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Oh hi it's that time of year again [2011 Taxes Thread]
ceres
When the last moon is cast over the last star of morningAnd the future has past without even a last desperate warningRegistered User, Moderator mod
When the last moon is cast over the last star of morningAnd the future has past without even a last desperate warningRegistered User, Moderator mod
Welcome to this year's Taxes Thread!
Post here with questions, resources, problems, and solutions. That way we can keep it all in one place for those who may encounter the same. If you have a question about your state taxes, don't forget to include the state.
Resources list and FAQ to be included.
Post here with questions, resources, problems, and solutions. That way we can keep it all in one place for those who may encounter the same. If you have a question about your state taxes, don't forget to include the state.
Resources list and FAQ to be included.
And it seems like all is dying, and would leave the world to mourn
ceres on
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For January 1st, 2011 - June 30th, 2011
For July 1st, 2011 to December 31st, 2011
Source: http://www.irs.gov/newsroom/article/0,,id=240903,00.html
Qualifying Child
Close Relative - Son, daughter, stepson, stepdaughter, borther, sister, stepbrother, stepsister, or a descendant of any of these, as well as a legal foster child.
Age Limit - Must be yougner than the tax payer and udner age 19 unless totally and permanently disabled. The age changes to 24 in the case of a full time student ( In this case, full time means a student who goes to college for at least part of five months during the taxable year. Night classes don't count!)
Residency and Filing Requirements - The kid must have the same principal place of residence of the taxpayer for more than 1/2 the year, and the kid can't claim file a joint return (unless it was just to get a refund)
Support test - You must provide over half the support for the jerk.
Qualifying Relative
Support test - Over 50% of the support must be provided on behalf of the dependent in order to claim him or her. These must be actual expenses incurred, like keeping a residence, etc. There are special complicated rules for Multiple Support Agreements.
Under Exemption Amount of Gross Income - They must have gross income under $3700, but only income that is taxable. So low-level social security, tax-exempt interest from state munis and scholarships don't enter this test.
Filing Requirements - Same as qualifying child - dependent can't be filing married filing joint unless it's only done for the purpose of a refund.
Only Citizens of the US, or a resident of the US, Mexico, or Canada (this was added to prevent people from sending like $5000 to 15 kids in Africa and claiming them all as dependents)
Relative - Children, grandchildren, parents, brothers, sisters, aunts, uncles, nieces and nephews can be claimed as dependents. Hell, Even if your dad is living in a home, for most of the year, as logn as he doesn't make above $3700 and you provide over half his support, you can still claim him as a qualifying relative. Cousins, foster parents, and freeloading girlfriends/boyfriends must live with the individual for the whole year, as long as it's legal.
I was brought on as a contract employee at the end of January last year, in Massachusetts. A few months later, my company moved to Rhode Island, and I was hired full-time. I know I'll have to file for both states, but would my status as a contract employee change how I file for MA? I wasn't making as much as a contractor. Is my company going to give me two W2's, one for each state? Otherwise I'm not sure how to calculate exactly how much I made in one state vs. the other.
Anything in particular I should watch out for, or might be a hassle?
You might be phasing out of certain deductions that you're not incorporating into your hand calculations. TurboTax is pretty trustworthy.
Here's the thing about multi-state returns. Typically, you're taxed on all income you made, even outside of the state. But if the income was already taxed by another jurisdiction, you may be able to claim a credit against the tax paid on income made out of state. For example, Let's say I'm a full time/part time resident of NY, but I did some work in NJ. I will be taxed on the full amount of income in NY, but will receive a credit for taxes paid outside of New York. But the rules are state-specific and can vary.
SINGLE
If you do not qualify for one of the other filings, then you gotta file single. Basically, the IRS uses the end of the year as a checkpoint. Single at the end of the year? File single. Legally separated? File single.
MARRIED FILING JOINT
You gotta be married at the end of the year to file MFJ. If your spouse dies during the year, you can still file a joint return. However, if you are legally divorced during the year, you cannot file as MFJ.
MARRIED FILING SEPARATE
Usually you don't want to file as this. It's a bad idea and you lose out on some credits and deductions, but tax planning aside, you can do this, but you must separately report your own income, exemptions, credits, and deductions. But it's a bad idea!!
SURVIVING SPOUSE
The taxpayer can file as a surviving spouse for each of the two taxable years following the year of death of his or her spouse. In the event of remarriage, the widow(er) will be filing joint or separate with the new spouse. In order to file as a Surviving Spouse, the taxpayer must maintain a household for the whole taxable year for a son,stepson, daughter or stepdaughter and must be entitled to claim them as a dependent.
HEAD OF HOUSEHOLD
This is usually a big one, because you get a bigger standard deduction and you get wider tax brackets. In order to file as HoH, the taxpayer must be unmarried, legally separated, or married and have lived apart from her or her spouse for the last 6 months of the year. Additionally, if you are a surviving spouse, you can't take HoH. You also must not be a nonresident alien. You must also maintain a home that for 1/2 the year is the residence of one or more children, which is a son, daughter, stepchildren, or legally adopted children or any combination of these.
For qualifying relatives, you can claim HoH for your dependent father or mother, even if they do not live with you. But other qualifying relatives, such as brothers, grandparents, sisters, aunts, uncles, nephews and nieces must live with you for 1/2 the year.
AMERICAN OPPORTUNITY CREDIT
The American Opportunity Credit is a modified version of the Hope Scholarship credit. It's pretty rad and it's available for any expenses made for qualified tuition, fees and course materials (including books) paid in the first four years of post-secondary (college) education. If you're in grad school or went to college for more than 4 years, then you'll want to see the Lifetime Learning Credit.
The maximum credit is $2,500 and part of it is refundable (if you owe no tax, it increases your refund). If the person is claimed as a dependent by a parent, expenses paid by both the kid and the parent are deemed to have been made by the parent (so they get the credit).
In order to claim the credit, the student must be at least half-time for one academic period during the year. Also, this is not available to students convicted of federal or state felony drug offense. At least, not in the year in which the expenses were paid.
LIFETIME LEARNING CREDIT
So you're a felon. Or a grad student. Or you just really like college. Well, the Lifetime Learning Credit is available for an unlimited number of years for tuition and related expenses (EXCEPT BOOKS) at eligible educational institutions. The same rules apply with the American Opportunity Credit with regards to who gets the credit if the student is a dependent of a parent. The maximum credit is $2,000, but non refundable.
Questions I have about it:
What are the pros and cons for doing so?
Is a personal vehicle eligible for business operation deduction if it's used as the sole mode of travel to and from work? Is there a minimum mileage that one must travel to qualify?
Is said vehicle eligible if you are still paying off the car (and the bank has the title)?
Are there any major rules that must be followed in the process of this type of claim?
The pros of the standard mileage rate: You might end up being able to deduct more than you would if you used actual expenses.
The cons of the standard mileage rate: You need to use it if you're leasing the car, and there's certain restrictions.
Commuting expenses are not deductible.
Here are some of the major rules.
http://www.irs.gov/taxtopics/tc510.html
But yeah, you can deduct using a personal car for business purposes. You just have to figure out what % you used it for business and what % you used for personal. Like, If I'm using my car for the month for about 50% business, and I have a $60 gas bill, I can only deduct $30 on my Schedule C.
If you're an employee of a business you do not own, GENERALLY if you're reimbursed in any way, you can't claim the expenses. If you are the exception, you'll be able to deduct them as an itemized deduction, subject to the 2% AGI threshold. If you're a business owner, though, you'll pick them up on Schedule C or Schedule C-Ez.
I guess that answers my question of whether I can claim my car at all!
(I can't :P)
pleaseguysiamsobroke
steam | Dokkan: 868846562
Yep, you can take a deduction (as an adjustment to income on 1040 line 33) for the interest you pay on student loans. See this link for details: http://www.irs.gov/taxtopics/tc456.html.
Now you can only deduct the interest, and not the principal. But theoretically you could have deducted the expenses you paid in the years you got the loans.
Yep, and unfortunately the penalty was increased from 10% to 20% in 2011. You report it on Form 8889 (Part II).
edit: just checked - nope, most of them are for IRA distributions, not HSA distributions. whooops
I guess I forgot to mention that the 20% is on top of regular income tax that you also have to pay on it. So if you're in the 15% bracket, it would be 35% total. They sure do make it a chore to take out and spend your own money, don't they?
I guess it's a deterrent, but I'd rather pay a 50% tax and have a roof over my head that's for sure.
Twitter
Yeah, even though companies are required to send 1099s, many don't. But that shouldn't matter to you. Just report what you made on Schedule C.
I have insurance, but I mean copays and things which aren't covered (mainly the dental stuff) by insurance.
I am worried about NOT doing the standard deduction. I don't wanna be auditeddddd
If your AGI is $15,000, your medical expenses have to be in excess of $1,125 for you to start deducting them.
take a look here at things you can deduct: http://www.irs.gov/taxtopics/tc502.html
Does that count as me having paid for them and can deduct them?
Yep, by charging it to a credit card you've become liable for the debt, so that counts as having paid it.
Hmm, I'm not sure about legal expenses related to a bankruptcy specifically. My guess would be no, though. From the Schedule A instructions, you can only deduct legal expenses that you paid to produce or collect taxable income and manage or protect property held for earning income. ... But do not include any personal expenses.
Yep, you can deduct the difference. Also keep in mind that for gifts of >=$250, you should have written documentation from the charity (which they usually give you without prompting anyway).
I never got a receipt but I have proof I paid that for a charity auction on my bank records. Unless the company that hosted it is going to turn around and claim all that loot they gave away as their own charitable donation.
Well, technically just a bank record isn't good enough when the donation gets big enough ($250, I think). But this is second nature to charities, they should be giving these out left and right (although you may need to ask). It's worth mentioning that nothing will prevent you from filing without that receipt, it's just something you'd want if you ever got audited. So I certainly wouldn't worry too much, and I'd personally still claim it even if I couldn't get proof from the charity.
Any tips? I don't recall the specific charity. I have the item and my bankroll and proof it was for charity pretty much.
I think it pretty much comes down to personal preference. Any tax preparer should tell you that you technically should have a receipt to take the deduction (without knowing which charity it was, you have no way to know if they're even eligible to receive tax-deductible donations). But like I said, in your shoes I'd probably take it myself, so there's that.
I have another question. I finished and sent the tax stuff, but TurboTax got back to me saying that the IRS could not confirm my identity. I was told to get a new PIN number from either the IRS phone support or this link: https://sa2.www4.irs.gov/irfof-efp/start.do
The problem is that they ask for my filing status for 2010, but there's no "I was a dependent and I didn't file" option. Same with the phone support (doesn't even let you talk to someone).
Twitter
1) I'm attending a university and got a tax form from the school for tuition paid. Thing is, those payments came out of my father's pocket, not mine. (I'm over 25, not a dependent). Do I put those in as a tuition deduction? Does my dad instead?
2) For the past bunch of years I've purchased and used Turbo Tax Deluxe, since it comes with the state taxes and has seemed appropriate for my needs. But I keep seeing more and more ads for getting free taxes done on Turbo Tax online or via other methods-- should I be taking a closer look at those? Are those just for people who can use the EZ form?
2) I've used Turbo Tax online for the past two years and it has been AWESOME. I file a standard 1040 since I occasionally have capital gains/losses to report. Turbo Tax online can do everything that the offline does (can the offline one look up your W2's for you?), so I'm honestly not sure why they still sell the offline version.