gar1976

I prefer to err on the side of caution, and try as hard as possible to keep the corporate shield "unpierced." Also, it helps the clients keep their info straight if they know there's "business assets" and "personal assets."

Good point, though. You could do it.

slimpi66y

buddy you are most definitely in a nightmare of tax complicance, your case is a classical example of international assignment pothole

there is a tax treaty between US and UK, but it is for you to pay the highest of the rates between two countries, and btw US citizens are taxed on citizenship, not residence, so you are required to pay US tax regardless of where you are,

since you work for your own companies, you will have to dish out around $2000 for tax consultant fees to file a Austria tax return, a US tax return with foreign tax credits, and possibly a UK corporate tax return,

good luck

Mortified

Gar,

This one comes up every year at tax time at my office. I work for a company that makes video games. Some of my coworkers claim that they can deduct the cost of video games and consoles that they personally buy saying that it can be claimed as 'research' or 'education' as to what is current to keep them competitive in our field. Most of them don't have kids, so they say they would be the only ones using the console and games. Is this proper? And if so, what are the rules to do so?

Thanks in advance.

gar1976

Whatever floats their boat.

The way this starts is that probably, at one time, one guy did have a legitimate reason to do so, told his buddy what he was doing, and the habit spread.

Legitimate, unreimbursed business expenses are allowed as a miscellaneous itemized deduction subjet to the 2% AGI floor. What your pals are doing is a bit agressive, but in all actuality probably isn't doing them much good. Would I do it? No.

Kadath

Here's a random question, assuming you're still looking at this now that questions have dried up a bit:
My gf underwent hospitalization that was totally uncovered by her insurance. I don't suppose she can deduct those costs(about $5000) or some fraction thereof?

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it's quiet in here

gar1976

Depends on what the surgery was for. Typically, totally cosmetic costs are not deductible. If however, the surgery was necessary for some reason or another, than it goes on schedule A as an itemized deduction subjet to a 7.5% AGI reduction.

Kadath

It was ER time, including ambulance costs, and 5 days in a state mental hospital. Suicide attempt. Her insurance rejected it as self-inflicted, and I wondered if the IRS would too. Since she's worked only 3 months this year and will only work a total of perhaps 6(and those second three at a considerably lower wage than before) her AGI will be pretty low -- is it going to be worth deducting it?

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it's quiet in here

gar1976

Sorry to hear about it. IMO (check with a paid tax professional here, folks!) I'd go for it. Why not.

She could only deduct it if she itemizes. If she uses standard deduction, you can't itemize. Keep all your receipts and keep track.

Hope she starts doing better.

phredgreen

okay... i've been sitting on this for too long, so just kick me in the head after giving me the answer.

i did my taxes through hrblock(head)'s online dealie, but because of my filing status, married filing separately, they didn't allow it to e-file. instead, the had me print out the pre-filled forms and mail those in, along with w2's. get a letter a month or two ago from the irs, stating that i owed, instead of getting a refind as hrblock had led me to expect. the reason? even though i specified and hrblock marked the paperwork as married, filing separately, they still checked off my (now ex) wife as a decuction (which the nice lady at the irs said is a big no-no). as of right now, i owe the irs about 270 dollars, but what recourse do i have against hrblock for misleading me with incorrect paperwork from the get-go?

__________________
My country is the world, and my religion is to do good.
- Thomas Paine

gar1976

From what I understand, you did the taxes with H&R's software, printed out the returns, and mailed them in yourself.

You can call and hollar, but you won't get very far. They might offer to do next year's for free. They would argue that although it was through their software, you were the one inputting the information and should have double-checked it. And besides, you would have owee the $270 whether or not the taxes were filed properly, you just would have needed to pay them earlier.

Captain Nemo

Gar, with respect to the medical expense question regarding the suicide attempt, I would definitely take the deduction. Treasury Regulation Section 1.213-1(e)(1)(v)(a) states:

"Where an individual is in an institution because his condition is such that the availability of medical care in such institution is a prinicipal reason for his presence there, any meals and lodging are furnished as a necessary incident to such care, the entire cost of medical care and meals and lodging at the institution, which are furnished while the individual requires continual medical care, shall constitute an expense for medical care. For example, medical care includes the entire cost of institutional care for a person who is mentally ill and unsafe when left alone."

The IRS would be hard pressed to claim that provision doesn't apply to a suicide attempt.

p.s., I'm a paid tax professional

gar1976

Without spending too much time looking it up, I figured the IRS would allow it too. And by all means, feel free to answer some of these too if you want.

Captain Nemo

Gar, just curious, what do you do for a living?

gar1976

CPA.

Captain Nemo

ah, a brother in arms. public or private?

Kadath

Doesn't CPA mean Certified Public Accountant?

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it's quiet in here

hazelman

Hi,

I have a question related to mortgage interest. It goes on the Schedule A of itemized deductions, right? If you claim mortgage interest as a deduction, do you have to itemize all of your other deductions as well, or can you take the standard deduction+mortgage interest?

Thanks,

Haze

Captain Nemo

Hazelman, you would have to itemize all of your deductions

Oh, and Kadath, yes that is what it stands for, although the way I have been being walked all over as of late by certain pompous partners, it could just as easily stand for Car Parking Attendant

mrpirene

Hi, I have a question about filling out W-4 form. How can my husband get more money like say $150 extra on his bi-weekly paycheck through out the year? His Income was $48,702 year 2003, right now he is claiming 3 dependent, we have 6 people in our household, three children for child tax credit this year, we want to be able to claim more on his W-4 and get more money through out the year, we live in the State of SC, but we do not want to owe taxes to IRS either.

gar1976

Cut and paste accounting.

Public, BTW.

gar1976

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.

Glava

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?

Dostoevsky

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.

pmkuon

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?

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wea willis

gar1976

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

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

gar1976

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.

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

gar1976

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.

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Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

gar1976

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.

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

gar1976

See your other thread for an answer.

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

peteysa

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!

gar1976

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.

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

isutommyt

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

macsmith230

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?

gar1976

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.

__________________
Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

macsmith230

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.

gonadman

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

__________________
For me there is only the traveling on paths that have heart, on any path that may have heart. There I travel, and the only worthwhile challenge is to traverse its full length. And there I travel, looking, looking, ...breathlessly.
-Carlos Castaneda

gar1976

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.

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Blistex, in regards to crappy games -

They made pong look like a story driven RPG with a dynamic campaign.

avhg1

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.

Captain Nemo

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.

Spec1al

hi people