NoSoup

Thanks for your reply - I figured I would be screwed tax-wise... but, thank you for your advice. I was actually planning on purchasing a home relatively soon, but I figured that since I was changing jobs I should hold off till things stabilize a bit.

Thanks Again!

NoSoup

synic213

Thanks for the reply.

So in regards to a house refinance, if I paid 2 points for the loan, and no straight fees, I should be able to write off the 2 points? And I can just include the monetary value associated with these points on the same form (schedule A?) that I claim my mortgage interest on? Also unclear as to whether this is a one time deal, this year only, where I claim the entire 2 points, or if I write off a portion of the "point fees" every year for the life of the loan. Any clarification would be appreciated.

Thanks again.

gar1976

You'll be able to write off the points. You say "2 points" so I'm assuming it's 2% of the loan cost (eg, 2% of $150k is $3k in points). You'll do what's called "amortizing" the points over the life of the loan.

So....

If the loan is 15 years, aside from the normal interest expense deduction, you also get $200 of deductions for point amortization that will go on your schedule A ($3k / 15). This gets prorated monthly if you refinanced during the year. So if you refied 7/1/03, you get $100 this year and $200 for years 2-15, and $100 the last year.

Now, if you still ahd points that you haven't written off yet and you refinance again, then you get to write off the full amount of the old points as well as amortize any new ones.

For 2003, it goes on line 12 of Schedule A.

http://www.irs.gov/pub/irs-pdf/p936.pdf

Page 5 has got your point info, and it goes to page 7 as well. Turbotax, although I haven't worked with it in like 10 years, should have a simple way to enter in the info. Check the help menu if you're still confused.

And you paid no other fees? What you're thinking of as "points" might not be points. The only points that are deductible are points paid to lower your interest rate. Unless you did a "no-cost" refi, where the lending costs are buried as a higher rate.

synic213

Thanks Gar, I think I have it figured out now.

I did do a "no-cost" refi and paid two points to lower the interest rate back down. I paid these two points up front, completely, during the refi, and so I believe that the full cost of these points can be deductable this year. The mortgage lender recomended formating the loan this way specifically so that I could get the tax break. Do you think this is a good way to go (if I ever have to do it again)?

gar1976

Close....but not quite. Since you refi'd and did not buy a new home, the points need to be spread out over the life of the loan, not all in the current year.

Merlocke

Hi gar1976 - I don't have a tax question - but on behalf of the board this is a really cool thing you're doing for folks.

For the Canadians - I may have a tax Shelter program available in a few months that would save you a lot. (apx 40% or so). I'll make a new post sometime around then.

__________________
-=[ Merlocke ]=-

yournamehere

I commend you for volunteering you expertise.

Here's another one for you:

Due to a less-than-successful surgery (euphenism) in 1989, my wife is in severe chronic pain and cannot work. She collects Social Security Disability - about $800/mo. Peanuts compared to what she used to make.

My question - why should we have to pay taxes on that money? Hasn't that money <i>already</i> been deducted from our paychecks once? And why is paying taxes on it dependent on <i>my</i> income? We never had to claim it until my income reached a certain level. Seems like the gov't is double dipping us on that - and since there's nothing deducted beforehand, we get the added burden of never getting refunds anymore - it's all "additional income." I realize I could have more deductions on my paycheck every payday, but this seems really unfair.

__________________
If you want to avoid 95% of internet spelling errors:
"If your ridiculous pants are too loose, you're definitely going to lose them. Tell your two loser friends over there that they're going to lose theirs, too."
It won't hurt your fashion sense, either.

gar1976

Income as a whole is dependent on the family unit, not just the taxpayer. So your income factors into the taxability, to avoid tax evasion by shifting income to one spouse or the other.

As for taxing the check, that's the way it goes. Our tax system taxes you when income is realized, not much you can do about it.

Best wishes to you and your wife.

Averett

I did my taxes through H & R Block's website last year and this year. 2002 I grossed about $13,000 (only worked part time) and for 2003 it was around $27,000. For 2002 I got back around $700 federal. For 2003 I got back about $350. What gives? My tax status hadn't changed. Did I screw up? Or is that just what I should have gotten as a return?

I don't know, it just seems like I was really shafted. Since I've obviously already received the return for 2002 and as well as for 2003, can I go to H & R Block and have someboby look at the returns? I'm really hoping that I screwed up with the online taxes and may get some more money back.

What should I do?

__________________
Absence is to love what wind is to fire. It extinguishes the small, it enkindles the great.

gar1976

The May 03 tax law changed withholding tables, lessening the amount withheld. You pay the same total tax, you just get more back during the year than at 4/15 when filing.

And in 2002, you probably got some low-earning credits (earned income credits, etc.) that you might not have been eligible for in 2003.

zenmaster10665

Thanks again...the only thing is that I think it might be hard to get US tax advice over here in Austria

Ill figure it out, i guess!!

__________________
"Beware of the man who works hard to learn something, learns it, and finds himself no wiser than before.
He is full of murderous resentment of people who are ignorant without having come by their ignorance the hard way."
-Kurt Vonnegut

scansinboy

Hi. Really simple basic question here, but one I have not been able to find an answer to anywhere else:

If I KNOW I'm getting a refund, Do I still have to file by April 15?

Details:
I've worked through TurboTax for/on the web and It tells me I'm getting close to $1000 back. I just haven't sent it in yet because I'm still waiting for a Rent certificate form back from an old landlord, and will be out of town when tax day hits. So it's either send it in before the 15th, minus the homestead credit claim (WI), which I know I can file for later, or wait until after, when I have all the paperwork, if that's possible.

__________________
Don't blame me... *I* voted for Kodos!

gar1976

You can do two things.

File an extension for all showing no tax due by 4/15, and then just file your taxes in the summer.

Or just file fed and extend the state, again showing no tax due.

gar1976

And yes, even if you're getting money back, you either need to file the return or an extension.

qtpye4u84

OKay what about this I worked at this place in the mall i quit after 2 weeks I got my w2 from them and i just threw it away could i get introuble for not filing? I filed my w2 from college and from my other job.

__________________
The QTpie

gar1976

Expect a notice from the IRS and ODR. They get copies, and expect your returns to match up.

Sounds like you filed your other returns. Try not to throw your tax stuff away next year.

scansinboy

I went out and bought Turbo Tax, worked through it and when I printed out my returns, the summary pages said to mail it by Aug 16, with no mention of having to file for an extention. Just wondering if they forgot to mention it, or if it's really not necessary, since I show refunds on both federal and state.
Your thoughts?

__________________
Don't blame me... *I* voted for Kodos!

gar1976

You still need to either file the return or an extension by 4/15 for federal.

For states, it depends on the state (you'll need to look itup). In Oregon, a properly filed federal return will extend an Oregon return automatically.

However, know that filing an extension DOES NOT get you off the hook for paying. You still might need to pay some in on 4/15 or be subject to state/federal penalties 'n' interest.

Jim Kata

I didn't file state last year (2002's).
I read somewhere that if I am due a refund...that I have up to three years to file it in order to get the refund. Is this true, or will I have a penalty to pay for last years state taxes even though I was due a refund?
Thanks.

gar1976

Depending on the state, you might have a failure to file penalty.

Most tax jurisdictions give you three years.

And considering they owe you money, why have ou not filed? Your laziness is costing you cash returns on your investment. Get cracking!

viejo gringo

Just turned 70--wife is 62---payed $1093 in taxes last year----have some investments..

When can I stop fileing income tax???

gar1976

When you no longer have any taxable income or stock transactions.

Essentially, if you have income/dividend/wage income under the standard deduction, you won't need to file. Check with a CPA for your particular situation.

If you're paying in tax still, you need to file, no matter how old you get.

Cynthetiq

I have some US savings bonds. I don't recall if they are the EE ones or what year they are from but they are mature now.

What's the tax implications?

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

Hurricane1

I am a new homeowner. I bought the house using an 80/20 loan so I did not put anything down and the sellers paid all of my closing costs. I ended up with 13.50 out of pocket at closing. No points were paid.

I am trying to figure out tax wise, what is/was deductible. I realize all interest is deductible....but how does that work? Lets say I will pay 12,000 in interest this year, what percentage is generally given back to me? Certainly not more than I paid in taxes and does this come back to me via federal or state taxes? If you could speak s-l-o-w-l-y (ha) I would appreciate a little breakdown in how this works.

Also, my home taxes are deductible?.?...

Thank you, in advance!!

gar1976

When bonds mature.....

nothing happens. You'll get a 1099 with interest income for the interest earned during the year. But when bonds mature, you have no gain or loss on the maturation, so the only taxation issue is the interest gained.

Also depends on whether they were zero-coupon bonds or not, and a host of other factors.

gar1976

All interest is deductible, and should be the amount on the 1098 received from your lending institution. I'm assuming that you didn't own a home prior to this one, otherwise there will be a difference.

The interest is included as an itemized deduction on Federal Schedule A. This has the effect of reducing your federal taxable income. And yes, real estate taxes are also a deduction, but these will be effected by your closing statement.

If you pay state income tax, usually (depends on the state) the itemized deductions for the state are pulled directly from the federal amounts, and are modified by any state taxes, so your interest paid will effect both federal and state taxable income.

Don't get confused with "mortgage payment" = interest. As with all loans, your payments (unless you got an interest only loan) consist of both principal and interest amounts. So you either need to run an amortization schedule yourself, or use the bank provided documents.

gar1976

Oh, and in regards to my previous post, NOT all home mortgage interest is deductible, but in the prior case, it looks as though it is. There are some cases where the interest is not deductible.

Hurricane1

Thanks gar1976! So let me get this straight... basically, what you are saying is the interest I pay via home mortgage reduces my taxable income. ie.. if I make 3800.00 a month/salary and pay 800.00 a month/in mortgage interest, then the IRS only wants their taxes based on 3000.00 of salary? Woohoo! Every little bit helps.

Cynthetiq

thanks!!!

__________________
I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not.

God of Thunder

Did a quick search, but didn't find anything about it, so hope it's not already been asked.

I have a full-time job, but want to start a side business. I plan to file a DBA (doing business as) with the county. Do I need and EIN?

According to the IRS website, you will need an EIN if you answer "Yes" to any of the following questions:

Do you have employees?

Do you operate your business as a corporation or a partnership?

Do you file any of these tax returns: Employment, Excise, or Alcohol, Tobacco and Firearms?

Do you withhold taxes on income, other than wages, paid to a non-resident alien?

Do you have a Keogh plan? <--- No idea what that is.

Are you involved with any of the following types of organizations?

* Trusts, except certain grantor-owned revocable trusts, IRAs, Exempt Organization Business Income Tax Returns
* Estates
* Real estate mortgage investment conduits
* Non-profit organizations
* Farmers' cooperatives
* Plan administrators


I answered no to all of those, but I know of some other people at work here who run a side business who do have an EIN. Do I need it? What are the benefits?

Thanks

__________________
I reject your reality, and substitute my own

-- Adam Savage

NoSoup

I believe the Keogh Plan is a form of retirement account that a self employed person can set up for for his employees... it is the equivalent of a small companies 401(k)

God of Thunder

Gotha, thanks. I guess that is a definate no then as well.

__________________
I reject your reality, and substitute my own

-- Adam Savage

gar1976

uhhh....that's a bit of an oversimplification, but sure, why not.

gar1976

You need an EIN if you want to be something other than self-empoloyed, such as....

Partnership
LLC
LLP
PC
C corp
S Corp

If it's just you, and only you, then you usually just use your social security number, for all the applicable federal, state, and county/local forms.

Watch out - if you live in a non-community property state (for example, here in Oregon), and you have a spouse that also works in the business as a co-owner, you must file as a partnership and not as a Schedule C.

God of Thunder

Thanks for the info. That is very helpful.

Buy yourself a beer on me next time you go out.

cheers

__________________
I reject your reality, and substitute my own

-- Adam Savage

gar1976

Or you could mail me one. Usual rate is $150/hour, fellas.

gar1976

Kinda spaced on an importamt thing here -

you need to find out if they are EE or not. Any docs you get should state if they are. This has some large tax implications.

User Name

I'm entering college in the fall, and I will be receiving Financial Aid and scholarship money. I will be living with my parents and will not be working. I will be claimed as a dependant. Will I have to file a tax return, and would this negatively affect my parents' tax return?

gar1976

Quick answer = no. Unless you're working and get w-2 income, which means you should probably file anyways. You'd file your own return with 0 exemptions, since you're being claimed as a dependent on someone else's return.

Nitrox

gar, one clarification on the EIN issue. He could create an LLC and treat it as a disregarded entity and just use his SS number.

This is probably the way to go as you could segregate the assets from his personal stuff.

Just a thought...