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Old 12-11-2010, 10:41 AM   #21
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Thanks for the update T-Al. It's encouraging to see that TaxAct gave such a detailed, specific response to an individual issue.

I am still confused though.

1) Did you use TaxAct last year, and this is an import from TaxAct, or some other method?

2) What did your Capital Loss Carryover Worksheet from 2009 say?

3) If none of your $3,000 allowance was used, does that mean your AGI was zero? Or that your Taxable income was zero? Or something else?

edit/add #4) If you had -$3,000 on Line 13, where does it get 'dis-allowed'?


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Wow. I think Turbo Tax has no support. Got a problem? Your tough luck!

Ha
I dumped TurboTax back when I was bit by a bug and got really PO'd (long story, I'll try to dig up the link if anyone really cares). I had no idea whether TaxAct was really any better though, and I haven't needed their CS yet. I could have been jumping from the frying pan to the fire. So this report from T-Al is good to hear.

PS: It's kinda interesting to see how many posters provided a definitive yes/no answer to this. IMO, tax laws are too complex and the info was a little too vague for a definitive answer, but that didn't stop some people! Heh-heh, it's why I tell DW that I am almost always right - I almost always add a caveat (it depends, I think, I'm pretty sure, almost, usually, rarely, as I understand it, etc, or the really silly cop-out that covers all sins: 'unless I am mistaken' )

-ERD50
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Old 12-11-2010, 10:49 AM   #22
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I read the response as saying that the gains from Al's sales in 2009 were not taxed since his deductions were high enough. If Al did pay taxes and had a combination of interest and dividend income, do the cap gains get applied first so that you can pay taxes, but none of it on capital gains?

e.g.

Deductions = $12k

Cap gains = $11k
Dividends & Interest =$4k

Taxes paid on $3k, but zero on the cap gains.
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Old 12-11-2010, 12:25 PM   #23
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Very interesting. Sometimes I also feel like I should override my tax software, but it is usually correct. Taxes are hideously complex.

Ha
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Old 12-11-2010, 04:52 PM   #24
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Quote:
Originally Posted by Alan View Post
I read the response as saying that the gains from Al's sales in 2009 were not taxed since his deductions were high enough. If Al did pay taxes and had a combination of interest and dividend income, do the cap gains get applied first so that you can pay taxes, but none of it on capital gains?

e.g.

Deductions = $12k

Cap gains = $11k
Dividends & Interest =$4k

Taxes paid on $3k, but zero on the cap gains.
Assuming the capital gains are long-term and the dividends are qualified, no federal taxes would be owed in your example. The deductions offset ordinary income first.
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Old 12-11-2010, 05:03 PM   #25
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Al,
Does a person have the option of using the $3K or not?
Let's say using the $3K you owe $0 Tax, but not using it you owe $150.00 . Can a person pay the $150.00 and not use the $3K this year and use it next year?
no such option unfortunately. You must "use" the 3K but it is possible that all, some, or none of it will actually disappear depending on the actual circumstances. There are worksheets , I believe, that will guide you to the correct answer.
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Old 12-11-2010, 05:05 PM   #26
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Originally Posted by FIRE'd@51 View Post
Assuming the capital gains are long-term and the dividends are qualified, no federal taxes would be owed in your example. The deductions offset ordinary income first.
What do you mean by ordinary income?

Assuming, in the example above, that the $11k was all long term gains, and that $1k of the dividends were qualified with $1k of non qualified divs and $2k of interest.

Surely there is some federal taxes owed since the total income of $15k is greater than the $12k of deductions, and make this for a single person, not a married couple.

I can see why I have needed a tax program this last 20 years
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Old 12-11-2010, 05:43 PM   #27
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Quote:
Originally Posted by haha View Post
Very interesting. Sometimes I also feel like I should override my tax software, but it is usually correct. Taxes are hideously complex.

Ha

I absolutely agree .My husband worked for the IRS and every year he brought home a large telephone size manual of the new changes .
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Old 12-11-2010, 06:00 PM   #28
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What do you mean by ordinary income?

Assuming, in the example above, that the $11k was all long term gains, and that $1k of the dividends were qualified with $1k of non qualified divs and $2k of interest.

Surely there is some federal taxes owed since the total income of $15k is greater than the $12k of deductions, and make this for a single person, not a married couple.

I can see why I have needed a tax program this last 20 years
Ordinary income is taxed at the same rates as earned income (e.g. wages). In your second example, the 1K of non-qualified dividends and the the 2K of interest would be taxed as ordinary income. Still no Federal tax would be owed, since the deductions (12K) are greater than the ordinary income (3K), and the LT gains and qualified dividends are taxed at zero since they fall into the 10% and 15% brackets.
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Old 12-11-2010, 07:51 PM   #29
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"When you figure the amount of any capital
loss carryover to the next year, you must take
the current year’s allowable deduction into ac-
count, whether or not you claimed it and whether
or not you filed a return for the current year."

Publication 550 page 67 under Capital Loss Carryover

I believe that you have to take the 3000 loss on the 1040 every year even if you don't need it. I was in this situation last year.
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Old 12-11-2010, 07:52 PM   #30
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Originally Posted by FIRE'd@51 View Post
Ordinary income is taxed at the same rates as earned income (e.g. wages). In your second example, the 1K of non-qualified dividends and the the 2K of interest would be taxed as ordinary income. Still no Federal tax would be owed, since the deductions (12K) are greater than the ordinary income (3K), and the LT gains and qualified dividends are taxed at zero since they fall into the 10% and 15% brackets.
FIRE'd is correct: another way of looking at it via the 1040...
AGI = 15K; Deduction/exemptions = 12K; Taxable Income = 3K
The formula for calculating tax calculates tax on CG/QDIV separately.
Separating out CG/QDIV = 12K; Taxable Income - QDIV/LTCG = -9K
Tax on -9K = 0; Tax on CG/QDIV= 0 since taxable income = 3K is in
the 10/15% bracket (<25%). Total tax = 0
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Old 12-11-2010, 08:46 PM   #31
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Quote:
Originally Posted by kaneohe View Post
FIRE'd is correct: another way of looking at it via the 1040...
AGI = 15K; Deduction/exemptions = 12K; Taxable Income = 3K
The formula for calculating tax calculates tax on CG/QDIV separately.
Separating out CG/QDIV = 12K; Taxable Income - QDIV/LTCG = -9K
Tax on -9K = 0; Tax on CG/QDIV= 0 since taxable income = 3K is in
the 10/15% bracket (<25%). Total tax = 0
Thank you - both you and FIRE'd
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