5th Annual Tax Thread - 2007

[Tweak155]

My question was skipped

 

[SampSon]

Originally posted by: CPA

Originally posted by: SampSon

Originally posted by: CPA

Originally posted by: SampSon
What is the cutoff level for paying into social security?
Is it $97,000?

For 2007 it was $97500
For 2008 it's $102000

So for the tax year ending on 12-21-2007 it's 97K?
Thanks.

$97,500

Doh!
Even better for me then!

 

[Xcobra]

Quick question for you here from a first timer:

Well my parents are divorcing (im 21)...my mother moved to NY, my father is still here in california. He has a house all to himself. I live off-campus on my own, he nor my mother provides ZERO support for my schooling or expenses at all. I get financial aid. Question is, would I still be called "dependent" even though I clearly depend on myself?

Also (again, california) i have no idea what form to file? suggestions.

 

[Cal166]

I have a side job (1099) and once in a while my co-worker and I go out to lunch/dinner to discuss some projects and what not. Could I write that off as a business expense?

 

[CPA]

Originally posted by: Cal166
I have a side job (1099) and once in a while my co-worker and I go out to lunch/dinner to discuss some projects and what not. Could I write that off as a business expense?

yup.

 

[CPA]

Originally posted by: Xcobra
Quick question for you here from a first timer:

Well my parents are divorcing (im 21)...my mother moved to NY, my father is still here in california. He has a house all to himself. I live off-campus on my own, he nor my mother provides ZERO support for my schooling or expenses at all. I get financial aid. Question is, would I still be called "dependent" even though I clearly depend on myself?

Also (again, california) i have no idea what form to file? suggestions.

If they provided zero support, then by definition they cannot claim you as a dependent.

 

[CPA]

Originally posted by: Tweak155
In the beginning of the year I worked part time in Michigan then was promoted to salary employee in Missouri.

I lived and worked in Missouri for 1 month (3/15 - 4/15). I then moved to Kansas but still worked in Missouri for the rest of 2007.

Will this be complicated to do with tax s/w? Would it be worth it to pay H&R to figure these taxes? I would expect a return as I was taxed roughly 28% of my income for the year.

Also my work paid for my relocation and it was not reimbursed through my check, however, they did provide a 1 time check that was "grossed up" but it was to cover any misc moving expenses. I'm assuming this is just counted as regular income?

I read all the posts and someone was mentioning salary increase and owing tax due to that... if thats the case my salary based on last year increased over 300%. I'm confused why a 20% increase in salary would result in owing 21k but that may be due to the way they are paid. I am a W2 employee.

We don't normally respond to state tax questions. Just too many different rules. I would check Kansas' rules on working out of state. Most tax software programs should be able to handle this, though.

Was the 1-time check paid through payroll? Some reimbursed moving costs are not taxable, while others are taxable.

I don't recall the other post, but it could be that he was a 1099 filer or, if W2, put him into AMT range.

 

[Cal166]

Originally posted by: CPA

Originally posted by: Cal166
I have a side job (1099) and once in a while my co-worker and I go out to lunch/dinner to discuss some projects and what not. Could I write that off as a business expense?

yup.

Thanks,

One more, with all my transactions done by credit card, say if I get audited, would my credit card statements be sufficient prove?

Thanks

 

[CPA]

Originally posted by: Cal166

Originally posted by: CPA

Originally posted by: Cal166
I have a side job (1099) and once in a while my co-worker and I go out to lunch/dinner to discuss some projects and what not. Could I write that off as a business expense?

yup.

Thanks,

One more, with all my transactions done by credit card, say if I get audited, would my credit card statements be sufficient prove?

Thanks

A receipt is the support, but if everything is small, then an auditor may not care.

 

[Tweak155]

Originally posted by: CPA

Originally posted by: Tweak155
In the beginning of the year I worked part time in Michigan then was promoted to salary employee in Missouri.

I lived and worked in Missouri for 1 month (3/15 - 4/15). I then moved to Kansas but still worked in Missouri for the rest of 2007.

Will this be complicated to do with tax s/w? Would it be worth it to pay H&R to figure these taxes? I would expect a return as I was taxed roughly 28% of my income for the year.

Also my work paid for my relocation and it was not reimbursed through my check, however, they did provide a 1 time check that was "grossed up" but it was to cover any misc moving expenses. I'm assuming this is just counted as regular income?

I read all the posts and someone was mentioning salary increase and owing tax due to that... if thats the case my salary based on last year increased over 300%. I'm confused why a 20% increase in salary would result in owing 21k but that may be due to the way they are paid. I am a W2 employee.

We don't normally respond to state tax questions. Just too many different rules. I would check Kansas' rules on working out of state. Most tax software programs should be able to handle this, though.

Was the 1-time check paid through payroll? Some reimbursed moving costs are not taxable, while others are taxable.

I don't recall the other post, but it could be that he was a 1099 filer or, if W2, put him into AMT range.

I guess wasn't my concern as specifics to each state, just the level of complication when it comes to moving, then moving then working out of state.

It was a separate check but received through payroll.

 

[EagleKeeper]

Originally posted by: Tweak155

Originally posted by: CPA

Originally posted by: Tweak155
In the beginning of the year I worked part time in Michigan then was promoted to salary employee in Missouri.

I lived and worked in Missouri for 1 month (3/15 - 4/15). I then moved to Kansas but still worked in Missouri for the rest of 2007.

Will this be complicated to do with tax s/w? Would it be worth it to pay H&R to figure these taxes? I would expect a return as I was taxed roughly 28% of my income for the year.

Also my work paid for my relocation and it was not reimbursed through my check, however, they did provide a 1 time check that was "grossed up" but it was to cover any misc moving expenses. I'm assuming this is just counted as regular income?

I read all the posts and someone was mentioning salary increase and owing tax due to that... if thats the case my salary based on last year increased over 300%. I'm confused why a 20% increase in salary would result in owing 21k but that may be due to the way they are paid. I am a W2 employee.

We don't normally respond to state tax questions. Just too many different rules. I would check Kansas' rules on working out of state. Most tax software programs should be able to handle this, though.

Was the 1-time check paid through payroll? Some reimbursed moving costs are not taxable, while others are taxable.

I don't recall the other post, but it could be that he was a 1099 filer or, if W2, put him into AMT range.

I guess wasn't my concern as specifics to each state, just the level of complication when it comes to moving, then moving then working out of state.

It was a separate check but received through payroll.

Places like H&R block will change you up to $100 when a return involves multiple states (per state)

Tax S/W will require you to purchase S/W for each state and still may not handle multiple states properly.

You are best to get the Federal filled out and do the states by hand; making phone calls to the relevant state if confusion arises.

 

[Bateluer]

A question about donations to 501(c)(3) non profit organizations: Can you deduct the full amounts you donated to them?

Edit - Nm, found 'IRS Publication 78' which lists all the charitable foundations which qualify.

 

[lizardboy]

Question someone asked me at work today...wasn't quite sure what the answer is:

If a homeowner rents out a room in their house (i.e., has a roommate), do they have to report the rent received as ordinary income? If so, can they depreciate the "spare room" as they would a home office?

 

[EagleKeeper]

Originally posted by: lizardboy
Question someone asked me at work today...wasn't quite sure what the answer is:

If a homeowner rents out a room in their house (i.e., has a roommate), do they have to report the rent received as ordinary income? If so, can they depreciate the "spare room" as they would a home office?

They are supposed to declare the rent.
Then they can also use Schedule E to depreciate the living quarters and expense off paid utilities & maintenance costs. A part of the Insurance can also be expensed off.

The percentage to use, can be based on sq footage of the room vs bedrooms, # bedrooms, or common sense.

 

[SmoochyTX]

What is the percentage that I should be putting away to pay on taxes for extra income? In addition to my regular paycheck, I also receive a monthly check for work done elsewhere (not affiliated with my "real" job). What's the easiest way to figure out how much to stow away out of that monthly check so that I'm killed at the end of the year?

 

[CPA]

Originally posted by: SmoochyTX
What is the percentage that I should be putting away to pay on taxes for extra income? In addition to my regular paycheck, I also receive a monthly check for work done elsewhere (not affiliated with my "real" job). What's the easiest way to figure out how much to stow away out of that monthly check so that I'm killed at the end of the year?

That's not an easy question to answer. I assume you have your own expenses to offset that check (if it's 1099 related). Additionally, I have no idea what your current lifestyle is - are you married, do you have kids, do you support others, etc.

Maybe the easiest way to do it is to calculate your effective taxrate with just your normal income. Apply that rate to the other income.

 

[SmoochyTX]

Originally posted by: CPA

Originally posted by: SmoochyTX
What is the percentage that I should be putting away to pay on taxes for extra income? In addition to my regular paycheck, I also receive a monthly check for work done elsewhere (not affiliated with my "real" job). What's the easiest way to figure out how much to stow away out of that monthly check so that I'm killed at the end of the year?

That's not an easy question to answer. I assume you have your own expenses to offset that check (if it's 1099 related). Additionally, I have no idea what your current lifestyle is - are you married, do you have kids, do you support others, etc.

Maybe the easiest way to do it is to calculate your effective taxrate with just your normal income. Apply that rate to the other income.

There are no expenses to offset (yes, it's 1099). Single, no kids, no dependents. If you need more info, I could provide it in PMs. This is my first time being in this situation -- I began receiving these extra checks in August 2007. I'll be continuing to do this job for 2008 so I really don't want it to snowball on me if I don't start off right.

I did save money from these 2007 checks for taxes but I have no idea if what I saved was good enough and I want to make sure there are no problems for 2008.

 

[EagleKeeper]

A good rule of thumb is 30% or your previous years tax bracket, which ever is the higher amount.


Also, I am suprised that you can not come up with expenses on how to offset some of that income.

There are plenty of suggestions/examples,etc in the previous 4 tax threads; linked at the top. It may be a long read, however, using your search within the browser on 1099 or Schedule C should help.

 

[BKLounger]

thank god the tax thread is back because this year I am gonna pull my hair out with the fiancee's taxes. Here is the backstory. She was a student in massachusetts for half the year and worked at an internship in Rhode Island for the other half(paying ri state tax)(still living in massachusetts). This means I will have to file federal and state for mass and ri for her correct?

 

[EagleKeeper]

Originally posted by: BKLounger
thank god the tax thread is back because this year I am gonna pull my hair out with the fiancee's taxes. Here is the backstory. She was a student in massachusetts for half the year and worked at an internship in Rhode Island for the other half(paying ri state tax)(still living in massachusetts). This means I will have to file federal and state for mass and ri for her correct?

Correct.

I would recommend that you use paper for the States.
Tax S/W does not like to cross states easily and H&R block crosses states at about $100 per state line.

 

[BKLounger]

i always use paper. i rather always do it it myself than pay H&R Block or software some insane amount. I have done mine and my parents taxes since I was 18 but now as of last year I am doing my fiancee's as well. So i looked and she will be filing a mass resident form, a ri nonresident form, but she still only files 1 federal form correct? (this is my first year with multi state returns)

 

[Syrch]

Quick question b/c i usually just avoid this and let the IRS keep money from me. I have donated a ton of stuff this year such as kids clothes, toys, a printer and misc house hold items. How do you claim them as i have no idea what the value of everything was? Also I only kept one of the receipts from all the times i've been to goodwill so should i just fill that one out and keep it with my tax return for this year as proof or should i just scratch the whole idea?

Also I paid for my G/F's kids day care during the summer. I am not claiming them as im not legal to but i see there is an option here for this on the tax form so should i put in how much i spent?

 

[EagleKeeper]

Originally posted by: BKLounger
i always use paper. i rather always do it it myself than pay H&R Block or software some insane amount. I have done mine and my parents taxes since I was 18 but now as of last year I am doing my fiancee's as well. So i looked and she will be filing a mass resident form, a ri nonresident form, but she still only files 1 federal form correct? (this is my first year with multi state returns)

Correct - Federal is only one government.

Consider getting off-line tax S/W though.
It makes it great for not having to re-enter data, pikcing up information that gets rolled over into the coming years, playing what if scenarios and getting calculations to line up.

 

[EagleKeeper]

Originally posted by: Syrch
Quick question b/c i usually just avoid this and let the IRS keep money from me. I have donated a ton of stuff this year such as kids clothes, toys, a printer and misc house hold items. How do you claim them as i have no idea what the value of everything was? Also I only kept one of the receipts from all the times i've been to goodwill so should i just fill that one out and keep it with my tax return for this year as proof or should i just scratch the whole idea?

Also I paid for my G/F's kids day care during the summer. I am not claiming them as im not legal to but i see there is an option here for this on the tax form so should i put in how much i spent?

1) If you have a working relationship with the local Goodwill, you may be able to get them to give you a coverall receipt. Other than that, you are on your own in terms of having to prove the donations IF you get selected for a personal visit by the IRS

2) Based on your description, the child(ren) do not meet the Qualifying Person test. Therefore you can not claim the child care credit.

 

[BaNzaiDags]

I have a question about health Savings ACC (HSA).
My girlfriend is pregnant and is Due in July. I'm starting an HSA this year, the baby will by my dependent, but she is under her own health plan
I was wondering if I could use my HSA to pay for her mediacal bills, I went to IRS.gov site and looked up publication 502 , I don't see why she wouldn't fall under qualifying relative.

my question is: Can i pay for her medical bills out of my HSA account?

"Qualifying Relative

A qualifying relative is a person:

1. Who is your:
1. Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild),
2. Brother, sister, or a son or daughter of either of them,
3. Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle),
4. Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or
5. Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law,
2. Who was not a qualifying child (see Qualifying child above) of any taxpayer for 2007, and
3. For whom you provided over half of the support in 2007. But see Child of divorced or separated parents, earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501, Exemptions, Standard Deduction, and Filing Information."