tag:blogger.com,1999:blog-4287245868337276052024-03-05T21:07:55.842-08:00Ask TaxGuruAsk TaxGuru is a free online US tax resource and support community, with helpful features such as Local Tax Professional Search, Tax Tips, Tax Calculators, Free Downloads and Resources.Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.comBlogger308125tag:blogger.com,1999:blog-428724586833727605.post-61978690126061216622014-01-28T11:00:00.001-08:002014-01-28T11:00:22.624-08:00Tax Form 8332 - Ask TaxGuru <div dir="ltr" style="text-align: left;" trbidi="on">
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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?</div>
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Answer:</div>
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#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.</div>
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#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 <a href="http://www.asktaxguru.com/9636-tax-form-8332-a.html" target="_blank"><b>Click to Read More...</b></a></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-31424704224192001592014-01-27T07:06:00.001-08:002014-01-27T07:06:38.108-08:00How to Calculate the Tax Liability for a Portion of Income - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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.<br /> <br />
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. <br /> <br />
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.<br /> <br />
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.<br />
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Answer:<br />
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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 <a href="http://www.asktaxguru.com/9626-how-to-calculate-tax-liability-portion-income.html" target="_blank"><b>Read More Here...</b></a> </div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-45882848003224651262014-01-24T07:16:00.001-08:002014-01-24T07:16:07.379-08:00 I Wasn't Supposed To Pay State Taxes - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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. <br /> <br />
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.<br />
<br />
Answer:<br />
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#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.<br />
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 <a href="http://www.asktaxguru.com/9602-i-wasn-t-supposed-pay-state-taxes.html" target="_blank"><b>Visit This Link to Know More...</b></a> </div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-31513048122315592162014-01-23T09:27:00.000-08:002014-01-23T09:27:28.792-08:00 Confused about 1098-T and 2012 - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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.<br />
<br />
Answer:<br />
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#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. <br /> <br />#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 <a href="http://www.asktaxguru.com/9584-confused-about-1098-t-and-2012-a.html" target="_blank"><b>Click Here to Read More...</b></a> <br />
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-87314725537765183232014-01-22T06:50:00.003-08:002014-01-22T06:50:52.127-08:00 Tax Collection Statute of Limitations Filed Return 2004 <div dir="ltr" style="text-align: left;" trbidi="on">
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.<br /> <br />
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.<br /> <br />
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.<br /> <br />
Advice would be appreciated.<br /> <br />
Thanks,<br />
<br />
<br />
Answer:<br />
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#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 <a href="http://www.asktaxguru.com/9583-tax-collection-statute-limitations-filed-return-2004-a.html" target="_blank"><b>Click To Read More...</b></a> </div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-68330555567952990782014-01-21T06:20:00.000-08:002014-01-21T06:20:02.364-08:00 Can I reclaim SE taxes I paid on a loss? - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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?<br />
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Answer :<br />
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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.<br />
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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 <a href="http://www.asktaxguru.com/9576-can-i-reclaim-se-taxes-i-paid.html" target="_blank"><b>Click to Read More...</b></a> </div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-43592533647993123782014-01-20T07:23:00.004-08:002014-01-20T07:23:59.294-08:00 Louisiana State Tax - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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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!</div>
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Answer : </div>
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#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.<br /> <br />
#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 <a href="http://www.asktaxguru.com/9553-louisiana-state-tax.html" target="_blank"><b>Read More...</b></a> </div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-16716518168814278312014-01-15T22:49:00.003-08:002014-01-15T22:49:46.781-08:00Incorrect K-1 Statement and Responsibility - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
<div id="post_message_15067" style="font-family: verdana, geneva, lucida, 'lucida grande', arial, helvetica, sans-serif; font-size: 13px;">
Good Evening:<br /><br />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.<br /><br />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:<br /><br />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.<br /><br />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.<br /><br />Any thoughts offered would be appreciated as these people are driving me crazy!<br /><br />Thanks</div>
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Answer :</div>
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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 <b><a href="http://www.asktaxguru.com/9517-incorrect-k-1-statement-and-responsibility.html" target="_blank">Read More Here...</a></b></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-78866408283243600862014-01-15T06:54:00.001-08:002014-01-15T06:54:15.660-08:00 Need Help With Payroll Tax Expense For Individual And Company - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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. <br />
-can the employer deduct that 40,000 that was for taxes?<br />
-And what does the employee do with that?<br /> <br />
Please help, confused<br /> <br />Answer :<br />
<br />
#1; ER can deduct Social security and Medicare taxes paid to match
required withholding from employees' wages on Sch C on line 23.<br /> <br /> <br />
#2;EE can never deduct FICA taxes withheld from <a href="http://www.asktaxguru.com/9510-need-help-payroll-tax-expense-individual-company.html" target="_blank"><b>Click to Know More...</b></a></div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-63354726245620169342014-01-13T07:19:00.000-08:002014-01-13T07:19:25.403-08:00 What is Taxable in the C-corp -Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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.<br />
<br />
Is any of this considered a dividend<br />
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Answer :<br />
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#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%.<br /> <br /> <br />
#2;As mentioned above.<br /> <br /> <br /> <br />
#3;i gues it depends. Distributions in complete liquidation treated as
exchanges .Amounts received by a shareholder in a distribution <a href="http://www.asktaxguru.com/9468-what-is-taxable-in-the-c-corp.html" target="_blank"><b>Click to Read More..... </b></a></div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com1tag:blogger.com,1999:blog-428724586833727605.post-52733200879670774682014-01-09T06:59:00.002-08:002014-01-09T06:59:16.945-08:00 S Corp Charitable Contributions - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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.<br />
<br />
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?<br />
<br />
Any ideas HOW we can help this non-profit client but not hurt our corporation in the process?? Thanks.<br />
<br />
Answer :<br />
<br />
#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;<br /> <br /> <br />
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 <a href="http://www.asktaxguru.com/9422-s-corp-charitable-contributions.html" target="_blank"><b>Know More Here...</b></a></div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-66904726202147636322014-01-08T10:05:00.000-08:002014-01-08T10:05:02.437-08:00 Tax Report for Foreign Sub Contractor - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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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?</div>
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Answer :</div>
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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.</div>
<div id="post_message_14908">
<br />
The payer has no obligation to send a copy of 1099/1096 to the IRS.so you <a href="http://www.asktaxguru.com/9412-tax-report-for-foreign-sub-contractor.html" target="_blank"><b>Read More Here....</b></a></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-47156083282780252292014-01-07T07:08:00.002-08:002014-01-07T07:08:21.608-08:00Company Paid Foreign Taxes - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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.<br /> <br />
The duration of work was not sufficient to have any wages counted as foreign income (for US Tax purposes)<br /> <br />
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.<br /> <br />
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.<br />
<br /> <br />
<br /> Answer :<br />
<br />
#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.<br /> <br /> <br />
#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 <a href="http://www.asktaxguru.com/9386-company-paid-foreign-taxes.html" target="_blank"><b>Read More</b></a>..... </div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-20065414453632403822014-01-06T10:39:00.003-08:002014-01-06T10:39:46.294-08:00Unemployed Student Tax Refund<div dir="ltr" style="text-align: left;" trbidi="on">
<div id="post_message_14834">
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?</div>
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Answers : -</div>
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#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<br /> <br /> <br /> <br />
#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 <a href="http://www.asktaxguru.com/9355-student.html" target="_blank"><b>Read More....</b></a> </div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-91733058049771035122014-01-01T06:58:00.000-08:002014-01-01T06:59:17.216-08:00Health Ins Premium And Medical Expense Deductions For 2014<div dir="ltr" style="text-align: left;" trbidi="on">
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#1;My CPA tells me that we as a C corporation can no longer deduct our health ins premiums or medical expenses for 2014. </div>
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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.</div>
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#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" .</div>
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#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. <a href="http://www.asktaxguru.com/" target="_blank"><span style="color: red;"><b>Read more at Ask TaxGuru</b></span></a>....</div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-29217271978980460702014-01-01T06:10:00.002-08:002014-01-01T06:59:28.999-08:00Completing a CA 540X - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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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.</div>
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On the 540X, lines 2, a thru d for CA adjustments, the instructions say:</div>
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"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."</div>
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I don't get how to determine if positive or negative.</div>
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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.</div>
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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 <b>Ask TaxGuru</b> - <span style="color: red;"><span style="color: red;"><a href="http://www.asktaxguru.com/" target="_blank"><b>Free online tax services forums</b></a></span>.</span></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-80328616819950089142014-01-01T05:57:00.001-08:002014-01-01T06:59:39.976-08:00Medicare Surtax - Ask TaxGuru<div dir="ltr" style="text-align: left;" trbidi="on">
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#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)?</div>
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#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.</div>
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#2;If yes, how will this tax be paid since there is no earned income (hence no tax witholding from wages)?</div>
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#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</div>
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#3;What if the same individual is married and his spouse has earned income. Will the surtax be applicable only only the spouse?</div>
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Read more on this topic visit our <a href="http://www.asktaxguru.com/" target="_blank"><b>online tax information forums</b></a>.</div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-87444282695304196472013-12-26T01:46:00.004-08:002013-12-26T01:46:44.803-08:00IRA Contribution / Withdrawal in the same year<div dir="ltr" style="text-align: left;" trbidi="on">
I contributed $4,000 towards my traditional IRA early in 2013, but later on I took out a distribution of $8,000 from this account. I know I need to pay tax on the $8,000 distribution. I also opened a ROTH IRA account last week which is not funded yet. My question is two-fold:<br />
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1. Do I show both the $4,000 contribution as a deduction from my 2013 AGI, and $8,000 taxable withdrawal, or just a net $4,000 withdrawal.<br />
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2. Since I have already taken out more that I contributed to my regular IRA this year, can I contribute the fully allowed $6,500 contribution to my Roth IRA account in 2013, while paying tax on the net withdrawal of $4,000 from my regular IRA.<br />
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#1; As you received a distribution in 2013 from a traditional IRA and you also made contributions to a traditional IRA for 2013 that may not be fully deductible because of the income. limits. Then you can figure the amount of nondeductible contributions to report on Form 8606. Follow the instruc-tions under Reporting your nontaxable distribution on Form 8606, next, to figure your remaining basis after the distribution.you need to report your nontaxable distribution on Form 8606. To report your nontaxable distribution and to figure the remaining basis in your traditional IRA after distributions, you must complete Worksheet 1-5 before completing Form 8606. </div>
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#2;as said above, I t depends on the amount of non-taxable contribution; you contribute to an IRA or ROTH IRA $5,500 for those age 49 and under $6,500 for those age 50 and older for the 2013 calendar year.</div>
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Get more details on <b><a href="http://www.asktaxguru.com/" target="_blank"><span style="color: red;">free online tax services</span></a>.</b></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-61785470513181394922013-12-26T01:41:00.001-08:002013-12-26T01:41:30.919-08:00Stock and Re-Investment<div dir="ltr" style="text-align: left;" trbidi="on">
I know the below formulas to calculate Gains/Losses IF you have auto-reinvest in mutual funds.<br />
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Gain or Loss = Sale Price - Cost Basis<br />
Cost Basis = {Original Cost Purchase + (Sum of all Capital Gains + Dividends)}<br />
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How about individual stocks? Do the above formulas still apply?<br />
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For example. I have a stock that pays $100 per quarter in dividends. If I use that $100 and buy more shares of the same stock, how does this affect my cost basis?<br />
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Correct. You need to determine the initial amount of money invested. For example, if you invested $5K for Stock XYZ, the cost basis is $5K. Cost basis can also be measured per share. If you bought 100 shares of Stock XYZ for $5K, then the cost basis per share is $50. So, remember that dividends are the portion of the profits a company pays out to you , as an investor (shareholder). Theoretically, the share price will drop by the amount of the dividend upon payment since that amount of cash has just been removed from the balance sheet. Dividends then are investment returns in the form of a cash payment. In contrast, when a company retains its earnings and foregoes paying dividends, the investment returns will presumably be in the form of an increasing share price (at least that's what its investors are counting on). Dividend reinvesting does affect the cost basis of your holdings, but it shouldn't be seen as a kind of partial refund of your original purchase. <a href="http://www.asktaxguru.com/8990-stock-and-re-investment.html" target="_blank"><b><span style="color: red;">Read More...</span></b></a></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-74557399562408734822013-12-24T00:51:00.002-08:002013-12-24T00:58:26.633-08:00What would be the Tax Rate for a Married Filing Joint Tax Return whose Taxable Income is entirely from Capital Gains in 2013?<div dir="ltr" style="text-align: left;" trbidi="on">
For example, if a Married Filing Joint Taxpayer, whose taxable income is $300,000 and due entirely to all long term capital gain, "what would be their tax rate in 2013?<br />
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According to the new tax law in effect in 2013, "if a married couple is below the $450,000 threshold, they will continue to pay tax at the 15% rate for long term gains, or 15% on $300,000 which is $45,000.<br />
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For example, if a Married Filing Joint Taxpayer, whose taxable income is $480,000 and due entirely to all long term capital gain, "what would be their tax rate in 2013? <span style="color: red;"><a href="http://www.asktaxguru.com/8973-what-would-tax-rate-married-filing-joint.html" target="_blank"><b>Read More...</b></a></span></div>
Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-54612162204505773642013-12-17T06:47:00.005-08:002013-12-17T06:48:40.775-08:00Duration to consider Long Term<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Verdana, sans-serif;">I bought a stock on 1/8/2013. If I sell it @ 9:30am on 1/9/2014 and assume I make $$ on it. That's considered long term capital gain because it's on the 366th day right?</span></div>
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<span style="font-family: Verdana, sans-serif;">Correct<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="c95ab36a-331f-491f-8729-e14144f1f278" id="2d86a573-4a03-4418-84e7-24863e7bb942">;</span>UNLESS you sell it <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="c95ab36a-331f-491f-8729-e14144f1f278" id="4a3d0790-5bdc-4c16-a5e2-211028bc2b3e">on</span> 12:00pm <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="c95ab36a-331f-491f-8729-e14144f1f278" id="4aab1351-68e9-4622-b4d6-d2dfa28a1fe4">of</span> 1/8/2014. Long-term capital gains are the profits made when you have sold an asset that you have held for at least a year.</span></div>
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<span style="font-family: Verdana, sans-serif;">Visit Asktaxguru for <b><a href="http://www.asktaxguru.com/8929-duration-to-consider-long-term.html" target="_blank"><span style="color: red;">Online tax help</span></a></b></span></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-8154984701616589612013-12-17T06:44:00.000-08:002013-12-17T06:44:07.240-08:00Certificate of Resale and online sales<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Verdana, sans-serif;">I am going to be officially starting up my business online sales (amazon and ebay) in Jan. I will be using a certificate of resale when purchasing my products from the wholesaler. I will be charging VA resident sales tax, but what happens to the products that are sold to out of state buyers? Do those items never have any sales tax paid ?</span></div>
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<span style="font-family: Verdana, sans-serif;">It depends; in general, a business must collect sales tax from its customers when it has a direct or indirect physical presence in a state, known as “nexus.” The standard for the nexus is not difficult to articulate, but can be nearly impossible to apply. In most states, a business (whether a sole proprietor, or organized as a partnership, limited liability company, or corporation) has a physical presence in a state if any employees or agents have had a physical presence in the state or if the business owns or leases property there. This is a direct physical presence. So you can assume that UNLESS you have have a direct physical presence in a ou of state, you have no sales tax collection obligations there. This is a common misconception, and it can prove costly in the case of a sales tax audit. Certain types of indirect presence in <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="9b0ab3bb-3670-4093-98bd-615da07d56b5" id="6adf8f76-f63a-4b8f-8c84-a3c44337c535">a</span> out of state, alone, will not trigger a sales tax collection obligation. A business owner can be comfortable that the mere selling of products over a website or by a catalog and shipping them to a state (by the U.S. Postal Service or common carrier) will generally not trigger a sales tax collection obligation because such activity does not constitute a physical presence.</span></div>
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<span style="font-family: Verdana, sans-serif;">As you can see, resale certificates are used by the purchasers, when acquiring property for resale in its present form or as components of other property. They are also used to purchase taxable services that become a part of property for resale in some states. States that allow for resale exemptions either accept a state issued resale certificate or, in some cases, a multi-state certificate. A business which is registered for sales and use tax can use a resale certificate only when the merchandise being purchased is to be resold by the business. A business cannot use a resale certificate to purchase merchandise that they will use and consume in the conduct of business. Any merchandise obtained upon resale certificate is subject to sales and use tax if it is used or consumed by the purchaser in any manner, and must be reported and the tax paid thereon direct to the appropriate jurisdiction.</span></div>
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<span style="font-family: Verdana, sans-serif;">Visit Asktaxguru for <a href="http://www.asktaxguru.com/8927-certificate-of-resale-and-online-sales.html" target="_blank"><b><span style="color: red;">Online tax help</span></b></a></span></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-23831954977168060252013-12-17T06:40:00.006-08:002013-12-17T06:40:54.564-08:00change 1099 to wife<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Verdana, sans-serif;">1 : Is there a way to change my 1099 to my wife? For half the year <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="d9edfe20-cb1e-45f4-bfcf-1bf090c38ada" id="1aaa8c09-0163-485e-908f-fdaafed2cbbd">our</span> <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="d9edfe20-cb1e-45f4-bfcf-1bf090c38ada" id="e08752b3-2f14-487c-b2bd-25e8f99e5a96">paypal</span> was in my name. My wife has her ebay business, and all the income should be hers.</span></div>
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<span style="font-family: Verdana, sans-serif;">2 : it was over 30k and it will affect my social security, as well as the fact I was on unemployment at the beginning of the year. </span></div>
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<span style="font-family: Verdana, sans-serif;">Does anyone know if Paypal will change the SS number to hers retroactively?</span></div>
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<span style="font-family: Verdana, sans-serif;">1 : I guess it depends on the type of account you have. If you have a personal or premier PayPal account you can change the name on your account only for a typographical error or legal name change. You cannot change the name on your account to another person's name<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2d59337c-c1fb-4ed9-8290-0401a7482b1c" id="a77e029d-0231-4b23-bd59-74e06073ce50">.</span>However, you can change the contact name on your business account for typographical errors and legal name changes or to replace the current contact with a new <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2d59337c-c1fb-4ed9-8290-0401a7482b1c" id="4a588591-c197-4abb-aac0-f1b035075061">contact</span>. To submit a request for a business contact name change, follow these steps:</span></div>
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<span style="font-family: Verdana, sans-serif;">Go to the PayPal website and log in to your account. </span></div>
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<span style="font-family: Verdana, sans-serif;">- Click "Profile" at the top of the page. </span></div>
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<span style="font-family: Verdana, sans-serif;">- Click "Business Information" in the Account Information column. </span></div>
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<span style="font-family: Verdana, sans-serif;">- Click "Change name." </span></div>
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<span style="font-family: Verdana, sans-serif;">- Select "Business Name Change" (change contact name). </span></div>
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<span style="font-family: Verdana, sans-serif;">- Click "Continue" and follow the instructions. PayPal does not offer joint accounts however, as you have a business PayPal account, you can allow your spouse to access your PayPal account; since you are a PayPal business account holder and want to change your name, you can do so within your account. Once logged in, you can change your name from the Profile section. You can also change additional information here if you wish. This is useful if you noticed an error in your name. So, as it's a business account with a business identity then it's indeed possible , but expect ID and utility request.</span></div>
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<span style="font-family: Verdana, sans-serif;">2 : I guess so; as MFJ filer, once your MAGI is $32k or exceeds $32K, then your source benefits can be taxable income to the IRS.</span></div>
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<span style="font-family: Verdana, sans-serif;">Visit Asktaxguru for <b><a href="http://www.asktaxguru.com/8827-change-1099-to-wife.html" target="_blank"><span style="color: red;">Online tax help</span></a></b></span></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-39842026399771074272013-12-17T06:35:00.001-08:002013-12-17T06:36:00.669-08:00Retirement Question<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Verdana, sans-serif;">I am fixing to have my 30 years in with a local city. Public works Department.</span></div>
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<span style="font-family: Verdana, sans-serif;">I'm able to file for my full retirement. Now the city is telling me that If I retire I have got to find employment somewhere else. They're telling me the IRS calls that Double Dipping. In the past we have people that draw there and still work there. Going on 45 years now. My Question is. Is this really <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="40a20bf1-5a4c-4b56-8a05-e8050d61edef" id="9e092221-3339-4f29-86a0-27ae8fd9035b">a</span> IRS rule or is the City trying to pull one over on me. Oh and Public Safety Employee's are exempt. From this rule. Wouldn't that be Discrimination?</span></div>
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<span style="font-family: Verdana, sans-serif;">"Double dipping is meeting opposition in state legislatures. New York and New Jersey limited double dipping in 2008. By the end of 2009, Utah, Arkansas, South Dakota, New Mexico and Florida were looking at curbing or ending double dipping with state retirement<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="acd02612-5628-4422-8362-7cc71b83b476" id="9750ebc3-41d5-4c3b-bbb5-a3807ab09450">.</span>Double dipping may end or be limited in your state soon. So you need to consider what might happen to your employment and retirement in the face of new legislation. Double dipping in retirement systems allows the retiree to collect money twice, usually with retiring and rehiring. This casual term applies to different types of double recovery in retirement benefits, but each requires the cooperation of others to make it work. Double dipping is meeting opposition in state legislatures. New York and New Jersey limited double dipping in 2008. By the end of 2009, Utah, Arkansas, South Dakota, New Mexico and Florida were looking at curbing or ending double dipping with state retirement<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="18090150-129a-4329-8a5b-fc6296b33510" id="f3cf43ce-7f8a-454d-b659-6aa13007692f">.</span>Double dipping may end or be limited in your state soon. So you need to consider what might happen to your employment and retirement in the face of new legislation. Double dipping in retirement systems allows the retiree to collect money twice, usually with retiring and rehiring. This casual term applies to different types of double recovery in retirement benefits, but each requires the cooperation of others to make it work<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="da72ec64-57b2-432b-9d97-16a013abcd24" id="2bd63fbc-2509-46a3-b7c6-e6a26c59e60f">.</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="da72ec64-57b2-432b-9d97-16a013abcd24" id="15f26abf-1e78-409b-b2e4-c864c338fd11">i</span> guess you may contact a labor <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="da72ec64-57b2-432b-9d97-16a013abcd24" id="f6e97af4-9f18-42e3-836e-3dcdb7234417">dept</span> <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="da72ec64-57b2-432b-9d97-16a013abcd24" id="d7df2707-0aa5-4a0a-a6cf-798d178fe407">of</span> your state for more info in detail</span></div>
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<span style="font-family: Verdana, sans-serif;">Visit Asktaxguru for <b><a href="http://www.asktaxguru.com/8796-retirement-question.html" target="_blank"><span style="color: red;">Online tax help</span></a></b></span></div>
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Ask TaxGuruhttp://www.blogger.com/profile/06059200723876598505noreply@blogger.com0tag:blogger.com,1999:blog-428724586833727605.post-60025590094427812972013-12-17T06:31:00.004-08:002013-12-17T06:31:42.055-08:00New LLC with calendar year expenses but no income<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: Verdana, sans-serif;">I started an LLC in August of 2013 that focuses on residential real estate flipping. I purchased the first house and have completed the renovations. I have plenty of expenses including the cost of the house but since it has not sold yet I'm wondering how I should be reporting this year's tax. My plan is to report as an S corporation and pass everything on to me (as the sole proprietor). My hope was that it would have sold this year so that I could neatly just pay on the profit.</span></div>
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<span style="font-family: Verdana, sans-serif;">So what I have been like this (hypothetically), 55K in expenses for CY 2013 and no income. If I write off all these expenses as losses and then pass that through to my personal income (using an S Corp designation) I would be set up nicely this year but next year when the house sells I'll be on the hook for the entire sale price as <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="0773ee96-652b-467d-a233-0d592fb8298f" id="a66e091e-393f-4240-ae5d-c407833618c1">a</span> income since I would have nothing to write off against it (or at least that's my understanding).</span></div>
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<span style="font-family: Verdana, sans-serif;">So the question is, am I forced to report the loss this year or can it be deferred to next year ?</span></div>
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<span style="font-family: Verdana, sans-serif;">Any insight would be appreciated!</span></div>
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<span style="font-family: Verdana, sans-serif;">In general, you need to report the losses on your 2013 return, NOT on your 2014 return<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="04533a55-1749-41ad-89ac-4df20e3283fe">.</span>However, assuming you actively participate in the operation of your S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="1da1d8cd-0589-472d-8582-590d18e05f42">corp</span> and you're not merely a passive investor and sufficient basis in <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="25043457-6825-4298-bc3e-d31b468b1e2f">AAA acct</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="da13dee1-0bf6-4a11-a0be-375ab1d59ce4">.</span>not <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="eee79400-f44c-442e-a495-52f31895d99e">neg</span> balance in AAAacct<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="7616eb75-9675-4d8a-9269-835bd7e3a832">.</span>then, if your S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="a748a4db-d50c-487c-8165-9030dca8a1e4">corp</span> suffers a loss in the tax year of 2013 you can deduct your share of the loss against your other sources of income, such as dividends, interest, your spouse's wages, <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="c0d9a2ca-a54b-44b7-8707-8ed50e11b960">etc</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="111f61f1-eec7-4a59-9fd4-32fbaeb8f7e5">.</span>say<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="9bf13dc8-4664-4170-b593-3739234e61ee">,</span>you own a 100% interest in your S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="2176734a-bffd-4ac9-bc05-f18154c6ad7a" id="bebfc673-b64e-4d51-b4b0-c97793b3445c">corp</span>. Your S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="bea7748e-d441-41bc-adb8-00ddf3bc4534" id="d26b75d5-6229-4702-9f8c-6d8111b6c820">corp</span> suffered a biz related loss of $55k in 2013, then. <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="998bdc7b-2b3c-4f7a-9860-4811d1ccab4b" id="4e2c2970-fc11-4883-86e2-6bf1579682e5">you</span> have a part-time job from which you earned , say<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="998bdc7b-2b3c-4f7a-9860-4811d1ccab4b" id="7dc23fe3-1336-4cbc-b708-89a6ff2a7273">,</span>$20k. You also earned , say<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="39a01b08-1b75-4cf8-8add-b2e50f0de2b9" id="ca87c8a0-330b-40cd-9eb7-beff2d163019">,</span>$1k in interest and received a dividend of $1k on <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="39a01b08-1b75-4cf8-8add-b2e50f0de2b9" id="20a1ceab-4efe-433e-87c6-560f3edeef8b">stock</span> you own<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="39a01b08-1b75-4cf8-8add-b2e50f0de2b9" id="0a8d2ba1-33ef-45c4-a39a-11ddf1a1eac7">.</span>Your total income from your job, interest, and dividend is $22k. You can deduct the $22k of the $55k loss from your $22k income not from the S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="9f4a68fd-5534-4521-817b-9b5fdc0611ce">corp</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="12204476-6585-4233-9e87-390bcae94870">.</span>you can also deduct the remaining $35k as long as <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="80f9c17b-9621-44b7-9da7-8531d5edf2e3">youhave</span> sufficient balance in AAA <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="c61156fc-4789-40eb-bf4e-9d9b2b1ecc6f">acct</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="d04919ce-ff0f-413f-94a2-83cc6364e260">.</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="c2052099-4a65-4bdd-8622-3b3d9709d7d4">so</span><span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="1db3c0bf-c922-409e-80db-aa9c0aaaf18e">,</span>You can only deduct an S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="5a55d023-3668-47ae-966b-795da89304e9">corp</span> loss if you have a sufficient tax basis<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="b3213381-cb86-4f6a-aefc-bf6447e99db4">.</span>also <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="1c1fa73b-fa78-4113-8f2e-3cbee4670432">youdo</span> not need to issue a w2 to yourself as the <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="3c1bc375-ab9b-4927-909d-749fd0b212a5">corp</span> took <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a52a1d6d-2942-4c6d-839c-a4a010be444f" id="4281937b-0a6f-40ee-8920-73399f16a1f9">looses</span> in 2013.</span></div>
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<span style="font-family: Verdana, sans-serif;">Note<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="981c7aa3-fbfd-49a0-99bd-5d8ec11f0131" id="e9f9c62a-7ff3-491c-9c1e-126a856033ca">;</span>as you can see, an S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="981c7aa3-fbfd-49a0-99bd-5d8ec11f0131" id="d514a52c-eb05-45cb-896f-cb98e0fa0b66">corp</span> is a business structure that allows its investors to claim earnings and losses on their personal income tax returns. Before you enter losses reported on a K-1 schedule from an S <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="0431ffd3-798e-4e9a-962c-9b8abbbb5d26" id="bb0f856f-e8a9-4ab7-9f90-82339898bca1">corp</span> into your personal tax return on 1040, you must be sure you have enough basis as a shareholder to claim the losses. So, knowing how to determine your basis and how the current year's increases and decreases affect it will tell you whether you can claim all or part of the losses or whether they are suspended. <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a9df10cb-f687-4025-beca-16a7c17a20e6" id="84729fd5-83ce-4b77-b2c8-f697aee1a0c3">you</span> can only deduct losses of the S-Corp against ordinary income to the extent you have <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a9df10cb-f687-4025-beca-16a7c17a20e6" id="800d83c9-94de-4b21-a14e-4ff6640c5e05">basis</span> in the S-Corp<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="a9df10cb-f687-4025-beca-16a7c17a20e6" id="6efde85d-b182-4d4b-a434-a4e1141293a0">.</span>Anything above that is considered a capital loss. It's probably long-term capital loss so it's subject to the $3k per year limit with any amount you can't deduct this year carried forward to future years. If you do that and get a negative number for AGI on line 37 of 1040, then you could have a Net Operating Loss. <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="b961b32f-6ff3-4a1e-a00a-4e07bec555a4" id="e7ebec58-ee2c-430a-959a-cebfa620f010">with</span> NOLs you want someone, a <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="b961b32f-6ff3-4a1e-a00a-4e07bec555a4" id="6e7927aa-3008-4954-8fe2-81d0bd0a3699">cpa</span>/ an <span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="b961b32f-6ff3-4a1e-a00a-4e07bec555a4" id="6a8475c6-b94e-462d-956c-50bbe5200160">irsea</span> in your local area, who knows what they're doing. And be prepared for your professional to charge more than an average return as it will be a lot of work for him/her. You need report on your 1040 the appropriate amount from your K-1 from the S-Corp. (<span class="GINGER_SOFTWARE_mark" ginger_software_uiphraseguid="256ee9a5-394a-4603-bc64-0961cc7265f7" id="ca5a4b00-9182-48cb-897f-e580783dc1bf">as</span> said, unless you don't have sufficient basis, then you will need to carry it forward to 2011). The basic rules for using an NOL are: you need to carry the amount back to the preceding two tax years and apply it against any taxable income, which can generate an immediate tax rebate. You can waive this action and instead proceed directly to the next step; if so, attached a statement to your tax return in the year in which the NOL was generated, documenting the waiver. Also you may carry the amount forward for the next 20 years and apply it against any taxable income, which reduces the amount of taxable income in those years. After 20 years, any remaining NOL is cancelled. </span></div>
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<span style="font-family: Verdana, sans-serif;">It makes financial sense to apply the NOL against the earliest periods possible, since the time value of money dictates that the tax savings in these periods is more valuable than for any tax savings in later periods.</span></div>
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<span style="font-family: Verdana, sans-serif;">If NOLs are being generated in multiple years, use them in the order the NOLs were generated. This means that the earliest NOL should be completely drawn down before the next oldest NOL is accessed. This approach reduces the risk that an NOL will be terminated by the 20-year rule noted earlier.</span></div>
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<span style="font-family: Verdana, sans-serif;">Visit Asktaxguru for <b><a href="http://www.asktaxguru.com/8794-new-llc-calendar-year-expenses-but-no.html" target="_blank"><span style="color: red;">Online tax help</span></a></b></span></div>
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