If you haven't met the time test by the date your 2004 tax return is due, you may still deduct your moving expenses on your 2004 return as long as you expect to meet the time test.

third, meals are not deductable.

fourth, If you meet the requirements, you can deduct the reasonable expenses of moving your household goods and personal effects to your new home. You can also deduct the expenses of traveling to your new home, including your lodging expenses.

your wife's expenses should be included in your deduction, but not the hunting itself only the moving. reasonable expenses are the packing, crating, and transporting your household goods and personal effects and those of the members of your household from your former home to your new home.

fifth, if you did this all by car you can deduct the expenses to your car. you can use the actual amounts that you have, such as gas, or you can use the 14 cent a mile standard mileage rate.

hope this helps.

amish

EDIT: almost forgot this, you can deduct expenses for only one trip to your new home for yourself and members of your household. However, all of you do not have to travel together or at the same time.

I'm kind of in the same position: I moved most of our stuff from Chicago to Seattle back in May '04. But due to some child custody issues, my wife remains there until it's resolved (indeterminate time). Will I be able to deduct the additional moving expenses in the year she actually makes it out here with the kids? Also, should we file jointly?

The cost of transportation only for your wife can be expensed in the year that she moves out; if it is related to your move, it must be within the time frame allotted by the IRS. Household moving expenses can only be expensed out once per job change.

If your wife obtains a job in Seattle, then she can independently file for a household move.