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Oh hi it's that time of year again [2011 Taxes Thread]
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Yup. I keep them as PDFs on my computer and backup drives.
I've done my own & my wife's taxes for several years now, including since before we were married. This year has a few big changes:
1. We started an IRA, but (because I am lazy) the money is just sitting in the "holding" account and hasn't been properly invested yet.
2. We have started receiving money from a trust that is disbursed from multiple (family) sources due to a death in the family.
3. edit: We also donated my car to charity.
I have NO CLUE how any of this stuff affects our taxes, so I'm considering hiring a professional instead of using Turbo Tax. Good idea or bad idea? How much should I expect to pay a professional?
Thanks!
3clipse: The key to any successful marriage is a good mid-game transition.
From some quick online research it looks like tuition is exempt from the taxable gift thing (whew) as long as it's paid directly to the institution and not to me then to the institution (close one).
1) You can take IRA contributions as an adjustment to gross income. As a general rule, you may deduct from income the lesser of $5,000 per spouse, or the individual's compensation ( does not include interest, dividends, pensions, and annuity income).
2) Income distributed to a beneficiary on a K-1 retains the same character that it had at a fiduciary (trust) level. That means if you get a K-1 and it's for $100 of dividend income, you pick that up as dividend income on your return. If the trust must distribute all of its current income, you have to report your share of distributable net income, whether or not you got it. If the trust doesn't have to distribute all its current income, you must report all income that is required to be distributed to you plus any other amounts paid to you, up to your distributable net income amount.
3) You can deduct the FMV of the car donated to a qualified charity 501(c)(3). You should have received a document confirming the value. You can deduct this amount as an itemized deduction.
That's good to know!
3clipse: The key to any successful marriage is a good mid-game transition.
That's really strange, but you're right. It just doesn't seem like it should be a difficult problem. Did you try completing the online form using your current filing status, and just see if it gives you a PIN anyway? The alternative would be to just file by paper (TurboTax should let you print it out and file that way).
They just had to make it more complicated... I've logged all my odometer readings with dates, so it's no big deal, but that's annoying.
Edit: Never mind, we figured it out.
t: @nataliepi | fb: fb.com/hernandeznlh
The first thing to check is whether your fellowship is taxable it all. Essentially if you're a degree candidate, and you use it to pay tuition, it should be non-taxable. If any or all of it is taxable, you just throw it on line 7 (income) of your 1040. Check out pub 970 for details, it's pretty easy to follow: http://www.irs.gov/publications/p970/ch01.html.
t: @nataliepi | fb: fb.com/hernandeznlh
As said above, the part of the fellowship that pays tuition/other mandatory qualifying expenses isn't taxed, but the stipend part that you get paid is. So if your total fellowship is 60k/year, with 30k/year going to the school for tuition and 30k/year as a stipend, your taxable income is 30k.
What I've done for the past few years is to calculate that amount (it depends on what your school does; mine gives us a 1098-T every year that has the tuition/stipend amounts that I include with my taxes), write that as my taxable income, and write "SCH" on the taxable income / W2 top line on the federal 1040 form (I got that from some instruction page somewhere). If you have a bunch of other complicated income sources, or you are going to try to deduct other educational expenses then maybe it gets more complicated, but I haven't had an issue doing it that way for the past 5 years.
Also, you should keep in mind for the future - if they're not withholding taxes, you're supposed to be paying estimated quarterly taxes every quarter... so your tax bill for this year may be high, and they may charge you penalties if you haven't paid anything and your tax amount is greater than some amount (there's a set of rules)... there's a form to calculate this, but you can also just not bother and let them calculate it and send you a bill / deduct it from your refund (which I usually do).
But yeah, payment for services rendered is usually considered income.
Here are the special things for filing
Well, you'll want to check the filing requirements for the state in question to see whether you need to file. For example, in Colorado you have to file a state return if you're required to file a federal return that year. If you don't meet the requirements to file for your state, and you wouldn't be getting a state refund, then yeah, you could skip that state and save the filing fee. It shouldn't affect your federal return at all.
Not that I know of, no. If it's used for business, that would be different. But I don't know of a way it could be deducted if the car is for personal use.
Now, part of the personal property tax on a car can be deducted on schedule A.
They have one value for Box 2 (Tuition Paid) and a MUCH bigger number for Box 5 (Scholarships/Grants).
Apparently I didn't qualify for one of the big grants so I had to refund it.
The problem is:
1 - They still show me as having gotten the full grant amount, not the reduced one.
2 - They don't show me as having repaid it.
So should the amount I repaid be deducted from Box 5? Or is Box 5 left the same and Box 2 gets the amount paid to it?
Also the Box 2 value is also wrong. :\
I guess I just call them and tell them to fix their stuff?
Yup, has to be a business expense to be file-able (your business).
The only interests you can deduct is school and mortgage as far as I know.
Do I file their wrong values or file what I know is correct?
In this case, the fact I repaid $4000 which isn't being reflected.
I would definitely put the correct amount on your return if they won't fix it. Just document clearly all of the details to keep with your records (how much you got and when, how much you repaid and when, when you asked them to change it, when they said no, bank statements, etc.).
Ok. Should I take it to HR Block or something?
Essentially the outstanding thing now is they said I paid 5k in tuition; I paid 11k.
They claim that the 6k I am disputing even though I PAID it in 2011 was billed to me in 2010 and thus they put on my tax form in 2010.
That seems ridiculous to me (and I believe untrue). I paid for it in 2011, so it should show up in 2011.
I'm just worried that if I say I paid 11k and they say 5k, it'll flag my account and I'll get audited and want to cry.
If they report based on amounts billed (which it sounds like they do) then they're unfortunately correct in this case. Schools can pick how they want to report, either paid or billed, and "amounts paid" is such a royal pain in the ass for most higher ed ERPs that they go with the far, far easier "amounts billed". You don't actually file the 1098T, you put its values onto a worksheet and it helps you come up with a number, and you can claim whatever you want. I can't speak to whether or not this will cause an audit. The 2010 form should have had a box checked that says "includes tuition for next year", so there's that.
I wouldn't even sweat it. If worse comes to worse and you actually did get audited some day, you'd just explain it and be on your way. But I doubt something like this would trigger an audit. Especially since the school should have reported 5k last year that you didn't claim, so this 11k amount doesn't come out of nowhere.
They claim they did report it, but okay. I'll just document it and move on.
I'm a U.S citizen who has been living overseas for such a long time now, and while there I didn't earn anything because I was dependent on my parents. Anyway I moved back to California in May, I did find a part time job, then ended up unemployed for some time. Found a new job afew months ago, but from May till todays date I would say my income was roughly around 8 k including tips. (My rent is super low) I don't live with any relatives, just a roommate who is not related to me in any way.
Now I'm starting grad school, applied for federal aid and was accepted to receive loans. My workplace said they were going to send my W-2, which I just recently learned what it is.
At this point what do I do, and where do I start? If someone could help me out abit I'd be very grateful.
As long as no one is claiming you as a dependent on their tax return for 2011*, you don't need to file a return for yourself if your income for all of 2011 was less than $9500. You said you made about $8k; did you get any unemployment? Did you have any income from investments? Just some things to think about.
If you do think you're above $9500, you have a couple of options. The cheapest option is to use one of the free filing options online. I think TurboTax has one, and others too I'm sure. If you're totally lost and would rather not do it yourself, you can either have a friend or something help you out, or you could go somewhere like H&R Block and pay to have them do it for you.
Now going forward, when your workplace says they're going to send you a W-2, that means than when you're filing your 2012 tax return next year, they'll send you this form that tells you exactly how much you made and how much was collected for taxes on your behalf.
*Your parents shouldn't be claiming you if you're at least 19 years old and they're not providing at least half of your support (did they support you until May? Did they pay for your plane ticket? Do they send you any money? Again, just some stuff to think about). Since you say you're not living with relatives, you're probably not a dependent of anyone except maybe your parents.
http://www.irs.gov/individuals/article/0,,id=107626,00.html
Also, if you made $8,000 and you're over 23 (or 19, really, if you weren't a full-time student at college before May), then you probably won't be picked up as a dependent on your parents return this year, seeing as you don't qualify to be a qualifying child or a qualifying relative. So, if you don't make more than $9500, you probably don't have to file. But you might want to, to get some sweet educational credits and withholding back.
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You'll just want to check the filing requirements for your state, because each state is different. I think I said this in a earlier post, but in Colorado, for example, you have to file the state return if you're required to file a federal return. If something like that is true for your state, then you probably don't need to file the state return (since you're not required to file the federal return).