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The 2011 Tax Thread

ceresceres Humming hallelujah in the darkLost with a compass in the fogSuper Moderator, Moderator mod
edited April 2011 in Help / Advice Forum
This is late because I haven't been around for it in years and completely forgot that it happens, so my apologies.

I don't know much about this stuff personally, so anyone who has some general information to get the ball rolling, please PM me with it and I'll include it in this post.

In the mean time, post your questions/answers about 2011 taxes here.


Posts found in this thread:

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  • Kate of LokysKate of Lokys Registered User
    edited March 2011
    I'm a Canadian citizen, currently living and attending grad school in the US. I moved down here in August of 2009. Last April, I filed my taxes in Canada for the 2009-2010 financial year, because a) all of my income was Canadian, and b) I had lived in Canada for eight months out of the year, so I was still a Canadian resident at the time. This year, however, things are trickier. Aside from a couple of brief visits home last year, I was living in the US the whole time, and I've been working as a TA on campus since October.

    I only made $1200 from TAing last year, and while I paid $50 in federal taxes on it, I *really* don't care about getting the money back. So, it looks like I can just file an 8843 here in the US, to say "hey, I was living in the US, but I don't need to file taxes because I'm a poor Canadian."

    Do I then file a normal tax return in Canada, listing my American income, tuition, etc? Again, I'm so far under any exemption limits it's laughable, but I want to make sure I'm doing things right - I'd hate to have any hypothetical future immigration plans destroyed because I neglected to submit some form.

    (I would just ask my school about it, but they've been seriously useless on every question I've had occasion to ask them - they're fully versed in handling students from Turkey, but I'm literally the only Canadian they've ever had, so they just have no knowledge of what I should be doing).

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  • localh77localh77 Registered User regular
    edited March 2011
    I'm a Canadian citizen, currently living and attending grad school in the US. I moved down here in August of 2009. Last April, I filed my taxes in Canada for the 2009-2010 financial year, because a) all of my income was Canadian, and b) I had lived in Canada for eight months out of the year, so I was still a Canadian resident at the time. This year, however, things are trickier. Aside from a couple of brief visits home last year, I was living in the US the whole time, and I've been working as a TA on campus since October.

    I only made $1200 from TAing last year, and while I paid $50 in federal taxes on it, I *really* don't care about getting the money back. So, it looks like I can just file an 8843 here in the US, to say "hey, I was living in the US, but I don't need to file taxes because I'm a poor Canadian."

    Do I then file a normal tax return in Canada, listing my American income, tuition, etc? Again, I'm so far under any exemption limits it's laughable, but I want to make sure I'm doing things right - I'd hate to have any hypothetical future immigration plans destroyed because I neglected to submit some form.

    (I would just ask my school about it, but they've been seriously useless on every question I've had occasion to ask them - they're fully versed in handling students from Turkey, but I'm literally the only Canadian they've ever had, so they just have no knowledge of what I should be doing).

    I can't help with the Canada side, but I just wanted to agree with what you said about the US side. By filing 8843, you can establish that you should be treated as a non-resident alien. And since your income is less than $3,650, you don't need to file a 1040NR. Out of curiosity, though, do you have a tax identification number already? Because if so, filing a 1040NR-EZ is really easy (probably would take less than 15 minutes), and you could get your 50 bucks back.

  • tyrannustyrannus Registered User regular
    edited March 2011
    If you make under $49,000 and would like to go to a place that will file your state and federal returns for free, check out VITA. Here is a site list: http://www.irs.gov/individuals/article/0,,id=219171,00.html

    All you have to do is fill out an informational form and answer a few questions and they will do all the work for you.

    It's mostly volunteer students but there are site coordinators and people from United Way at all sites that will be more than willing to answer any questions. Just make sure to make an appointment, they'll give you all the details.

  • tyrannustyrannus Registered User regular
    edited March 2011
    Additionally, if you are quite lazy,
    Taxpayers will have until Monday, April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. By law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have three extra days to file this year.
    Source: http://www.irs.gov/newsroom/article/0,,id=233910,00.html

  • fightinfilipinofightinfilipino legally competent Registered User regular
    edited March 2011
    if i'm a graduate student currently subsisting on only a combination of student loans and work study, and have been so for the last two years, what's the recommended way of getting my taxes filed?

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  • tyrannustyrannus Registered User regular
    edited March 2011
    if i'm a graduate student currently subsisting on only a combination of student loans and work study, and have been so for the last two years, what's the recommended way of getting my taxes filed?

    You could check out VITA http://www.irs.gov/individuals/article/0,,id=219171,00.html for your state and see if any locations are near you. They offer free tax filing for state & federal returns.

    If not, or if you do not meet the requirements, H&R Block has an free online service that you could use. I cannot attest to how the service is, however.

  • ImprovoloneImprovolone Registered User regular
    edited March 2011
    I cashed in a lot of investments in 2010, I suspect I should go to a professional...
    How professional are the blokes at H&R block? Should I find a private person instead?

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  • tyrannustyrannus Registered User regular
    edited March 2011
    You could go to a professional about it but there will be documents you will need to produce in order to report a capital gain or loss on your Form 1040, Schedule D. Again, I cannot attest to the services provided by H&R Block, but we have sent many people from VITA to them in order to have their prior returns amended, so they can't be all that bad.

    Just some general information:
    You will need to know: The original cost of the asset, plus any increases and decreases to the cost, the holding period (how long you kept the investments), and the proceeds from the sale.

    The original cost of the asset will be your basis in the investments. It will be very important that you have documentation from your stock broker about the basis in the property. The increases and decreases to the cost, or basis, may include any additional commissions or fees paid to the broker at the time of the purchase or sale. Your holding period is also important as it determines the amount of tax you will pay on the gain.

  • kaliyamakaliyama Registered User regular
    edited March 2011
    H&R Block is useless. At the pop up stores they're seasonal employees who will help you fill in their turbotax-like program. I like Turbo Tax - as long as you got tax statements from your investment peeps you should just be able to plug in. If you want expert advice i'd talk to a CPA. I filed on V-Day and got a $5k rebate, woot woot.

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  • localh77localh77 Registered User regular
    edited March 2011
    I cashed in a lot of investments in 2010, I suspect I should go to a professional...
    How professional are the blokes at H&R block? Should I find a private person instead?

    As long as all you're talking about is stock, then I'd agree with tyrannus that it's not very hard to do it yourself. Pretty much just fill in the purchase date, sale date, basis (cost + fees), and the proceeds for each sale. A little tedious, but not too hard.

    You could go to H&R Block, but they charge per form, and on something like a Schedule D, it might even be per line. One idea is to fill it out yourself (I used freefilefillableforms.com last year), and then taking it to H&R Block to have them do a second look. Something like $20 - $30 (and I think someone pointed out that it's free during a certain week in March).

    As far as how professional they are, I'd say it's pretty much a crap shoot. Some of them are fine, but others are pretty useless. If you decide to go with a professional, I'd suggest getting advice from a friend or family member on someone they use and like.

  • tyrannustyrannus Registered User regular
    edited March 2011
    Here's a checklist for if someone can claim the American Opportunity Credit. I already posted this in "Another Tax Thread", but I think this would be good information for the tax thread sticky.

    If you can answer all these questions, you can take (probably) the American Opportunity Credit.
    • Are you within the first four years of post-secondary (undergrad, not graduate) study? Yes
    • Are you enrolled in a program that leads to a degree, certificate, or other piece of paper? Yes
    • Are you taking at least one-half the normal full-time workload for the course of study for at least one academic period beginning in 2010? Yes
    • Have you ever been convicted of a felony for possessing or distributing a controlled substance? No
    There are other rules, as well. If you are claimed as a dependent on another person's tax return, you cannot claim the credit. Your parents, or whoever claim you as a dependent, will end up claiming it.

    After that, you can get a credit for up to $2,500 depending on the amount of eligible expenses, the amount of tax on the return, and whether or not your scholarships/grants cover the expenses. (That last part means that your qualified expenses sent on your 1098-T are reduced by nontaxed benefits) The form you would use is the 8863, found here.

  • jclastjclast Registered User regular
    edited March 2011
    I have to look at my return to make sure, but does anybody know what the process is for fixing an error on a return before the IRS finds it but after I've received my refund check?

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  • tyrannustyrannus Registered User regular
    edited March 2011
    An amended return is not always required when the original return has an error. The IRS will usually correct a math error, or they'll write you and request a missing schedule.

    Here are a few scenarios where you may want to file an amended return:
    You may need to file an amended return if you received another form W-2 after you filed, or a corrected form W-2.
    Or if you got another 1099 or a corrected 1099
    Or, if you claimed your own personal exemption on the return when someone else could claim it.
    Or if you claimed deductions or credits you should not have claim, or did not claim deductions or credits you could have claimed, or if your filing status is different.

  • jclastjclast Registered User regular
    edited March 2011
    That's what I was afraid of. I am an idiot and thought that "post-secondary education" meant after undergraduate instead of after high school so I took the American Opportunity Credit when I shouldn't have. :(

    I'll fire up H&R Block at Home when I get home after work and see if it can lead me through it.

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  • tyrannustyrannus Registered User regular
    edited March 2011
    I think you may need to file a 1040X. It can be prepared using tax software, but it cannot be e-filed.

    You're going to have to want to print out two copies of the amended return, one for you, and one to mail in.

    You can expect the processing time for an amended return to be 8-12 weeks. I'll get you some more details in a bit.

  • EggyToastEggyToast Registered User regular
    edited March 2011
    I cashed in a lot of investments in 2010, I suspect I should go to a professional...
    How professional are the blokes at H&R block? Should I find a private person instead?

    If you're really not good at reading forms and doing form-based math, then going to a tax person may be your best bet. Nothing wrong if you're not a form person, of course, although if you do generally find that you have some "odd income" every year, you might rather look for a personal accountant. Their fee is on an annual basis, usually very competitive with walk-in tax services, and you can ask them other tax questions throughout the year (if you get a good one -- try to assess how good they are with email).

    The catch with a lot of the extra forms is that half the work is tracking them down -- the other half is simply punching in numbers. I've been using freetaxusa.com for the last 3 years now and I really enjoy it (as much as one can enjoy a tax service). They do a good job of explaining what you need and where things go.

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  • Dropping LoadsDropping Loads Registered User regular
    edited March 2011
    So my wife and I file jointly, and she was paid this year partially through salary and partially with direct funds from a fellowship (she's a researcher at a university). It turns out that the fellowship portion of her pay was not taxed during the year, and that the comptroller has no official tax document for what she was paid, although they do have pay stubs for how her fellowship was disbursed to her. They say that we should just add the fellowship money to the "wages" line on her W-2.

    Does this sound reasonable? I'm concerned that we have no "formal" document to explain this income.

    Thanks for the help!

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  • tyrannustyrannus Registered User regular
    edited March 2011
    Qualified scholarship and fellowship grants are treated as tax-free amounts if the following conditions are met:

    You are a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regular enrolled body of students in attendance at the place where it carries on its educational activities; and
    Amounts you receive as a scholarship or fellowship grant are used for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses of instruction.

    Do any of these apply?
    EDIT: Actually, this seems to be an issue of confusion for me. Might need some help, but this is what Publication 970 says.
    Form 1040. If you file Form 1040, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7.

    Schedule SE (Form 1040). To determine your net earnings from self-employment, include amounts you receive under a scholarship as pay for your services that are reported to you on Form 1099-MISC, Miscellaneous Income. If your net earnings are $400 or more, you must pay self-employment tax. Use Schedule SE, Self-Employment Tax, to figure this tax.

    http://www.irs.gov/publications/p970/ch01.html#en_US_2010_publink1000178011

  • jclastjclast Registered User regular
    edited March 2011
    Huzzah! After reading some stuff it turns out I was mistaken and took the Lifetime Learning Credit - no amended return for me after all! :)

    H&R Block at Home asked the right questions after all. And this, ladies and gentlemen, is why I shouldn't try to remember what tax things are called when the forms aren't in front of me.

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  • tyrannustyrannus Registered User regular
    edited March 2011
    Tax is pretty confusing, that stuff happens. Congrats on not having to file an amended return!

  • Dropping LoadsDropping Loads Registered User regular
    edited March 2011
    Thanks tyrannus, that SCH thing looks like what they are expecting.

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  • localh77localh77 Registered User regular
    edited March 2011
    Thanks tyrannus, that SCH thing looks like what they are expecting.

    That sounds good, but I'd try to nail down for sure that the fellowship money is taxable. Like tyrannus said, if she's a degree candidate and uses the money to pay tuition and fees, it wouldn't be taxable, in which case it would be left off the return altogether. I'd recommend the worksheet on page 5 of pub 970 (http://www.irs.gov/pub/irs-pdf/p970.pdf).

  • Dropping LoadsDropping Loads Registered User regular
    edited March 2011
    Thanks localh77! After doing the worksheet, we definitely owe taxes, as she is a professional scientist rather than a student. The whole form is quite helpful!

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  • localh77localh77 Registered User regular
    edited March 2011
    Thanks localh77! After doing the worksheet, we definitely owe taxes, as she is a professional scientist rather than a student. The whole form is quite helpful!

    Too bad - I always hate owing at the end of the year!

  • tyrannustyrannus Registered User regular
    edited March 2011
    Alright this is a little esoteric but there's a chance people might do this so.....
    The New Jersey Division of Taxation has posted an alert that there are two errors on page 10 of the printed and online versions of the 2010 NJ-1065 partnership return instructions.

    Under Column K, it incorrectly reads “Multiply the amount from Column I by 8.97%.” It should say “Multiply the amount from Column I by 9.0%.”

    Additionally, under Column K it incorrectly reads “If an amended return is filed and the result of multiplying the amount from Column I by 8.97% is less than the amount reported on the original Partners Directory, report the amount listed on the original Partners Directory”. It should say “If an amended return is filed and the result of multiplying the amount from Column I by 9% is less than the amount reported on the original Partners Directory, report the amount listed on the original Partners Directory.”

    Source: http://www.njscpa.org/story.cfm?SID=15347

  • tsmvengytsmvengy Registered User regular
    edited March 2011
    Question about Roth IRAs.

    I opened a self-directed Roth IRA in January 2011. I contributed the max amount applied to 2010 ($5000). I've been contributing on a regular basis (for 2011) since then. I haven't taken any money out. What do I need for tax documents for this? Is there a 1099 or something? I haven't gotten anything from the broker.

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  • localh77localh77 Registered User regular
    edited March 2011
    tsmvengy wrote: »
    Question about Roth IRAs.

    I opened a self-directed Roth IRA in January 2011. I contributed the max amount applied to 2010 ($5000). I've been contributing on a regular basis (for 2011) since then. I haven't taken any money out. What do I need for tax documents for this? Is there a 1099 or something? I haven't gotten anything from the broker.

    You may get a form 5498, which shows your IRA contributions for the year. But it shouldn't affect your taxes for this year. With a Roth, you're making contributions with after-tax dollars, so you won't have to worry about it until you start making distributions.

    I don't know how it works, but since you didn't open it until 2011, you might not get a form until next year. And I don't know if they're actually required to send a form for a Roth. Anyway, like I said you won't need to worry about it yet. Just save any documentation you have for when you do finally make distributions.

  • Marty81Marty81 Registered User regular
    edited March 2011
    Are there any random nice credits this year, like the Making Work Pay credit from last year?

  • localh77localh77 Registered User regular
    edited March 2011
    Marty81 wrote: »
    Are there any random nice credits this year, like the Making Work Pay credit from last year?

    Nothing quite that nice that I can think of. Just make sure to look into the American opportunity credit if you have education expenses. And it's not too late to take advantage of the residential energy credits (getting energy efficient windows for your home, for example). I think the limit is reduced quite a bit for 2011, but if you did anything in 2010 the limit is still pretty high.

    And of course the Making Work Pay credit again (this is the last year, though).

  • ImprovoloneImprovolone Registered User regular
    edited March 2011
    What is the Making Work Pay credit?

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  • localh77localh77 Registered User regular
    edited March 2011
    What is the Making Work Pay credit?

    It's a credit for up to $400 for everyone that had a job in 2010 (and 2009). As long as you didn't make too little in wages (or too much), you get the credit, which is essentially free money. Technically, you've already received the money (in the form of lower withholdings from your paychecks), but you still need to claim it on your return.

    The only real tricky factor is that people with multiple jobs can get screwed a little (both jobs withhold less from each paycheck, but then you only get a total of $400 on your return, so you can end up owing).

  • Fizban140Fizban140 Registered User, __BANNED USERS
    edited March 2011
    I am kind of in a weird situation, I have been in 3 different states and two countries, paid by the military and by the state (unemployment) all in 2010. Should I go ahead and just do this online, and if so where? We always had free tax services on base but now I am out of the military.

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  • physi_marcphysi_marc Registered User regular
    edited March 2011
    Quick Canadian tax question here.

    My girlfriend did not go to school last year, but her notice of assessment says she still has unused tuition fees that she carried forward from 2009 (i.e. from last year's taxes). Can she claim them on her 2010 taxes?

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  • localh77localh77 Registered User regular
    edited March 2011
    physi_marc wrote: »
    Quick Canadian tax question here.

    My girlfriend did not go to school last year, but her notice of assessment says she still has unused tuition fees that she carried forward from 2009 (i.e. from last year's taxes). Can she claim them on her 2010 taxes?

    Admittedly, I know nothing about Canadian taxes. But it sounds like yes, she can carry them forward to 2010: http://www.taxtips.ca/filing/students/transfercarryforward.htm.

  • tyrannustyrannus Registered User regular
    edited March 2011
    Fizban140 wrote: »
    I am kind of in a weird situation, I have been in 3 different states and two countries, paid by the military and by the state (unemployment) all in 2010. Should I go ahead and just do this online, and if so where? We always had free tax services on base but now I am out of the military.

    I would see a CPA or another tax professional. The income across the three states as well as the two countries as well as the military pay might throw several wrenches into the conventional free tax program.

  • ATIRageATIRage Registered User regular
    edited March 2011
    Edit: I see VITA has already been posted
    Use them if your taxes are simple, I've volunteered for them before and it was pretty awesome. They also tend to give you simple financial planning advice as well.

  • ImprovoloneImprovolone Registered User regular
    edited March 2011
    So, what can I do to be more prepared for NEXT year?
    Save all of my...
    Medical Bills?
    Attorney Fees?
    Education related bills?
    Child care bills?
    What counts as a work expense; clothing? Food I bring to the office as a nice gesture?

    What the hell is worth keeping track of?!!?!??!

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  • localh77localh77 Registered User regular
    edited March 2011
    So, what can I do to be more prepared for NEXT year?
    Save all of my...
    Medical Bills?
    Attorney Fees?
    Education related bills?
    Child care bills?
    What counts as a work expense; clothing? Food I bring to the office as a nice gesture?

    What the hell is worth keeping track of?!!?!??!

    You can always keep track of everything, but it's worth keeping a few things in mind.
    • Medical Bills: You can only deduct medical expenses that exceed 7.5% of your gross income, which they don't for most people. If you have some big expenses in the year, though, by all means. And don't forget to keep track of the miles you travel for medical visits.
    • Attorney Fees: Yes, but only helpful if the expenses exceed 2% of your gross income.
    • Education Bills: Yes.
    • Child Care Bills: Yes, but only for during the times that you (and your spouse) were working.
    • Work Expenses: Yes, but a lot of things don't count. Clothing - no (unless it's something you couldn't wear outside of work). Food you bring in - no. Regular commuting expenses - no. But a few things do. Job search expenses, professional journals, and tools for your job, to name a few. But combined with attorney fees, only the amount above 2% of your gross income counts.

    Also, keep track of everything (cash and non-cash) you donate to charity.

    Oh, and if you live in a state without an income tax, one thing you can do is keep track of all the sales tax you pay for the year. But this is only really worth it if you spend a lot, cause the IRS will let you take a certain amount just based on your income, and it's actually pretty generous.

    And it's worth noting that if you don't itemize, you won't deduct your medical, attorney, work expenses, charity, or sales tax amounts. And if you don't pay mortgage interest, you likely won't itemize.

  • tyrannustyrannus Registered User regular
    edited March 2011
    Keep track of your medical bills, co-pays, and prescription purchases anyway. In certain states you can deduct them against your state return. Instead of 7.5% of your AGI, it could be 2%, like in NJ. Any e-filing you do will cover both state and federal, so be mindful.

    Also work expenses are tricky. Keep this list in mind: http://www.irs.gov/publications/p529/ar02.html#en_US_publink100026912

    Any cash and noncash charitable contributions over $250 require documentation.

  • ASimPersonASimPerson And protect them from the evils of the world like trigonometry and prime numbers.Registered User regular
    edited March 2011
    localh77 wrote: »
    And it's worth noting that if you don't itemize, you won't deduct your medical, attorney, work expenses, charity, or sales tax amounts. And if you don't pay mortgage interest, you likely won't itemize.

    I used to think this too, but if your state income tax exceeds the standard deduction then it's worthwhile to itemize.

    Of course, I think California's income tax is higher than many states, so I dunno.

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