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I have a roth IRA from a while ago, and no traditional IRA currently. Opening a traditional IRA, and converting it 'backdoor' should be pretty straight forward then, right? It seems the only complication is when you already have a traditional IRA. Does the conversion have to happen before the new year, or does it follow the taxtime deadline rule of IRAs?
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Dec 17, 2012 00:25
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jtsold posted:So I'm self-employed, and I'm due for a new car. I'm familiar with the per mileage write-off. Is there another way to write off a new vehicle? I anticipate making approximately the same amount of money next year as this year, but I also anticipate more write-offs next year. Is there a way to write off a vehicle as much as possible for this year, if I buy before 12/31? You can either use the standard deduction per mile or deduct the business use % of your actual expenses (loan interest, gas, depreciation, insurance, repairs, etc.). If you decide to use the actual expenses, you might be able to accelerate the depreciation to the extent of business use, but only if you use it more than 50% for business. There are also limits on depreciation for most cars (those than are less than 6,000 pounds gross vehicle weight). If you use §179 to accelerate depreciation and you later stop using the car at least 50% for business, you will need to recapture some of the §179 expense you claimed. socketwrencher posted:Sch. C/ Section 179 question: I have a full-time job (W-2) and started a part-time job a couple months ago doing property maintenance (1099'ed by two landlords). The part-time job sometimes requires traveling long distances and I'm thinking of buying a new car before the end of the year for this work. The car would be used mostly for business use, maybe 75/25 business to personal; it would not be used for my W-2 job as I ride a bike to that one. See above answer. Yes, it can potentially create a schedule C loss and offset W-2 income. Any business loss could be a "red flag", as could filing a return with a significant amount of auto expense (since the IRS knows from experience that very few taxpayers keep proper mileage logs to substantiate the expense). However, it is generally impossible to say how likely your return is to be audited beyond that schedule C returns, returns showing losses, and returns reporting significant auto expenses are more likely to be audited. Overall about 1% of returns are selected for audit, but the IRS does not release statistics that are much more granular than that. Pardot posted:I have a roth IRA from a while ago, and no traditional IRA currently. Opening a traditional IRA, and converting it 'backdoor' should be pretty straight forward then, right? It seems the only complication is when you already have a traditional IRA. The issue is that when you have other IRA balances you don't just get to put in $X of non-deductible IRA contributions and then convert and have $X of non taxable distributions, because you recapture your basis ratably. So if you don't have any other TIRA accounts you should not have any issue. You have until 4/15/13 to contribute to your TIRA for 2012. Your conversion will be reported in the year it occurs, which should not matter since none of it should be taxable (unless you wait a while between the contribution and the conversion and there are gains in the account in the interim, in which case the gains would be taxable as income when you convert the account).
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Dec 17, 2012 20:45
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furushotakeru posted:
Thanks so much, this is really helpful. I'll make sure to keep an accurate mileage log. My concern is that I won't have much 1099 income but will have a lot of expenses if I can 179 the car (if I understand things correctly, there is a max deduction of $11,060 for vehicles). So I'll have about $3k income and $15k expenses for 2012.
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Dec 17, 2012 21:46
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furushotakeru posted:You can either use the standard deduction per mile or deduct the business use % of your actual expenses (loan interest, gas, depreciation, insurance, repairs, etc.). If you decide to use the actual expenses, you might be able to accelerate the depreciation to the extent of business use, but only if you use it more than 50% for business. There are also limits on depreciation for most cars (those than are less than 6,000 pounds gross vehicle weight). If you use §179 to accelerate depreciation and you later stop using the car at least 50% for business, you will need to recapture some of the §179 expense you claimed.
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Dec 18, 2012 00:12
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I have a bunch of computers I bought off the government a long time ago that turned out to be a bad investment. I want to unload them for a tax deduction. How do I go about evaluating their fair market value and can I just dump them off at a Goodwill or do I need to find another place to donate? Thanks. Sephiroth_IRA fucked around with this message at 04:19 on Dec 18, 2012 |
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Dec 18, 2012 04:16
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Orange_Lazarus posted:I have a bunch of computers I bought off the government a long time ago that turned out to be a bad investment. I want to unload them for a tax deduction. How do I go about evaluating their fair market value and can I just dump them off at a Goodwill or do I need to find another place to donate? Goodwill and the Salvation Army have information available on their websites to give you an idea of what the value of your donation would be. I think all the charities tend to stay around the same value ranges for the items they accept so I don't see any reason why you wouldn't be able to just dump them off at Goodwill, just make sure you get a receipt. socketwrencher posted:Thanks so much, this is really helpful. I'll make sure to keep an accurate mileage log. My concern is that I won't have much 1099 income but will have a lot of expenses if I can 179 the car (if I understand things correctly, there is a max deduction of $11,060 for vehicles). So I'll have about $3k income and $15k expenses for 2012. A loss like that has a chance of triggering an audit, but if you have all of your backup information organized you should be fine. Just make sure you hang on to all of your logs and receipts for at least 3 years. One thing to keep in mind, and someone correct me if I'm misremembering any of the facts about this, is that you have to show income on a Schedule C business for 3 out of the previous 5 years otherwise the business becomes considered a hobby and hobby losses are only deductible as far as your income from the hobby is. Your loss this year won't be an issue, but keep this in mind for future years.
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Dec 18, 2012 17:04
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Epi Lepi posted:Goodwill and the Salvation Army have information available on their websites to give you an idea of what the value of your donation would be. I think all the charities tend to stay around the same value ranges for the items they accept so I don't see any reason why you wouldn't be able to just dump them off at Goodwill, just make sure you get a receipt. If you try to claim more than $5k in value, the IRS rules require an appraisal that gets attached and submitted with your return, FYI. Form 8283 instructions have some guidance.
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Dec 18, 2012 18:11
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It would definitely be less than 5k since the computers are fairly old and not many are left. Thanks.
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Dec 18, 2012 19:17
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Epi Lepi posted:
It is not automatically deemed to be a hobby, but it becomes much more difficult to prove to the IRS that it is not one. You would have to show them your business plan, and explain why the business wasn't generating a profit and show that you were making a sincere effort to make things work. You would also need to demonstrate that you were undertaking the activity on a "for profit" motivation and not for personal enjoyment. This is more of an issue for crafts and other such businesses where the line between hobby and business can be blurry.
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Dec 18, 2012 19:23
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I love these online (Federal) tax return estimators. One I got an over $2000 return. Another I owed $900, another I would get a $400 return. Didn't you say last year that those are garbage Furu? 
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Dec 19, 2012 01:02
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I just look at a few, and while not outright terrible, they seems to mostly just be mimicking form 1040 anyway. I don't really see the point compared to the actual form, with its instructions. At least one didn't seem to have an option to take the standard deduction so that might be throwing things off. If you want to quickly estimate the best way is probably just to quickly fill out a 1040, maybe with last years as reference. Xenoborg fucked around with this message at 01:48 on Dec 19, 2012 |
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Dec 19, 2012 01:43
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Three-Phase posted:I love these online (Federal) tax return estimators. Actually I said that the paycheck withholding estimators are garbage because the W-4 instructions that they are mimicking suck rear end.
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Dec 19, 2012 19:52
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I spent about $10,000 in tuition this year, a little more than half of it in loans. The other part was Pell Grant. I'm reading about my options for tax deductions, and I'm unsure if I could write off the $5500 in loans or go for the Lifetime Learning Credit, I know I can't double dip. Looks like I'll just use Turbo Tax and write off what I can. JD fucked around with this message at 07:46 on Dec 20, 2012 |
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Dec 20, 2012 07:25
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I had a general question about the "Fiscal cliff" tax stuff, I'm sorry if this is a shut-the-gently caress-up-about-it-already topic in here, but my questions is a little more specific. Q: If our FICA/SS increase returning to the previous tax rates, how does that effect the "standard deduction" amount? My guess is that the standard deduction amount would also change, correct? Deets: Filing jointly with my wife, I think the standard deduction has been around $10,500? We'll probably end up itemizing this year thanks to a full year of daycare expenses.
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Dec 20, 2012 17:00
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dreesemonkey posted:I had a general question about the "Fiscal cliff" tax stuff, I'm sorry if this is a shut-the-gently caress-up-about-it-already topic in here, but my questions is a little more specific. The standard deduction amount for MFJ in 2012 is $11,900.
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Dec 20, 2012 17:20
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The standard deduction and personal exemptions are completely separate from any FICA taxes you pay on your paychecks. The only direct effect I can think of that an increase in FICA taxes would have on an income tax return would be a change in the Self-Employment tax rate (and the various related adjustments and forms). The standard deduction and personal exemptions tend to increase by a nominal amount each year. I'm not sure if this is because of legislation passed by Congress or if the Department of Treasury arbitrarily decides on a number. Perhaps other posters know more about the intricacies of the legislation that allows this increase.
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Dec 20, 2012 19:08
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dreesemonkey posted:I had a general question about the "Fiscal cliff" tax stuff, I'm sorry if this is a shut-the-gently caress-up-about-it-already topic in here, but my questions is a little more specific. Also, daycare expenses have absolutely nothing to do with itemizing. On the plus side, it means you can claim the dependent care credit even if you use the standard deduction.
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Dec 20, 2012 19:30
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saltylopez posted:The standard deduction and personal exemptions are completely separate from any FICA taxes you pay on your paychecks. I think I have myself to blame. I think I was under the (false) impression that income tax/ss paid lowers your AGI, but I'm pretty sure that's now incorrect. I think that when you file you're "what you should have paid" is calculated based off your AGI, which is mostly effected by anything pre-tax taken out of your checks (401k, health savings plans, etc). So then that "what you should have paid" is compared to "what you did pay" based on the number of dependents you were calculating. My bad, I think I answered my own question. Carry on.
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Dec 20, 2012 19:34
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furushotakeru posted:Also, daycare expenses have absolutely nothing to do with itemizing. On the plus side, it means you can claim the dependent care credit even if you use the standard deduction. Thank you, as you can see my knowledge of tax stuff is pretty much non-existent, especially what's a deduction vs. credit. I looked the dependent care credit up on the IRS website and it looks like this for us, I think: We paid around $7000 for daycare this year, however $6000 is the most a couple can claim. The credit % is based on AGI, and since our AGI is over $43,000 the percentage we get back is 20%. So 20% of 6000 is $1200, so we should get a $1200 credit applied to our taxes. It's something anyway 
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Dec 20, 2012 19:50
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dreesemonkey posted:Thank you, as you can see my knowledge of tax stuff is pretty much non-existent, especially what's a deduction vs. credit. Assuming you paid for childcare for at least 2 children, yes. Also, both you and your wife need to have earned income for the year, or she must be a full time student for at least 5 months, or she must be physically incapable of caring for the children.
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Dec 20, 2012 19:53
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No harm done. If everybody could understand this stuff, I probably would not have a job. Plus its an election year, that combined with the fiscal cliff negotiations has probably given a rise to many misconceptions and misunderstandings.
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Dec 20, 2012 19:55
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furushotakeru posted:Assuming you paid for childcare for at least 2 children, yes. Also, both you and your wife need to have earned income for the year, or she must be a full time student for at least 5 months, or she must be physically incapable of caring for the children. Ah poo poo, so the $3000/person is the person actually receiving the service, not the person earning the income. poo poo, well then that halves that $1200. I guess it makes sense seeing that it would be a penalty for making less money, which is a penalty in itself.
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Dec 20, 2012 20:04
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I just now caught up on most of this thread. I'm an enrolled agent in Michigan, so if any goons have any questions related to the Michigan income tax (there have been a TON of changes that take affect for 2012), I'd be happy to help. I'm also happy to help with federal questions, though I don't have nearly the experience of furu or abbi. (This will be my 4th year preparing taxes)
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Dec 20, 2012 20:04
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saltylopez posted:I just now caught up on most of this thread. I'm an enrolled agent in Michigan, so if any goons have any questions related to the Michigan income tax (there have been a TON of changes that take affect for 2012), I'd be happy to help. Always nice to see another EA.
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Dec 20, 2012 20:19
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I just found out I'm being laid off at the end of year, sucks, but i'll get over it. The issue I have is that I have already sent in my check for my 5.5k deposit for my 2013 Roth IRA. I probably will, but obviously can no longer be sure I'll make the minimum 5.5k in 2013 to be eligible for an IRA. Since it was just send yesterday, it hasn't arrived yet, and hasn't bought anything. I can call the whole thing off if need be and redirect it to a taxable account. My question is: If I let it go into the Roth IRA, and I don't get a new job by the end of 2013, what are the tax implications? Can I just take it back out in December if i don't get a job?
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Dec 20, 2012 21:46
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Xenoborg posted:I just found out I'm being laid off at the end of year, sucks, but i'll get over it. You should be able to reverse the transaction up until 4/15/14, I think. Check with the account custodian to make sure though.
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Dec 20, 2012 22:13
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furushotakeru posted:Always nice to see another EA. They're so young. I started in 1998, dagnabbit!
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Dec 20, 2012 22:33
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AbbiTheDog posted:They're so young. I started in 1998, dagnabbit! Quiet, old man  . I started doing taxes in 2003, so I guess I am what you would call a "whippersnapper" 
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Dec 20, 2012 22:39
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jtsold posted:So if I used it 100% for work for the rest of 2012, then did closer to 75%/25% work/personal from January on, would that affect my 2012 sec. 179 write off? Further, how long into the future does it need to be used over 50% for work? (I'm considering looking for a W-2 position at some point, and want to understand the tax implications of my write off decisions now.)
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Dec 21, 2012 00:52
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jtsold posted:Sorry to quote myself, but can somebody weigh in on this? My accountant hasn't been available except for a 3 minute phone call he squeezed in between moving offices. furushotakeru posted:You can either use the standard deduction per mile or deduct the business use % of your actual expenses (loan interest, gas, depreciation, insurance, repairs, etc.). If you decide to use the actual expenses, you might be able to accelerate the depreciation to the extent of business use, but only if you use it more than 50% for business. There are also limits on depreciation for most cars (those than are less than 6,000 pounds gross vehicle weight). If you use §179 to accelerate depreciation and you later stop using the car at least 50% for business, you will need to recapture some of the §179 expense you claimed. It doesn't affect 179 unless you go below 50% business use.
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Dec 21, 2012 14:18
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Oh also of course depreciating/¸§179-ing your car reduces your basis in the vehicle, so later on you may have to recapture some depreciation if you sell/trade it in for more than your basis even though you get less for it than you paid. Example: You buy a new truck for $50,000 and §179 $30,000 of it on your 2012 return. In 2013 you trade the truck in and receive a trade credit of $35,000 for it. In real dollars you lost $15,000 on the car, but for tax purposes you have a taxable gain of $15,000 since your basis in the car is now ($50,000-30,000=)$20,000. This gain might be deferred if you elect to treat it as a tax deferred like kind exchange. furushotakeru fucked around with this message at 20:20 on Dec 21, 2012 |
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Dec 21, 2012 20:17
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I have a legal question about donations. A good friend of mine works at a company that 100% matches employee donations to most respected charities, including the one I'd be donating to. I would like to take the money I'd be donating, transfer it into his bank account, and have him donate the money instead while his company matches it. I understand that I won't be able to file a tax exemption for my donation. Is there anything unlawful about this? Would it be unlawful if my friend filed a tax exemption on it?
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Dec 22, 2012 16:50
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BSchlang posted:I have a legal question about donations. I don't see why it would be, given that you're essentially gifting the money to your friend who, in turn, donates it and gets the charitable contribution deduction benefit (assuming you haven't structured it as some sort of conditionally revocable gift to your friend). So long as you don't exceed the $13,000 gift limit for the year, there shouldn't be any filing issues with this, as far as I can tell. Horseshoe theory fucked around with this message at 21:00 on Dec 22, 2012 |
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Dec 22, 2012 17:35
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Hi furushotakeru, How are you all going to deal with the fact that the government doesn't have its poo poo together this year and that AMT rates for 2012 haven't been set yet, especially since you deal mainly with the California Bay Area where tons of people are affected by AMT? So, I normally do my tax returns sometime mid February, but it's sounding like waiting as long as possible for our federal government to make a decision would be better for the 2012 season?
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Dec 23, 2012 21:11
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ntan1 posted:Hi furushotakeru,
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Dec 24, 2012 01:59
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How can I figure out how much money my husband and I have to put into a 401k or something else so we stop owing money to the federal government at the end of the year. Last year we owed $1500 or so when we filed our return. We are a dual income no kids family, we didn't own a house, etc. We both make decent money, and claim 0 and even put an had an extra $2600 withheld from our paychecks (total between the two of us) to attempt to break pretty even come the end of the year. Now, in my preliminary stab at figuring out what we would owe for 2012, it appears we owe yet another $2,600 in addition to what we paid in already this year. So, is there some sort of magic calculator that can tell us how much money we could be putting into our 401k's or some other vehicle that would help lower our taxable income? We generally save about 43% of our after tax income just in a savings account for now (and that doesn't include our maxing out of our Roth IRA's either for savings amount, and the amount we put in pre-tax to our 401k's). There probably isn't a need for us to put 43% of our after tax/health insurance/retirement savings/etc money into just a run of the mill savings account, so if there is some magic calculator that tells us how much additional we can put into our accounts to save us sending the money to the feds, that would be great. (Side note if it matters, but it is probably hard to tell what with the clusterfuck in Washington, but we recently purchased a home and are expecting our first child in June).
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Dec 26, 2012 03:16
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ntan1 posted:Hi furushotakeru, Nothing to do about it except wait for Congress to pass a patch and hope that it all works out. I am especially dreading the prospect of a large number of my clients taking a "wait and see" approach like you are describing. I still need my clients to come in at the same time as they usually do, we just might not be able to actually FILE the return until later in the filing season than usual. There are still only so many hours in a day and I am already working almost all of them so there isn't really a lot of slack to absorb extra work at the end of the season  scribe jones posted:dunno about furu, but my plan amounts to "drink heavily and hope IRS/Lacerte get their poo poo together before March" Intuit claims to be programming for several different scenarios so as to be able to issue an update very quickly whenever something gets passed. We'll see how that shakes out. Also this reminds me of the other year when a client came to their appointment and gave me some vodka filled chocolates. I asked her whether I should be eating these before or after I prepared her return! She said to hold on to them and give them back to her when I sent the return so she could eat them after seeing how much she owes. sheri posted:How can I figure out how much money my husband and I have to put into a 401k or something else so we stop owing money to the federal government at the end of the year. $2600 divided by your marginal tax rate. Of course 2013 will be different due to the house and kid. Congratulations on being such strong savers, almost no one has the financial discipline or wherewithal to save that much (including myself!). furushotakeru fucked around with this message at 19:49 on Dec 27, 2012 |
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Dec 27, 2012 19:47
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I'm trying to reduce my 2012 & 2013 AGI but I've hit some roadblocks setting up a 401k and HSA- My employer has a health care plan, but it's the opposite of a high deductible plan- all medical expenses are reimbursed up to certain amount. The limit is fairly low so I end up paying a decent amount out of pocket. Is there anything similar to an HSA I can use for this? I don't think I qualify for an HSA since I don't have a high deductible insurance plan. Similar issue for retirement contributions- I contribute the max to my IRA but my employer does not offer any sort of 401k program. But to open a of SEP 401k I think I need to have income on schedule C or SE? The only 1099 income I have is unearned.
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Dec 27, 2012 23:25
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MiTEG posted:I'm trying to reduce my 2012 & 2013 AGI but I've hit some roadblocks setting up a 401k and HSA- The IRA rules, quite frankly, suck. The people that have the cash to contribute to an IRA get limited or the amount is so low it's kind of a "so what" issue at a certain point. You sound like you're screwed in the HSA as well. You could always talk to your local life insurance salesman to buy a whole life policy, you know. 
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Dec 28, 2012 00:30
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Any opinions from the tax pros on rolling post-tax, non-Roth 401(k) contributions directly into a Roth IRA (subject to the pro-rating of contributions and earnings)? It seems like people have been doing this, but the IRS hasn't said one way or the other as to whether it's allowed. What would you tell a client who wanted to make this move? EDIT: I'm not actually doing this one way or the other as I found a simpler way to achieve my goals. But I am curious how this sort of thing gets handled, since it seems that there are plenty of issues that the IRS refuses to resolve. ChineseBuffet fucked around with this message at 05:22 on Dec 28, 2012 |
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Dec 28, 2012 04:24
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