BITOG Tax Thread

[BeanCounter]

Alright folks, the end of the year is within site and we all know what that means...

...taxes will soon need to be filed!

Please feel free to ask questions or pose any information requests that you may be in need of in the near future.
Don't feel obligated to remain on personal and business income tax topics exclusively though, as anything tax-related is fair game.

Hopefully I/we can be of some assistance to the forum where possible.

 

[JHZR2]

Wow, sure appreciate it!

Question #1, had an iphone stolen. Worth a few hundred dollars. Can I write this loss off somehow?

Thanks!

 

[Drew99GT]

Originally Posted By: JHZR2
Wow, sure appreciate it!

Question #1, had an iphone stolen. Worth a few hundred dollars. Can I write this loss off somehow?

Thanks!


Indeed you can, but it generally has to be a loss of over $500.

http://www.irs.gov/pub/irs-pdf/p547.pdf

I also do taxes, so I'd be more then happy to help people. I've helped quite a few on BITOG in the past.

 

[JHZR2]

OK, here's another... My wife started working for herself on the side this year. Not making a lot, but it is multiple thousands of dollars. Only a fraction of our "employee" wages though. She will have write-offs on this, expenses incurred, etc.

Can she/we just deduct everything against ourselves with her being the sole proprietor, and do it on our own taxes, or should she quickly set up an LLC or similar? Is there a benefit to one or the other if she is making less than $10k? $25k?

 

[salesrep]

For repair of a rental property.
What is the limit for monies spent on labor per individual before you have to 1099 them?
Seems like it used to be $600.

 

[greenaccord02]

I surely appreciate it. I'll have some questions for you in the not too distant future, I'm sure.

 

[BeanCounter]

Originally Posted By: JHZR2
Wow, sure appreciate it!

Question #1, had an iphone stolen. Worth a few hundred dollars. Can I write this loss off somehow?

Thanks!


Drew gave you the likely answer here, but by chance was it stolen from somewhere that it would fall under insured property?

 

[JHZR2]

Figured it was not worth putting a claim in on homeowner's for a $300 item... my experience with insurance is that tey raisde your rates for claims...

 

[BeanCounter]

Originally Posted By: JHZR2
OK, here's another... My wife started working for herself on the side this year. Not making a lot, but it is multiple thousands of dollars. Only a fraction of our "employee" wages though. She will have write-offs on this, expenses incurred, etc.

Can she/we just deduct everything against ourselves with her being the sole proprietor, and do it on our own taxes, or should she quickly set up an LLC or similar? Is there a benefit to one or the other if she is making less than $10k? $25k?


In order to approach this question from a complete tax planning perspective, I might have to know more info to address it more correctly.

Yes, you can deduct expenses straight from your Schedule C, including home office deductions as a percentage of the ft^2 of your home and a great number of expenses.

The nature of the business and its income might influence the necessity, or lack thereof, to go the LLC, S-corp, or other route. Please feel free to PM me if you would like to find out more specifics without posting it on the interweb for everyone!

 

[JustinH]

Is a health insurance premium deducted from my paycheck allowed to be deducted from my taxes?

 

[BeanCounter]

Originally Posted By: salesrep
For repair of a rental property.
What is the limit for monies spent on labor per individual before you have to 1099 them?
Seems like it used to be $600.


You're correct, still $600!

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf

 

[BeanCounter]

Originally Posted By: greenaccord02
I surely appreciate it. I'll have some questions for you in the not too distant future, I'm sure.


Absolutely, that's what we're here for!

 

[BeanCounter]

Originally Posted By: JHZR2
Figured it was not worth putting a claim in on homeowner's for a $300 item... my experience with insurance is that tey raisde your rates for claims...


Yeah, you shouldn't have had to file a claim in order to take a deduction here, but like he said, it is the excess over $500 typically.

Some insurances will do that and some won't, but I wouldn't likely file a claim either unless it was enough over the $500 the IRS has a floor at anyways.

If only this were already 2010...the floor returns back to $100!

 

[BeanCounter]

Originally Posted By: JustinH
Is a health insurance premium deducted from my paycheck allowed to be deducted from my taxes?



No - if the premiums are excluded from your gross income (meaning they are deducted "pre-tax") then you cannot take a deduction. Think of it this way, if they aren't getting the benefit of taxing the $$$, they aren't going to give you the benefit of, essentially, another tax deduction.
i.e. employer cafeteria plan, etc.
That would be too unfair, sort of like, I don't know...their forms of multiple taxation.

Yes - only if you pay taxes on the income first (meaning the deduction is "post-tax").

Not very clear, but scroll about 1/4 of the way down to "Insurance Premiums":
http://www.irs.gov/publications/p502/ar02.html#en_US_publink1000178947

 

[Drew99GT]

Yea, pre-tax payments for many things like insurance - you're essentially already getting the full deduction, and it's even more of a benefit since you need to itemize deductions and medical expenses have to be over 7.5% of your adjusted gross income to be deductible.

By all means, if you have access to pre-tax cafeteria plans and the like, USE THEM!

 

[simple_gifts]

I hear form 1040 is outdated, should I be moving to form 1030 or maybe 520?

 

[Quattro Pete]

Originally Posted By: simple_gifts
I hear form 1040 is outdated, should I be moving to form 1030 or maybe 520?

And if your return is very simple, then use form straight 20.

 

[ryansride2017]

My employer pays us .40 cents per mile for transportation costs (I travel about 15K-18K miles per year on company business). I understand there is a way of deducting the difference between what my employer pays and what the federal government pays for mileage, but is there a way of doing it if I don't plan on itemizing deductions and use the standard form?

 

[Drew99GT]

Generally, you need to itemize deductions to take employee deductions. So if they include the .40/mile as income, you generally can not deduct that back off your taxes unless you itemize. Plus, employee expenses have to be over 2% of AGI to be deductible.

However, if you're employer has what's called an accountable plan where you submit your mileage records and they reimburse you based off that, then it essentially doesn't affect your taxes at all. It's not included as income and you don't have to deduct anything.

It all depends on whether your employer includes the mileage reimbursement on your W-2.

 

[Dooskey]

I had a question about doing a Roth Conversion on a small IRA I have. The value of the IRA is around $7200 right now.

My household income for the year will probably be right around $40,000. I'm married and have a child and we just bought a house this year. So, with all that, I think my effective tax rate will be pretty low. If I do the Roth Conversion this year, I will only have to pay taxes on the conversion at my tax rate for this year, correct? Or are there other fees or rates at which this type of a conversion might be taxed? Thanks a lot for your help.