supporter
Posted by Wendy Wilson (+6171) 11 years ago
I though it was time I started another tax thread for the 2009 tax year. Post your questions here and I'll do my best to answer them. I specialize in individual and sole proprietor tax returns but have some knowledge of S-corps. Anything I don't know I'll do my best to point you to resources that can help. Please no anti-tax ranting or I'll quit the thread.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
HAITI: If you donated to a qualified charity specifically for the Haitian relief efforts between January 11, 2010, and before March 1, 2010 you can take that donation as a deduction on your 2009 return. This is assuming that you can itemize.

Michigan return: I'm not an expert on Michigan returns. I've never done one. If you didn't sell any property there I would take the MI w-2s. Your preparer will have more questions for you.

New House: If your house purchase was after Nov. 6,2009 you may qualify for up to 6500 credit if you lived in your previous house as a main residence for 5 years of the 8 years prior to selling it. You are required to send a copy of the settlement statement for the new house with you return. Look up Form 886-H-FTHBC for a list of required documentation.
Top
supporter
Posted by Mary1 (+152) 11 years ago
Thanks Wendy, I will get a copy of the form and see what happens.
Top
supporter
Posted by howdy (+4950) 11 years ago
that form is for the first time buyers...is the documentation the same for the repeat buyers credit as well?
Top
supporter
Posted by Gunnar Emilsson (+16811) 11 years ago
Wendy: After living in our home for 20 years, our mortgage has become so small, that itemizing no longer is the best option....we should just take the standard deduction.

With our mortgage at 6%, and no tax benefits available from itemizing anymore, should we just suck it up and pay off our mortgage? In this economy, I can't think of any investment that would pay 6% or better anymore.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Howdy, it's called the first time home buyers credit regardless. I haven't had a client with that credit yet this year but I do know that you have to send documentation and mail your return. You can't e-file it.


Gunnar, I guess whether you should pay off your house depends on whether it's financially feasible for you and fits in with your future plans. I'm not really a financial planner. Maybe you should talk to one. Don't forget that even though you take the standard deduction you still get to deduct your real estate tax.
Top
supporter
Posted by howdy (+4950) 11 years ago
Thanks Wendy...
Top
Posted by Chuck Schott (+1291) 11 years ago
Wendy, the amount of Federal withholding on my W-2 is way lower then it was last year. Am I in for a big hit when I get mt taxes done this year?

In other words is that extra $20-25 bucks a check that I've got all year going to bite me now?
Top
supporter
Posted by Bob L. (+5099) 11 years ago
Ask Ricardo.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Chuck, your withholding went down due to the Making Work Pay Credit that went into effect, I think, in April. When you do your tax return the credit will be figured out and in most cases it will offset the lower withholdings so that you shouldn't have a problem. In certain situations, however, it may be that the credit is lower than the additional withholding amount. This will happen where both the wife and husband work and they file a joint return. It may also happen if you work more than one job at the same time. The withholding tables don't take multiple jobs or working spouses into account.
Top
Posted by Chuck Schott (+1291) 11 years ago
I guess I'll know on St. Paddy's day the accountant has always saved a late day appointment for us so we can have a cold one.

Thanks!
Top
Posted by GVC (+521) 11 years ago
Hi Wendy,

I am a long-time reader but first-time writer-

Can you please advise on the new IRS "Sports Car Tax Credit"?
I have heard that the new stimulus plans are allowing the tax credit to nearly pay for the entire amount of the purchase price for high end sports cars, including the BMW Z-4. The program is so new that you may not have heard of it.

I am hoping to convince my wife to support my purchase but wanted to better understand this new program.

Thank you.
Top
Posted by Vicky Strom (+119) 11 years ago
Too funny GVC! Does Wendy your wife support the "Sports Car Tax Credit"? I've heard of it and my answer to my husband is YOUR DREAMING!!!

[This message has been edited by Vicky Strom (1/28/2010)]

[This message has been edited by Vicky Strom (1/28/2010)]
Top
Posted by GVC (+521) 11 years ago
shhhhh!!!
Top
founder
supporter
Posted by Amorette Allison (+11533) 11 years ago
Should I take cookies when I go see my accountant? If so, what kind?
Top
supporter
Posted by Bob L. (+5099) 11 years ago
I've already mailed in my taxes. Do I get a cookie?
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
GVC - nice try.

Amorette - I find that chocolate chip is always welcome and brownies are a favorite. Once I got a cheesecake and I have a client who always brings me bagels.

Bob L. - you get a pat on the back. pat, pat
Top
Posted by Christen LeBlanc Ramsey (+278) 11 years ago
thank you wendy! ok, we purchased our home in march 2009, and were able to claim the new home buyers 8k credit on the 2008 tax return. this year do we need to claim the 8k as income?
Top
supporter
Posted by Bob L. (+5099) 11 years ago
No.
Top
supporter
Posted by Kelly (+2634) 11 years ago
Wendy:

One of my W-2s has a negative amount for federal tax withheld. How do I enter a negative number, or do I enter "$0.00?"

Thanks!
Kelly

EDIT: If you live in MT and do your taxes yourself, I highly recommend www.icanefile.org. It is FREE and very easy to use. I've used it for the 2007 and 2008 tax years and plan to use it again this year.

[This message has been edited by Kelly (1/28/2010)]
Top
supporter
Posted by howdy (+4950) 11 years ago
Top
supporter
Posted by Kelly (+2634) 11 years ago
Thanks Howdy!
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Christen, the credit isn't taxable by the feds. I don't think Oregon taxes it but you'll want to double check. I haven't done an Oregon return in years.

Kelly, WTF? How can you have negative withholdings? Your W-2 must be incorrect. Or are you just messing with me?
Top
supporter
Posted by Kelly (+2634) 11 years ago
Hey Wendy:

I'm not messing with you. My W-2 from the city has a negative withholding. The HR department is checking to find out why this is.

Kelly
Top
founder
supporter
Posted by Amorette Allison (+11533) 11 years ago
Maybe you are dead? Which reminds me, I better pick up my City W-2s today.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Kelly, maybe you are in some kind of disturbance of the time-space continuum? Are you getting younger and younger?
Top
Posted by Christen LeBlanc Ramsey (+278) 11 years ago
thanks wendy!
Top
supporter
Posted by Kelly (+2634) 11 years ago
I've often thought I was in the middle of some kind of disturbance...

As far as I know I'm not getting younger, still a 43 year old in a 73 year old body.
Top
supporter
Posted by Mary1 (+152) 11 years ago
Wendy,

How does the making work pay tax credit work? How can we tell if the employer reduced the withholding or if we can claim it now on schedule M. The tax program I'm using is just giving us the $800 credit but I would hate to have to fix it later if that is not right.

Thanks,

Mary
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Mary, the Making Work Pay Credit for married folks filing jointly is maxed at 800 and is reported on schedule M. If you have wages or self-employment income you qualify for the credit. I don't know what program you're using but if you answered the questions accurately it should be correct. To satisfy yourself you could print out the Schedule M from your return and go through it line by line. It's not too complicated.

You don't need to worry about the employer. The withholding tables changed in April to accommodate the credit. If, for some reason, your employer used the old tables it just means that you will get the credit as part of your refund whereas most folks got theirs as part of their increased paychecks. It's all about timing.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
bump
Top
supporter
Posted by Barb Holcomb (+400) 11 years ago
Wendy

In December I terminated a mutual fund account from one company and transferred everything to a different company. I have a 1099-DIV from the old account as well as a 1099-B and am waiting for the 1099-DIV from the new account. How do I list the 1099-B? I didn't sell anything - just transferred it, so didn't earn/lose any shares in the transaction. Thanks! barb
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Sorry, Barb. A 1099-B means that you sold some shares. The fact that these shares may have been replaced doesn't negate the sale. The form should show you exactly what you sold. You list these on a Schedule D where you show the date you bought them, the date you sold them (on the 1099-B), the proceeds received (again on the 1099-B) and how much you paid for the shares originally. Make sure that you also add any taxable dividends you received over the time you owned the shares to the original cost. This is your cost basis. You have to claim the difference between the proceeds and cost basis as income - unless of course, you have a loss. You can claim any loss up to 3000 on your 2009 return and carry over any leftover to future years until it's used up. Most broker firm can give you the information about your cost provided you purchased the shares through them originally.

I doubt you'll receive a 1099-DIV for the new fund if your investment in it was in December. You may have missed the payment date for dividends. I'd double check with your broker.
Top
moderator
founder
Posted by David Schott (+16636) 11 years ago
Make sure that you also add any taxable dividends you received over the time you owned the shares to the original cost.

This is assuming she reinvested those dividends into the mutual fund, correct?

...unless of course, you have a loss. You can claim any loss up to 3000 on your 2009 return and carry over any leftover to future years until it's used up.

Let's say she took a $4K long term capital loss but had a $500 long term capital gain on some other stock she sold in 2009. Can she offset the $500 gain and also deduct $3K from her income and carry the remaining $500 over to future years? That's how it works, isn't it? That $3K limit only applies when deducting the loss from ordinary income?
Top
supporter
Posted by Barb Holcomb (+400) 11 years ago
Thanks Wendy for the answer, even though I didn't like it. I've been investing monthly for almost 23 years. Are you saying I need to have the 276 months worth of share purchase dates and the dividends reinvested annually each year? The 1099B doesn't show the cost-basis at all, but does show the transaction as termination. I'm currently deployed so don't have access to any of the info I need to figure out the cost basis. I hope my broker can send me some sort of summary from their records or I'll have to file for an extension.

I did receive the 1099-DIV today from the new company. I didn't make a payment in Dec, but they counted the entire deposit of share value into the new account as the first payment.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
"Make sure that you also add any taxable dividends you received over the time you owned the shares to the original cost."

This is assuming she reinvested those dividends into the mutual fund, correct?


Yes, sorry, that's what I meant.

"...unless of course, you have a loss. You can claim any loss up to 3000 on your 2009 return and carry over any leftover to future years until it's used up."

Let's say she took a $4K long term capital loss but had a $500 long term capital gain on some other stock she sold in 2009. Can she offset the $500 gain and also deduct $3K from her income and carry the remaining $500 over to future years? That's how it works, isn't it? That $3K limit only applies when deducting the loss from ordinary income?


Yes, you always offset the losses and gains. It is the final net result that affects your taxes. If your net is a loss you can deduct up to 3000 from your ordinary income and carry the rest to the next year.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Barb,

Maybe you have some yearly statements that show the total amount invested in the fund. If you've invested with the same firm for the 23 years you should be able to get the information from them. You don't want to have to pay taxes on anymore than you have to. If you can't determine a cost the IRS assumes it's zero and you definitely don't want that.


This is a lesson for all investors. It is your responsibility to keep track of your cost basis. The broker firm is not required to although I think there is a new requirement that they have to report whatever info they do have. It's just if you've held an investment for a long time and transfer it from place to place your broker may not have the info.
Top
moderator
founder
Posted by David Schott (+16636) 11 years ago
I'd be curious to know the details of how transferring shares in a mutual fund from one brokerage to another resulted in a sale of shares. Please tell me the source brokerage was not ShCitigroup's Salomon Smith Blarney.
Top
supporter
Posted by Barb Holcomb (+400) 11 years ago
David

It wasn't Smith Barney or Citigroup. I'm still using the same management firm (First Command), just went from a fund that had closed to new investors and wasn't doing anything to a group of funds that is very actively managed. I didn't realize it was considered selling anything either. I understood it as closing one account and tranferring to another one. I end up having Ordinary and qualified dividends on both accounts which seems like I'm taxed twice for the same thing.

Wendy - thanks again. I do have all the annual statements, just not with me or able to get to them until I redeploy.
Top
moderator
founder
Posted by David Schott (+16636) 11 years ago
Thanks for filling me in, Barb. That all makes sense.

I don't much care for Salomon Smith Barney. I know someone who had an IRA there and Salomon kept charging this person an annual account maintenance fee. The fee came due one year and I suggested that person call Salomon and ask them to waive the fee since most brokerages are happy to offer IRA accounts w/out an annual fee. They said no. Person then asked if they could move the account to a different brokerage and avoid having to pay the fee that was currently due. Yes, was the answer. Said person moved the IRA to Fidelity and closed the account. Salomon wound up charging the annual fee anyway AND charged a fee to close the account. It cost like $150 to just get away from Salomon. They have very high fees. Also the investment consultant from SSB that helped this person consistently talked this person into buying funds with heavy front-end loads. I think they are, um, shall we say "not your friends" when it comes to investing.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
I understood it as closing one account and tranferring to another one. I end up having Ordinary and qualified dividends on both accounts which seems like I'm taxed twice for the same thing.


I doubt that you're being taxed twice, Barb. You received dividends from both accounts so you should be taxed on both amounts. As far as transferring from one account to another, if you change the funds you are invested in you are selling them. Since you are active military, I think you get an extension to file automatically. I'd look into that if you need more time to get all your stuff together.
Top
Posted by bh (+149) 11 years ago
My Dad passed away early last year. He had a little over $6,600.00 in earnings, from Social Security and his IRA. Do I need to file a return for him? Yes, I have the papers that say I can take care of any of his estate.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Sorry for your loss, bh.

It depends on what the amount of the distribution from his IRA was. If he didn't take a distribution before he passed away you won't have to file for him if the SS income you mentioned was his only income. If he did take a distribution I'd talk to a tax professional just to make sure his income was still below the filing requirement.
Top
founder
supporter
Posted by Amorette Allison (+11533) 11 years ago
Just got back from the accountant. What did we talk about? Flood insurance. Grrrrrr.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Not deductible, Amorette.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
The deadline is 3 weeks away. How's everybody doing?
Top
moderator
founder
Posted by David Schott (+16636) 11 years ago
Haven't even started.
Top
supporter
Posted by Richard Bonine, Jr (+14818) 11 years ago
Waiting on the accountant for my K1. Grrr
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Richard, are you an S-corp? That deadline was March 15.
Top
supporter
Posted by Wendy Wilson (+6171) 11 years ago
Lay it on me, people.
Top