Just a couple of tax form questions

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Topic Author
capran
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Just a couple of tax form questions

Post by capran »

I got all my tax forms done, or so I thought. (I'm old school- on paper, even though our wonderful IRS has never sent me the forms I requested in January), As I am double checking what I thought was all done, ready for the mail, I notice two items on a "summary of 2019 Original Issue Discount": line 6 "Acquisition Premium $2.06" and line 11 "Tax Exempt OID $8.19" (Digging further, this is from two different tax free bonds, Oregon Health Sci and Snohomish County Wa HSG.) Do I really need to include these, which would mean re-working almost every single tax form, since it would change all calculations on Income 1040, Schedule B, Capital Gains worksheets, AMT work sheet (even though I don't owe any ATM.(Had to complete the 6251 because of line g-Interest from specified private activity tax exempt bond). If I do have to re do all, and include them, are they put in the Schedule B as a minus under Interest, since all the payments I receive from these bonds is Interest rather than dividends?

And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form. But putting 83,500 on line 4b, as that was the taxable amount. Even though for most people, the amounts would be the same. I know most people put in the full amount and pay the tax from a separate account, but I wanted to do it this way out of simplicity with Vanguard doing the withholding.

And lastly, am I the only one feeling like the ATM and Capital Gains worksheets are a bunch of hooey- so convoluted, when in the end, why not just say "if your income is between this and that, you owe X% in capital gains", or "if you underpaid your taxes due, you must complete the AMT"? Just seems like so many calculations and repetitive "the lesser of line x and line x.
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Duckie
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Re: Just a couple of tax form questions

Post by Duckie »

capran wrote:And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form. But putting 83,500 on line 4b, as that was the taxable amount. Even though for most people, the amounts would be the same. I know most people put in the full amount and pay the tax from a separate account, but I wanted to do it this way out of simplicity with Vanguard doing the withholding.
This is wrong. You withdrew $83,500 from the IRA and the 1099-R would have reported that. Even though only some of it came to you, none of it qualifies for an exclusion. That $83,500 should be reported on Form 8606 line 7 to end up on Form 1040 line 4b and the $13,300 withheld should be included on Form 1040 line 17. Otherwise your math isn't going to add up. I don't know how picky the IRS is but you should do it right to avoid a potential CP2000 notice.
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

Duckie wrote: Sat Mar 14, 2020 7:12 pm
capran wrote:And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form. But putting 83,500 on line 4b, as that was the taxable amount. Even though for most people, the amounts would be the same. I know most people put in the full amount and pay the tax from a separate account, but I wanted to do it this way out of simplicity with Vanguard doing the withholding.
This is wrong. You withdrew $83,500 from the IRA and the 1099-R would have reported that. Even though only some of it came to you, none of it qualifies for an exclusion. That $83,500 should be reported on Form 8606 line 7 to end up on Form 1040 line 4b and the $13,300 withheld should be included on Form 1040 line 17. Otherwise your math isn't going to add up. I don't know how picky the IRS is but you should do it right to avoid a potential CP2000 notice.
OK, as I am walking through this: "Part I
Nondeductible Contributions to Traditional IRAs and Distributions From Traditional, SEP, and SIMPLE IRAs
Complete this part only if one or more of the following apply.
• You made nondeductible contributions to a traditional IRA for 2019.
• You took distributions from a traditional, SEP, or SIMPLE IRA in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year. For this purpose, a distribution does not include a rollover (other than a repayment of a qualified disaster distribution (see 2019 Forms 8915-C and 8915-D)), qualified charitable distribution, one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
• You converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year." so help me understand these instructions! I did not make a non deductible for 2019, nor did I fulfill the "and make a nondeductible contribution (ever) nor did I fulfill the 3rd bullet point "converted all or part AND made a non deductible contribution". so if I don't meet any of the criteria for Part 1, I was assuming I don't fill in part 1. ?? As to part II it says "enter the net amount you converted from a traditional IRA to a Roth" since 70,200 went to the roth, I thought that should be the number. But as you rightly point out I did convert 83,500 FROM my IRA, which is the first part of the sentence. If it's a matter of needing the numbers to match up, I don't have a problem putting in the 83,500 figure, even though it says to put the "net amount converted". And I assume basis is 0 for line 17, since none of the money in my IRA has ever had any tax paid on it. Yes, my 1099 says gross distribution 83,500, taxable amount 83,500 and federal income tax withheld (box 4) 13,300.
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Duckie
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Re: Just a couple of tax form questions

Post by Duckie »

capran wrote:I did not make a non deductible for 2019, nor did I fulfill the "and make a nondeductible contribution (ever) nor did I fulfill the 3rd bullet point "converted all or part AND made a non deductible contribution".
If you have no non-deductible basis in your TIRA you do not need to fill out Part I.
As to part II it says "enter the net amount you converted from a traditional IRA to a Roth" since 70,200 went to the roth, I thought that should be the number.
You wrote you took a distribution from your TIRA. You didn't mention you converted most of it to the Roth IRA.
But as you rightly point out I did convert 83,500 FROM my IRA, which is the first part of the sentence. If it's a matter of needing the numbers to match up, I don't have a problem putting in the 83,500 figure, even though it says to put the "net amount converted".
I was stumped so I checked it in TurboTax. You were right. When I entered that you withdrew $83,500, withheld $13,300, and converted $70,200 I got:
  • Form 8606 Part II
    Line 16 -- 70,200
    Line 17 -- 0
    Line 18 -- 70,200

    Form 1040
    Line 4a -- 83,500
    Line 4b -- 83,500
    Line 17 -- 13,300
If you had not converted the $70,200 there would have been nothing on Form 1040 line 4a and no Form 8606 because you had no non-deductible basis.
And I assume basis is 0 for line 17, since none of the money in my IRA has ever had any tax paid on it.
Yes.
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

Thanks for the clarification. Not adding that it was a Roth Conversion is a major omission on my part. So sorry. My line 17 includes the withholding from my IRA to Roth conversion as well as other tax I had withheld from my SS and pensions, so it is 21130. No way to break out the underlying source. Glad to verify that as well as my 1040 line 4a and 4b. So at least that is correct. Since I may not get an answer here, I'm hoping to get a CPA to do a paid check of my forms including the first part of my original question re: Acquisition premium and tax exempt OID. The reason I questioned it was that that particular holding was inherited and a professional tax preparer did not include it on the 2018 tax form. (I had matched up what I had on mine 1099 compared to the original owners tax return to understand the relationship between forms and the 1099.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

Duckie wrote: Sat Mar 14, 2020 9:36 pm I was stumped so I checked it in TurboTax. You were right. When I entered that you withdrew $83,500, withheld $13,300, and converted $70,200 I got:
  • Form 8606 Part II
    Line 16 -- 70,200
    Line 17 -- 0
    Line 18 -- 70,200

    Form 1040
    Line 4a -- 83,500
    Line 4b -- 83,500
    Line 17 -- 13,300
Duckie, not sure what TT did, but this does not look right right to me. ETA. See several posts below. Duckie's numbers are right.

The form says that line 18 is the taxable amount and that you are to include that amount on 1040 Line 4b. So line 18 cannot be $70,200. It must be $83,500.


I am stumped by the use of the word "net" on the form because the entire $83,500 is taxable.


Capran, you didn't mention your age. If you are not yet 59.5, there will not only be taxes on the part you withheld for taxes but there will be an additional 10% penalty on it. Since you didn't mention a penalty on the 1099, perhaps you are over 59.5.
Last edited by retiredjg on Sun Mar 15, 2020 11:27 am, edited 1 time in total.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

capran wrote: Sat Mar 14, 2020 5:43 pm And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form.
In my opinion, line 8 should be $83,500. And it says the same number goes on line 16.

Again, I'm stumped by the use of "net" on that line.
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

retiredjg wrote: Sun Mar 15, 2020 7:53 am ...............................................................

Duckie, not sure what TT did, but this does not look right right to me.

The form says that line 18 is the taxable amount and that you are to include that amount on 1040 Line 4b. So line 18 cannot be $70,200. It must be $83,500.


........................................................
retiredjg..............to me , this doesn't mean 8606 L18 and 1040L4b must be identical. " L18 must be included in L4b" means to me that other things could be included L4b so L4b>= L18; in this case L4b= 70200conversion +
13300 w/h
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

retiredjg wrote: Sun Mar 15, 2020 8:12 am
capran wrote: Sat Mar 14, 2020 5:43 pm And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form.
In my opinion, line 8 should be $83,500. And it says the same number goes on line 16.

Again, I'm stumped by the use of "net" on that line.
in his 3/14 9:11pm post, capran says "so if I don't meet any of the criteria for Part 1, I was assuming I don't fill in part 1. ??" so it sounds like line 8 (in pt I) doesn't need to be filled out. Wondering if the "net" conversion is a relic from the past when you could recharacterize conversions?
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

retiredjg wrote: Sun Mar 15, 2020 7:53 am
Duckie wrote: Sat Mar 14, 2020 9:36 pm I was stumped so I checked it in TurboTax. You were right. When I entered that you withdrew $83,500, withheld $13,300, and converted $70,200 I got:
  • Form 8606 Part II
    Line 16 -- 70,200
    Line 17 -- 0
    Line 18 -- 70,200

    Form 1040
    Line 4a -- 83,500
    Line 4b -- 83,500
    Line 17 -- 13,300
Duckie, not sure what TT did, but this does not look right right to me.

The form says that line 18 is the taxable amount and that you are to include that amount on 1040 Line 4b. So line 18 cannot be $70,200. It must be $83,500.


I am stumped by the use of the word "net" on the form because the entire $83,500 is taxable.


Capran, you didn't mention your age. If you are not yet 59.5, there will not only be taxes on the part you withheld for taxes but there will be an additional 10% penalty on it. Since you didn't mention a penalty on the 1099, perhaps you are over 59.5.
Yes, way past the penalty age- late 60's. as to line 16 and 18, I agree it seemed to pose conflicting requirements, or confusing at best, hence my question to you all who are more knowledgeable. It specifically says "net amount you converted from traditional to Roth". Seems like it should/could be line 16a amount withdrawn from TIRA, and a 16b amount of IRA converted to Roth. Sometimes I think the IRS intentionally makes things less clear. Even the title of the form really doesn't apply since it was a deductible IRA. Maybe we are outsourcing our IRA forms to someplace with lower labor costs?
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

retiredjg wrote: Sun Mar 15, 2020 8:12 am
capran wrote: Sat Mar 14, 2020 5:43 pm And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form.
In my opinion, line 8 should be $83,500. And it says the same number goes on line 16.

Again, I'm stumped by the use of "net" on that line.
So you are suggesting I complete part 1 even though I don't meet the criteria under Part 1 where it says "Complete this part only if one or more of the following apply" ? (mostly because the form Part 1 seems to be directed at having made a non deductible contribution, which we never have done.)
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

kaneohe wrote: Sun Mar 15, 2020 10:04 am retiredjg..............to me , this doesn't mean 8606 L18 and 1040L4b must be identical. " L18 must be included in L4b" means to me that other things could be included L4b
I agree and something I had not considered.

so L4b>= L18; in this case L4b= 70200conversion + 13300 w/h
I can't go this far yet.

To me, the taxable amount of the conversion (line 18) has to be $83,500. But I could be wrong and just not see it yet.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

kaneohe wrote: Sun Mar 15, 2020 10:14 am
retiredjg wrote: Sun Mar 15, 2020 8:12 am
capran wrote: Sat Mar 14, 2020 5:43 pm And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form.
In my opinion, line 8 should be $83,500. And it says the same number goes on line 16.

Again, I'm stumped by the use of "net" on that line.
in his 3/14 9:11pm post, capran says "so if I don't meet any of the criteria for Part 1, I was assuming I don't fill in part 1. ??" so it sounds like line 8 (in pt I) doesn't need to be filled out. Wondering if the "net" conversion is a relic from the past when you could recharacterize conversions?
I'm going to agree with you on this. Apparently Part I does not need to be filled out since there were no non-deductible contributions ever.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

capran wrote: Sun Mar 15, 2020 10:47 am
retiredjg wrote: Sun Mar 15, 2020 8:12 am
capran wrote: Sat Mar 14, 2020 5:43 pm And I wanted to follow up on an earlier question re: 8606. I took an IRA distribution of 83500, but had taxes withheld of 13,300, so I am putting 70,200 on the 8606 form.
In my opinion, line 8 should be $83,500. And it says the same number goes on line 16.

Again, I'm stumped by the use of "net" on that line.
So you are suggesting I complete part 1 even though I don't meet the criteria under Part 1 where it says "Complete this part only if one or more of the following apply" ? (mostly because the form Part 1 seems to be directed at having made a non deductible contribution, which we never have done.)
No. I was originally thinking (once you mentioned Roth conversion) that part I would be in play, but agree with you and Kanohe that Part I is not in play here because you NEVER made any non-deductible contributions.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

The instructions are not helpful. The instruction for line 16 is to look at the instruction for line 8. The instruction for line 8 says this....
  • Line 8
    If, in 2019, you converted any amounts from traditional, SEP, or SIMPLE IRAs to a Roth IRA, enter on line 8 the net amount you converted.

Again, that word "net". Don't know why it is there.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

:oops:

Ok, I now agree with Duckie's numbers. I ran it through TT and got the same thing that Duckie got.

Line 16 and 18 are $70,200 and lines 4a and 4b are $83,500.

On line 18, "taxable amount" does not refer to the taxable amount of the distribution. It refers to the amount that ended up in Roth IRA only. The entire amount does end up being taxable because the entire distribution is reported on line 4b.

Capran, sorry to lead you off into a wild good chase. :happy
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

retiredjg wrote: Sun Mar 15, 2020 11:05 am The instructions are not helpful. The instruction for line 16 is to look at the instruction for line 8. The instruction for line 8 says this....
  • Line 8
    If, in 2019, you converted any amounts from traditional, SEP, or SIMPLE IRAs to a Roth IRA, enter on line 8 the net amount you converted.

Again, that word "net". Don't know why it is there.
perhaps it is a relic of the past when recharacterizations of conversions could be done?
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

retiredjg wrote: Sun Mar 15, 2020 11:26 am :oops:

Ok, I now agree with Duckie's numbers. I ran it through TT and got the same thing that Duckie got.

Line 16 and 18 are $70,200 and lines 4a and 4b are $83,500.

On line 18, "taxable amount" does not refer to the taxable amount of the distribution. It refers to the amount that ended up in Roth IRA only. The entire amount does end up being taxable because the entire distribution is reported on line 4b.

Capran, sorry to lead you off into a wild good chase. :happy
I appreciate all the dialogue, as it helps my understand my own confusion. It also helps me realize next year I need to get TurboTax, which could make it a little easier on me. I still hope someone will weigh in on the other part of my original question re: the Original Issue Discount and the acquisition premium- whether I can let it pass as it looks to be that I would not be taking those to items off/ ( a deduction) on my schedule B), of if I absolutely have to take it as a deduction, and then re-work all the affected forms since it would reduce my income by $10. I sure appreciate the collective wisdom of this forum. I just wish Vanguard would have noted those two items in the main box under Interest rather than as a sub note in it's own smaller box at the bottom. But I also noticed they did not include a piece of misc income from a Royalty and expenses from that same royalty company, which offset all but $86, but I managed to catch that before I got everything else done.
trueblueky
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Re: Just a couple of tax form questions

Post by trueblueky »

I just wish Vanguard would have noted those two items in the main box under Interest rather than as a sub note in it's own smaller box at the bottom. But I also noticed they did not include a piece of misc income from a Royalty and expenses from that same royalty company, which offset all but $86, but I managed to catch that before I got everything else done.
As someone who prepares many returns each year, I just wish Congress would force a standard 1099-B.

If Joe's auto body and plumbing must use a standard W-2, Schwab, Fido, VG, et al can use a standard 1099-B.
retiredjg
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Re: Just a couple of tax form questions

Post by retiredjg »

kaneohe wrote: Sun Mar 15, 2020 12:34 pm
retiredjg wrote: Sun Mar 15, 2020 11:05 am The instructions are not helpful. The instruction for line 16 is to look at the instruction for line 8. The instruction for line 8 says this....
  • Line 8
    If, in 2019, you converted any amounts from traditional, SEP, or SIMPLE IRAs to a Roth IRA, enter on line 8 the net amount you converted.

Again, that word "net". Don't know why it is there.
perhaps it is a relic of the past when recharacterizations of conversions could be done?
Who knows?
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

capran wrote: Sun Mar 15, 2020 12:47 pm .................................................................................

....................................... I still hope someone will weigh in on the other part of my original question re: the Original Issue Discount and the acquisition premium- whether I can let it pass as it looks to be that I would not be taking those to items off/ ( a deduction) on my schedule B), of if I absolutely have to take it as a deduction, and then re-work all the affected forms since it would reduce my income by $10. I sure appreciate the collective wisdom of this forum. ...........................................
Did you buy those on the offering or on the secondary market? http://investinginbonds.com/learnmore.a ... ubcatid=62 Hopefully on the offering as that makes things easier...............
if you did, sounds like the discount adds to tax-exempt interest and the premium subtracts. Tax-exempt interest does not go on Sch B so that might help you. Tax-exempt interest only affects things indirectly such as taxable SS
and you have a -2 + 8 = net +6 situation which seems so small that the net effect would be near 0. If you bought
at the offering, I would be inclined to leave things alone and let IRS decide if it's worth their valuable time to squeeze you for $1 or so. If you bought on the secondary,things are a bit more complex............but the effects would still be small.
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

They we bought on the original issue offering but passed on to us as an inheritance. Both hers and ours are in a box titled "Summary of original issue Discount". Since these are all new tax forms for us, I was comparing what was on the family owners 1099 and their Tax forms. Interesting about your comment that the tax free interest does not go on the Schedule B. A CPA firm in Portland had been doing her taxes every year, and every year they put the tax free interest on schedule B first as a plus, and then subtracting the tax free also on B, so effectively it doesn't add anything to the total. I always found that odd in looking at her taxes but thought that is the way it is done.
For example Line 1 totaled 10,429 (which we determined came from adding 8495.37 Interest Income 1099 line1+1906.26 tax free interest from line8). so her schedule B looks like:
Line 1 10,429
"OID Acquisition Premium" -10
Bond Premium -4
Bank interest 29
Nustar interest 39
the "subtotal for Line 1 10,483
Tax exempt interest -1,839
ABP Adjustment -67 (which was from line 14 under interest income "bond premium on tax exempt bond"
line 2 and 4 8,577

Same issue under Ordinary dividends, first adding tax exempt dividends to the total for line 5 under a "sub total" heading, and then deducting the tax exempt dividends to get the total for line 6. (the tax exempt dividends are from LEO.)

So what you are saying is that neither the tax free interest or tax free dividends belong on the Schedule B. And if I am understanding correctly, the 2.06 Acquisition Premium that came from a tax free holding should be a plus, added to interest, not subtracted as the previous CPA firm had done. Yep, I know I am getting Turbo tax next year, as it's clear I can't trust the old CPA firm to have done hers correctly, from which I modeled my own. But from what you are saying, the tax exempt OID really wouldn't affect much if anything, but the 2.06 added to my interest total would not substantially effect the total of my taxes. I miss my uncomplicated return.
trueblueky
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Re: Just a couple of tax form questions

Post by trueblueky »

If your taxable income is less than $100,00, you use the tax table, which bases tax on $50 increments, such as "at least $72,000, but less than $72,050". A $2 increase in taxable income in the 12% tax bracket incurs either no additional tax or $6 tax increase.
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

The 1040 has this line:

2a Tax-exempt interest . . . . 2a xxxxxxxxxx b Taxable interest. Attach Sch. B if required 2b xxxxxxxxxx

Tax-exempt interest is entered in 2a (on the left side of page out of the mainstream)
Taxable interest is entered in 2b on the right side of page in the mainstream flow of income and comes from Sch B.

The instructions for Sch B have this:
Line 1. Report on line 1 all of your taxable interest
.........Don't report on line 1 any tax-exempt interest. See
Tax-exempt interest, later, for more information

The tax-exempt interest sections has this:
Tax-exempt interest. If you received
any tax-exempt interest (including any
tax-exempt OID), such as from municipal
bonds, each payer should send you a
Form 1099-INT or a Form 1099-OID. In
general, your tax-exempt stated interest
should be shown in box 8 of Form
1099-INT or, for a tax-exempt OID
bond, in box 2 of Form 1099-OID, and
your tax-exempt OID should be shown
in box 11 of Form 1099-OID. Enter the
total on line 2a of your Form 1040
Topic Author
capran
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Re: Just a couple of tax form questions

Post by capran »

trueblueky wrote: Sun Mar 15, 2020 8:47 pm If your taxable income is less than $100,00, you use the tax table, which bases tax on $50 increments, such as "at least $72,000, but less than $72,050". A $2 increase in taxable income in the 12% tax bracket incurs either no additional tax or $6 tax increase.
Fortunately, or unfortunately, we are at 167k before using the standard deduction, so still not able to use the tables. That was my biggest foe paw and we deferred too much of our income during the working years, and never did the anticipatory math of pension+social security+dividends+interest+anticipated RMDs. And there's no rewind button. kinda funny our income was always so "low" that we used the tax tables while we were working, but not in retirement.
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

capran wrote: Sun Mar 15, 2020 11:10 pm ..................................... unfortunately, we are at 167k before using the standard deduction, so still not able to use the tables. .....................................
Are you receiving SS ? If you are your income sounds high enough that your SS taxation is "saturated" at the max and 85% of your SS is subject to taxation. If this is true adding 6 more $ of tax exempt income would not change your taxes. You can verify with this calculator https://www.mortgagecalculator.org/calc ... ulator.php

Input your existing data. Check how much your taxable SS/AGI/taxable income are. Then add $6 of tax exempt income and see if anything changes.
kaneohe
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Re: Just a couple of tax form questions

Post by kaneohe »

capran wrote: Sat Mar 14, 2020 5:43 pm .....................................................................

And lastly, am I the only one feeling like the ATM and Capital Gains worksheets are a bunch of hooey- so convoluted, when in the end, why not just say "if your income is between this and that, you owe X% in capital gains", or "if you underpaid your taxes due, you must complete the AMT"? Just seems like so many calculations and repetitive "the lesser of line x and line x.
Re: CG wksht.................I agree w/ you. The wksht is a series of simple steps but if you make 1 error (easy to do),
you're down the tubes. Alternatives:
1)let the tax calculator link above do the calculation for you.
2)learn the stacked bar chart concept of stacking QDIV/LTCG on top of ordinary income
see chart by tfb 12/11/11 here viewtopic.php?t=86849
The chart is somewhat old due to the new tax law (now is 12% tax bracket instead of 15%) and the top of the 0% CG
bracket does not exactly coincide w/ the top of the 12% ordinary income bracket. If you have a graphical concept of your QDIV/CG structure you can see that all of of your QDIV/CG is in the 15% bracket, or that some of it is in the 0% bracket, with the rest in 15%. You can then actually go back to the QDIV/CG wksht and almost understand it instead of just working it mechanically.
Topic Author
capran
Posts: 186
Joined: Thu Feb 18, 2016 10:45 am

Re: Just a couple of tax form questions

Post by capran »

kaneohe wrote: Mon Mar 16, 2020 8:40 am
capran wrote: Sun Mar 15, 2020 11:10 pm ..................................... unfortunately, we are at 167k before using the standard deduction, so still not able to use the tables. .....................................
Are you receiving SS ? If you are your income sounds high enough that your SS taxation is "saturated" at the max and 85% of your SS is subject to taxation. If this is true adding 6 more $ of tax exempt income would not change your taxes. You can verify with this calculator https://www.mortgagecalculator.org/calc ... ulator.php

Input your existing data. Check how much your taxable SS/AGI/taxable income are. Then add $6 of tax exempt income and see if anything changes.
Yes, I am taking my SS and pay tax on 85% of it. I will try that calculator and see what it does. Thank you for that. In further reading looks like I need to review what I have done again, as my LEO tax free muni fund shows up on my 1099 DIV line 11, but from my reading it says it should be reported as tax free interest on 1040 as well as AMT form.
kaneohe
Posts: 6786
Joined: Mon Sep 22, 2008 12:38 pm

Re: Just a couple of tax form questions

Post by kaneohe »

Yes, instructions in 1040 agree w/ you

"Tax-Exempt Interest
...............................................

Also include on line 2a any exempt-interest dividends from a mutual fund or other regulated investment company. This amount should be shown in box 11 of Form 1099-DIV."
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