Owner: Gina's Tax Blog URL:http://glgcpa.blogspot.com/ Join Date: Tue, 08 Aug 2006 11:21:09 -0500 Rating:1 Site Description: This blog provides general information about U.S. and Texas taxes by Gina L. Gwozdz, CPA. Gina is the owner of Gina's Tax Service. Her main goal is to help all her clients minimize their tax liability within the constraints of the law. Site statistics:Click here
When are taxes due? 1970-01-01 00:59:59 The IRS has announced that individual taxpayers have until April 17, 2007 to file their taxes, because April 15 is on a Sunday and April 16 is Emancipation Day.
IRS Notice 1970-01-01 00:59:59 Jim writes:
I have just received a notice from the IRS stating that I did not report $4,000 of income. The detail shows that a bank had reported that amount as non-employee compensation. It turns out that the amount was for a settlement of a 2003 claim I filed under the Fair Credit Reporting Act. I never received a 1099. The IRS says that my tax increase along with penalties and interest
Pause in Posting 1970-01-01 00:59:59 I just wanted my readers to know that I need to take a break from posting. My father had emergency triple bypass surgery yesterday and is doing well, but I just don't have time for posting until he's out of the hospital.
Thanks for understanding,
Gina Read more:Posting
, Pause
Postings to Resume 1970-01-01 00:59:59 I'll be bringing my father home from the hospital today (thankfully in time for the Superbowl) and should be able to resume posting next week (or possibly tomorrow). I appreciate your patience.
Gina Read more:Resume
ROTH IRA Withdrawals 1970-01-01 00:59:59 Kelly asks:
Is it true that I will never have to pay capital gains taxes on my Roth IRA? If I do well in the market and my Roth has a million dollars in it and $50,000 of that is contributions, I can take money out and won't have to pay any taxes? No short term or long term capital gains? And no additional income taxes later when I retire and take even more money out? And my withdrawals won't
Super Tax Party 1970-01-01 00:59:59 Don't miss Kay Bell's latest carnival, "Super
Tax Party
" where you'll find many fun and interesting tax articles.
Allocate Sales Price on Rental Property 1970-01-01 00:59:59 Doris from CA writes:
Hi Gina,
Great blog! I have a question about allocating costs between land and buildings. We have a rental home that we sold this year. For the initial allocation between the land and buidling, I used the original property assessment for the home. (We originally purchased it as our main home and converted to a rental home 2 1/2 years later). Now that we've sold it, I'm Read more:Sales
, Rental
Cost Segregation 1970-01-01 00:59:59 If you own rental real estate or are thinking of purchasing or building rental real estate then you should ask your CPA about cost segregation.
Cost segregation is the method used to divide or segregate the basis in your property into components. The tax saving advantage is that some components can be depreciated much faster than the standard 39 years that rental real estate must be Read more:Segregation
Hobby Rules Unfair 1970-01-01 00:59:59 Karen from Michigan asks:
I just read your post about hobby income. The rules seem somewhat bizarre, in that it seems as if someone who is deliberately trying *not* to make a profit -- merely asking to be reimbursed for the cost of raw materials for something she makes to give to another person -- would end up paying income tax on what is essentially a reimbursement. I desktop-publish fanzines -- Read more:Hobby
, Rules
Flexible Spending Account 1970-01-01 00:59:59 Roger asks:
I put money into my flexible spending account at work for both medical and dependent care. The money goes into the account pre-tax. Any money left in my account at the end of the year I forfeit.
If a medical bill is paid out of my flexible spending account can I still deduct it on my taxes as a medical expense? What about the Dependent Care? Can I take the Credit for Child and Read more:Flexible
, Spending
, Account
Form 1099Q: Education Expenses 1970-01-01 00:59:59 Todd writes:
I am having a terrible time trying to figure out my son's income tax. He received form 1099-Q for his educations expenses dispersed from the texas tomorrow fund. I looked up publication 970 Chapter 8 and I have read it and figured it but still don't get it. If he is still my dependent how does this work. Surely I did this last year but i am clueless this year. I don't think that Read more:Education
, Expenses
Foreign Taxes 1970-01-01 00:59:59 Jim asks:
Hello! I was wondering if you can help me understand the IRS policy on foreign tax credits? From what I understand there's a cap, but there's also a deduction available?
Thanks,
Jim
My response:
Hello Jim! The foreign tax credit can get very complicated very fast, which is why, if you paid foreign taxes (or they were withheld from your foreign income) you should have a qualified Read more:Foreign
, Taxes
Charitable Donations and AMT 1970-01-01 00:59:59 Carl asks:
The past two years I have listed some charitable donations on our Schedule A, but they have been cancelled by the AMT.
Since my wife retired in 2006, I expect to avoid the AMT this year. Can we use those same donations from previous years this year, since they did us no good in the years they were made?
I didn't think so.
My response:
Carl, you seem to be pretty confused about Read more:Donations
Tax Carnival #12: Presidents' Day 1970-01-01 00:59:59 Kay Bell has selected my article, "Roth IRA withdrawals" for Tax Carnival
#12: Presidents
' Day. There are a lot of other valuable contributions, so go take look.
Homeschooling Deductions/Credits? 1970-01-01 00:59:59 Denise asks:
My daughter in law has her teaching degree but she is staying at home and home schooling their 2 sons. Can they claim any of their expenses or is their a credit for home schooling? I have looked and can't find anything I really understand re this issue.
My response:
Hello Denise! The short answer is no.
The educator deduction was extended at the last minute, but it is only Read more:Homeschooling
, Credits
RMD for Inherited IRA 1970-01-01 00:59:59 Richard asks:
My father passed away earlier this year. He was 86 when he died. I am the sole beneficiary of his Traditional IRA. He was taking distribution for some time. I think I understand correctly that I may set up a beneficiary distribution IRA from which I must continue to make withdrawals (starting by Dec 31 of next year) based on my lifetime, and this is what I intend to do. My
Deductible Medical Expenses 1970-01-01 00:59:59 It appears that there's a local tax preparer who is/was advising taxpayers that they should have cosmetic surgery in order to increase their medical expenses to reduce their taxes. Not only that, this tax preparer is/was also allowing taxpayers to deduct the cost of medical and dental insurance paid with pre-tax income. Neither of these are legitimate deductions.
Assuming you can benefit from Read more:Deductible
, Expenses
Non-employee Compensation 1970-01-01 00:59:59 Question from Ted:
Sweet site! I'm doing my own taxes with Tax Cut and I have a question. I have a regular job, but I worked part-time, as a fitness instructor for a local gym. They sent me a 1099 with the amount they paid me reported as "non-employee compensation". I'm not self-employed, do I just put this amount on Line 21, Other Income?
Thanks,
Ted
My response:
Hello Ted. I'm glad you Read more:Compensation
Severance Pay 1970-01-01 00:59:59 Jacob asks:
My daughter's was just informed that her firm is moving to another state. She she will not be moving with them and she has worked for them for over ten years, they are going to give her severance pay. I would greatly appreciate your help with the following questions:
1. Does her employer have to deduct Federal/State withholding tax and social security and Medicare from her Read more:Severance
Tax Canival #13 2007-03-05 06:40:00 Since I haven't had time to write much of my own here, Kay Bell from “Don't Mess With Taxes!” has graciously allowed me to host this month's Tax Carnival #13, to make sure my readers have plenty to read. This carnival is filled with tips and advice for completing your return yourself, hiring a tax professional and more....
Ask Uncle Bill, believes if you have a simple return, you should do your
Form to report inheritance? 2007-03-09 00:58:00 Carol asks:
I am about to inherit a little over $100,000. What form do I use to report
this even though it is not taxable? Can you tell me what publication covers this situation?
Thanks,
Carol
My response:
Hello Carol!
An inheritance is a "gift" in that someone gave it to you and it is not taxable to you. There are no gift tax consequences from an inheritance that you receive from an
Long Term Capital Gains Rates 2007-03-16 11:33:00 Steve asks:
I am planning to sell shares of stock that I own which are currently subject to Long-Term Capital Gain treatment, as I have held them for over a year. I'm not clear on the following things:
1) How do I qualify for LTCG of 5%, i.e., is there an income limit?
2) Is there an even lower rate (0%??) if I hold on to the stock longer, and if so, how much longer?
3) Is there an income Read more:Rates
, Long Term
, Capital Gains
Trading stocks in ROTH 2007-03-20 21:47:00 Sharon asks:
I have a Roth IRA and was considering to use it instead of my regular account for purposes of trading stocks, mind you I am not a day trader, when I refer to trading stocks, it may be after holding it a couple months to possibly a year to two. I will do that with seasonal stocks or cyclical. I have been for the most part long-term buy and hold in my Roth IRA, but figure i would be Read more:Trading
Tax Deductibility of Co-op Expenses 2007-03-24 12:18:00 Chris asks:
We are in the 15% bracket and own a co-op for which we pay $1,400 a month maintenance or $16,000 a year, of which 45% is tax deductible. My wife does our taxes and she informed me that last year we could not use it because we did not have enough deductions to fill in the long form. Is there any way we could use it?
My reply:
Taxpayers who own their homes, and itemize their deductions Read more:Expenses
Sale of Timber 2007-03-29 13:05:00 Rusty asks:
I inherited some land back in the 80's. A logger would like to harvest the trees. He is going to pay me 8,000 for the trees. How would I treat this? Capital Gain? Is it all taxable? Part of it?
Thanks,
Rusty
My reply:
Timber sales are complex; thus it's best to have a qualified tax professional help you with this.
In order to report your gain or loss you must first determine
Assisted Living Deductions 2007-04-10 23:36:00 Estelle asks:
I have a parent in assisted living. I have asked two accountants the answer to this question and both gave me different answers. One accountant said to deduct the whole amount of rent as a medical deduction, because she is there for health and medical reasons. The other accountant said to deduct the difference between the rent (with services included) and rent for independent Read more:Living
Organize Your Business Records 2007-04-15 22:22:00 All small business owners must deal with the massive amounts of paperwork. How you organize that paperwork is totally up to you; however most small business owners would like more guidance. The following is generally how I advise my new business clients to set up their records:
Purchase three plastic manila folder boxes. Label them as follows:
Enter into ComputerTo Be PaidTo Be FiledEvery Read more:Business
, Records
Sale of Mother's Home 2007-04-26 18:01:00 Carol writes:
My mom will be closing on the sale of her house next week to move to assisted living. The profit will be split evenly between her, myself, and my two siblings since the house is in all of our names. My siblings and I want to preserve as much of our portions as possible to help with her assisted living costs. Any thoughts would be appreciated.
My response:
It's a shame that you're
Excess Contribution to Roth IRA 2007-04-26 17:57:00 Mary would like to know:
My husband and I have both been contibuting to Roth's - 1600.00 combined per year. This past year, because he left a job, had a vacation buy out, and started a new job, we are over the salary limit for the Roth, among other things. We are stymied by what to do. Next year our income will not be over the limt. Do we have to take out everything? Only the amount Read more:Excess
, Contribution
Contributions to 529 Plans 2007-04-26 16:22:00 Jake writes:
Dear Gina,
I understand that I can contribute $22,000 a year or $110,000 in a 5 year period into a 529 without triggering gift tax. Does $22,000 a year use up your gift tax to that individual for the year, or is the $22,000 a year in addition to the normal yearly exemption?
Thanks in advance!
Jake
My response:
Hello Jake!
For 2007 you are allowed to gift any one person up to
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