What Did you Learn From Doing Your 2009 Taxes?

[Gone4Good]

You can choose which year you apply the tax credit - 2009 OR 2010. I am choosing 2009, even though we are closing in 2010.

Yup. 2009 we're clearly over the threshold. 2010 I'll have gotten paid only through mid-April but I might still have too much income to qualify.

What I found surprising though, is that I'm a current home owner and I can still qualify for the "first time buyer's" credit . . . and for a motor home, too. Silly.

 

[calmloki]

I learned that I may be entitled to the "First Time Home Buyer's Tax Credit" in 2010 for the purchase of my motorhome, even though I already own a home. But will probably still earn too much this year to take advantage of it.

Are you planning for your motorhome to be your new primary residence? Have been yearning for that $6500 for a new home buyer who has been in their current home for 5 years, but to do so would require me to declare new residence. As I understand it. OK to have the existing home as a secondary, but credit has to be on the primary home. That is my understanding, but am eager for someone to set me straight - would love to be second home shopping with $6500 in play money in my pocket!

 

[Gone4Good]

Are you planning for your motorhome to be your new primary residence?

Yup.

 

[W2R]

This may be a dumb question, but wouldn't you incur higher property taxes and/or insurance by making your bricks and mortar home your secondary home? In particular, I thought insurance companies were pretty sticky about having someone in full time residence at a home.

 

[audreyh1]

Yup. 2009 we're clearly over the threshold. 2010 I'll have gotten paid only through mid-April but I might still have too much income to qualify.

What I found surprising though, is that I'm a current home owner and I can still qualify for the "first time buyer's" credit . . . and for a motor home, too. Silly.

Oh right - Calmloki points out that the "new home" has to be your primary residence.

Some things might be tricky with a motorhome IMO. Our current motorhome does not qualify as a "home" as it is not fixed to a location. This is what is allowing us to qualify as first-time homebuyers because we have not owned a house for over 3 years. And I thought I read some IRS language that said our motorhome did not "count" as a home for the purposes of this credit because it is mobile - has been moved around.

So it might be a little more complex than you expect - not that it matters since you have been too "rich" in both years - LOL!

Audrey

 

[Jay_Gatsby]

I learned that DW and I pay way too much in taxes (higher tax bracket and all that). We need to find more ways to shelter income legally from the taxman.

 

[Gone4Good]

Some things might be tricky with a motorhome IMO. Our current motorhome does not qualify as a "home" as it is not fixed to a location.

Yup, I think you're right. When I read the regs the first time I may have mistook "mobile home" for "motor home". I swear I looked at the actual legislation and saw that it specifically mentioned motorhomes as qualifying . . . but I can't find it now.

So I guess what I learned from doing my taxes this year is to read more carefully.

 

[Bimmerbill]

I should have lowered my exemptions when I lowered my 401K %.... DOOH!

 

[Rustic23]

I learned the standard deduction for over 65 is larger, and I don't have enough itemized deductions. It will be better for me to double property tax deductions in 2010 and take standard in 2011. If we pay off the house this year then even this won't work.

 

[DeborahB]

I learned the standard deduction for over 65 is larger...

Oooooh! I didn't know that - 3 more years

 

[Gumby]

I learned that, for everyone but bona fide currency traders, currency gains and losses on foreign currency denominated cd's are ordinary income/loss reportable on line 21 of form 1040. I learned that you must make this calculation yourself, because it is not reported on any sort of 1099 from Everbank (although it's easy enough to figure out from account history).

 

[JOHNNIE36]

I am planning on the first time home buyers credit for 2009 tax year. Here is how I see the situation: What you're coming from and going into are two different things. You can be going to almost anything shy of a tent. Coming from is another story. No one has clearly defined what is a "home". As a former
realtor, the description of a residence is that is has to be attached to property for which you get a tax bill. Currently we live in a manufactured home that is on a rental lot. We don't own the property (land) and pay a monthly rental fee. To me, that is the same as renting an apartment. We are not "home owners" even the manufactured home is worth $125k. We bought a new home on land that we now own so we are claiming the credit. Going to is another story. As I see it, you can buy almost anything and have it qualify as a home as long as it is your primary residence and you have to live in at least three years. My BIL has already filed his taxes for 2009, has now bought a new house and wants to claim the $6500 credit. He will close by 6-30-10 and claim it on his 2009 taxes but will have to file an ammended return. What a mess.

 

[travelover]

I learned that I wasn't doing the withholding right. The IRS has a nice online calculator that lets me know exactly what DW and I should each be withholding to come out even on April 15th. This online calculator is much better than the old paper estimator form.

 

[Danmar]

I learned how great Quicktax (Turbo in US) is, how much I really enjoy doing our returns. Also how simple my finances really are-pension, dividends and interest income. Medical alimony,and donation expenses. what could be simpler. Got a big refund too-yay!!

 

[audreyh1]

I am planning on the first time home buyers credit for 2009 tax year. Here is how I see the situation: What you're coming from and going into are two different things. You can be going to almost anything shy of a tent. Coming from is another story. No one has clearly defined what is a "home". As a former
realtor, the description of a residence is that is has to be attached to property for which you get a tax bill. Currently we live in a manufactured home that is on a rental lot. We don't own the property (land) and pay a monthly rental fee. To me, that is the same as renting an apartment. We are not "home owners" even the manufactured home is worth $125k. We bought a new home on land that we now own so we are claiming the credit. Going to is another story. As I see it, you can buy almost anything and have it qualify as a home as long as it is your primary residence and you have to live in at least three years. My BIL has already filed his taxes for 2009, has now bought a new house and wants to claim the $6500 credit. He will close by 6-30-10 and claim it on his 2009 taxes but will have to file an ammended return. What a mess.

Interesting. Filing an amended return is not that big of a deal IMO. Turbo tax handles it readily, and it's well worth the tax credit. Or, he could wait until next year if he is sure that 2010 income will still let him qualify.

The language on mobile homes on leased land is not so clear, as buying a new one even on leased land still qualifies for the tax credit. So why wouldn't the prior one be considered a residence?

Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?

A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.

However, there is still room for getting some tax benefit from changing principal residences if you have lived in the first one long enough.

Fortunately for us, the IRS language is very explicit about us RV fulltimers qualifying as "first-time" homebuyers - i.e. not having a principal residence.

Q. Can an individual who has lived in an RV qualify for the credit?

A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer.

from First-Time Homebuyer Credit Questions and Answers: Basic Information

Audrey

 

[ERD50]

Your "Effective Tax Rate"?

I learned that my tax program does not know how to calculate "effective tax rate" for Federal Income Tax.

This is a number I always calculated for myself, before the days of using a tax program. I would look at what I really paid net, divided by AGI (which is already a slightly manipulated number, but close enough for comparison). So net taxes was always: Taxes Withheld plus/minus any refund/due amount.

But now we have credits, and refundable credits in the mix, and this GOVT RETIREE CREDITS/MAKE WORK PAY thing, and.... TaxAct gives a different number than I would calculate for myself. They base it on a "total tax"/AGI, where "Total Tax" is before credits. Makes no sense to me, a credit is tax I don't pay.

Tax regs are too complex for even the tax programs.

-ERD50

 

[target2019]

I learned (again) that my in-laws pay a financial advisor fee to a large company US** and it gets them nothing but some churning, over-diversification, and pretty quarterly reports. Well, they were pretty until they stopped printing them in color mid-way thru the year.

 

[TromboneAl]

In tax year 2008 we paid no federal taxes. So, I decided not to pay federal estimated taxes last year as no matter what there would not be a penalty provided that I paid my taxes by April 15 of this year. I know we will pay fed taxes this year due to the sale of real estate and other income. I have no idea how much and I am on a trip and it is going to be tough to even guess by April 15 in order to file an extension and pay the estimated amount.
Didn't think that one through.

I'm sorry, I'm not understanding this. You have to pay your taxes by Apr 15, but how is that relevant to the estimated taxes you paid? I understand how you don't have to pay estimated tax amounts greater than the tax you paid in the prior year, but don't see how that affects your situation. Are those things related in a way I'm unaware of?

 

[kaneohe]

T-Al,

I'm not confused (might be wrong tho). My interpretation of what Martha says
is:
1) paid no taxes for 2008
2) paid no est. taxes for 2009 (safe harbor based on 2008)
3) owes taxes this yr (I interpret as for tax yr 2009...in Apr 2010)
4) does not know how much to pay in Apr 2010....even if filing for
extension, must pay your best guess as to full amount (Martha used the word
estimated here but I think differently than when used in "estimated taxes" paid quarterly;

am I confused?

 

[cardude]

I learned I have a ridiculously complicated return (for me) due to the closing of the business, the rentals, and the closing of an activley managed account with it's 100+ trades, so I'm going to still let my CPA do it until it becomes more normalized and after the final business return is filed.

I also learned that I'm still a little lazy when it comes to paperwork.

 

[M Paquette]

I learned that an optimal strategy for minimizing taxes, or even reducing Federal taxes to zero, is to simply not have any income. Of course, since the state defines income differently, I still owe them taxes.

 

[dixonge]

I learned that Gainskeeper might not have saved me any hassle or time, and I wish I could get my money back...

 

[Buckeye]

I learned that retiring part way through the year was a really good idea, because my salary income was less than if I had worked the full year so my marginal tax rate was lower than in past years. Consequently, I got an unexpectedly large refund.

I also got a whopper of a refund since I only worked 6.5 months in 2009 and I was witholding too much even if I had worked all year. Actually, I got four refunds...federal, state, village and school district. Good for funding two over-50 IRA's. No big refund next year since I am witholding the bare minimum. I can easily change my W-4 online at work and the change takes effect the following pay period. I'll double-check in early November and have extra taken out if it doesn't look like I'm going to make it.

 

[scrabbler1]

I learned that retiring part way through the year was a really good idea, because my salary income was less than if I had worked the full year so my marginal tax rate was lower than in past years. Consequently, I got an unexpectedly large refund.

I had a similar thing happen to me the first year I began working (1985). I figured out that I would have my withholding determined as if I were going to work the whole year although I would end up with only half the income. This was before the 1986 Tax Reform Act so there were many more brackets back then.

What I ended up doing was to file a W-4 form with 12 (yes, twelve) exemptions, something which was legal back then and needed no justification, even to my payroll division. This boosted my biweekly paycheck by about $160 and it worked out perfectly, as I ended up owing the Feds and getting a refund from the state (or vice versa, I forget) each for less than $100. All that extra money I collected ended up helping me buy my first car for cash, avoiding the nuisance and expense of getting a car loan.

 

[tapper]

I learned that if your income is low enough that the federal government will pay you $1000 to possess a child. We have a seven year old and this is the first year we have ever received any such credit.

I also learned that the mileage to and from the doctor's office can be deducted.

I don't think that I would have a prayer at getting my taxes correct without a computer program such as Turbotax. Every time I do my taxes I keep having these visions of politicians sitting around in lush leather chairs, smoking cigars, drinking liquor, and speaking amongst themselves saying "Wait, wait, wait, I think we can make it even more complicated!"

Unfortunately, we were supposed to get our refund five days ago and it still hasn't shown up. The IRS web page doesn't provide any useful information either.