Just file a new w-4 claiming more exemptions.

Warning - this won't change the total amount of taxes due, it reduces the amount withheld during the year.

Meaning.....

If you normally get a refund, it will be smaller. If you normally pay in, you'll pay in more. Your total tax will be exactly the same.

I just started college and received a nice ($2,700) check disbursement (extra money from Financial Aid and scholarships after tuition has been taken out) and should get at least that much next semester, in January. Will my parents still be able to claim me as a dependant on their tax return? Would this money hurt my Financial Aid possibilities for next year? Would I have to report this money when filing my FAFSA? If I start my own bank account, is anything affected?

Gar, thank you so much for taking all this time out of your schedule to help us out.

I am playing professional basketball in Croatia. I will make the equivalent of about $40k in salary over the next 9 months. The club I play for covers my Croatian taxes, apartment rent, car costs, insurance, food, etc. I just put the money in the bank.

(1) Do I have to pay US taxes on my salary?
(2) If not, do I even have to file any forms?
(3) Should I leave my money in a Croatian account or can I put it in my American account?

Thank you so much for your help.

I had a small seasonal (Xmas only) business with a Fed tax ID. I want to close the business. IRS says to file final taxes, but I filed the business with my regular salaried income on 1040. What to do now?

Shoot, suppose I'll need to answer some of these soon. Hopefully this week.

Rules to claim a dependent:

a) Make sure you are a US citizen.
b) Make sure your parents provide more than 50% of your total support for the year.
c) Do not file a joint return.
d) Make sure you're related to your parents (duh).
e) If you go to college, make sure you are under age 24 and a full-time student for some part of each of five months during the year.

Financial aid questions - I have no idea. Check with your school councelor.

Starting your own bank account - no big deal.

1) Foreign earned income is reported on Form 2555 or Form 2555 EZ. Qualified individuals may exclude up to $80,000 of foreign earned income (example: salary or wages, housing allowances) from taxable income. Foreign taxes paid on excluded income do not qualify for the foreign tax credit.

To qualify, you must be a resident for an uninterrupted period that includes an entire tax year (jan 1 - Dec 31,) OR you must be physically present in a foreign country 330 full days during a period of 12 consecutive months. If you are not present for the amounts listed in the above criteria, the amount of the foreign earned income exclusion is adjusted pro-rata.

2) See above.

3) If the Croatian account is relatively secure and guaranteed by something, than sure. Leave it. If not, move it to a US account if not too much of a hassle, since they have FDIC insurance in most cases, which covers up to $100k from loss.

Shoot, almost forgot. You also need to file a 1040 like usual, with the attached form 2555. Should show zero income from your oversees basketball.

See your other thread for an answer.

Greetings,

I have just formed an LLC to absorb the money made via 1099. Can I immediately begin accounting the checks coming in for my new LLC or do I need to wait for my EIN (mailed off today) and send my current clients new 1099s?
I'm assuming to wait since one is based on SSN vs EIN.


Thanks!

I hope you weren't expecting to reduce your taxes and only your liability with this, since that's what you're doing. I'm also assuming that you formed the LLC when you started work, and simply didn't have all the paperwork done in time for some 1099s.

Anyways, you can report all your income through your LLC if you want. On your 1040, simply fill out a schedule C with all your income that matches your SSN 1099s, and then have a large deduction that states "Amount nomineed to LLC EIN #XX-XXXXXXX." This will help the IRS match the amounts listed, and then they can reference your LLC return. Your LLC will have an income item listing "Amount nomineed from XXX-XX-XXXX [insert SSN here]."

No big deal. Just make sure you don't double count anything, and since the IRS usually screws something like this up, expect to get a letter or two in the mail.

What can you tell me about online poker being taxed? I have made some money on it and wondering where and if I have to report it. Thanks

In the past I've had a hard time remembering to pay my taxes. Well, my state taxes. Last year the state of Massachusetts caught up with me and made me pay, along with a nice little fee for being late. Well, there's another state that hasn't caught up with me yet and I just did my 2000 taxes that show I owe that state about $100.

I'm ready to send in my check, and prepared to pay any late fees/penalties, but today a friend told me that she just read an article stating that if you file your taxes late but file them before the state comes after you then they won't charge you any penalties. I don't think that sounds right. Anybody have any specific knowledge about this?

Penalties are not calculated based on whether the state "catches" you first.

However, you could throw yourself at the mercy of the revenue agent, give them a sob story, and hope they reduce or eliminate them.

Oh, BTW, you'll also have interest accrued on those as well. Good luck.

Thanks Gar...I've got an idea of what to expect even though it's a different state so I'll just bite the bullet and send them my tax forms.

Gar- Thanks so much for answering all these questions... I've got one for you.

I'm a sole proprietor of a high liability business. I employ 8 part time employees and one independant contractor. I have a Sep-Ira set up for the vested employees.

Due to the liability, I need to incorporate. What is more beneficial in terms of taxes, expense, and hassel factor, an LLC or an S Corp?

Thanks

You'll need to see a CPA for this one. Offhand, I'd recommend doing a S Corp and having an aggressively low salary to reduce your SE tax impact compared to a LLC.

Remember, however, to take at least a reasonable salary you can defend to the IRS. Pigs get fat, hogs get slaughtered.

I have a few for you. Lots of people sell on Ebay, myself included and I was wondering at what point do you need to take the step to becoming a business and filing those earnings? Is there a gross dollar amount or profit? As of right now, I make no real profit that I keep. I have a separate bank account and use the money to purchase more items and supplies.

The items I sell buy and sell are from retail stores and I have paid sales tax on the items, but haven't collected any tax on the items when reselling them. Is that the buyers' responsibility?

Any advice would be greatly appreciated.

Each state has a specific rule for casual sales. Maryland, for example, allows for one casual sale per yer before sales tax begins applying. The latest rumor has it that sometime next year, internet sales become subject to sales tax. The original internet sales tax freedom act exempted purchases on the internet from being subject to sales tax (however, the end buyer was still subject to use tax, which is why you saw the change to the state income tax returns in which they had the tax payer self assess for catalog and internet sales). When Congress passed the latest version of the Internet Freedom act, they only updated the provision which said that internet access fees would still be non-taxable. Therefore, web based sales and purchases would be subject to sales tax. EBay is still trying to figure out how they are going to handle this, as all trading activities (with the exception of casual sales) would now become taxable.

IM me if you would like additional information on this and the Streamlined Sales Tax Project in general.

hi
 

hi people ;)

Build up your post count in another thread! :hmm:

Hey ,
I also have been thinking about buying items then marking them up for sale on ebay. I am sorry to have to ask this again but i didnt wuite understand the reply to the other post. Can i just file my income from it on my personal tax returns and if i can witch section would i use to note this on the state/federal tax forms. Hehe its not that i dont wanna pay tax its that i dont now how too!!!!! hehehehe

bond info
 

hi taxman. i have some bonds that my grandparents bought for me many years ago. my question is i know that there are taxes related to these bonds if i cash them which sucks. what's the best way to make sure i get the lowest amount of taxes taken out of my bonds. how do i file my taxes if i cash these bonds with the receipt the bank gives me? is it possible for the band to take the taxes directly out as i cash the bonds to save me the hassle of filing taxes and claiming the bonds? thanks in advance!

Inventory - Small Business Schedule C
 

I am starting a small home-based business that buys and resells merchandise on an extremely small scale. On my startup inventory purchases can I categorize that as expense on part V of schedule C, or do I have to use the inventory section.

My main question is if I spend $3000 starting my business and do not have any profit by the end of the year, can I show a $3000 loss?

Thanks.

Why isn't my withholding paying my taxes?
 

Gar, thanks for taking your time for this post. Maybe you can clear up something for me. My wife and I file a joint return. We each claim no exemptions on our withholdings so as to have the max withheld. I do the same for my Navy retirement pension. We do not itemize and we take the standard exemption. I have one dependent chlid under 18. My AGI is 65K. Bottom line is I still end up paying a significant amount of tax (600-1200) over and above what was withheld. Is this normal?

I'm going to chalk this one up to "can't read, and I'm too tired to translate."

Depends on the bonds. If they pay interest over time, then you'd be getting a 1099 and paying interest every year.

I'd need to know the type of bond, some of the goverment bonds have some weird quirks to them.

You can ask your financial institution to withhold some, but I don't see why you'd want them to.

If you don't have much inventory, I'd probably just expense it all as a purchase in the cost of sales section. Otherwise, you'd need to calculate out your purchases if you decide to record inventory.

Cost of sales + beginning inventory - ending inventory = purchases, IIRC.

And if the $3,000 is for legitimate business expenses, probably. Don't forget, there's other costs as well, such as business use of the home and auto milage.

I believe this was answered in another post because my lazy ass was busy.

Don't itemize? There's ways around that, such as bunching your expenses (property taxes, donations, state taxes) so that every other year you can itemize and not lose out on some deductions.

That sounds interesting. I don't have state tax, so the mortgage interest and property taxes, & donations would be it. How would I go about bunching these? Thanks for your reply!

Here in OR, we have an option of paying all our property taxes at once in November, or paying 1/3, 1/3, 1/3 spread over a few months. The idea is to pay 1/3 in one year, and 2/3 in the second. In the second year, you then pay your property taxes in full that November, so you wind up with 5/3rds of a deduction in one year. You then make all of you charitable contributions in the second year, and hope you can get over the standard deduction hump.

Also, with the new tax law, you are allowed to deduct an estimated amount of state sales tax based on your income and state of residence. That, combined with a mortgage, should get you over the hump. Heck, even without that your mortgage interest should get you close with property taxes.

Thanks for the info Gar, I'll look into that!

here's one (i hope it hasnt been talked about already)....concerning states that have no income tax. im sure that money must be made up somewhere, so what's the compensation? ive heard that property taxes higher, but how does that affect someone renting an apartment? (completely in the dark on this one)

A state can compensate for the lack of income tax revenue by increasing other taxes, such as sales tax. Michigan is a prime example of this. A while back they made a big deal on how they were reducing the income tax rate, but at the same time they increased the sales tax rate.

This is a 401(k) question. I want to max out my 401(k) for 2005. I'm told the max contribution is $14,000. Is this correct?

What happens if you contribute more?

Sounds about right, I'd need to check for '05.

You're forced to withdraw the contribution if you exceed the limit, and if you don't, there's a fairly hefty penalty. Screwing around with your retirement funds is NOT something the government wants you to do.

What does that mean, "You're forced to withdraw the contribution?" So if I put too much money in then I get the balance back (and, I'm guessing, must pay taxes on that).

They mail you a check.

ok, i have a question for you.
i kinda forgot about taxes (i really did, not "forgot") the first year i was supposed to do them. how would i go about fixing it?

Phant84, how far back was this first year?

For 2003, I received a check for a few grand... and what I wanted to do was set my dependents high enough so that I didn't get ANYTHING back for 2004. A few grand split across 12 months is a few extra hundred I could use right away instead of waiting a year. I own a house, so I have a lot to write off when it comes to interest/property taxes.

So, the guy I had prepare my taxes suggested I raise my dependents to 2 to kinda balance it all out.

I know NOTHING about taxes, but what I did was briefly went over last year's forms with this year's numbers... and it appears by entering 2 dependents that I'm getting even MORE back. That doesn't seem right...

Now, I'm assuming I did the form wrong, but how does one generally work something like this out? Would setting it to 2 balance it all out?

You're not calculating the taxes like you've got two dependents, you're calculating the withholdings like you do.

More dependents = less withheld, so you get less back on 4/15.

If you want to pay in the least amount possible, you really only need to pay in 100% of the prior year tax to be "penalty proof." You can then pay in as needed on 4/15 should anything change.

There's an art to this, so check with your accountant.

File amended returns, federal form 1040X. Or just fill out originals and file those, the IRS website might have old copies in PDF. I'd say either way would work at this point.

Same with your state, if you have state income tax.

Damn, come to think of it, I didn't file for '96 (or '97, don't remember)! There's probably a few extra hundred bucks I can get back! I worked in fast food at the time, so I can get a good amount of all I made back :D

I'm assuming I'd have to go to my old employer to get my tax info from that time period?

Too late. The IRS and most states do not give refunds beyond three years of the original due date of the return. Assuming an April 15th due date, at this point the only years you can amend (or originally filed) and get money back are 2001, 2002 and 2003. If you owe money on a nonfiled year, their is no statute of limitations in order for them to collect the amount due. Generally, if a return is filed and an error was made but undetected by the taxing agency, they only have three years from the due date of the return to adjust you return and request the additional funds. If an amount is owed to a taxing agency, and a return has been filed, in most cases they have ten years to collect the amount due.

Bottom line, you have three years to get money back, they have much longer to collect money from you.

If he only worked part time in food, his income might not have been high enough to require filing, and the IRS just didn't bother. They might still have his amount on record, though. I'd say it wouldn't hurt to ask, but you might dig around your old records first to confirm this.

it was for 2003. are there going to be any fines that i should be looking forward to?

thank you so much for your help

My question is when kinda an payroll tax thing...


When I fillling out my W2(?) at a new job it had how many claims do you have,Some people say claim myself and you get more money on the pay day,other people say don't claim anyone and less money to pay at the end of the year ,or more money you get back.

I guess my question is what is best way to keep my money.Man,i hope this makes sense. :)

Medical Expense
 

I have a question regarding allowable medical expense for deduction on our taxes. My wife has a subluxed (sp?) rib that she has been seeing a chiropractor for over the past two years. One of the possible therapies that was suggested to assist her recovery is hydrotherapy. I have heard from other friends that if you can demonstrate medical neccessity, you can deduct the cost (some or all) of a home whirlpool spa for hydrotherapy.

Do you know if this is the case? If so, what is needed to demonstrate medical need or neccessity? Is it as simple as a doctor's note or prescription? Are there any limits or requirements on the type or cost of spa? We are looking into it, but it looks like it will cost us in the neighborhood of $6K to have one installed at our house.

Thanks in advance.

I guess I'll pipe in here and ask my question. Got married in March '04 and changed my W-4 immediately to married status. My wife, however, just now changed her w-4 to reflect her married status. I claim zero dependents (yearh, I know interest free loan to Uncle Sam) and she claims herself.

We both make roughly the same amount of green (~70k/year a piece). How should we file? Joint income or married filing seperately? Do the benefits of the lower tax bracket outway the marriage penalty? Also, does her w-4 have to say she is "married" before we can file joint? I always contribute about $25 a paycheck just to make sure I get a refund will the ~650 bucks help cover the so-called "marriage penalty" if that's the case?

Alien, filing "married filing separately" will not help you if you and your wife are in approximately the same income level. If you look at the rate structure, they effectively took the various tiered income levels and cut them in half for the Married Filing Separately table.

For example, at 140,000K of taxable income you would pay $29,158 in income taxes using the married filing joint table (140,000 - 117,250 = 22,750*28% = 6,370 + 22,788 = 29,158).

If you were to calc. your liabilities separately you would owe $29,380 (70,000 - 57325 = 12,675 * .28 = 3,549 + 11,141 = 14,690 * 2 = 29,380)

If you were both single, you'd be paying $28,692 in taxes using the single tables, so you are paying approximately $466 more in taxes using the married tables.

Just a rough approximation, as I didn't factor in itemized/standard deduction and personal exemptions. Also, married filing separately is used, for example, when one spouse has income greatly in excess of the other

LLL2, it depends on whether you can budget for the taxes you are going to owe. I always screw around with my W-4 towards the end of the year and exempt myself to take my total taxes paid in for the year to 90% (or as close as I can). I take the excess withholdings and dump them in a short term CD and make some earnings off of them before remitting them on 4/15. If cash management is difficult, try to project out what you think your tax liability will be for the year and claim enough to have you at approximately 100% paid. Then when you file you don't have to pay but you don't get a refund.

PM me if you would like some assistance on how to project this. I have some excel worksheets that work quite well. I would just need to update them for 2005.

Oh, and if Gar doesn't get to you others first, I'll answer them tomorrow. My assistant is giving me the evil eye for not being out the door already, as I owe her some Cosmopolitans.

Later

Thank's Nemo, I figured that was the case, but it never hurts to ask questions :thumbsup:

Braisler, you will have to show that the primary purpose of the expenditure is for medical reasons, and that the recreational value of the cost was not the primary purpose of the whirlpool. Even then, it looks like an uphill battle based upon the court cases out there where taxpayers have installed pools or whirlpools for medical reasons. There is this, however, that may be in your favor (sorry for the length, but I thought it was the best way to get you the ruling):

Rev. Rul. 83-33, 1983-1 CB 70, (Jan. 01, 1983)

Section 213.--Medical, Dental, etc., Expenses

26 CFR 1.213-1: Medical, dental, etc., expenses.

Medical expenses; swimming pool; capital expenditures.--
Taxpayer's cost of constructing a special exercise or "lap" swimming pool to treat severe osteoarthritis, to the extent the expenditure exceeds any resulting increase in the value of taxpayer's related property, is deductible as a medical expense under section 213 of the Code. Rev. Ruls. 54-57 and 59-411 modified.

ISSUE

Are expenditures for the costs of constructing, operating, and maintaining an exercise pool deductible as medical expenses under section 213 of the Internal Revenue Code?


FACTS

A, an individual, has severe osteoarthritis, a degenerative disease that results in a progressive weakness and decreased use of the knees and legs. To slow the effects of this disease, A's physician prescribed a treatment ofswimming several times a day. A constructed an indoor "lap" pool in order to follow the prescribed, daily exercise.

The pool, which is attached to A's residence, is 8 feet wide by 36 feet long and varies in depth from approximately 3 feet to 5 feet. The pool does not have a diving board and is not suitable for general recreational use. The stairs for the pool are specially designed with wider steps and smaller risers to enable A to safely enter and emerge from the pool. The pool also has a hydrotherapy device to aid in A's treatment.

LAW AND ANALYSIS

Section 213(a) of the Code allows a deduction in computing taxable income for expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, the taxpayer's spouse, or a dependent, subject to certain limitations. The term "medical care" is defined by section 213(e) to include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, for the purpose of affecting any structure or function of the body, or for transportation primarily for and essential to these purposes.

Section 1.213-1(e)(1)(ii) of the Income Tax Regulations provides, in part, that deductions for expenditures for medical care allowable under section 213 of the Code will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. However, an expenditure that is merely beneficial to the general health of an individual is not an expenditure for medical care.

Section 1.213-1(e)(1)(iii) of the regulations provides, in part, that capital expenditures are generally not deductible for federal income tax purposes. See section 263 of the Code and the regulations thereunder. However, an expenditure that otherwise qualifies as a medical expense under section 213 shall not be disqualified merely because it is a capital expenditure. Moreover, a capital expenditure for permanent improvement or betterment of property that would not ordinarilybe for the purpose of medical care may, nevertheless, qualify as a medical expense to the extent that the expenditure exceeds the increase in the value of the related property, if the particular expenditure is related directly to medical care.

The test whether a capital expenditure is deductible under section 213 of the Code as a medical expense is whether the expenditure is incurred for the primary purpose of, and is related directly to, the taxpayer's medical care.

The courts have distinguished personal expenditures that are merely beneficial to the general health of the individual from those that have as their purpose medical care, the prevention or alleviation of a physical or mental defect or illness. Thus, not every expenditure prescribed by a physician or for the physical comfort of the individual will be considered a medical expense. Seymour v. Commissioner, 14 T.C. 1111 (1950). For example, the costs of transportation expenses to and from a golf course where golf was recommended for a victim of pulmonary emphysema are not deductible. Altman v. Commissioner, 53 T.C. 487 (1969). The costs of vacations or athletic club fees, while beneficial to the general health of a taxpayer, are also nondeductible personal or living expenses under section 262 of the Code. Havey v. Commissioner, 12 T.C. 409 (1949). An expenditure that merely serves the convenience of the taxpayer is not considered a medical expense. Worden v. Commissioner, T.C.M. 1981-366. Deductions under section 213(e) are confined strictly to expenditures for medical care.

In the present situation, A's physician prescribed swimming in order to alleviate A's osteoarthritis. In order to follow the prescribed treatment, A constructed a shallow "lap" pool incorporating specially designed stairs for ease of entry and exit and a hydrotherapy device. The specially designed exercise pool is not suitable for general recreational use.

HOLDINGS

A's cost of the pool is an expenditure incurred for the primary purpose of, and is directly related to, the taxpayer's medical care and, to the extent the expenditure exceeds the increase in value of A's property as a result of the installation, is deductible under section 213 of the Code.

A's costs to operate and maintain the special purpose exercise pool are deductible in the tax year paid as medical expense under section 213 of the Code.

EFFECTS ON OTHER RULINGS

Rev. Rul. 54-57, 1954-1 C.B. 67, holds that a deduction is not available for capital expenditures that increase the value of the taxpayer's property. Rev. Rul. 59-411, 1959-2 C.B. 100, holds that expenditures made for medical purposes will not be disallowed merely because they are of a capital nature. Rev. Ruls. 54-57 and 59-411 are modified to the extent they indicate that a capital expenditure for medical purposes may only be deducted as a medical expense if it does not increase the value of the taxpayer's property.

Phant84, it is possible that you could avoid fines by filing the return now and paying the applicable interest on the taxes that you owe. I have had clients in the past that have come forward voluntarily and paid the tax (including the interest) and I have included a letter asking for a waiving of the late filing and late payment penalties due to the taxpayer's acquiesence.

Still, you're dealing with the IRS so all bets are off. For the record, did you earn enough that you had a filing responsibility?

Captain Nemo, thanks for answering my question. I found out some of the same information myself, ie. that it would be fighting an uphill battle. I found out that it is your responsibility to get an appraisal of your property done before the improvement, followed by one directly after. Then you only get to make a deduction on the amount that the improvement cost minus the increase in appraised value of your property. Now, you've raised the issue of recreation vs. medical use. Seems like it would be more hassle than the potential tax savings are worth. Thanks for your time in constructing a detailed answer though.

Damn Nemo, you should send that guy a bill!

Couple questions

1) - I sold shares from my Employee Stock Purchase Plan that I acquired back in 2003 (15 months after purchasing the shares). Should I be receiving a W-2 form from that company even though I did not work there during 2004?

2) - Currently I'm looking at e-filing, but also have a 1098T form for tuition and scholarships? Do you have any suggestions for sites/programs to use for e-filing?

ok I got a 1099 from my employer.. which tax form do I fill out

it was my only income for the year. ..

thanks in advance

Post removed.

guccilvr, it sounds like you worked as an independent contractor for the company. If that is the case you should file Schedule C with your 1040. This will allow you to deduct legitimate expenses you incurred while on the project.

kurty[B], you don't get W-2's for the sale of stock. You need to report the sale and any gain (loss) you incurred on Schedule D. As far as E-filing, I punt to Gar, as I E-file all of the returns I prepare directly. I have never used an outside service.

ahh I knew it was something like that.. thanks a bunch Nemo :thumbsup:

Hello,

So my question revolves around the issue of dependents. I was in college for the first half of last year, graduated, and now I'm in grad school but pretty much financially independent. My parents probably can file me as a dependent, but said that they won't since I can then further reduce my taxable income. Of course I'd love to reduce my taxable income to essentially zero and get a full refund, but is this allowable? The wording that confuses me is that on the tax form it states "Can you be filed as a dependent?" Well, I *can be*, but I'm not going to be claimed.

His W-2 info might have some stock info on it (not the w-2 itself, but the year end crud that goes with it). Things like the basis and exervise price, which he might need depending on the plan.

Shit, Lacerte does my efiling for me. Have no idea how you would do it otherwise.....might check the online H&R Block site/Turbotax, you might be able to do your own and efile from there.

Guess I'll take the punt and kneel down for a touchback.

Good luck with the season Nemo.

some questions:

1- how much do you have to pay towards health stuff in order to claim it on your taxes? Can i claim the $20 deductible i paid every visit to the chiropractor's over the course of six months on my taxes, or do i have to have a certian amount of medical expenses to write it off on my taxes?

2- i was married on jan 6, so for the 2005 fiscal year can i claim myself as a dependent as i had been doing prior to being married? (my parents don't claim me as a dependent)

3- is it true that the # of dependents in the household is determined by the status of the household as of January 1? So, could i still claim myself as a dependent next year as i wasn't married until the 6 of jan?

ironchef82 and I have the same question almost.

I think I filled out my W2 wrong. The w2 said if your single, and not married put 1 in the box, so I did. The W2 also said, If your single and cant be claimed by someone put a 1 in the box. So on my paycheck it says single: 2 Because I followed the directions.
Is that wrong? Does that mean they are not taking enough money out? So does that mean I will have to pay them this tax season?
If I have to pay them, do they need the money right away cause, I don't have any $

I have co-workers that claimed the same as me cause they followed the directions like i did.
I just know not to expect any money.

1) Lots. Medical costs are reduced by 7.5% of your AGI (bottom line of the first page of your 1040), and you need to itemize first. Standard deduction = no such luck.

2) You can't claim yourself as a dependent. You can claim an exemption for yourself, though. If you're married and file joint, you'd get one exemption for yourself and one for your wife.

3) Don't know where you're getting this one. Looks like for 2005, you'll be MFJ with 2 exemptions.

I teach part time at a local community college. Am I able to use the Educator's Expense? I haven't spent that much money out of pocket but I know I have spent some as I tracked it in my personal finance program.

Thanks,
Marc

Marc, does this answer your question?

The Internal Revenue Service advised teachers and other educators to save their receipts for books and other classroom supplies. They will be able to deduct up to $250 of such expenses again this year, following recently-enacted legislation.

The Working Families Tax Relief Act of 2004 reinstated the educator expense deduction, which had expired at the end of last year, for both 2004 and 2005. Expenses incurred any time this year may qualify for the deduction, not just those since the Act was signed on October 4.

The deduction is available to eligible educators in public or private elementary or secondary schools. To be eligible, a person must work at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide.

An educator may subtract up to $250 of qualified out-of-pocket expenses when figuring adjusted gross income (AGI). This deduction is available whether or not the taxpayer itemizes deductions on Schedule A.

The IRS suggests that educators keep records of qualifying expenses in a folder or envelope with a label such as "Educator Expense Deduction," noting the date, amount and purpose of each purchase. This will help prevent a missed deduction at tax time.

Looks like I don't qualify as secondary education. Secondary is high school and college prep. Oh well, it was worth a shot.

--Marc

Hi, my question has to do with taxes.

Can I deduct any home improvement projects I make to my home to increase its value such as, window replacements, re siding, re-roofing, etc?

Thanks.

I have a question about personal tax returns. How many years back can you file for if you've never filed for any of your returns? I just found out my current girlfriend has never filed for any of her returns, she hasn't ever owed because she claims 0. Thanks.

I got one for you tax gurus... My company headquarters is in Massachusetts. I live in Rhode Island.. I am a contractor for the govt. in RI... can I deduct my mileage and tolls because my work requires me to work somewhere other than my work headquarters?

I have a question about charitable donations: If I put $20 cash into the collection tray at church weekly, will I be able to itemize $1040.00 on my taxes without being audited?

I don't have any receipts because nobody gets a receipt for putting money in the tray.

No, unless you're using it as a rental/claiming office in home.

Usually three years are held open, so you can do 2001 - 2003.

If she's claiming zero, than she probably is going to get fatty refunds, and you've lost a ton of money. Well, she has. Better tell her to get on it.

And man, if you're going to get serious with this chick, straighten her out with her finances, because if she always acts like this with money.....

I would, but first, see if you can get a receipt from your church just to be on the safe side.

I do have a home office and I plany to start a business this year. Does that affect things?

Two things, first, assuming you are not going to claim a home office deduction, you add remodeling costs to the basis of your home, which lowers your gain when you sell it (although with the current level of gain exclusion, this doesn't have a very dramatic effect anymore). Second, if you are planning on claiming a home office deduction, these costs would (normally) be capitalized and you could claim a depreciation expense for them on an annual basis. See IRS Publication 587 for the particulars on deducting expenses associated with a home office, as the IRS is quite particular when it comes to deducting expenses associated with your home.

Oh, and Gar, I just wanted to tell you best of luck with the season yourself. I don't know your marital status, but to give you a quick peek into mine, imagine my household... My wife and I are both tax CPA's. Homelife is fun right now....

Gar or Captain Nemo

You guys are professionals so I'll ask.

What's your opinion on the "National Retail Sales tax" bill by Congressmen John Linder. Do you agree or disagree, and why?. I look forward to your guys answer.


Also this is a silly question, is there personally any state it's better to live in compared to others for tax reason. Personal taxes, not small business or corporate.

I'm a bit of a social liberal, so any sales tax on the national level I'm not going to be too fond of. Plus, I'm not rich, so any sales tax would also increase my tax bill!

IIRC, Alaska has what, a small sales tax and not much else? Same with Montana?

Nevada is a popular place to go and die, with no income/estate taxes.

Being a little more well to do, a national sales tax wouldn't really bother me, but I do feel it would shift a tremendous burden to the lower income class.

Also, for the record here are the states with no sales tax: Alaska, Delaware and Oregon.

And for the states with no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

I live in Oregon, no sales tax, but a very prohibitive income tax. Up to 9% on all income, including capital gains.

Best tax planning there is around is to hop the river to Vancouver before unloading massive amounts of capital gains, like selling stock in a business.

I would be interested in seeing you guys post something out of this thread about the National Sales Tax that John Linder is pushing, and get your perspective of it. Because this thread is for your guys help though, I'll end it at that.

You guys are doing an amazing job, and I'll echo everyone elses sentiments, thank you so much for giving your time. I look forward to reading more advice, because it's good to know a little more here and there.

Actually Konichiwaneko, I just read the Fair Tax Act of 2003.

http://thomas.loc.gov/cgi-bin/query/z?c108:h.r.25:

The first thing that comes to mind is that this guy is an idiot. Under his definition of services that would be subject to tax, it appears that if I get into an accident and have to go to the hospital, I would have to pay tax on the medical services I would receive. At least I think that is what it is saying....

This man frightens me......

http://linder.house.gov/index.cfm?Fu...&Resource_id=1

The Wall Street Journal, no bastion of liberals that, estimated a national sales tax would need to be around 40-50%, and include capital items (cars, houses, etc.) Vastly different than the yayhoos who throw out 15%, or the congressman who I believe estimated 17%.

I'd believe it would fall around 30-35%, personally.

And most economists agree, having an estate and gift tax helps prevent an unwanted buildup of wealth in a few very wealthy families - these taxes help redistribute wealth back to the rest of society.

And really, under the current tax system poor people don't pay taxes anyways, so the argument that a sales tax would help them out is somewhat moot.

Considering the amount of special interest groups available (eg, what would happen to the charitable deduction? Would mortgage interest still be deductible? Etc.) any overall repeal of an income tax would be improbable at best.

I think one of the benifits is taxing underground money (drug money, gambling, etc..) which can't be traced anyways. Eventually that money will be used to buy goods.

Also The tax that corporations have to pay for products is deferred to the buyer, so I think we actually pay about 23% tax + the sales tax we normally pay when we purchase a good.



We should start another thread about it though :)

Alright, bit of a complicated state tax question for you guys.

I am a college student going to school in Pennsylvania. During the school year I hold a student job, so I have one W-2 from working in PA.

During the summer I worked at an internership in DC. I was paid, but the company reported it to the IRS using a 1099-misc as "non-employee compensation (I thought is was a bit dodgy legal-wise but their accountant OKed it). While working in DC I resided in Virginia. I continued to work for the same company editing their blog once I went back to school in PA, and they continued to pay me. All of this income was reported on a sigle 1099 form

Finally, my parents live in New Jersey, though I have not lived there for more then a week at a time for two years. Still, they claim me as a dependant on tax forms.

So my question is, where do I file state income taxes (PA, VA, NJ, DC, all?), and for what income in what state?

PA for W-2. Non-resident form (depends, see below).
IF DC has a tax, I'd put the entire 1099 amount for there if you feel like being legal. If not, just claim it in your home state.
If your state of residence is still NJ, I'd file a NJ return with no taxable income (except interest and dividends) allocated there. Possibly the 1099 income, if you don't want to file a DC return.

Keep in mind, I work in OR, not that familiar with east coast taxes. This is a SWAG. If it was me, I'd file PA for the W-2 and stuff the rest into my resident state because who wants to hassle mith mutli-state returns? :hmm:

Alright, follow up question. How do I determine my state of residence? Is it whereever I feel like? Where I live most of the year? Or is it NJ because that's where my parents live and they claim me as a dependent. Or (and I have a sneaky suspicion it's gonna be this one) does it depend on the laws of each state?

Most times you "establish" your residence by changing your mailing address, signing up to vote, going to church/school/etc, heading to DMV for new licence, that kind of thing.

If you are still in college, I'd go ahead and use NJ as your resident state. It's a "facts and circumstances" kind of determination.

Depreciation Equivalent
 

Hello..I am using Turbo Tax 2004. I sold an Areostar in june 2004 and picked up a New 2003 Grand Caravan. I used the Aerostar for business and pleasure(my rentals) & used the standard mileage deduction for all the years I owned it. Now because I sold the Aerostar Turbo Tax is asking for me to do the depreciation equivalent.
Here is what it asks:

OLD VEHICLE

Enter the depreciation equivalent of your standard mileage deduction for eeach year including 2004. The amount for AMT should be the same as the amount for regular tax unless you used the actual expense method for any year.

Depreciation Equivalent [ ]

AMT Depreciation Equivalent [ ]

Here are the instructions to go with it:

Depreciation Equivalent To determine the amount to enter for depreciation, multiply your business mileage for each year you used the standard mileage rate by the amounts below. Use these standard amounts for both your regular tax depreciation and your AMT depreciation. However, the total amount you enter cannot exceed the depreciable basis of the vehicle.

Remember, if you used the actual expense method ian any year, you must use the depreciation computed for that year instead of the mileage amounts.

2004........16 cents

2003........16 cents

2002........15 cents

2001........15 cents

2000........14 cents

1994-1999...12 cents

MY QUESTION IS:

DO I TAKE THE MILEAGE FROM 1995 TO 2004 AND MULTIPLY TIMES THE RATE ABOVE AND ADD THEM TOGETHER? OR JUST FROM 2004? WHAT DO I DO FOR THE AMT?

Thank you to anyone who can help!

In February I sold a rental property with a gain of $50K. I have owned the property for 15 years. I have been depriciating the property during the tax time. What kind of tax implications, I will be facing?

I just googled over here and had such a great time reading this thread, I registered. Perhaps YOU can answer this seemingly easy question:

What is the formula for finding out exactly how much money one W-4 exemption change will get you?

I like to live on the bleeding edge of my fiscal responsibility to the IRS. They upped the top end recently to owing $1000 (or 10% of the tax?) w/o penalty on your 1040. I got an accursed $250 back this year. I want to be able to change my W-4 so that I pay about $700 (which gives me a buffer). The "Exemption Worksheet" is way too conservative.

Wow, if you could help me I will praise you. I've even tried going to a tax person, but what they calculated seems wrong. PLEASE and I mean PLEASE help, I've looked everywhere for help, but none was out there, here's the situation:

Over the summer I participated in a Research Experience for Undergraduates program funded by the NSF. I hope you are familiar with this as what happened in terms of payment of this program was unique. I basically did research for a university with due dates on papers and such and they paid me in intervals corresponding to due dates. All in all they paid me 3,000 plus 1500 that was supposed to be for housing. so 4500 overalll. So when tax season comes along, I expect a W-2 or something similar, but instead recieve a 1099-misc with 4500 filled in box 7 (non employee compensation). I should note that when i got my money none was taken out for taxes. Anywho, so bascially my parents took it to a guy who calculated that I owe over 700 dollars in state and federal tax. My parents did not explain my situation to them though, they basically just gave him my form and it was a sort of asian ghetto place. It seems that most of the money comes from line 57 on the 1040 federal form, which is self employment tax. So here is my question, is this done right? I mean is it possible they expect me to pay about 750$ now when I have already spent the money and considering the payment was only 4500. It seems crazy to me that they would put students in such a situation, also it seems odd that i'm getting charged self employment tax. ps. I am a dependent. Well, if you could help me out in anyway it would be real awesome. I'd even be willing to pay you if you could as it would save me 750$.

hope you can help a student with very little money.

Gar, quick question for you. I have approximately 2,000 employees working on various engagements throughout the country. These employees perform engagements both in their states of residency, as well as in other states. Ignoring reciprocity arrangements, what are my withholding requirements for pay earned when performing services in a non-resident state. I know every state is different, but I am trying to determine if there is a common "bright line" test that I can apply across the board.

Last week I attended a seminar in DC, and the person who was running it was an old Andersen person who said that it is a "control" issue. I.e., if the services are being controlled from within the non-resident state, then that state can tax the payroll. She claimed that is the position Andersen took after they were sued by the Attorney General in Colorado.

However, after digging into the various state statutes, I don't think it is that simple.

Thoughts?

I'm in the neophyte stages of Real Estate investing. I've formed an LLC, mainly because of other people opinions & books that i've read...did i do the right thing???

Thanks...Dizuke

If it was a rental, you might have passive loss carryforwards, that might help offset the gain.

Assuming no AMT, this will more than likely be taxed at long-term capital gains rates for federal, and then whatever your state tax lumps on.

Safe estimate would be 25% of your gain should be saved for taxes.

Look at the IRS web site, www.IRS.gov

Under forms and publications, look for circular E, which is the employer tax guide. There, search for your filing status (single, married) and your pay frequency (weekly, semi-monthly, monthly, etc.). Charts will show you your change.