Income tax thread 3.0

[Owensdad]

Agree. The point was that borrowing is better than an early distribution.

Just like shooting yourself in the foot is better than shooting yourself in the nuts.

I would agree.

 

[SFSV650]

A hypothetical; if someone was knocked off their bike in a hit and run and had to buy a new jacket, would they be able to take that as a deduction?

(Just realized I forgot to claim the $700 of gear stolen from my bike this summer :cry )

 

[Owensdad]

Unreimbursed theft losses can be taken as casualty losses. You will need to itemize. And there are AGI limits. If this is your only casualty loss, given the amount, it is unlikely to generate a tax benefit.

 

[Holeshot]

A tenant leases space, 3 year term. Capitalizes leasehold improvements over 36 months. Moves out for one month, comes back after 30 days. New lease is established. 30 day break in lease contracts.

Still need to capitalize over 15 years or can the remainder be written off in year 4?

 

[SpeedyCorky]

Owensdad spent 10~ min on the phone w/ me and explained this real easy, and help me answer some *i'm sure very basic* questions related to the tax changes that occurred for me this past year.

KUDOZ !!!

 

[Holeshot]

Yeah, Sam rules hardcore.

 

[dmaxAl]

Just finished my ass raping efile.. My tax situation is pretty straightforward, what was striking was turbotax definitely asked more questions this year..
Thanks Obama

 

[Eye Heart Pasta]

Just finished my ass raping efile.. My tax situation is pretty straightforward, what was striking was turbotax definitely asked more questions this year..
Thanks Obama

Are you "married filing jointly"? I tried to efile over the weekend and my fed was rejected because of some issue with the SSN being the primary on one return and secondary on another. I tried again on Monday and same problem. AFAIK, everything looks right on my return. I suspect it's a single wrong line of code either within turbotax or at the receiving computer at IRS. I was going to wait until next Monday and try again and if that failed just file by mail. My state return sailed through on the first try.

 

[Ducky_Fresh]

I've been getting a tax professional for the last 4 years. I paid him $800 this year. I think I am going to file my taxes myself next year and save that, just wondering how much complexity there is to replicating it. I wouldn't think a whole lot?

Major change in 2014: We're expecting our first kid.

Oh, and went back and deposited $3000 in to my HSA to get those pre-tax dollars, of which I am getting about $1000 back. Pretty cool..

 

[dmaxAl]

Are you "married filing jointly"? I tried to efile over the weekend and my fed was rejected because of some issue with the SSN being the primary on one return and secondary on another. I tried again on Monday and same problem. AFAIK, everything looks right on my return. I suspect it's a single wrong line of code either within turbotax or at the receiving computer at IRS. I was going to wait until next Monday and try again and if that failed just file by mail. My state return sailed through on the first try.

Yeah man, joint filing. I ran update last night before check and everything sailed through.. Call turbotax support, you shouldn't have to snail mail.

I've been getting a tax professional for the last 4 years. I paid him $800 this year. I think I am going to file my taxes myself next year and save that, just wondering how much complexity there is to replicating it. I wouldn't think a whole lot?

Major change in 2014: We're expecting our first kid.

Oh, and went back and deposited $3000 in to my HSA to get those pre-tax dollars, of which I am getting about $1000 back. Pretty cool..

Is your situation complicated? Turbotax is very straightforward to use, and just walks you through income/deductions/etc... For the $60 it costs you could even try it before deciding to use your cpa..?

 

[Owensdad]

A tenant leases space, 3 year term. Capitalizes leasehold improvements over 36 months. Moves out for one month, comes back after 30 days. New lease is established. 30 day break in lease contracts.

Still need to capitalize over 15 years or can the remainder be written off in year 4?

Qualified leasehold improvements are depreciated over 15 years as you note.

I think you are asking if this can be accelerated under some interpretation of the disposition rules. Highly doubtful, since the tenant must permanently give up possession to create an abandonment disposition.

 

[Holeshot]

Thanks Sam…and a few months won't be considered abandonment. Gracias Amigo!

 

[Ducky_Fresh]

Is your situation complicated? Turbotax is very straightforward to use, and just walks you through income/deductions/etc... For the $60 it costs you could even try it before deciding to use your cpa..?

Nothing too crazy. Married, sales occupation and deductions, but not 1099, rental property. Not really, IMO. I had a lot of complex house things for a few years and something major always seems to come up and I want to ensure maximum return. So it seems OK. But replicating next year seems easy.

And yes, I thought about using turbo tax and using it to replicate and estimate my tax return (along with my wife's). I am pretty sure I can get close enough that the $800 fee can be mitigated.

 

[Eye Heart Pasta]

I suspect it's a single wrong line of code either within turbotax or at the receiving computer at IRS.

Nope. Someone already filed a return using my wife's SSN.

I called the IRS this morning and found out the bad news. Have to snail mail my return along with form 14039 ID Theft Affidavit. I printed out pub 4535 IDTheft victim checklist and the wife gets to deal with that on her day off.

Good times. :rolleyes

On the plus side, Ms. Miller at the IRS was very pleasant and helpful.

 

[byke]

I sent a check to the IRS and noted that the payment was for 2013 taxes. Around a month later, I receive a refund for 2012 (filed late due to some complexities) and for whatever reason, the IRS gave that 2013 payment right back to me in my 2012 refund and did not apply it towards 2013 taxes like they were supposed to. They've acknowledged the error on their end. I didn't catch their mistake on my 2012 return and now they've wrecked my planning for 2013. Do I have any recourse?

 

[Owensdad]

Nope. Someone already filed a return using my wife's SSN.

I called the IRS this morning and found out the bad news. Have to snail mail my return along with form 14039 ID Theft Affidavit. I printed out pub 4535 IDTheft victim checklist and the wife gets to deal with that on her day off.

Good times. :rolleyes

On the plus side, Ms. Miller at the IRS was very pleasant and helpful.

Bummer. Glad Ms. Miller was pleasant and helpful, typical of IRS front line representatives in my experience.

Cold comfort: the IRS is keenly aware of these scams and it is a priority for the CID division. Anything that threatens public confidence in the self reporting regime on which the US tax system relies has a way of focusing the government mind and resources.

Dirtbag perps will be delt with very harshly.

Edit: PM me if this gets ridiculous.

 

[Owensdad]

I sent a check to the IRS and noted that the payment was for 2013 taxes. Around a month later, I receive a refund for 2012 (filed late due to some complexities) and for whatever reason, the IRS gave that 2013 payment right back to me in my 2012 refund and did not apply it towards 2013 taxes like they were supposed to. They've acknowledged the error on their end. I didn't catch their mistake on my 2012 return and now they've wrecked my planning for 2013. Do I have any recourse?

Really good question. You absolutely have recourse. This is what tax practitioners call an issue of procedure and it happens all the time.

A late filed return where no tax is owed should not be an issue assuming the SOL has not run.

Your explicit instructions on how to apply the payment to a specific year's tax liability should generally be respected assuming no illicit acts (fraud etc.). Written instructions on the check itself should be sufficient. Example: year/form/tax ID#, "2013/form 1040(ES)/123-45-6789" in the memo. Did you include any other documents with your payment?

Resubmit the 2013 payment and dispute any interest/penalties based on the facts you noted above.

Robust documentation is critical. How did the Service acknowledge their error? If verbally, keep a record of the agent's ID# and name. If you didn't catch that, keep a diary of your interactions and supply those facts (including a copy of the check that presents your instructions) in a written response to the computer generated notification (the notice will have an identifying number in the upper right hand corner starting with "CP") of additions to tax regarding your 2013 return that you will probably receive in the next few months.

You must respond in a timely manner, typically 30 days from the date of the notice. Timely mailing is generally considered responsive.

Keep a copy of everything.

 

[jt2]

Hey Sam, this is only tangentially tax-related, so feel free to ignore.

I hit the max 401(k) contribution last year. Each year, my employer does a non-discrimination audit, and I get part of my contribution kicked back to me based on the results of that audit.

I am about to change jobs, and intend to roll the 401(k) account into my IRA. I'll likely do so before the audit.

If that happens, is what is the tax status of any "excess" contributions? They wouldn't be excess of the $17500 limit, but only in the sense that they were more than would be allowed in that employer's program for that year, where I would no longer be an employee.

I actually do want to roll the funds out before they can get their mitts on them, but don't want to jeopardize the status of my IRA.

Thoughts?

 

[Owensdad]

What the hell is a non discrimination audit in a defined contribution retirement plan context? This seems more relevant in a defined benefit plan arrangement where executives and rank and file employees have different benefits under the plan.

401(k) and IRA contribution limits are statutory. An ostensibly qualified plan that prevents deferral within those limits seems to me to run afoul of ERISA rules but, as you note, this is not a tax issue per se.

Generally speaking, contributed amounts not eligible for deferral will be taxable as ordinary income.

More details please.

 

[Reli]

Sam, any input on the chart below? (click to zoom).
Under the red bar for long-term capital gains, do those income figures INCLUDE the gains?