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It's that time of the year again! [2013 Tax 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
It's mid-January! That means it's time to start watching for W2s, adding up your charitable donations and medical expenses for the previous year, and trying to find all those receipts you misplaced because you moved twice in one year and you're only pretty sure you even know what happened to all the boxes from the second move, let alone the first.
That last one's just me? Okay then.
Anyway, here goes your questions, comments, and helpful links for US and state taxes. I will try to note any links passed along in the next post, so check there first to see if the link you need has already been posted!
I know 2013 was my most monstrously complicated tax year yet and I will definitely be seeking help with that... May you all have it a bit easier.
That last one's just me? Okay then.
Anyway, here goes your questions, comments, and helpful links for US and state taxes. I will try to note any links passed along in the next post, so check there first to see if the link you need has already been posted!
I know 2013 was my most monstrously complicated tax year yet and I will definitely be seeking help with that... May you all have it a bit easier.
And it seems like all is dying, and would leave the world to mourn
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Do you need to file a Federal income tax return?
http://www.irs.gov/Individuals/Do-You-Need-to-File-a-Federal-Income-Tax-Return?
You don't have to file if you made less than $9,000 I think.
Wud yoo laek to lern aboot meatz? Look here!
If you worked and made less than $9,000, you still file, you just end up getting everything you paid in throughout the year back.
For example, for a married couple that makes a modest $60k and doesn't have a mortgage, you'd have to spend $18k in medical expenses for the year before it even started to help. If you own a home, pay a bunch of property taxes, have a lot of charitable contributions, or other big itemized deductions, it might be as low as $6k before it started to help. But still, it's quite a bit.
Yes, the 1099-R. Those will go out by the end of this month.
This year:
- My husband was getting unemployment for the first half or so of the year. Do we need a W2?
- I had a baby, which came with a $3500 price tag for care (midwife). Having a baby counts as a medical expense, right?
- My husband got a job and we moved almost 2500 miles so he could take it, costing us about $5k all told. What of that can be declared, if anything? We don't have our gas receipts but if it mattered I could scour our bank records.
- He has about 4 months of employment for the year, so I think our tax bracket should be pretty low. We'll only need to worry about what he made and not "annual salary", right?
- We donated literally all of our furniture, a house full of it, plus some clothes and books and a bunch of other odds and ends to HfH and GoodWill, between both moves, all starting in January. I only pray I can figure out where all those receipts went. How do I itemize that? Do I itemize that?
- I worked but not even $5k worth and it was cash. Do I need to bother declaring it?
- We had to do a short sale on our house and ended up with a pretty big deficiency, which was forgiven by the bank. I am pretty sure the act that says we won't owe huge money to the government for that was extended to 2013 because Congress was busy filibustering emergency relief funds for Hurricane Sandy or some bullshit. What in the sam hell do we need to fill out for that? Can all the info be gleaned from the forms we got at settlement?
- Our son was born this year. He counts as a dependent for the whole year and not some fraction of a dependent or something, right?
I am seriously considering hiring someone at this point. How much does that run, usually?
1. You'll get a 1099 from the state, similar to a W-2, that'll show his unemployment income and taxes withheld (if any)
2. It does, but like I said above, it won't necessarily help unless you have a lot of medical expenses
3. I would take all of it, personally. Ideally you should have all the documentation to back it up, but if nothing else just count up the big expenses. And estimate where necessary.
4. Right
5. Donations are tough. As with the moving expenses, it's good to have documentation. But again, I'd take it regardless. Just create a list from memory, if you have to. For each thing/batch of things: date donated (roughly), what it is (clothing, household items, furniture, etc.), and your best guess at the fair market value. Ideally you'd have the receipts, but those don't really show anything, just confirmation that they got something from you on that day. As long as it's less than (I think) $5k total for the year, you don't need to worry about appraisals. As with medical, it goes on Schedule A, so if you don't/didn't own a home, you may well not get to use any of this.
6. As an accountant, of course I have to tell you yes. You have to declare all income, regardless of the source. It's up to you whether or not to, of course. Would the IRS ever find out if you didn't? Probably not. Keep in mind that if it's self-employment income, you'd have to tack on 15% in addition to regular income tax, which adds up fast.
7. You'll get a couple of forms on this. One that shows the sale. And the other that shows the amount of debt forgiven. Those, plus details on what you originally paid, and details about your mortgage, should be all you need. You're right that it shouldn't hurt you, but it can get complicated. Of all your bullets, this is the biggest one that people are likely to mess up on their own, and I'd recommend getting professional help for. If you're buget conscious, you could always prepare it yourself and have someone review it.
8. Yep. Our first daughter was born Dec 30, and we got the whole amount for her that year. Oh, and congrats!
To give you an idea on price, I know I'm not the cheapest preparer in the area (I don't want to be), and based on what you said, I'd probably quote someone like you $300 - $400. H&R block would probably be a little cheaper, but in my opinion they're hit and miss.
If you used the car to take you, others in your household, or your stuff to a new home, you can actually take that as a deduction on top of the other moving expenses. You can either use your actual expenses, like gas and oil for your car, or you can take a standard mileage rate. This year it's 24c per mile. Also, you can also deduct the parking fees and tolls you paid while you moved. You can use google maps to retrace your route and see how many tolls you went through. Or you can go through your EZ Pass records, if you have that. The only deductions you can't take are for depreciation and insurance, whether you use the standard mileage rate or the actual expenses.
Below's just a quick summary of stuff for this year:
Personal exemptions this year:
$3,900
Standard Deduction this year:
$6,100
Standard deduction for dependents:
Cannot exceed the lesser of (1) $6,100 or (2) the greater of $1,000 or $350 plus the dependents earned income.
Standard mileage rates for 2013:
Business: 56.5c per mile
Medical and moving: 24c per mile
Charitable services: 14c per mile.
Credits:
Child tax credit is $1,000 per qualifying child under 17. Phases out above certain income levels.
Adoption expenses: $12,970 max
Child and dependent care: 35% of employment-related expenses, up to $3,000 for one kid and $6,000 for two or more. It phases out by 1% for each $2,000 over AGI of $15,000, so you're most likely going to see 20%, which is the lowest of the low.
American Opportunity credit: $2,500 per year (100% of the first $2,000 of qualifying expenses and 25% of the next $2,000) with 40% of the credit being refundable.
Lifetime learning credit: 20% of up to $10,000 of qualified tuition and related expenses, up to a max of $2,000. Not refundable.
Random stuff:
Maximum 401(k) deferral was $17,500
IRA contribution limit was $5,500
Roth IRA contribution was also $5,500
Per-donee gift tax exclusion: $14,000
New shit this year
You might remember some of these crappy tax laws from awhile ago, but 2013 is the year that you see the return of the Itemized deductions limitation and personal exemption phaseouts over an applicable AGI threshold. These thresholds begin at: $250,000 for single people, $275,000 for head of household, and $300,000 for married people
The Personal Exemption Phaseout (PEP) reduces personal exemptions for both taxpayers and their dependents by 2% for each $2,500 (or part of $2,500) that adjusted gross income (AGI) exceeds the threshold for the relevant filing status.
The itemized deduction limitation, also know as the Pease limitation, phases out itemized deductions by the lesser of 3% of the excess AGI over the applicable threshold or 80% of the amount of the itemized deductions for the tax year.
Quick example: Single filer with no dependents and AGI = $300,000: AGI exceeds the phaseout threshold by $50,000 (= $300,000 - $250,000); 3 percent of $50,000 is $1,500. Itemized deductions may be reduced by $1,500, up to a maximum of 80% of itemized deductions.
@tyrannus
The first one is capped at being claimed only for four years total, right? The second is for whenever you qualify?
I've been taking classes towards a degree part time and claimed the Opportunity credit because I would just about max it out but with only one course this year I think I want to save my eligibility for another year. Is that sensible?
Thankee kindly folks, I'll keep my eyes out.
Wud yoo laek to lern aboot meatz? Look here!
Off the top of my head I'm not positive, but I think it's actually limited to your first four years of undergrad, regardless of whether you take it. So even if you didn't take it all four years, you couldn't take it in your 5th year. Again, I'm not 100% sure on that.
I think you also have to be at least half time to qualify, so if you're only taking one class it might be moot.
I definitely do not qualify for the Hope this year, I only took one course. Previous years I had at least one semester each year where I took two courses which does qualify, which is nice that I didn't inadvertently break the law and all. Also it would seem that Turbotax left some detail out of the requirement thing. Jerks.
There's a box on the 1098T for "at least half time" or something like that. Presumably TurboTax would key off that, and if you didn't have it checked it wouldn't give you the credit.
Yea, it's actually the "First four years" bit that had me worried. I had taken some previous courses as a non-matriculated student a few years back, that was worrying me. I think I'm okay though since I wasn't matriculated at the time. If a year doesn't count as on of the "First four years" because of non-matriculated/course load but does count to render me ineligible in the future....well that's just silly.
This is ignoring the whole "half time" requirement is based on typical people in my degree program which because of my school means it consists of me, myself and I since all degree programs are individually designed. I suppose they'd default to the big classifications like BS or BA. Though given that my school is geared towards adult learners I am now kinda curious what the average course load is.
Anyways, thanks for the help.
TurboTax is asking for all the 1099 box data I can't just put "$8" or something. So that's why I'm confused.
Yeah, you're supposed to report it, no matter how small. You can put in whatever, even $1. If you didn't report it, would the IRS ever know? Probably not.
One thing I'd suggest is to cross reference the 1098 you get from the bank with your settlement statement (HUD). They don't always put the points (if any) on the 1098, and if they sold your mortgage to another bank (which is common), the 1098 won't necessarily include all of the interest.
Yeah I have no problem reporting it, just didn't know if I was supposed to.
For things under 0.50 cents, just leave it at $0 right? I do have a bank account that I apparently earned 5 cents from, according to mint.
http://www.irs.gov/publications/p970/ch04.html
$75,000 modified adjusted gross income
That's right. On tax returns these days, everything gets rounded to the nearest dollar.
Yeah, above that a non-married filer would get no benefit. Although after $60k of AGI, it starts to phase out (linearly up to $75k, I believe).
You'll probably want to quickly look over Appendix B in Pub 970 (http://www.irs.gov/publications/p970/ar02.html). The formatting is awful, maybe there's a better table somewhere. But it should have everything.
Basically there are a couple of different options, any of which might be possible for you. Generally the American Opportunity Credit is the best, then Lifetime Learning Credit, then Tuitition and Fees Deduction.
Thanks! There's a table in there that is almost completely impossible to follow, but I think I successfully reformatted it. Looks like the Lifetime Learning Credit is the best choice this year, but I'll run through the math to make sure.
Sounds good. And bear in mind that if you use TurboTax or whatever, I'm sure it'll have an optimization function that calculates the best option for you.
See earlier in this thread, apparently the Opportunity credit is only your first four years, not any four years.
Remember also that Lifetime one isn't refundable while Opportunity is. If you go to school on the side with a real income this is probably not an issue.
both my wife and I are getting masters degrees and both of us work full time, so it looks like Lifetime will work best for us.
I'm guessing that you're thinking of the FBAR (for >$10k, filed separately from the tax return) and 8938 (>$50k, filed with tax return). http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements
Let 'em eat fucking pineapples!