Search found 949 matches

by damjam
Sun Feb 23, 2014 5:43 pm
Forum: Personal Finance (Not Investing)
Topic: What to do with Annual Bonus
Replies: 12
Views: 1674

Re: What to do with Annual Bonus

It may feel like your sheltering your bonus, but then your just subjecting more of your "regular" pay to the 40% tax. It all comes out the same.
I will caution that some 401k matching contributions by employers are based on a per paycheck basis. So if you front load your 401k contributions such that you max out before the end of the year, you could miss out on some employer match. That is assuming you get an employer match and that it is structured that way.
by damjam
Sun Feb 23, 2014 12:06 pm
Forum: Personal Finance (Not Investing)
Topic: How do I attach a statement when filing electronically?
Replies: 29
Views: 10636

Re: How do I attach a statement when filing electronically?

Browser wrote:I'm curious. Why do people e-file anyway? Can't afford the cost of a stamp?
1. You get very fast feedback as to whether the return was accepted.
2. You get faster refunds, especially if you go for direct deposit.
3. You don't have to go to the post office (if you like to use certified mail for this).
by damjam
Sun Feb 23, 2014 11:31 am
Forum: Personal Finance (Not Investing)
Topic: How do I attach a statement when filing electronically?
Replies: 29
Views: 10636

Re: How do I attach a statement when filing electronically?

Sorry I don't know about your software. Maybe you should try using Turbo Tax or TaxAct. AFAIK, both automatically allow for a statement to be attached when there is a 1099-R indicating a rollover or recharacterization. In TaxAct it is near the end of the process, after all information has been entered. You can e-file with such a statement. I don't know about your software, but the professional tax software VITA sites use allows us to upload PDF attachments to our efiles. The IRS can definitely accept PDFs as part of an efile, so I would think that consumer software would have the same capability. I would check with customer support if it is not obvious from the software menu how to do this. TaxWise (the software used by VITA and AARP TCE si...
by damjam
Sun Feb 23, 2014 11:11 am
Forum: Investing - Theory, News & General
Topic: issues concerning 401k rollover
Replies: 7
Views: 990

Re: issues concerning 401k rollover

TO39 wrote:Thanks for the replies,


My 401k has pre tax monies, 401k roth monies, and post tax monies. I wanted to transfer this money to a Roth IRA, a regular IRA, and a taxable account, respectfully. or just a Roth IRA and a regular IRA if that made sense.
Why would you want to transfer the post tax money to a taxable account? It's my understanding that the preferable thing to do is to transfer post tax money to a Roth account.
Go to http://fairmark.com/ and search for "isolation of basis" for information on how to move post tax money to a Roth.
by damjam
Sun Feb 23, 2014 11:07 am
Forum: Personal Investments
Topic: I thought I understood backdoor Roth but now I'm confused
Replies: 27
Views: 2908

Re: I thought I understood backdoor Roth but now I'm confuse

tmhudg wrote:
retiredjg wrote:I think it is good to have some tax-diversification (some money in traditional status and some in Roth status). But there is an argument to be made that putting money into Roth at 28% is not the best choice when you could be getting a tax-deferral instead.

I see this now and agree that I might be able to get out of this bracket and that is appealing. I'm not clear on contribution limits for her (potential) solo 401k. Can we go up to 23K on hers too (based on our join income) or is it based on her self-employment income in some way?

The amount your wife can contribute to her solo 401k will be based on the earnings of her business and her salary from that business. Your income does not come into play.
by damjam
Sun Feb 23, 2014 10:18 am
Forum: Personal Finance (Not Investing)
Topic: Filing paper stubs with by-mail tax return - why?
Replies: 4
Views: 896

Re: Filing paper stubs with by-mail tax return - why?

Are you talking about W2s and 1099-Rs?
If you are, I have no idea why they are required, but I know they are.
Seems silly considering the IRS should already have this information. At least they should have it by February.
by damjam
Sat Feb 22, 2014 3:57 pm
Forum: Personal Investments
Topic: I thought I understood backdoor Roth but now I'm confused
Replies: 27
Views: 2908

Re: I thought I understood backdoor Roth but now I'm confuse

See the WIKI on Backdoor Roth. Read the caution section, it explains the problem with having additional tIRAs when you want to do backdoor Roths.
If you have money in a 401k that does not get factored into the equation for converting a tIRA to a Roth IRA.
If you do not wish to do backdoor Roths there is no reason I can think of not to rollover your wife's 401k to a tIRA. Unless she has access to something really great in that 401k that she can't get on her own.
by damjam
Sat Feb 22, 2014 12:15 pm
Forum: Investing - Theory, News & General
Topic: Retirement account value vs. total contributions
Replies: 15
Views: 1596

Re: Retirement account value vs. total contributions

baw703916 wrote:What I think this means is that if an investor doesn't have an low-cost plan and nearly perfect behavior, it's very difficult indeed to save an adequate amount in a 401(k) or equivalent.
This is true. But the other important lesson is that you can't expect your returns to rescue you from not saving enough. (Whatsapp employees excepted)
by damjam
Sat Feb 22, 2014 11:43 am
Forum: Personal Investments
Topic: I thought I understood backdoor Roth but now I'm confused
Replies: 27
Views: 2908

Re: I thought I understood backdoor Roth but now I'm confuse

Makes complete sense. OK. Given the fact that you are in the 28% tax bracket and you are also paying 5% state tax, I would say you want to maximize pre-tax vehicles. It is very possible that most of the money you withdraw in the future will be in a lower bracket than you are now. Of course no one knows the future, but we make plans based on the information we have available today. Your wife could look into a solo 401k for her business. There is also the SEP-IRA. Back in the day when I had a consulting business with my spouse, we had a SEP because it was easier to set up. Apparently the rules have gotten easier to comply with for solo 401ks since then. Check out Vanguard's site for information comparing 401ks to SEP IRAs to Simple IRAs. You ...
by damjam
Sat Feb 22, 2014 10:32 am
Forum: Personal Investments
Topic: I thought I understood backdoor Roth but now I'm confused
Replies: 27
Views: 2908

Re: I thought I understood backdoor Roth but now I'm confuse

Just quickly looking at the information you provided, I'm finding a discrepancy. You say you are in the 28% tax bracket, yet you also say that you are contributing 15% of your income to your 401k. Both can not be true. In order to be in the 28% tax bracket you would need a minimum income of $166,400. $146,000 is the bottom of the bracket for 2013 and you are entitled to a standard deduction of $12,200 and two exemptions of $3,900. An gross income of $166,400, where you are contributing 15% to your 401k, would imply a contribution of $24,960. That amount exceeds the maximum possible contribution of $17,500 + $5,500 = $23,000. So either your tax bracket is incorrect, or you were a little loose with your estimate of your contribution level to ...
by damjam
Sat Feb 22, 2014 9:09 am
Forum: Personal Investments
Topic: I thought I understood backdoor Roth but now I'm confused
Replies: 27
Views: 2908

Re: I thought I understood backdoor Roth but now I'm confuse

Just for background let me say that a backdoor Roth is when you make a non-deductible contribution to a tIRA and then immediately convert that to a Roth IRA. This is done because the person's income is too high for either taking the deduction for a tIRA contribution or making a Roth IRA contribution directly.

Given the information you provided, it sounds like it would be a good idea for your wife to explore setting up some type of retirement plan from her business.

To really answer your questions we would need more information about your tax bracket, the choices in your 401k, the amount you are setting aside each year, etc.

If I were you I would consider submitting your information according to the format listed here.
by damjam
Fri Feb 21, 2014 7:33 am
Forum: Personal Finance (Not Investing)
Topic: What's the Appropriate Net Worth by % for a 27 year old?
Replies: 78
Views: 20315

Re: What's the Appropriate Net Worth by % for a 27 year old?

I found Chris Farrell's Your Money Ratios helpful in thinking about this: http://www.amazon.com/Your-Money-Ratios-Financial-Security-ebook/dp/B002YJK5O6/ Basically Farrell has some rules of thumb for each age of what your capital (excluding home equity) should look like to be on track for a retirement that replaces X% (say 65% or 80%) of your income at age 65: Gold Standard - Age 65 @ 80% income Replacement shown: Age Capital to Income (CIR) 25 0.10 30 0.60 35 1.40 40 2.40 45 3.70 50 5.20 55 7.10 60 9.40 65 12.00 Reading the book was helpful to me not because say at 27 the answer of somewhere between 0.1 and 0.6 is precisely correct, but rather because it gave me some easy fingers to the wind to think about what I should have saved. I like...
by damjam
Thu Feb 20, 2014 12:17 pm
Forum: Personal Finance (Not Investing)
Topic: 1st time filing tax return
Replies: 6
Views: 747

Re: 1st time filing tax return

It is my understanding that you file a return and apply for an ITIN at the same time.
See W-7 application for ITIN instructions.
You will not be able to e-file the return.
by damjam
Wed Feb 19, 2014 5:34 pm
Forum: Personal Finance (Not Investing)
Topic: Tax report related question ( prepare it by my own or not)
Replies: 16
Views: 1122

Re: Tax report related question ( prepare it by my own or no

love6375 wrote:If we file it as a joint, because my husband had no income in 2013, only thing we would be filing is a w-2 from my previous job and I earned more than the amount that dont need to be reported so i do know for sure i need to prepare a tax report but I was wondering if i should file it as a joint with my husband although he had no income or just do it as individual. We got married spring of 2013.
Is your husband a US citizen as well?
If he is, you almost certainly want to file as "Married filing Jointly."

Do either of you receive financial support from others?
Can someone claim either one of you as a dependent on their tax return?
by damjam
Wed Feb 19, 2014 5:18 pm
Forum: Personal Investments
Topic: IRA vs Roth IRA
Replies: 13
Views: 1228

Re: IRA vs Roth IRA

The tax bracket question comes up often enough that I wonder why there is no WIKI page to explain it. Or did I just miss it?

Sorry, don't mean to hijack the thread.
by damjam
Wed Feb 19, 2014 4:58 pm
Forum: Personal Investments
Topic: IRA vs Roth IRA
Replies: 13
Views: 1228

Re: IRA vs Roth IRA

Try using the Tax Bracket Calculator to figure out your bracket.
Hint: there is no 8% tax bracket.
by damjam
Wed Feb 19, 2014 4:38 pm
Forum: Personal Finance (Not Investing)
Topic: Hitting the Roth Phaseout, Do I understand this correctly?
Replies: 17
Views: 1623

Re: Hitting the Roth Phaseout, Do I understand this correctl

I'm not sure but there may be a waiting period between the time you recharacterize the Roth IRA to a tIRA and when you can reconvert to a Roth IRA. I know the time requirement applies to conversions and rollovers to Roth IRAs, but not sure about your situation. See IRS : Is there a minimum waiting period to reconvert the money to a Roth IRA following a recharacterization? Yes, if you recharacterize all or part of a rollover or conversion to a Roth IRA, you cannot reconvert the amount recharacterized to the same or another Roth IRA until the later of: 30 days after the recharacterization, or the year following the year of the rollover or conversion. The waiting period to convert applies only to amounts you recharacterized. For example, you c...
by damjam
Wed Feb 19, 2014 4:24 pm
Forum: Personal Investments
Topic: Tax Question
Replies: 23
Views: 1657

Re: Tax Question

It was originally a traditional IRA with VALIC when she was with her previious employer. All pretax. I suggested she roll the VALIC IRA over to Vanguard in the summer of 2003 and convert to a Roth as she is young and has a 15% marginal tax rate. I'm not sure why you are suggesting recharacterization at this point. You can not now recharacterize a rollover that was completed in 2003. Your daughter could convert to Roth and pay the tax on the conversion. If she converted in 2013, and she now wishes to recharacterize that conversion back to a tIRA that is possible and then no tax would be owed for 2013. If her future earning potential is good (as in, she will be in a higher tax bracket in the future), then it may be worthwhile to leave the co...
by damjam
Wed Feb 19, 2014 2:26 pm
Forum: Personal Finance (Not Investing)
Topic: Tax report related question ( prepare it by my own or not)
Replies: 16
Views: 1122

Re: Tax report related question ( prepare it by my own or no

I've always done my own taxes.
You can probably file 1040 EZ.
Give the instructions a gander. See if you feel up to it.
If not there is free tax services offered by VITA volunteers and AARP TCE volunteers. Search around the irs.gov website for info.
Or aarp.org/taxaide. You don't have to be a senior to go to an AARP Tax-Aide site.
by damjam
Wed Feb 19, 2014 2:17 pm
Forum: Personal Finance (Not Investing)
Topic: Tax report related question ( prepare it by my own or not)
Replies: 16
Views: 1122

Re: Tax report related question ( file it by my own or not)

I'm not sure what you mean by "file it by my own."

The IRS determines that you are married or not married by your status on December 31.
If you were married on December 31 you must file either Married filing Jointly or Married filing separately. (except for a rare exception for those who are separated, not living together, and there are minor children)
by damjam
Wed Feb 19, 2014 2:07 pm
Forum: Personal Investments
Topic: Tax Question
Replies: 23
Views: 1657

Re: Tax Question

Is this a tIRA that existed before 2013? ie: are there multiple years included in the account?
Are we talking about a contribution to a tIRA for 2013?
Has your daughter already done the conversion?
by damjam
Wed Feb 19, 2014 1:56 pm
Forum: Personal Finance (Not Investing)
Topic: Hitting the Roth Phaseout, Do I understand this correctly?
Replies: 17
Views: 1623

Re: Hitting the Roth Phaseout, Do I understand this correctl

barnaclebob wrote:So lets say I call vanguard and tell them recharacterize the whole 2014 contribution plus its gains so far into a tIRA, lets say its 11100 total (11k contribution +100 in gains)

This would create a taxable event and have to pay taxes on the $100 come tax time, correct? Or does the taxable event happen when I backdoor the whole thing?
The taxable event happens when you do the conversion of tIRA to Roth IRA.
When you recharacterize the Roth to tIRA, it is as if you made the original contribution to a tIRA. Contributions to a tIRA and any subsequent earnings are not taxable until distributed or converted to Roth IRA.
by damjam
Wed Feb 19, 2014 1:51 pm
Forum: Personal Finance (Not Investing)
Topic: Hitting the Roth Phaseout, Do I understand this correctly?
Replies: 17
Views: 1623

Re: Hitting the Roth Phaseout, Do I understand this correctl

Since you don't have any other traditional IRAs, I think you have 2 choices: 1. You could recharacterize your contribution to a tIRA then convert to a Roth IRA. Any earnings would be taxable. 2. You could also have the contribution to the Roth IRA returned to you by the trustee (plus any earnings) and then make a new contribution to a tIRA followed by converting to Roth. You would have to include any earnings as income in your 2014 taxes. In either case the longer you wait the more potential earnings and the greater the potential tax. Anyone have an opinion whether scenario 1 or 2 is better? I think option 2 would create a penalty on the gains wouldn't it? Good catch. Yes, you would owe a penalty on the gains. That's why I asked the questi...
by damjam
Wed Feb 19, 2014 1:19 pm
Forum: Personal Finance (Not Investing)
Topic: Hitting the Roth Phaseout, Do I understand this correctly?
Replies: 17
Views: 1623

Re: Hitting the Roth Phaseout, Do I understand this correctl

Since you don't have any other traditional IRAs,
I think you have 2 choices:
1. You could recharacterize your contribution to a tIRA then convert to a Roth IRA. Any earnings would be taxable.
2. You could also have the contribution to the Roth IRA returned to you by the trustee (plus any earnings) and then make a new contribution to a tIRA followed by converting to Roth. You would have to include any earnings as income in your 2014 taxes.

In either case the longer you wait the more potential earnings and the greater the potential tax.

Anyone have an opinion whether scenario 1 or 2 is better?

Next year just contribute to a tIRA and then convert immediately.
by damjam
Wed Feb 19, 2014 12:20 pm
Forum: Personal Consumer Issues
Topic: Please Help Me Find A Doctor
Replies: 23
Views: 2725

Re: Please Help Me Find A Doctor

Even if you find a new doctor, he/she will not have your immunization records. You need to contact your pediatrician/other doctors you have had, to get that info.

Have you tried your insurance company for a list of doctors that accept your insurance? That could be a good place to start to find a new doctor.
by damjam
Wed Feb 19, 2014 11:01 am
Forum: Personal Investments
Topic: Tax Question
Replies: 23
Views: 1657

Re: Tax Question

Engineer wrote:All pre tax.
That was my assumption.

But of course the other posters are correct that if the contributions were post-tax 8606 would be required and not all of the distribution would be included in line 11b.

I should have been more precise.
by damjam
Wed Feb 19, 2014 10:15 am
Forum: Personal Investments
Topic: Tax Question
Replies: 23
Views: 1657

Re: Tax Question

Careful reading of the instructions indicates that you would put nothing in 11a if the entire distribution was converted to Roth.
You would put the 1099-R box 1 amount in 11b, leaving 11a blank.
by damjam
Wed Feb 19, 2014 9:53 am
Forum: Personal Investments
Topic: Tax Question
Replies: 23
Views: 1657

Re: Tax Question

Line 11a & 11b.

See 1040A Instructions.
by damjam
Tue Feb 18, 2014 3:10 pm
Forum: Personal Finance (Not Investing)
Topic: Confused about field DD on W2
Replies: 8
Views: 1418

Re: Confused about field DD on W2

Right ... and my question, again, is this: If the salary that my employer and I negotiated is $50k, of which my (employee) portion of the health insurance is $5k, why does the W2 show my salary as $45k (minus other pre-tax deductions), and the health insurance that came out of my paycheck show up as (part of) employer's contribution to my health insurance? Ask the IRS. Code DD—Cost of employer-sponsored health coverage. Use this code to report the cost of employer-sponsored health coverage. The amount reported with code DD is not taxable. Additional reporting guidance, including information about the transitional reporting rules that apply, is available on the Affordable Care Act Tax Provisions page of IRS.gov IRC 3111(d). In my reading of...
by damjam
Mon Feb 17, 2014 3:46 pm
Forum: Personal Consumer Issues
Topic: Continual phone solicitation by a debt consolidation company
Replies: 34
Views: 4610

Re: Continual phone solicitation by a debt consolidation com

I have the same problem with annoying calls for credit card offers, etc.
I used to try to get off their list. It's a waste of time.
I have an old fashioned answering machine.
So now, if I don't recognize the number on caller ID, I don't pick up.
Those who I know, who block their numbers have to wait for a call back when I'm not busy.
by damjam
Mon Feb 17, 2014 9:34 am
Forum: Personal Finance (Not Investing)
Topic: Quick W2 Tax question
Replies: 10
Views: 516

Re: Quick W2 Tax question

Rounding error by the program.
Where is "Misc Taxes," my copy of line 60, 1040 just says: "Taxes from" and then three boxes to check and a place to enter codes.
See: 1040.
by damjam
Mon Feb 17, 2014 9:22 am
Forum: Personal Finance (Not Investing)
Topic: Quick W2 Tax question
Replies: 10
Views: 516

Re: Quick W2 Tax question

That $45 should show up on line 60 of 1040, with box c checked next to it.
by damjam
Sun Feb 16, 2014 11:38 am
Forum: Personal Finance (Not Investing)
Topic: 1099 Misc Tax Question... Help appreciated!
Replies: 10
Views: 1961

Re: 1099 Misc Tax Question... Help appreciated!

Box 7.
Hmmm
Box 7 is usually reflected on a Schedule C.
Box 3 would have made more sense to me.
The mystery deepens.

I would call the IRS.
Telephone Assistance for Individuals:
Toll-Free, 1-800-829-1040
Hours of Operation: Monday – Friday, 7:00 a.m. – 7:00 p.m. your local time (Alaska & Hawaii follow Pacific Time).

Of course they are undoubtedly closed tomorrow for President's Day.

Be prepared for a long wait. Last year, when I called it took 2 hrs, but they did answer my question.

Hopefully someone more knowledgeable will see your question here and answer.
by damjam
Sun Feb 16, 2014 11:24 am
Forum: Personal Consumer Issues
Topic: Son's I bond redeemed and received 1099 INT
Replies: 13
Views: 1301

Re: Son's I bond redeemed and received 1099 INT

The answer you posted a link to was correct. a part of your child's 2013 unearned income may be taxed at the parent's tax rate. This may happen if all of the following are true: The child had more than $2,000 of unearned income. The child is required to file a tax return. The child was under age 18 at the end of 2013. From Pub 17 page 4, Filing requirements for Dependents: Single dependents—Were you either age 65 or older or blind? No. You must file a return if any of the following apply. • Your unearned income was more than $1,000. • Your earned income was more than $6,100. • Your gross income was more than the larger of: • $1,000, or • Your earned income (up to $5,750) plus $350. Page 31 of Pub 17 discusses when a parent may elect to repo...
by damjam
Sun Feb 16, 2014 10:40 am
Forum: Personal Finance (Not Investing)
Topic: 1099 Misc Tax Question... Help appreciated!
Replies: 10
Views: 1961

Re: 1099 Misc Tax Question... Help appreciated!

I too looked at pub 521. Was your reimbursement under an accountable plan? If you receive a reimbursement for your moving expenses, how you report this amount and your expenses depends on whether the reimbursement is paid to you under an accountable plan or a nonaccountable plan. I saw that also, but the publication goes on to say on the top of page 11: Your employer will add the amount of any reimbursement paid to you under a nonaccountable plan to your wages, salary, or other pay. Your employer will report the total in box 1 of your Form W-2. So again the 1099-MISC is a bit of a mystery. AFAIK, the general rule to follow is that if an expense is reimbursed it is not deductible on your taxes and the reimbursement is not income. If you rec...
by damjam
Sun Feb 16, 2014 9:50 am
Forum: Personal Finance (Not Investing)
Topic: 1099 Misc Tax Question... Help appreciated!
Replies: 10
Views: 1961

Re: 1099 Misc Tax Question... Help appreciated!

I looked in pub 521, and it discusses reimbursements being reported on W-2. No mention of 1099-MISC. Perhaps this is 1099-MISC because you reimbursed by the hospital system and not your employer.

What box of the 1099-MISC is this showing up in?
by damjam
Sat Feb 15, 2014 1:23 pm
Forum: Personal Finance (Not Investing)
Topic: Question about filing amended return
Replies: 20
Views: 2629

Re: Question about filing amended return

MarkNYC wrote:
damjam wrote:You filed, so no failure to file penalty. You are subject to a failure to pay penalty.
Regarding the failure to pay penalty, I disagree. This penalty applies to unpaid tax that is "shown" on the original tax return. When an amended return is filed which shows additional tax due, the penalty only applies if the additional tax remains unpaid more than 21 days after assessment and demand for payment. So if you send in the additional tax payment with your amended return, the failure to pay penalty is not applied. (Sec 6651(a)(3))
:oops:
Thanks for correcting my error MarkNYC.
Your a trusted source on these matters and I respect your interpretation.
by damjam
Sat Feb 15, 2014 12:12 pm
Forum: Personal Finance (Not Investing)
Topic: Question about filing amended return
Replies: 20
Views: 2629

Re: Question about filing amended return

You filed, so no failure to file penalty. You are subject to a failure to pay penalty. Failure to file definition . Failure to File or Pay Penalties . from the Justice Department : Proof of Failure to File Establishing that there was a failure to file can be done either through a witness or by a certification procedure. A combination of the two methods also may be employed. Witness Procedure If a witness is to be used, a representative of the appropriate Service Center, i.e., one from the Service Center having custody of returns for the required place of filing, is called to testify. The witness testifies that he or she is a representative of the Director of the Service Center, that he or she has custody of tax returns for a given area, tha...
by damjam
Sat Feb 15, 2014 11:58 am
Forum: Personal Investments
Topic: Tax Implications of Blindness
Replies: 3
Views: 544

Re: Tax Implications of Blindness

I am sorry to hear that your wife is suffering from this condition. I wish you both all the best.

As far as taxes are concerned. If her vision is less than 20/200 in her better eye (with glasses), you and your wife will be entitled to an additional $1,200 for the standard deduction. So if both of you were born before January 2, 1949, and you file Married filing jointly, your standard deduction will be $15,800.

If your itemized deductions are greater than your standard deduction, you can deduct medical expenses related to your wife's condition as allowed by law.
by damjam
Fri Feb 14, 2014 7:47 am
Forum: Personal Finance (Not Investing)
Topic: Tax Return Question [1099-B]
Replies: 9
Views: 1023

Re: Tax Return Question [1099-B]

js2012 wrote:You guys are the best. Thank you so much. So I wasn't wrong by following the software which makes me feel a lot better. Going through it alone and knowing nothing is incredibly scary but it's been an education. Before I did my taxes, I didn't know what a standard deduction even was!

The software is now flagging Box 14 for my IRC132 (my transit benefits that are pre-tax). So, I took them out because they aren't taxed and the software isn't recognizing what they are and I think the money is being taxed.

I hope this is right. :confused
You are correct IRC132 is not federally taxed. I don't know all the state laws so I can't comment there. Unless you live in NY, where I know it is not taxed.
by damjam
Fri Feb 14, 2014 7:22 am
Forum: Personal Finance (Not Investing)
Topic: TaxAct versus TurboTax
Replies: 24
Views: 5492

Re: TaxAct versus TurboTax

steve r wrote: I like to itemize my charitable deductions, TaxAct seemed to ask for the total.
In TaxAct you can link to a detail sheet on almost any entry. This way you can itemize all you like. It is not sent it into the IRS but you will have a record of what you did. Also, you can check your addition, as the sheet will add up the individual items and transfer the total to the linked line.

I think it's hand with a pencil icon when in a field in forms view mode.
by damjam
Thu Feb 13, 2014 9:13 am
Forum: Personal Finance (Not Investing)
Topic: minimizing tax hit from selling rental condo
Replies: 5
Views: 857

Re: minimizing tax hit from selling rental condo

You said you converted three years ago. Is it exactly 3 years? When is the three year mark? Because if you lived in the unit 2 of the last 3 years you are entitled to the maximum exclusion for selling your home. See Pub 523 . To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have: Owned the home for at least 2 years (the ownership test), and Lived in the home as your main home for at least 2 years (the use test). Reduced Maximum Exclusion If you fail to meet the requirements to qualify for the $250,000 or $500,000 exclusion, you may still qualify for a reduced exclusion. This applies to those who: Fail to meet the ownership and use tests, or H...
by damjam
Wed Feb 12, 2014 10:07 pm
Forum: Personal Finance (Not Investing)
Topic: Simple tax questions (I hope)
Replies: 6
Views: 994

Re: Simple tax questions (I hope)

Non-cash charitable contributions of $500 or more require an additional form.

From pub 526:
Total deduction over $500. If your total deduction for all noncash contributions for the year is over $500, you must complete Form 8283 and attach it to your Form 1040.
Record keeping requirements for charitable contributions can be found in pub 17, starting on page 168.
by damjam
Thu Jan 30, 2014 8:23 am
Forum: Personal Finance (Not Investing)
Topic: How to fund 401k with low paycheck
Replies: 19
Views: 5076

Re: How to fund 401k with low paycheck

From Form 4137 Instructions:
Payment of tax. Tips you reported to your employer are subject to social security and Medicare tax (or railroad retirement tax) and income tax withholding. Your employer collects these taxes from wages (excluding tips) or other funds of yours available to cover them. If your wages were not enough to cover these taxes, you may have given your employer the additional amounts needed.
This implies to me that it may be possible for the worker to have amounts withheld from his/her paycheck for the 401k and then owe withholding and FICA taxes to the employer.
by damjam
Mon Jan 27, 2014 8:42 pm
Forum: Personal Investments
Topic: Tax liability when I sell an MLP at a loss from an IRA
Replies: 2
Views: 928

Re: Tax liability when I sell an MLP at a loss from an IRA

As far as I know, the only way you could claim a loss would be to cash out the entire IRA for less than you contributed to it. And to clarify you can only deduct a loss if you have a "basis" in the IRA. So if it is a traditional IRA you would have to have made non-deductible contributions resulting in a basis. Or if the IRA were a Roth IRA and you receive less than what you contributed when you cash out. If you have a loss on your traditional IRA investment, you can recognize (include) the loss on your income tax return, but only when all the amounts in all your traditional IRA accounts have been distributed to you and the total distributions are less than your unrecovered basis, if any. Your basis is the total amount of the nond...
by damjam
Sun Jan 26, 2014 4:43 pm
Forum: Personal Finance (Not Investing)
Topic: Education tax credit for Spring 2013 class but paid in 2012
Replies: 18
Views: 3296

Re: Education tax credit for Spring 2013 class but paid in 2

Good catch on your part.
Unfortunately, you are on a cash basis.
Therefore you can only use expenses paid in 2013 for 2013 tax purposes.
by damjam
Sat Jan 25, 2014 5:22 pm
Forum: Personal Finance (Not Investing)
Topic: Good sources on doing taxes?
Replies: 51
Views: 3848

Re: Good sources on doing taxes?

sscritic wrote:Also get a blank 1040; they used to be easy to get in the library, but those days may be over.
But of course you can get all publications and forms at http://www.irs.gov - just go to the Forms and Publications tab, select Current Forms & Pubs, and put any form or pub number into the Find box. :wink:
by damjam
Sat Jan 25, 2014 5:16 pm
Forum: Personal Finance (Not Investing)
Topic: College Kids taxes
Replies: 35
Views: 2008

Re: College Kids taxes

If the capital gain is short-term and thus the student has some tax liability, look into the American Opportunity Credit. This will probably wipe out any tax liability owed by the student.
As discussed earlier the student can not claim a personal exemption for himself - even if the OP does not claim him.
However, the student may be eligible for the American Opportunity Credit even though he can be claimed on another taxpayer's return.
The key is that the student can be claimed but has not been claimed.
See pub 17, page 224 for additional information.
by damjam
Sat Jan 25, 2014 5:01 pm
Forum: Personal Finance (Not Investing)
Topic: Good sources on doing taxes?
Replies: 51
Views: 3848

Re: Good sources on doing taxes?

I've learned almost everything I know about taxes from the publications on http://www.irs.gov
I would start with the instructions for the 1040.
Also pub 17 is very good.
Both are a little dense but the information is all there and it's free.