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.
Good point, state income tax can definitely swing things toward itemizing. I'm so used to living in a state with no income tax that I forget to take that into account.
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?
Yes she can. If you're using the computer and you are importing last years return, it should do it automatically (does for me in uFile). If not, then you can put in the amounts on your 2009 Notice of Assessment into the correct boxes on your 2010 return.
So I am using this freeish website my sister used, doing my own taxes for the first time, Taxactonline.com. So far its been easy, but I don't think its picking up my charitable donations section. I have a recipt for the 137 I donated to a charity in 2010, but when I put it in their little section for deductions it has absolutely no effect on my total worksheet and I don't see the numbers reflected anywhere else. Anyone have any ideas what I need to do?
Its not a huge deal if I can't claim it, it was for charity after all, but if I can I would like to. Thanks in advance.
ok is that a crazy amount of paperwork? Because I also bought (well financed) a new car this year and according to their deductions site
"You can choose to deduct sales taxes on motor vehicles instead of state income taxes if you itemize deductions on your tax return and the sales taxes are greater than your state income taxes."
and
Auto registration fees that qualify as personal property taxes are entered in the Itemized Deduction section of the program, and are reported on line 8 of Schedule A, Itemized Deductions, as a tax.
So even though I leased the car, it looks like (the recipt here is funny and its been awhile since I've looked at it) that I paid 1551.17 in taxes, can claim about $200 in registration fees.
Am I putting too much thought into this? should I just take what I says I can get and run with it? I should add I am a 24 year old College student with less then 20k income.
Unless you have a home or pay an egregious amount of taxes to the state, then there's very little reason or incentive to itemize your deductions. Remember, the government gives you a 5700 standard deduction, no questions asked. If you itemized deductions cannot total over this amount, then generally it's not worth it to itemize.
Deductible personal property taxes are those based only on the value of personal property such as a boat or car. The tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year.
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.
Even if you do itemize, I think deducting medical expenses, for those paid with a flex spending plan(since it is paid with pretax dollars) would not work.
As noted in the American Opportunity Credit post, I don't know that it's necessary to keep education bills, if you're in grad school or beyond 5 years of undergrad, and are not itemizing.
Question: I took the Making Work Pay credit last year, and got a large refund benefit from it. The fact that it's still available, is only to allow people who didn't specifically claim it last year, to do so now, right? Am I required to claim it even if it seems to not make any difference on my refund, and I claimed it last year?
Tax is pretty confusing, that stuff happens. Congrats on not having to file an amended return!
I claimed the American Opportunity credit last year and got ~300ish in my refund for it, when I shouldn't have because it was for grad school. Is the penalty just interest, or is there a further penalty on incorrectly claiming it?
You should keep any type of 1098-T tuition expenses because you can still see if you qualify for the lifetime learning credit, which is pretty much like the American Opportunity Credit but not refundable. You can also deduct student loan interest paid if you make below a certain amount of income.
The Making Work Pay credit was offered in 2009 and is offered again for 2010. You can claim it when you file your return. Basically, you were given a bit of the credit every pay period when you received your paycheck. It's an offset against your withholding. Your return should reflect this.
I'll get some more information on claiming the wrong credit.
Ugh, H&R Block's website is so confusing. I was and still am eligible for the lifetime learning credit, but the way the steps of identifying the credit are presented, it looks like I was eligible for the American Opportunity Credit, and it also encourages me to include expenses for books etc which are not eligible for lifetime learning.
So I may have taken lifetime learning last year, but I certainly know that I included books etc. So, yay: I get to take the credit this year, balls: I have to figure out an amended report for last year, which hopefully is just the carved out portion for non-tuition expenses.
Q: From the IRS FAQ for lifetime learning-
Q.14. May a parent or student claim a Lifetime Learning Credit for tuition paid in advance of when the academic period begins?
A.14. Generally, the credit is available only for payments of qualified tuition and related expenses that cover an academic period beginning in the same calendar year as the year in which payment is made. (An academic period begins on the first day of classes, and does not include periods of orientation, counseling, or vacation.) An exception, however, allows a parent or student to claim a Lifetime Learning Credit for payments of qualified tuition and related expenses made during the calendar year to cover an academic period that begins in January, February, or March of the following taxable year. Because the Lifetime Learning Credit does not apply to expenses paid before July 1, 1998, this exception does not apply to tuition paid before that date to cover academic periods beginning before or after that date.
I take this to mean, that I could claim payments made in December, for this January, even though the class is for the current tax year, and claiming a similar December 09 payment for January 2010 classes last tax year was also proper.
In the past, the IRS hasn't really given a damn about the type of expenses you use it to calculate the credit, so don't worry about it too much.
Also you are correct about the tuition paid in advance of when the academic period begins.
Sweet, sounds like I may be able to let go of the 2010 tax return, if all I did wrong was add about $200 of expenses out of $3000ish total claimed. So, like $20 worth of my refund last time.
Just make sure they were expenses actually paid. Like, on your 1098-T, if your scholarships paid for all your qualified education expenses, you don't get the credit. If they paid for a part, then you subtract the scholarship amount from the qualified expense amount to get the amount you actually paid.
My parents transferred the money to me(and supposedly I don't need to report anything on that), and I paid the school cash.
And yay, checking my return from last year, it was definitely Lifetime Learning, so the only hiccup is the extra $200 or so that I claimed from books last time.
Yeah, that's fine, then. They can gift you about $26,000 per year and it doesn't reduce their gift tax exclusion of 1,000,000. And the $200 isn't really a hiccup. You'll be fine.
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ani_game_bumOptimistic, Rule-Breaking Nice GuyThe Final World/DestinationRegistered Userregular
edited April 2011
Ok, so I flied my tax return back in February and was accepted by federal and state. Got my state refund OK, but have yet to receive my federal refund. I ended up calling the IRS after the Online refund tracker informed me to call the customer service line (wonderful) after my refund was MIA for three weeks after my accept date.
Turns out, according to the rep on the phone, that there is an issue if you have taken the 2008 First-Time Homebuyer Credit when you filed your 2008 taxes (this is the one where you can take up to $7500 max depending on the purchase value of your home and have to pay back up to $500 in additional tax per tax year starting in 2010 for the next 15 years). Apparently the government cannot figure out how to process this additional tax and are delaying refunds to those that have it until they can figure it out.
Now I have to wait until April 8th to see if they can get this straightened out for everybody that took this credit two years ago and if I still do not get my direct deposit by then I need to call them and ask for a referral to expedite the processing of my refund. Total BS; I got a medical bill I need to pay with this money and is a freaking downer to check my account and not see my refund there every Friday. Ended up sending e-mails to my Congress peoples letting them know the above mess.
Anybody else here dealing with this same kind of nonsense?
Ok, so I flied my tax return back in February and was accepted by federal and state. Got my state refund OK, but have yet to receive my federal refund. I ended up calling the IRS after the Online refund tracker informed me to call the customer service line (wonderful) after my refund was MIA for three weeks after my accept date.
Turns out, according to the rep on the phone, that there is an issue if you have taken the 2008 First-Time Homebuyer Credit when you filed your 2008 taxes (this is the one where you can take up to $7500 max depending on the purchase value of your home and have to pay back up to $500 in additional tax per tax year starting in 2010 for the next 15 years). Apparently the government cannot figure out how to process this additional tax and are delaying refunds to those that have it until they can figure it out.
Now I have to wait until April 8th to see if they can get this straightened out for everybody that took this credit two years ago and if I still do not get my direct deposit by then I need to call them and ask for a referral to expedite the processing of my refund. Total BS; I got a medical bill I need to pay with this money and is a freaking downer to check my account and not see my refund there every Friday. Ended up sending e-mails to my Congress peoples letting them know the above mess.
Anybody else here dealing with this same kind of nonsense?
Well, that sounds like a huge pain. I looked it up, and it sounds like there isn't really anything you can do, except wait. I guess it's good that at least acknowledge the problem...
I recently filled out my info on Turbo Tax, and I owe 298 federal, and 129 state. Due to just recently obtaining work, after being unemployed since November I just do not have the money available before the filing date coming up in April. Is there any way other than the IRS payment plan (150 to buy in?). I feel paying 50% of what I owe to be in a payment plan painful, but will have to do it if it is my only choice. Any other tips?
I think you'd be better off taking the payment plan. It's not $150, it's more like
A $52 user fee for a Direct Debit Installment Agreement or a $105 user fee for a Payroll Deduction Installment Agreement or Routine Installment Agreement will be added to the amount you owe. Low income individuals may qualify for a reduced user fee of $43
Additionally, you can send a payment in anyway for whatever you can afford. I'd try paying off the state, because they are bigger jerks. The IRS and state will send you a bill and the bill will accrue interest, but it's not like anyone will come to your house. As long as you keep some type of payment coming, they will keep sending you bills.
So I've got an issue. My wife spent part of last year providing childcare for a friend of hers; I can easily total up how much we received all together, and it's not a huge ammount. However, her friend and her fiance split up during the year. I can't tell how much we received from either one specifically and they're not filing together (I don't think).
At this point, I could just lump the whole thing together but I don't have any idea how or if they reported it for the deduction and haven't been able to get an SSN from either of them, which I assume I'd need in place of an EIN to report it. It's only a couple thousand dollars at the most, in cash and personal checks, but there's a possibility it might affect whether or not we qualify for some credits.
I've been holding off on filing because of this, but I can't do that much longer. What should I do in this situation?
So I've got an issue. My wife spent part of last year providing childcare for a friend of hers; I can easily total up how much we received all together, and it's not a huge ammount. However, her friend and her fiance split up during the year. I can't tell how much we received from either one specifically and they're not filing together (I don't think).
At this point, I could just lump the whole thing together but I don't have any idea how or if they reported it for the deduction and haven't been able to get an SSN from either of them, which I assume I'd need in place of an EIN to report it. It's only a couple thousand dollars at the most, in cash and personal checks, but there's a possibility it might affect whether or not we qualify for some credits.
I've been holding off on filing because of this, but I can't do that much longer. What should I do in this situation?
Well, this isn't really as bad as it sounds. You basically have 2 choices:
Report whatever your wive got as income, regardless of if her friend reported it. If you decide to report it, it goes on a Schedule C, which isn't hard to fill out. Keep in mind that you could deduct any expenses (like snacks) and mileage if she had to drive.
Ignore it.
Technically you're supposed to report it, but it's really your call. If the friend doesn't report it, it's unlikely the IRS would ever find out.
And you don't need their SSNs to report the income; it's them that would need yours to take the deduction. Do they even have your wife's SSN?
I suppose the other option would be to file your return without it, and then amend it later if you find out that your wife's friend reported it.
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ceresWhen the last moon is cast over the last star of morningAnd the future has past without even a last desperate warningRegistered User, Moderatormod
edited April 2011
This probably depends on a lot of things, but I made about a grand or so doing undergrad research at my university last year, and our tax preparer (my mother-in-law, who used to do this professionally) of course meticulously noted it on our taxes as certainly the school would, but said there was no way an amount that small would make any difference to what we might owe or receive.
I say this more to be comforting about the likelihood that reporting it will affect much than anything.
ceres on
And it seems like all is dying, and would leave the world to mourn
I now need to wait till Monday to finish because I don't have my daycare's EIN. Even without deducted childcare expenses I've got a nice return headed my way. Wheeee.
I think tax credits are basically 'have some money!' for doing something the government wants to encourage. Unlike a deduction, it's just $X in taxes they knock off, and it can go below zero at least for some of them. So let's say you owed $1,000 in taxes at the end of the year, but bought a house and qualified for a $5,000 first time homebuyer credit. That means your tax bill gets reduced by $5,000 and you get $4,000 from the government.
tax credits are direct reductions of your tax liability. you get a 1:1 tax benefit for them. they are very sexy. a credit you get back from the government, even though you have no tax liability, is called a refundable credit. you can see this with the EIC and the American Opportunity credit. Nonrefundable credits only can reduce your tax liability to zero.
also withholding is usually a good idea so you don't owe at the end of the year, but if you're getting more back in credits than what you owed from the lack of withholding, then you probably wouldn't have to file anyway. If you start making more than $9,350, you should start withholding taxes.
I think you have a typo that was confusing me. Are you saying that it is NOT a good idea to with hold taxes? I thought it was a good idea as long as you have enough money that you can afford your taxes at the end of the year, because why would you want to give the government more money than you're required as soon as possible?
I do make more than 9350, but I also have a ton of deductions which helped bring me to zero.
I think you have a typo that was confusing me. Are you saying that it is NOT a good idea to with hold taxes? I thought it was a good idea as long as you have enough money that you can afford your taxes at the end of the year, because why would you want to give the government more money than you're required as soon as possible?
I do make more than 9350, but I also have a ton of deductions which helped bring me to zero.
Once you make over a certain amount (on a W-2) you MUST withhold taxes or you will pay a penalty at the end of the year.
Like, if you have an outstanding balance for the amount of tax due at the end of the year, they will assess a small penalty on the balance. The withholding is you paying income tax over the year. It's a good idea to have some form of withholding on W-2 income.
The idea that you're giving them more money than you're required to is the concept of having higher withholding than you'd need to, so they would give it back to you in the form of a refund (with no interest). On the other side, if you do not pay them enough in withholding, they assess a penalty on you.
Just be mindful of how much you make and how many credits you will qualify for at the end of the year, or you may end up owing more than you should. It's just a caution, that's all.
I received dividend income, so I filled out a 1099-div. I paid $55.92 in foreign tax on this dividend income, so I put this in Box 6. But they want more than just the foreign tax amount I remember putting in for previous years - they want to know how much tax was paid on which dividends in which countries. I've checked out my documentation throughly and I can't find this information. I did the calculation with and without the foreign tax and it really doesn't make much of a difference. So as I see it, I have a few options. Mark down "0" for foreign tax paid and have my return be $10 smaller. Mark "55.92" as foreign tax paid and leave all the other foreign information spaces I can't find blank. Or mark down "55.92" and spend a bunch of time on the phone trying to figure out all the other crap. I'm leaning towards the first option but I'd be interested to hear advice.
I received dividend income, so I filled out a 1099-div. I paid $55.92 in foreign tax on this dividend income, so I put this in Box 6. But they want more than just the foreign tax amount I remember putting in for previous years - they want to know how much tax was paid on which dividends in which countries. I've checked out my documentation throughly and I can't find this information. I did the calculation with and without the foreign tax and it really doesn't make much of a difference. So as I see it, I have a few options. Mark down "0" for foreign tax paid and have my return be $10 smaller. Mark "55.92" as foreign tax paid and leave all the other foreign information spaces I can't find blank. Or mark down "55.92" and spend a bunch of time on the phone trying to figure out all the other crap. I'm leaning towards the first option but I'd be interested to hear advice.
When you say that you filled out a 1099-DIV, you mean in the tax software you're using, right? Because you should have received a 1099-DIV from the bank. Out of curiousity, what software are you using to fill out your return?
Anyway, since you have less than $300 total in foreign tax paid, you shouldn't even need to fill out form 1116, which is where you would need to enter the country/countries, etc. You should be able to put $56 directly on 1040 line 47. See the first page of the 1116 instructions if you have any questions, but hopefully that helps.
I received dividend income, so I filled out a 1099-div. I paid $55.92 in foreign tax on this dividend income, so I put this in Box 6. But they want more than just the foreign tax amount I remember putting in for previous years - they want to know how much tax was paid on which dividends in which countries. I've checked out my documentation throughly and I can't find this information. I did the calculation with and without the foreign tax and it really doesn't make much of a difference. So as I see it, I have a few options. Mark down "0" for foreign tax paid and have my return be $10 smaller. Mark "55.92" as foreign tax paid and leave all the other foreign information spaces I can't find blank. Or mark down "55.92" and spend a bunch of time on the phone trying to figure out all the other crap. I'm leaning towards the first option but I'd be interested to hear advice.
When you say that you filled out a 1099-DIV, you mean in the tax software you're using, right? Because you should have received a 1099-DIV from the bank. Out of curiousity, what software are you using to fill out your return?
Anyway, since you have less than $300 total in foreign tax paid, you shouldn't even need to fill out form 1116, which is where you would need to enter the country/countries, etc. You should be able to put $56 directly on 1040 line 47. See the first page of the 1116 instructions if you have any questions, but hopefully that helps.
I'm using TaxAct, and I'm putting in the info from the 1099-div the bank sent me. The program is saying I might have an issue not because of no 1166, which it is cool with, but because I'm not filling out part of the 1099-div that I don't remember seeing before. Screenshot:
If I leave zeroes in there at the end it isn't happy about that. Can I get away with leaving them with zeroes since the foreign tax is so small? Thanks, I appreciate it.
I received dividend income, so I filled out a 1099-div. I paid $55.92 in foreign tax on this dividend income, so I put this in Box 6. But they want more than just the foreign tax amount I remember putting in for previous years - they want to know how much tax was paid on which dividends in which countries. I've checked out my documentation throughly and I can't find this information. I did the calculation with and without the foreign tax and it really doesn't make much of a difference. So as I see it, I have a few options. Mark down "0" for foreign tax paid and have my return be $10 smaller. Mark "55.92" as foreign tax paid and leave all the other foreign information spaces I can't find blank. Or mark down "55.92" and spend a bunch of time on the phone trying to figure out all the other crap. I'm leaning towards the first option but I'd be interested to hear advice.
When you say that you filled out a 1099-DIV, you mean in the tax software you're using, right? Because you should have received a 1099-DIV from the bank. Out of curiousity, what software are you using to fill out your return?
Anyway, since you have less than $300 total in foreign tax paid, you shouldn't even need to fill out form 1116, which is where you would need to enter the country/countries, etc. You should be able to put $56 directly on 1040 line 47. See the first page of the 1116 instructions if you have any questions, but hopefully that helps.
I'm using TaxAct, and I'm putting in the info from the 1099-div the bank sent me. The program is saying I might have an issue not because of no 1166, which it is cool with, but because I'm not filling out part of the 1099-div that I don't remember seeing before. Screenshot: snip
If I leave zeroes in there at the end it isn't happy about that. Can I get away with leaving them with zeroes since the foreign tax is so small? Thanks, I appreciate it.
Interesting. It's just weird because as long as you don't have any federal tax withheld (box 4), the 1099-DIV doesn't need to go to the IRS, all that matters is that the proper amounts are carried over to the 1040. I'm wondering - can you leave them blank? Cause generally, when there are lines on a tax return that should be 0 or are not applicable, leaving them blank is fine. But maybe TaxAct doesn't like that. When it says that you might have an issue, is it just a warning? Cause if so, you should be fine leaving them blank/0. Good luck!
Also, you should be able to choose "Passive income", since that's what these dividends should be.
I can leave them blank, it just says "Are you sure you want to leave that blank? You might be screwing up!" I'll just go ahead and do that, thanks for the advice.
I think I used turbotax online for 2007, 2008 because it was completely free. For my 2009 taxes I went with taxact because turbotax state file was no longer free, and taxact was cheaper.
This year I started out using turbotax since they sent the most recent email reminder. I double checked some of my taxes in taxact since the turbotax refund amount seemed high (getting 2k back vs oweing 1k last year, which ended up being the same in both) and I think I like the turbotax interface more. With taxact I feel like by default they asked a lot more questions for exemptions and credits that I didn't qualify for. You can skip them but it's not intuitive. Turbotax had more/better popup boxes before entering a new line of questions so it was easier to tell if you should skip a questions series before starting it.
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Good point, state income tax can definitely swing things toward itemizing. I'm so used to living in a state with no income tax that I forget to take that into account.
american opportunity credit rocks
dolla dolla
Yes she can. If you're using the computer and you are importing last years return, it should do it automatically (does for me in uFile). If not, then you can put in the amounts on your 2009 Notice of Assessment into the correct boxes on your 2010 return.
Its not a huge deal if I can't claim it, it was for charity after all, but if I can I would like to. Thanks in advance.
"You can choose to deduct sales taxes on motor vehicles instead of state income taxes if you itemize deductions on your tax return and the sales taxes are greater than your state income taxes."
and
Auto registration fees that qualify as personal property taxes are entered in the Itemized Deduction section of the program, and are reported on line 8 of Schedule A, Itemized Deductions, as a tax.
So even though I leased the car, it looks like (the recipt here is funny and its been awhile since I've looked at it) that I paid 1551.17 in taxes, can claim about $200 in registration fees.
Am I putting too much thought into this? should I just take what I says I can get and run with it? I should add I am a 24 year old College student with less then 20k income.
Deductible personal property taxes are those based only on the value of personal property such as a boat or car. The tax must be charged to you on a yearly basis, even if it is collected more than once a year or less than once a year.
Even if you do itemize, I think deducting medical expenses, for those paid with a flex spending plan(since it is paid with pretax dollars) would not work.
As noted in the American Opportunity Credit post, I don't know that it's necessary to keep education bills, if you're in grad school or beyond 5 years of undergrad, and are not itemizing.
Question: I took the Making Work Pay credit last year, and got a large refund benefit from it. The fact that it's still available, is only to allow people who didn't specifically claim it last year, to do so now, right? Am I required to claim it even if it seems to not make any difference on my refund, and I claimed it last year?
I claimed the American Opportunity credit last year and got ~300ish in my refund for it, when I shouldn't have because it was for grad school. Is the penalty just interest, or is there a further penalty on incorrectly claiming it?
The Making Work Pay credit was offered in 2009 and is offered again for 2010. You can claim it when you file your return. Basically, you were given a bit of the credit every pay period when you received your paycheck. It's an offset against your withholding. Your return should reflect this.
I'll get some more information on claiming the wrong credit.
So I may have taken lifetime learning last year, but I certainly know that I included books etc. So, yay: I get to take the credit this year, balls: I have to figure out an amended report for last year, which hopefully is just the carved out portion for non-tuition expenses.
Q: From the IRS FAQ for lifetime learning-
A.14. Generally, the credit is available only for payments of qualified tuition and related expenses that cover an academic period beginning in the same calendar year as the year in which payment is made. (An academic period begins on the first day of classes, and does not include periods of orientation, counseling, or vacation.) An exception, however, allows a parent or student to claim a Lifetime Learning Credit for payments of qualified tuition and related expenses made during the calendar year to cover an academic period that begins in January, February, or March of the following taxable year. Because the Lifetime Learning Credit does not apply to expenses paid before July 1, 1998, this exception does not apply to tuition paid before that date to cover academic periods beginning before or after that date.
I take this to mean, that I could claim payments made in December, for this January, even though the class is for the current tax year, and claiming a similar December 09 payment for January 2010 classes last tax year was also proper.
Also you are correct about the tuition paid in advance of when the academic period begins.
Sweet, sounds like I may be able to let go of the 2010 tax return, if all I did wrong was add about $200 of expenses out of $3000ish total claimed. So, like $20 worth of my refund last time.
And yay, checking my return from last year, it was definitely Lifetime Learning, so the only hiccup is the extra $200 or so that I claimed from books last time.
Turns out, according to the rep on the phone, that there is an issue if you have taken the 2008 First-Time Homebuyer Credit when you filed your 2008 taxes (this is the one where you can take up to $7500 max depending on the purchase value of your home and have to pay back up to $500 in additional tax per tax year starting in 2010 for the next 15 years). Apparently the government cannot figure out how to process this additional tax and are delaying refunds to those that have it until they can figure it out.
Now I have to wait until April 8th to see if they can get this straightened out for everybody that took this credit two years ago and if I still do not get my direct deposit by then I need to call them and ask for a referral to expedite the processing of my refund. Total BS; I got a medical bill I need to pay with this money and is a freaking downer to check my account and not see my refund there every Friday. Ended up sending e-mails to my Congress peoples letting them know the above mess.
Anybody else here dealing with this same kind of nonsense?
Well, that sounds like a huge pain. I looked it up, and it sounds like there isn't really anything you can do, except wait. I guess it's good that at least acknowledge the problem...
You can request it here. http://www.irs.gov/individuals/article/0,,id=149373,00.html
Other options would be taking out a loan to pay for it, using a credit card, or attempting to file for an Offer in Compromise.
Did TurboTax make sure to claim all the credits you're eligible for?
At this point, I could just lump the whole thing together but I don't have any idea how or if they reported it for the deduction and haven't been able to get an SSN from either of them, which I assume I'd need in place of an EIN to report it. It's only a couple thousand dollars at the most, in cash and personal checks, but there's a possibility it might affect whether or not we qualify for some credits.
I've been holding off on filing because of this, but I can't do that much longer. What should I do in this situation?
Well, this isn't really as bad as it sounds. You basically have 2 choices:
Technically you're supposed to report it, but it's really your call. If the friend doesn't report it, it's unlikely the IRS would ever find out.
And you don't need their SSNs to report the income; it's them that would need yours to take the deduction. Do they even have your wife's SSN?
I suppose the other option would be to file your return without it, and then amend it later if you find out that your wife's friend reported it.
I say this more to be comforting about the likelihood that reporting it will affect much than anything.
I now need to wait till Monday to finish because I don't have my daycare's EIN. Even without deducted childcare expenses I've got a nice return headed my way. Wheeee.
So yay not owing taxes, but what the hell are tax credits?
That's my laymans understanding, anyway.
also withholding is usually a good idea so you don't owe at the end of the year, but if you're getting more back in credits than what you owed from the lack of withholding, then you probably wouldn't have to file anyway. If you start making more than $9,350, you should start withholding taxes.
I do make more than 9350, but I also have a ton of deductions which helped bring me to zero.
Once you make over a certain amount (on a W-2) you MUST withhold taxes or you will pay a penalty at the end of the year.
The idea that you're giving them more money than you're required to is the concept of having higher withholding than you'd need to, so they would give it back to you in the form of a refund (with no interest). On the other side, if you do not pay them enough in withholding, they assess a penalty on you.
Just be mindful of how much you make and how many credits you will qualify for at the end of the year, or you may end up owing more than you should. It's just a caution, that's all.
When you say that you filled out a 1099-DIV, you mean in the tax software you're using, right? Because you should have received a 1099-DIV from the bank. Out of curiousity, what software are you using to fill out your return?
Anyway, since you have less than $300 total in foreign tax paid, you shouldn't even need to fill out form 1116, which is where you would need to enter the country/countries, etc. You should be able to put $56 directly on 1040 line 47. See the first page of the 1116 instructions if you have any questions, but hopefully that helps.
I'm using TaxAct, and I'm putting in the info from the 1099-div the bank sent me. The program is saying I might have an issue not because of no 1166, which it is cool with, but because I'm not filling out part of the 1099-div that I don't remember seeing before. Screenshot:
If I leave zeroes in there at the end it isn't happy about that. Can I get away with leaving them with zeroes since the foreign tax is so small? Thanks, I appreciate it.
Interesting. It's just weird because as long as you don't have any federal tax withheld (box 4), the 1099-DIV doesn't need to go to the IRS, all that matters is that the proper amounts are carried over to the 1040. I'm wondering - can you leave them blank? Cause generally, when there are lines on a tax return that should be 0 or are not applicable, leaving them blank is fine. But maybe TaxAct doesn't like that. When it says that you might have an issue, is it just a warning? Cause if so, you should be fine leaving them blank/0. Good luck!
Also, you should be able to choose "Passive income", since that's what these dividends should be.
This year I started out using turbotax since they sent the most recent email reminder. I double checked some of my taxes in taxact since the turbotax refund amount seemed high (getting 2k back vs oweing 1k last year, which ended up being the same in both) and I think I like the turbotax interface more. With taxact I feel like by default they asked a lot more questions for exemptions and credits that I didn't qualify for. You can skip them but it's not intuitive. Turbotax had more/better popup boxes before entering a new line of questions so it was easier to tell if you should skip a questions series before starting it.