Will MM be doling out tax advice this year?

[MrsAxilla]

I need some!

[LoveTrains]

What questions do you have?

[MrsAxilla]

DH and I usually file jointly. This year, I was un/underemployed. I'm waiting on one last W-2, but I expect I'll be around $25K. DH is slightly over $100K. We started our own business - an LLC, of which I'm majority owner. We're about $6K in so far of our own money. Most of that is inventory. We haven't launched yet, but have sold about $1.5K through word of mouth. I have a dedicated home office.

Do you think we're better off filing separately this year? Will Turbo Tax guide us through ok? Any tips on business expenses and such? Thx!

[Deleted]

I would run it both ways in turbo tax to see.

[southerngirl]

Can I ask a question here? 

We bought a new house in April and are using a PM company to rent out our other house. Renters pay $1K, pm fee is $100, we receive checks for $900 each month, mortgage payment is $899. Those that also do this, how does this "income" effect your taxes? We are still waiting on a w2 to file ours. 

[awkwardpenguin]

Jan 23, 2013 6:32:53 GMT -5 southerngirl said:

Can I ask a question here? 

We bought a new house in April and are using a PM company to rent out our other house. Renters pay $1K, pm fee is $100, we receive checks for $900 each month, mortgage payment is $899. Those that also do this, how does this "income" effect your taxes? We are still waiting on a w2 to file ours. 

You have to fill out the forms for rental income.  You can deduct the property management, taxes, and mortgage interest, but the part that is building equity counts as income.

www.irs.gov/publications/p527/index.html

[LoveTrains]

Jan 23, 2013 6:32:53 GMT -5 southerngirl said:

You need to fill out schedule E. you might have a loss for tax purposes after you depreciate the property. I have a four figure loss each year on my rental although my deduction is limited by our AGI.

[LoveTrains]

MrsAxilla turbo tax is very easy to use. You just have to run the numbers both ways. If you have a Roth IRA you can't do MFS.

[SJ]

TT can easily handle both of these situations.

[aspentosh]

I am curious to see what our taxes look like since we started renting our townhouse out. We rent it for a loss each month, so I am hoping that'll help our taxes a little.

[jwright]

Jan 22, 2013 23:59:27 GMT -5 MrsAxilla said:

DH and I usually file jointly. This year, I was un/underemployed. I'm waiting on one last W-2, but I expect I'll be around $25K. DH is slightly over $100K. We started our own business - an LLC, of which I'm majority owner. We're about $6K in so far of our own money. Most of that is inventory. We haven't launched yet, but have sold about $1.5K through word of mouth. I have a dedicated home office.

Do you think we're better off filing separately this year? Will Turbo Tax guide us through ok? Any tips on business expenses and such? Thx!

If you are legally and LLC, and you have a federal id number from the IRS, you will need to file a 1065 partnership tax return.  I don't know if Turbo Tax prepares these or not.  You may want to see an accountant.  Start up expenses are required to be capitalized, you should be able to deduct the cost of inventory since you likely meet the requirements to be classified as a small business.  You will have a loss on the business, and you and your husband will each get a K-1 to report your share.

From there, you enter the K-1 onto your 1040 tax return.  At that point you can run it both ways through Turbo Tax, although unless you have significant medical expenses Joint is most likely going to be the way to go.

[jwright]

Jan 23, 2013 6:32:53 GMT -5 southerngirl said:

Can I ask a question here? 

We bought a new house in April and are using a PM company to rent out our other house. Renters pay $1K, pm fee is $100, we receive checks for $900 each month, mortgage payment is $899. Those that also do this, how does this "income" effect your taxes? We are still waiting on a w2 to file ours. 

As others have said you will need to file Schedule E to report rental income and loss. You need to report the entire $1,000/month as income (not just what you receive) and then show the pm fee as an expense along with mortgage interest, property taxes, insurance, and any other expenses.  Principal payments on the loan are not a deduction.  You will then depreciate the cost of the house, Turbo Tax will walk you through that (basically divide the entire cost of the house by 27.5 years and get that expense).  You will most likely have a loss and that may or may not be deductible depending on your income.

[Deleted]

Ooh, ooh! I have a question too!

My husband (who is an accountant, btw) messed up our taxes for 2009 and we got audited by NY State. They were right, and we owe them $350 (approximately $300 of which is our mistake, and $50 of which is our penalty).

Apparently the issue had to do with the fact that he was working at a client's office in NJ often enough back then that he had to file returns in both NY and NJ and he messed up something with the refund or credit that NJ had given us in the prior year for the taxes that we had paid in NY.  I think he forgot to apply it to our taxes, which means that we underpaid. Or something like that.

And I think the $300 would have be able to be applied to our federal tax return for 2010.

Would you bother redoing your taxes for those years to get that money back? That would entail amended returns for the feds, NY, AND NJ, right? That sounds annoying, so I wouldn't want to do it for like $10.

[LoveTrains]

Jan 23, 2013 7:56:34 GMT -5 aspentosh said:

I am curious to see what our taxes look like since we started renting our townhouse out. We rent it for a loss each month, so I am hoping that'll help our taxes a little.

Maybe. It all depends. It doesn't matter if its a loss on paper, it might not be a loss for tax purposes. 

Also, you can only deduct up to $25K of Real Estate losses and your income must be lower than $100K (for both single and MFJ - it makes me RAGE that its the same). Your loss will be limited up to $150K income, at which point you cannot deduct any losses. 

You can roll over the loss that you can't deduct, but that isn't helping me because now I have like a bajillion dollar loss that keeps rollling over that I can't deduct.

[aspentosh]

Jan 23, 2013 8:40:29 GMT -5 LoveTrains said:

Jan 23, 2013 7:56:34 GMT -5 aspentosh said:

I am curious to see what our taxes look like since we started renting our townhouse out. We rent it for a loss each month, so I am hoping that'll help our taxes a little.

Maybe. It all depends. It doesn't matter if its a loss on paper, it might not be a loss for tax purposes. 

Also, you can only deduct up to $25K of Real Estate losses and your income must be lower than $100K (for both single and MFJ - it makes me RAGE that its the same). Your loss will be limited up to $150K income, at which point you cannot deduct any losses. 

You can roll over the loss that you can't deduct, but that isn't helping me because now I have like a bajillion dollar loss that keeps rollling over that I can't deduct.

Interesting, thanks! I have some reading up to do but I have been lazy since we don't have our W-2s or anything yet.

[doxies]

Jan 23, 2013 8:23:14 GMT -5 v said:

And I think the $300 would have be able to be applied to our federal tax return for 2010.

Would you bother redoing your taxes for those years to get that money back? That would entail amended returns for the feds, NY, AND NJ, right? That sounds annoying, so I wouldn't want to do it for like $10.

I think you just declare that you paid it on this year's taxes - it should ask if you paid any taxes for previous years if I remember correctly.

[jwright]

Jan 23, 2013 8:59:40 GMT -5 doxies said:

Jan 23, 2013 8:23:14 GMT -5 v said:

And I think the $300 would have be able to be applied to our federal tax return for 2010.

Would you bother redoing your taxes for those years to get that money back? That would entail amended returns for the feds, NY, AND NJ, right? That sounds annoying, so I wouldn't want to do it for like $10.

I think you just declare that you paid it on this year's taxes - it should ask if you paid any taxes for previous years if I remember correctly.

Yes, you get a deduction on Schedule A for state taxes paid.  Since you are a cash basis taxpayer you get the deduction in the year you paid the taxes not the year you had the liability.  So deduct the $300 for 2012.

[lizard]

I have a question!

I only started doing my taxes myself last year. I was going through w-2's and found my w-2 from 2010 which only had a federal tax withholding of 42.22. I only made ~$11,000 that year because I was out on maternity leave. In 2009 I paid about $400 in income tax and the same in 2011 and 2012. So that number must be wrong, right?

I spoke with my HR (which is located in India so it was hard to get anyone that I could understand and who could understand what I was asking). They said that it was correct because if you earn less than $264/bi-weekly it isn't subject to income tax. I asked for all of my pay stubs from 2010 to be mailed to me because they couldn't help me and told me to speak to a tax adviser.

I know it couldn't be right because I was working full time from January to June. I'm really pissed at myself for finding it now and wish I had kept better records.

[Deleted]

Jan 23, 2013 9:27:27 GMT -5 jwright said:

Jan 23, 2013 8:59:40 GMT -5 doxies said:

I think you just declare that you paid it on this year's taxes - it should ask if you paid any taxes for previous years if I remember correctly.

Yes, you get a deduction on Schedule A for state taxes paid.  Since you are a cash basis taxpayer you get the deduction in the year you paid the taxes not the year you had the liability.  So deduct the $300 for 2012.

Excellent.  Thanks guys!

[ReenaP]

Ok I have a question about the Schedule K-1.

I have small ownership stake in a fairly new family business.   The business generates a
Schedule K-1 for me, but we never get it until about June of each year (well
after we have filed our taxes).  We are supposed to amend every year to include the K-1, but unfortunately have been
lazy about it.

I know there is a 3-year limit to file amended returns, so
we are trying to do that now.  Here are
the losses/gains for the 3 yrs I have K-1’s for:

2009:  $1,777 loss

2010: $26,600 loss
2011: $950 gain (never saw this, it was reinvested)

Doing some google searches, I see that I can use up to $3k oss each year to offset ordinary income. 

Then I can carryforward the rest of the losses.  So what would I do in this scenario?  File an amended ’09, file an amended ’10, and
file an amended ’11 that carries over the remaining $23.6k loss from ’10?

Also, we normally do our own taxes using turbo tax.  Do you think this situation is tricky enough that you recommend hiring a professional?

I appreciate any advice!