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Tuesday, January 28, 2014

Tax Form 8332 - Ask TaxGuru

Recently I remarried and changed my name, I havent changed the name on my social security card yet. A few years ago I signed the 8332 tax form for my ex-husband to claim our 4 children on his taxes for all furture years. After I change my name on my social security card do I need to sign another 8332 tax form with my new last name?
 
Answer:
 
#1;ok.however,just for reference, an 8332 signed for future years can be revoked by signing a different part of the form. It has to be given to the non-custodial parent, but it can be pretty hard to prove that it wasn't . You can also use Form 8832 to revoke a dependency exemption that you had previously released.A revocation is not immediate; it goes into effect for the year after you provide the noncustodial parent with a copy of the revocation.
 
#2;your ne name is not required to file form 8332 for yur ex; in lieu of form 8332, the noncustodial parent may attach a written declaration conforming to the substance of form 8332. To meet the requirements of IRC ,this statement must include the Name of the Click to Read More...

Monday, January 27, 2014

How to Calculate the Tax Liability for a Portion of Income - Ask TaxGuru

I'd like preface this by stating that I am not looking for any moral or ethical judgments. If you cannot offer me advice on calculating the taxes or other helpful information please do not respond. This may seem rude but I've found people on message boards can be extremely judgmental.

I need help calculating the tax consequences on a portion of my income. I was working as an independent contractor for a company my friend worked for. Through some lies and misrepresentations he convinced me to allow him to earn extra income under my name. I understand this was wrong and quite possibly illegal but I did not completely understand the situation at the time. The situation as since been rectified and will NEVER happen again. He earned $3,436.02 in my name. I earned a total of $4,854.03 from this company, none of which was taxed since I was an independent contractor.

How do I calculate the tax consequences for his portion of the earnings? He has agreed to pay me for this but I want to make sure I do the calculations myself so he cant screw me over any further.

I'm sure someone will need further information regarding my financial situation to answer this question but I am not sure what to provide. I can tell you I live in FL so I do not need to worry about state tax consequences. Please let me know what is needed and I will try to provide it.


Answer:

assume that, your net,NOT GROSS as I have no any info on your biz operating expenses, self employer’s income is 8290.05;$3436.02+$4854.03.however, you need to calculate the seca tax only on $3,436.02 that was earned in your name but it actuaaly belongs to your buddy. I assume that you file sch c /sch se to report your self employer income Read More Here...

Friday, January 24, 2014

I Wasn't Supposed To Pay State Taxes - Ask TaxGuru

I am an active duty service member currently residing in a U.S. state as a legal resident that filed income taxes last year and state taxes were deducted. While reviewing tax information and working on filing for this year, I had been informed (I had e-filed, both years) that as an active duty service member residing in this state that I do NOT pay state taxes. There have been zero changes to my living situation, marital status, state of residency etc. in the last year.

Who would I contact/how would I go about getting that money back from the state? Should I contact the IRS and take it up with them? I'm unsure of the process and am not having much luck researching the information.

Answer:

#1;Different states have different rules for taxing military pay. In general, UNLESS the state where you are residing is your home state, you are NOT subject to state tax to the state. Military personnel and their families have special rules for their state tax situation. You will pay taxes to your home state even you are stationed at another state. That is why, many in military claim Washington, Texas, Tennessee and Florida or etc. as their home state because these state have NO state income tax. However, if you earned income from outside job in another state, then, you need to report the income that you earned in the state to the State as a nonresident/ or a resident of the state and can claim the tax that you paid to the state on your home state return.
Note; the family member of the military person MUST pay taxes on income earned within the state borders of the state where the family is stationed. Most states have them report as residents, but some have them report as non-residents. It varies Visit This Link to Know More...

Thursday, January 23, 2014

Confused about 1098-T and 2012 - Ask TaxGuru

Hi basically I didn't file in 2012, and I'm not sure If I even had to because I only made about $5000. I was a student though and I think If I had filed I would have received a credit. I Have decided to file this year for 2013 I made even less though about $3400. I didn't attend any classes in 2013 though Although I did register. I was wondering if it is still possible to try to claim the credit in anyway or if I should try to file both 2012 and 2013, and how I would go about doing that. I'm pretty lost with all of this any help would be greatly appreciated.

Answer:

#1;I guess it depends; You must file a federal income tax return if your income is above a certain level; which varies depending on your filing status, age and the type of income you receive. There are some instances when you may want to file a tax return even though you are not required to do so. You should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year 2011 overpayment applied to next year’s tax, 2012 or etc. You may qualify for EITC if you worked, but did not earn a lot of money.EITC is a refundable tax credit; which means you could qualify for a tax refund.

#2; You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses; It provides a tax credit of 20% of tuition expenses, with a maximum of $2K, 20%*10k in tax credits on the first $10K of college tuition; The American opportunity tax credit can be claimed for expenses for the first four years of post-secondary education. It is Click Here to Read More...

 

Wednesday, January 22, 2014

Tax Collection Statute of Limitations Filed Return 2004

I filed my taxes through H&R block in 2004 owing a few thousand dollars. I sent a check for the amount due but the check was never cashed by the IRS. I have filed my return every year since almost always getting money back. They have never said anything about the 2004 year. It has now been 10 years since then and still haven't received anything from them about 2004.

This year I owe a couple thousand and want to apply for the online payment plan. Will this be a red flag and cause the IRS to notice my 2004 taxes not being paid. Or should I not worry about it because the statute of limitation on collection of the return has been reached.

The reason they did not cash my check was due to my parents claiming me as a dependent even though I wasn't. My parents refiled their taxes not having me as a dependent leaving my tax return being true but they never cashed my check. I did not receive anything asking me to re-file.

Advice would be appreciated.

Thanks,


Answer:

#1;I don’t think applying for the online pmt plan ‘d be a red flag as long as you paid/filed the taxes on time 10 years ago; I mean you owe no back taxes to the irs.Individuals or businesses who have unpaid taxes to the IRS may wonder how long the government can continue to collect on this debt. The length of time allowed by law to file legal proceedings against a person is known as the SOL. While this definition applies to all types of legal proceedings, in Click To Read More...

Tuesday, January 21, 2014

Can I reclaim SE taxes I paid on a loss? - Ask TaxGuru

Last year I had 25k in income from partnership. I paid my federal taxes and SE employment taxes. This year, I have a 25k loss in the partnership. I see in my turbotax software the refund of federal taxes, but I am not seeing an SE taxes. Is there a way to get these back as well?

 Answer :

No you can’t get se taxes paid last year;on your last return, on your 1040, you deduct 50% of the se taxes paid to the IRS on 1040 line 27.


the tax deduction for SE taxes apply whether you choose to itemize your deductions or not, meaning all self-employed taxpayers stand to benefit from the deduction. The IRS states that the SE tax deduction does not apply to any taxes other than income taxes Click to Read More...

Monday, January 20, 2014

Louisiana State Tax - Ask TaxGuru

I live in Florida, work in Texas and the company I work for is based in Louisiana. My employer withheld $2400 in Louisiana state tax. H & R Block just did my taxes and I only got a $400 refund on the state taxes. Why did I have to pay $2000 in LA state taxes when I live and work in states that do not have a state tax? If this is a mistake how do I fix it? Thank you!
 
 
Answer : 
 
#1;Your ER made a mistake as you do not physically work in LA but you physically work in TX, you do not need to pay state tax to LA regardless of your ER’s location(LA in this case; however, you didn’t work in LA but you work in TX). You will not owe anything to LA as mentioned above. As you can see, there is no state tax in TX/FL.

#2;Since your employer had LA tax withheld, talk to someone in payroll immediately. In fact, print this answer and take it with you. They should refund any LA tax to you and do not need to start withholding TX/FL tax as there is no state tax in FL/TX. If they can't or won't refund the LA tax you had withheld, you will need to file a non-resident LA tax return for 2013 showing no income Read More...

Wednesday, January 15, 2014

Incorrect K-1 Statement and Responsibility - Ask TaxGuru

Good Evening:

A company I used to work for issued me an incorrect K-1 in 2011 and since then it has become an issue with the IRS. I have repeatedly contacted the LLC to get a revised K-1 and they keep coming up with excuses.

They have freely admitted that the form they originally supplied is wrong, but for some obvious reasons such as not wanting to have to refile their taxes and some other reasons that make me question what they are up to, their suggestion was this:

That they pay me what the difference was they calculated (and conveniently failed to back up with documentation) and bear the burden on my own. This was followed by the request at the bottom of the letter that asked for a signature by me to absolve them of any further liability.

Now as ridiculous as it sounds, I have to ask. 1. Is it even legal to ask me to do this? It sounds a lot like they are offering to pay me so hide their legal tax liabilities. I should mention the taxable amount in dispute is about $20,000.

Any thoughts offered would be appreciated as these people are driving me crazy!

Thanks

Answer :

I guess it is a legal/ moral issue; you may contact a tax attorney for accurate professional/legal help for sure. As you can see, As LONG AS you forget to take all the deductions you could have, or you make some mistakes in preparing your tax return, THEN, You should file an amended tax return if you Read More Here...

Need Help With Payroll Tax Expense For Individual And Company - Ask TaxGuru

OK for example, you work for a public accounting firm you make $100,000 but you only clear $60,000 because of state, fed and SS taxes.
-can the employer deduct that 40,000 that was for taxes?
-And what does the employee do with that?

Please help, confused

Answer :

#1; ER can deduct Social security and Medicare taxes paid to match required withholding from employees' wages on Sch C on line 23.


#2;EE can never deduct FICA taxes withheld from Click to Know More...

Monday, January 13, 2014

What is Taxable in the C-corp -Ask TaxGuru

I have a c-corp that closed in 2013. My question is besides selling equip out of the c-corp what else is taxable? He still has money in the checking account and he is keeping the pickup that was put into the c-corp.

Is any of this considered a dividend


Answer :

#1;if you are in process of selling pieces of real estate owned by corp. When sold, the capital gain on the real estate will be taxed to corp. If you'll be selling off some business assets to recoup some of your investment, you'll need to file Form 4797.If you're selling all of your business assets as a group, you may need to file IRS Form 8594 instead. The assets that are sold are compared to their depreciated basis and the difference is treated as ordinary income to the C Corp. Any good will is a 100% gain and again is treated as ordinary income. This new found income drives up your corporate tax rate, often to the maximum rate of around 34%. You are not done yet. The corp pays this tax bill and then IF there is a distribution of the remaining funds to the shareholders. They are taxed a second time at their long term capital gains rate.Compare this to a C Corp stock sale. The stock is sold and there is no tax to the corporation. The distribution is made to the shareholders and they pay only their LTCG on the change in value over their basis. The difference can be hundreds of thousands of dollars. Another approach you can use is Personal Good Will. This is where the seller's reputation, expertise, and relationships are in effect separated from the assets of the company and account for as much of the good will value as possible from the business. So let's say that the company sells for $10 million dollars and the amount allocated to the hard assets is $8 million. That leaves $2 million that can be classified as good will. If that good will is assigned to the C Corp, it will be taxed at the 34% rate and then taxed again when it is distributed to the shareholders at 15%.


#2;As mentioned above.



#3;i gues it depends. Distributions in complete liquidation treated as exchanges .Amounts received by a shareholder in a distribution Click to Read More.....

Thursday, January 09, 2014

S Corp Charitable Contributions - Ask TaxGuru

In 2012, we donated a considerable amount in services to one of our clients who has a 501-C. We did this by charging them the full amount then giving a huge discount on each invoice. I am now understanding that this discount is just a loss to us as we cannot itemize these donated services for taxes as ab s-corp.

This year, is it possible to give this client a cash donation each month, then charge them the full amount of services rendered on each invoice? It would be basically giving them money that they would turn around and pay us with. And, if we did this cash donation, would it help us any to itemize the charitable contribution on our personal taxes (as a pass-through) when we are now also having to show the full amount of services as income to the corp?

Any ideas HOW we can help this non-profit client but not hurt our corporation in the process?? Thanks.

Answer :

#1; With tighter budgets, many charitable organizations are having a tough time affording their contractors. Tax laws provide little incentive for volunteers to step in, as charitable services are not tax-deductible, regardless of the service rendered. Alternative options for you who wants to help include performing a paid service for someone else, then donating the money to the charity; or building an item, donating it and deducting the fair market value of the item. The IRS does allow the following to count as charitable deductions;


Since S corp is a "pass-through" entity, the deduction for the charitable contributions of S corp also passes through to the personal income tax returns of the S corp ownership. Each shareholder can then claim a pro rata share of the corp's Visit As Know More Here...

Wednesday, January 08, 2014

Tax Report for Foreign Sub Contractor - Ask TaxGuru

I'm a sole proprietor, based in Florida, who works in the web design and development industry. I understand you need a 1099 form when sub contracting work to an individual in the US. However, what do I need to report to the IRS when I sub contract work to an individual in another country?
 
 
Answer :
 
you do not need to submit W9 to your payer in another country unless the payer is a USresident.you also do not need a 1099 from the payer.you need a receipt of wire transfer for your income transferred into your acct in US to prove your gross self employment income to the IRS.you just need to file Sch C/ C-ez or Sch SE.

The payer has no obligation to send a copy of 1099/1096 to the IRS.so you Read More Here....

Tuesday, January 07, 2014

Company Paid Foreign Taxes - Ask TaxGuru

I had international work in 2 countries and my company paid the income taxes directly to those countries for me and is paying a tax service to do my US taxes.

The duration of work was not sufficient to have any wages counted as foreign income (for US Tax purposes)

I believe the taxes paid by my company to these other countries should be converted to USD and included in my W-2 as 'other income'. If it is not included then the tax preparer cannot logically include a deduction for foreign taxes paid.

To me this seems logical, but in my experience accounting and taxes are not always as straight forward. I am just looking for clarification of the treatment of the foreign taxes as income or not.



Answer :

#1;Then, you can claim the expense on Sch A of 1040 as long as you itemize deductions on your return; if not, you can’t claim the expenses. The only way to take advantage of the tax preparation deduction is to file itemized tax return.


#2;as mentioned above, then, the tax person needs to make sure that he does include the amount for tax preparation on the appropriate line when preparing the taxes. You, as a Taxpayer, who incurs fees from tax preparation can deduct those Read More.....

Monday, January 06, 2014

Unemployed Student Tax Refund

I'm a full time student and unemployed. I received financial and got a nice refund. I was told that if you receive a refund greater than $1000, that you had to file it as earned income. Is that true? Also if it would I be able to get the child tax act credit,since I just had a baby?
 
Answers : -
 
#1;no; any income you earn by working for someone else will be considered earned income. Salaries, wages, tips, professional fees, business income from self-employment, and farm income all count as earned income. Those are pretty straightforward. If you receive a federal tax refund, you never have to worry about paying taxes on it the following year; however, you may have to pay taxes on your state refunds, depending on how you handled deductions



#2; You say you have no earned income. that means you have said you have no income at all. That brings up the question how do you live? If you have alimony, that is income. If you have investment income, that is income. If you Read More....

Wednesday, January 01, 2014

Health Ins Premium And Medical Expense Deductions For 2014

#1;My CPA tells me that we as a C corporation can no longer deduct our health ins premiums or medical expenses for 2014.

Answers:-
For many years, businesses have picked up health insurance costs, either in full or in part, for employees. The IRS extends a deduction for the expense, whether you are running a limited partnership, a limited liability company, a C- or S-corp or a sole proprietorship. There are rules and conditions on this tax break, as well as a new wrinkle in the tax code that may assist small companies; with the passage of the Affordable Care Act in 2010, the federal government offered a tax credit to small businesses that offered health insurance coverage for employees. With some conditions, small businesses with less than 25 employees could deduct 35 %of their health insurance premiums from 2010 through 2013, and 50 percent of their premiums from 2014 on. The credit is only for employees, not for owners. Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.


#2;My wife and I each own 50% of the corp.We live in Minnesota. We are salaried employees of the corp. We have one non family employee. We have individual health plans for ourselves and our employee. Which the corp has paid 100% of the health ins premium as well as 100% of all medical expenses incurred by the salaried employees( my wife and I ). We have not paid any medical expenses incurred by our nonfamily employee, but have paid his health ins premium. Under the new Obamacare health plan legislation, I believe we are supposed to provide a group coverage health plan, which costs considerably more than our individual plans, as well as subject us to huge premium increases, and we have to pay our nonfamily employee's medical expenses. If we don't follow these new rules, we are subject to substantial fines. Is this correct? If so, is their a way around this? I searched for and read a similar post, but it applied to 2013, before "OBC" .

Answers:-
#2; Businesses with fewer than 50 full-time employees are not required to provide health insurance for their employees under Obamacare. 95% of businesses in this size-range already provide health insurance for their employees, but the cost is usually high and coverage is often slim. If small businesses do not offer health insurance, their employees can go to the state health insurance exchange (as of October 1st) to enroll in a plan. Read more at Ask TaxGuru....

Completing a CA 540X - Ask TaxGuru

I'm doing a CA 540X to fix an omitted 2010 to 2011 tax loss carryover. I've updated Turbotax and have the amended 540 which will increase my refund substantially.

On the 540X, lines 2, a thru d for CA adjustments, the instructions say:

"On line 2a through line 2e, show adjustments to your federal AGI as negative or positive amounts based on differences between California and federal law."

I don't get how to determine if positive or negative.

On the original 540, there are 2 adjustment numbers: subtractions and additions. the subtractions happen to exactly equal my SS benefit. The original addition was a much bigger number, the amended number is $5. However I do it, I don't see the 540X numbers matching those on either the original 540 or the amended one.

Answers:-

As an illustration, say, to Compute California AGI by applying adjustments,the starting point in computing California income tax is the Federal Adjusted Gross Income (AGI). California individual tax law generally conforms to Federal tax law, but there are situations where they differ. When differences occur, an adjustment is necessary to convert Federal individual AGI into California individual AGI. These adjustments to Federal AGI can be either positive or negative. The terms “positive and negative” are sometimes confusing when learning this concept so another way to think of the adjustments as increases or decreases to AGI—Federal AGI. There are two types of positive adjustments, which are added back to (increasing) Federal AGI to arrive at California AGI: Items that are income for California taxation, but are not income for Federal taxation. A ssume that you are a California resident who owns bonds issued by the State of Colorado. Find your answer here Ask TaxGuru - Free online tax services forums.

Medicare Surtax - Ask TaxGuru

#1;Is this tax applicable to an individual who has retired and has no "earned income" (but may have social security benefits and/or net investment income)?

Answers:-

#1; Beginning in 2013, higher-income taxpayers will be subject to an additional tax on earned income and a new 3.8% tax on investment income; An additional 0.9 percent Medicare tax is imposed on wages, compensation and self-employment earnings above a threshold amount,.Medicare wages and self-employment income are combined to determine if income exceeds the threshold. A self-employment loss is not considered for purposes of this tax. RRTA compensation is separately compared to the threshold.

#2;If yes, how will this tax be paid since there is no earned income (hence no tax witholding from wages)?

Answers:-

#2;This tax, the unearned income Medicare contribution tax (UIMCT), is equal to 3.8% of the lesser of: (1) Your net investment income (generally, net income from interest, dividends, annuities, royalties and rents, capital gains and income from a business that is considered a passive activity) or (2) yourMAGI

#3;What if the same individual is married and his spouse has earned income. Will the surtax be applicable only only the spouse?

Read more on this topic visit our online tax information forums.
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