Topic: The official tax advice thread for 2006 federal tax returns. (was 2005)
Boon
unregistered
posted
quote: Wow - let's hear it for tax-deductible hobbies. Just about everything is the same as last year, except I paid tuition, so I get a refund for the first time in years.
I've heard it said that the perfect tax return is the one where you owe Uncle Sam exactly $1.00.
You know, Rivka, you could come to Tulsa. You could even bring the kids. We'll have a TulsaTaxCon and I'll do all the attendees' taxes for free and take y'all to the zoo.
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posted
Boon, I figured you'd be frazzled from all you had to do today, so I thought I'd call tomorrow. (Friday, if you don't read this till then.) I'll be home all day except from 9:30 - 11:30. And all weekend. Any time in particular good for you?
(I kind of assumed she meant schooling, too.)
Posts: 9871 | Registered: Aug 2001
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Boon
unregistered
posted
Tomorrow afternoon would be good, as I have to be out again in the evening.
Otherwise, weekend afternoons and evenings are best.
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posted
Okey dokey. What do you mean by "afternoon?" (I'm not too obsessive or anything, but I'd hate to get you at lunchtime, or as you're putting kids down for a nap or something.) (Okay, I am too obsessive, but hey, what can you do?)
Posts: 9871 | Registered: Aug 2001
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posted
We may be in Vegas in September for a weekend, and Jeff will be busy, but I won't... (Well, excepting the two small ones that I'll be looking after.)
Posts: 21182 | Registered: Sep 2004
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But there's probably no way we're going to get there for a weekend before then. Most weekends Jeff works, and we're going to have a newborn, and we're already going to a wedding in Flagstaff in March.
Posts: 21182 | Registered: Sep 2004
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quote:Originally posted by Kayla: Is it also a day-care?
Well, they have pre-school and kindergarten there with one administrator, and 1st through 8th grades with a different administrator.
quote:Originally posted by Kayla: Our son went to a full-time kindergarten (that also had other grades, but one big school room basically) but since they had the daycare registration thingy with the state, they were considered daycare.
Hmm... so maybe there's a chance there.
quote:Originally posted by Kayla: However, I found a website that mentioned something about Illinois and private school tuition.
Thanks. I'd seen that, but I was wondering whether it made more sense to use the child care deduction, because it's not limited the way the tuition tax credit is.
Posts: 12266 | Registered: Jul 2005
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posted
I'd guess several things -- if they have "classes", if the people directly in charge of the children have teaching degrees or certifications (or the title "teacher"), what percentage of the time is spent on various activities.
Except it looks like they stand pretty firm on anything entitled "kindergarten":
quote:7.1 Child Care Credit/Other Credits : Child and Dependent Care Credit & Flexible Benefit Plans My spouse and I both work and are eligible for the Child and Dependent Care Credit. May I include my 5 year old son's parochial school kindergarten tuition cost as a qualified expense in Form 2441, Child Care Expenses?
The expenses for kindergarten do not qualify for the dependent care credit because kindergarten is primarily educational in nature. However, you can count the part of the expenses of sending your child to school that is for your child's care if it can be separated from the expenses of education. For example, you may count the cost of an after school care program even though the school tuition does not qualify.
posted
Boon -- I ran my turbotax last night and ran into a question I couldn't answer.
I was trying to see whether or not it would be right to claim my mother as a deduction. According to the guidelines, she couldn't make over XXX (I don't remember the amount) of taxable income.
She received only social security. Now on the form that Social Security sends her for her taxes, it list how much she made for the year in SS (and it was like $5000 or so) and then says "this MAY OR MAY NOT be taxable".
SO I can't answer the question as to whether she makes that $5000 as taxable or as non-taxable income! So I don't know whether I should claim her as a dependent. (She is over 65, and getting just the general retirement SS benefit).
FG, her SS is NOT taxable. If you provided more than 50% of her room, board, and upkeep (sounds like a house or something, upkeep ), claim her.
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quote: The EITC is a refundable federal income tax credit for low-income working individuals or families. The credit was created in 1975 in part to offset the burden of Social Security taxes and as a work incentive. The amount of the credit varies but it is generally determined by income and family size.
The maximum amount of earned income allowed is higher for 2005 than it was for 2004. A taxpayer may be able to take the credit for 2005 if they:
earn less than $31,030 ($33,030 if married filing jointly) and have one qualifying child; earn less than $35,263 ($37,263 if married filing jointly) and have more than one qualifying child;
earn less than $11,750 ($13,750 if married filing jointly) and have no children.
There are other rules, but that's the one that affects most people.
quote: How do you know if you qualify for free tax prep?
Different providers have different requirements. You'll just have to check.
quote: I'm on Mac, is there free software for it?
I said tax questions, not computer questions. I have no idea.
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posted
Human, go to HEREand do all the paperwork/filing online, and you don't need to download any specific software onto your machine. So it won't matter which OS you are using.
quote:*nod* Understood. But this is for a work thing, neh?
Yup. We'd be along for the trip. We'd have most of our time free, Jeff would have some, not necessarily much.
Posts: 21182 | Registered: Sep 2004
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Student Loan Interest deductions. My husband graduated in 1994, but I'm wondering if the law hasn't changed since then.
I looked at the IRS publication 970 (Tax benefits for education) and on page 25 (student loan interest deductions) there is information that has cunfuzzled me. The Reminders section, right at the beginning says that "the following changes apply to interest due and paid on qualified student loans after December 31, 1997.
Also, right next to that Reminders section is a graphic "Student Loan Interest Deduction At A Glance" and the fourth one down says "Time limit on deduction" and then "You can deduct interest paid during the remaining period of your loan."
So, between the fact that the legislation was passed in 1997 and the loan was originated in 1994, I can't find any information on whether or not the interest is deductible. Cause it seems that if the loan were made after 1997, the interest would be deductible for the life of the loan. Personally, I don't even really see that the legislation is particularly saying that the it only affects loans after 1997, just the interest paid after 1997.
OOh, maybe this is an example of how it used to work and how the law changed?
quote: Example. You took out a qualified student loan in 1994. Beginning October 1, 1996, you made a payment on the loan every month, as required. In September 2002, you received a small inheritance that allowed you to make an extra payment on your loan during October, November, December, and January. You made your final loan payment in August 2003. No student loan interest deduction was allowed before 1998. The following interest payments would qualify for deduction.
See, I was wondering where that 60 month thing we talked about came in, because there was no mention of it on the tax forms. So, according to that example, it doesn't matter when the loan originated, or how many years he's been paying on it, right?
[Also, you should e-mail me your snail mail addy so I can send you a thank you.]
Posts: 9871 | Registered: Aug 2001
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posted
I don't know if this helps any Kayla -- but I had student loan interest.
I simply logged onto my student loan information on the Sallie Mae loan site, and they had the 1098-E information right there on my account (they don't mail it anymore) and told me exactly how much interest I could show as being deductible on my tax return.
posted
Thanks, Farmgirl. I'll have him log on. I got a letter telling me that they sent the information from the 1098 E to the IRS. And it has the information from "Box 1" (?) which may be less than actual interest paid if the loan originated before 2004 because loans before then didn't include origination fees and whatnot. Or something.
So, they basically sent me a letter telling what information was on the 1098 they sent to the IRS, but didn't send me the 1098.
My brother's bank did the same thing with mortgage interest. Sent me a letter telling me that they sent the 1098 to the IRS, but not to me. I don't get it. Are people forging 1098s? I would think if they did this to avoid that, the problem with W-2s would be even worse.
Posts: 9871 | Registered: Aug 2001
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Boon
unregistered
posted
Hm. An area I need to brush up on. Okay, I'll learn it and post tonight (or first thing tomorrow). Right now I have to run out (again!) to do more cookie stuff. Grrr.
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Holy crap. Got our last W-2 today, did the math, and we owe $1,064. Holy crap. When my wife took the job for which she had the most income ($7,151), she specified withholding at the "higher, single rate" on her W-4, yet they withheld only $218. Holy crap.
posted
Wow, things have changed. Here's all the information in 970 that has to do with student loan interest.
There's no time limit anymore. If the loan was written before ...umm, sometime in 2004, all kinds of things are deductible that weren't before. Origination fees, capitalized interest...even interest on credit cards if they were used for qualified expenses. Wow, wow, wow!
1098s are frequently sent to the taxpayers (us) in letter format now. The reason? Uhhh..dunno. Costs less to print?
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Boon
unregistered
posted
Irregardless, need some help or are you sure that's right?
They probably didn't hold out as much as you thought they would because of the job change. See, when you switch jobs, your new employer treats your paperwork as though he's the only one you've worked for that year, so they base the withholding on how much you'll need to have taken out to pay taxes on only the amount you'll make for them. And they only start taking out taxes once you reach a certain amount (I think it's like, $3000 or something).
FWIW, in the future, there is a box on the W-4 you fill out as a new hire to tell the boss to hold out extra every paycheck.
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Thanks, Boon. Yes, that sounds like the problem, and that practice sounds insane, IMO. Posts: 326 | Registered: Aug 2005
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Boon
unregistered
posted
But still, $7000 shouldn't change your taxes by that much. If you decide you'd like a private consult, send me an email and I'll send you my phone number.
I hope you don't really owe that much. I hate the IRS too much to see anyone give them that much money.
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posted
This is our last year to pay self-employment, praise God. We did have some plumbing business in 2005. After this year it's all going to be on W-2's and I can't wait for tax time to be simpler and less stressful!
Posts: 14428 | Registered: Aug 2001
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Boon
unregistered
posted
Yay for easier tax paperwork. You know, this whole headache could be avoided if we switched to a national sales tax instead.
quote:Originally posted by Boon: But still, $7000 shouldn't change your taxes by that much. If you decide you'd like a private consult, send me an email and I'll send you my phone number.
I hope you don't really owe that much. I hate the IRS too much to see anyone give them that much money.
I couldn't believe it when I first ran the numbers, but I'm fairly certain it's right. This was the most straightforward & simple our taxes have been since we've been married.
Married jointly, no dependents Total income: $44444 - Student loan interest $358 Standard $10K deduction (no mortgage, etc.) + 2 exemptions Taxes: $3421 Withheld: $2357 Owe: $1064
Posts: 326 | Registered: Aug 2005
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posted
There any way you can get more deductions by itemizing?
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Boon
unregistered
posted
Without a mortgage, the chances are slim...unless one of them has a cost intensive job, like a mechanic that has to buy tools or something.
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I mean, I feel your pain, having owed the IRS even more than that before (self-employment taxes are a bugger bear) but I know how disheartening it is to receive bad news, especially unexpected bad news from a tax return.
At least you know about it now, and can start putting money away between now and April 15th. One thing I know from experience - it doesn't feel good ever sending the IRS a check, but it certainly will feel worse if you send it in early. Even when I had the money set aside, I always pay them on the 15th. No reason they should get my money one day sooner than I legally have to provide it.
Posts: 14428 | Registered: Aug 2001
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posted
Nope. About the only significant item would be church contributions, and that's nowhere near the standard deduction.
Posts: 326 | Registered: Aug 2005
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quote:Originally posted by Belle: At least you know about it now, and can start putting money away between now and April 15th.
That's about the only good thing about this. At least I did them as soon as I got the documents, instead of getting caught by surprise two months from now.
Posts: 326 | Registered: Aug 2005
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I'm gainfully employed full-time in the pits of hell. Some people call it a retail sales job.
I'm also working with a small business part-time, off their official payroll, doing miscellaneous work. Payment has been through personal check, and no single payment to me has exceeded $200. I should report this under gross income, my conscience says. Is there a certain threshold below which these payments don't have to be reported? A certain level of income from a source that isn't taxable?
Posts: 1813 | Registered: Apr 2001
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Boon
unregistered
posted
You can also make payment arrangements if you need to, or pay your taxes with a major credit card if you absolutely must.
I wouldn't unless I absolutely had no choice, though.
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Boon
unregistered
posted
quote:I'm also working with a small business part-time, off their official payroll, doing miscellaneous work. Payment has been through personal check, and no single payment to me has exceeded $200. I should report this under gross income, my conscience says. Is there a certain threshold below which these payments don't have to be reported? A certain level of income from a source that isn't taxable?
The lower limit was $400 as of last year...but that was only if that was your only income.
Basically, yes, you have to report it. Here's where it gets tricky:
If you were an independent contractor, setting your own hours, deciding for yourself *how* the work would be done, you're file a Schedule C. That means self-employment taxes, etc.
If, however, you were a regular employee and just off the books, you're required to report the income on line 7, with a written explaination attached.
If you want the IRS to determine your status as an employee or not, you must request it.
If you do report the income, though, on anything but a Sch C, you're employer will probably get a visit (or at least a letter) from the IRS.
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I have my taxes almost all done (although not yet sent through) and my bank (where I also work) sends me this little letter (I don't have the form number with me) that is the kind of thing you usually get to report interest on your accounts. (except I already had the interest on my accounts known). This letter doesn't say "interest" but shows a little $25 "bonus" that has to be reported to the IRS, it says.
That "bonus" was a $25 Visa gift card I received for referring someone else to open an account with our bank.
Now where the heck and I supposed to report THAT number on this return?
And I still hate doing my tax return!
Posts: 4393 | Registered: Aug 2003
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Boon
unregistered
posted
quote: This letter doesn't say "interest" but shows a little $25 "bonus" that has to be reported to the IRS, it says.
That "bonus" was a $25 Visa gift card I received for referring someone else to open an account with our bank.
Now where the heck and I supposed to report THAT number on this return?
Normally they would have sent you a 1099-MISC and put that in box 7. I hate that they've switched to letters. More confusing.
How. Fun. Now you get to do a Schedule CEZ.
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Boon
unregistered
posted
quote: Holy Carp.
Your tax system makes ours seem simple.
And I still hate doing my tax return!
Yeah. And, not only do all of us get to do the federal return, but most of us also get to do state returns, and some of us even get to do city returns.
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