What Did you Learn From Doing Your 2009 Taxes?

[ERD50]

I learned that:

1) There are 2009 tax policies to reward pursuit of higher education.
2) There are 2009 tax policies to punish pursuit of higher education.
3) Both of these can apply to the same student in a family, one effectively counter-acting the other.

For #1, there are various education credits (with some refundable credit elements). So if the goal is to economically motivate people towards pursuit of higher education, fine.

But for #2, you can be 'punished' if your child has savings/earnings in their name. In some cases, this gets taxed at the parent's rate rather than the child's rate. But what really, really makes this weird is being a student is a negative in this case. So if the goal is to economically motivate people towards pursuit of higher education, this opposes the same goal that is supported in #1.

* Before a child reaches age 19 (24 for full-time students), the next $950 in income is taxed at the child's rate. Earnings above $1,900 are taxed at the parent's marginal rate.

* All income (after the first $950) earned by children age 19 and older (24 for full-time students) is taxed at the child's rate.

So, a 21YO who *is* a student can get taxed at their parent's rate.

But a 21YO who is *not* a student gets taxed at their own (probably lower) rate.

Counterproductive, no?

-ERD50

 

[vlagirl]

I learned 2 things:

First, that Obama signed a Military Spouse Relief Act into effect last November that I somehow never heard about until doing our taxes, which means I had to file as a non-resident of GA to get my estimated payments I'd been making all last year back because I now qualify to be a resident of the same state as my Army husband. There was apparently no warning or preparation for this act, and state agencies are scrambling to make sense of it all. Big old mess!

Second, that my husband was having WAY too much money withheld from his paychecks (we only got married last year), which means an embarrassingly large refund (going straight to our retirement house fund), and also meant getting him to immediately reduce his withholdings.

 

[JohnDoe]

What do I do now? I just got a 1099-misc in the mail today.

I've had my refund for almost a month now.

 

[rothlev]

File an amendement and mail a check with the balance due, by April 15. 1099 misc goes on sch. c. you owe the fica taxes and any income tax that applies to the income

 

[vlagirl]

As a freelancer, I get a sizeable stack of 1099-MISCs every year. It's extremely frustrating how (illegally) late some of them are. By law, they're supposed to get them to you by Jan. 31 and to the IRS by Feb. 28. If you're in the same kind of situation I am, you don't want to complain about the lateness because the person might just decide not to hire you anymore. I just report every bit of income whether I receive 1099s or not, so I don't worry about any potential IRS problems. Or, at the very least, keep a record through the year of every employer/job that has your SSN.

 

[JohnDoe]

File an amendement and mail a check with the balance due, by April 15. 1099 misc goes on sch. c. you owe the fica taxes and any income tax that applies to the income

Aren't these forms suppose to be mailed by Jan 31st?

Now because of someone elses failure, I have to file an amendment? That doesn't seem right.

 

[jimnjana]

John Doe & vlagirl,

make sure you take all the expenses you can on the schedule c or c-ez form. Mileage is a big one, you may also have other expenses that you incur to make that income...

 

[LOL!]

Aren't these forms suppose to be mailed by Jan 31st?

Now because of someone elses failure, I have to file an amendment? That doesn't seem right.

One year, just after our CEO's accountant had submitted the CEO's tax return, we got word that some highly-compensated employees (HCEs) would get a corrective distribution from the 401(k) plan. It was hilarious that the CEO didn't know much about this, but had to have his accountant amend his tax return at a greater cost than the corrective distribution.

Needless to say, the 401(k) plan was adjusted a little bit so that would not happen again.

 

[Free To Canoe]

I have learned many things. Here are a few.

1) In certain situations for capital gain (losses), it pays to use actual share values vs the average share values that the mutual fund companies routinely use. Should be a couple of grand difference for one fund that I liquidated.

2) You should keep your old returns for 7 years (or more).

3) If you have losses, you must use $3k per year even if you do not need to use them.

4) You can get an energy credit for the installation of a tin roof or a new gas furnace.

Free to canoe

 

[audreyh1]

Aren't these forms suppose to be mailed by Jan 31st?

Now because of someone elses failure, I have to file an amendment? That doesn't seem right.

No, it's not fair.

One year I got a corrected 1099 that was mailed on April 16th!!!!!!

Some mutual fund had screwed up it's numbers.

So, yes, we had to file an amended return. We had just filed our taxes a few days before! Turbo-tax made the process pretty straightforward, fortunately.

Now we wait until pretty late March to start our taxes to be sure we don't get corrected 1099s, and we don't file (electronically) until pretty close to April 15. Didn't have that trouble last year, but for a few years before there always seemed to be some change.

Audrey

 

[kaneohe]

I learned that my state (CA) did not agree w/ Fed IRA deduction in 1982-86 when you could contribute 2K/yr for total/person of 10K in those yrs. If you were working and belonged to a retirement plan you could not take any CA deduction for IRA contributions. Thus CA IRA has potential of 10K basis so the first 10K that is distributed is not taxed by CA. I kind of knew that in the back of my mind but I wasn't relating a small Roth conversion to a distribution until quite late in the process. I don't know if any other states have the same issue. Learned that it can be valuable to have old tax returns.....real old ones......that proved that I had not taken state deductions in those yrs. Haven't found 5498s or bank statements that proved I had the IRAs yet though, only the tax returns that show I took a Fed deduction but not a CA one.

 

[Nords]

Learned that it can be valuable to have old tax returns.....real old ones......that proved that I had not taken state deductions in those yrs.

I've been saving a 1989 tax return to document a roll-over of cap gains from a condo sale into another home purchase.

By the time (in 20-40 years) that we use the return to establish the basis on the sale of our final home, the IRS will be at least two generations beyond the era when that law was in effect...

 

[Texas Proud]

WOW!!!!!

What I just learned is that my taxes are WAY down from when I was single... and from last year when I made more money....

Last tax year I had 1 3/4 income as I got severance and also a new job.. this tax year just one income... so... that real estate loss comes back.. the credits etc. kick in... I was hoping that I had enough withheld and would not have to pay much... but I am getting a BIG refund....

Got to get the withholding changed...

 

[kaneohe]

3) If you have losses, you must use $3k per year even if you do not need to use them.
Free to canoe

Note that although you must use the 3K every yr, it doesn't necessarily get consumed. There is some wksht you have to use to determine how much got consumed....apparently it can range from all to none depending on your income relative to deductions and exemptions.

 

[jblack]

I learned that despite reading a lot here and at Bogleheads I still have a lot to learn...

DW and I are in the accumulation phase and have a fairly simple tax return since we just DCA into a taxable account with index funds (after 401ks, IRAs, HSAs). Aside from an annual rebalancing we never sell anything, so no losses, wash sale rules, tax on 2nd homes, cap gains, etc to worry about. We just have to itemize common deductions and file.

Biggest thing for us to figure out (related to taxes) is if we should convert our non-deductible IRAs into Roths sometime this year. At the 28% bracket and planning to ER in the 15% bracket many years from now it's a bit fuzzy.

 

[sheehs1]

I learned: My junior college student daughter had enough income last year so that ...we elected to have her claim herself so she could take advantage of the $2400 college tuition credit. Until now...we were not able to use the credit as it was phased out for us and she didn't have enough income to be able to use the credit.

 

[Onward]

I learned that the tax advantages of passive ownership of rental real estate evaporate very quickly once your income crosses a not-so-high threshold. What a wonderful incentive to reduce your income and productivity. Well, they got their wish--I retired in February.

 

[JohnDoe]

File an amendement and mail a check with the balance due, by April 15. 1099 misc goes on sch. c. you owe the fica taxes and any income tax that applies to the income

Would I list the this amount under 'wages'? The amount is in box 7 on the 1099.

It was severance money from 2008. The company I worked for was paying me severance in 2008, then filed for bankruptcy and the payments stopped.

In 2009, they paid me the rest of what I was due for severance.

Thanks.

 

[Dawg52]

Got my final K-1 statement just the other day so finished my taxes this morning. No real surprises. Getting about $700 on federal plus another $1500 rebate for new energy efficient air/heat system. I do owe $275 to the state. Plan to review again tonight and efile the fed. Pay the state on the last day.

 

[smjsl]

I learned that online filing via free fillable forms via IRS site is full of subtle problems if irs.gov link leads you to www.freefilefillableforms.org. But if it (seemingly randomly) gets you to www.freefilefillableforms.com instead, you might be in better shape. (I did not bother to fill out forms on .com version, but quick checks showed that at least the problems that I saw at the .org site are fixed on the .com site.)

 

[SecondCor521]

I learned that forgetting a K-1 is a pain in the rear.

Filed about a week ago, got the K-1 in the mail on Friday. Now I think I have to amend both federal and state. Sigh.

2Cor521

 

[bbbamI]

I learned that for the next four years (unless the tax law changes) we don't have to pay a dime of federal taxes.

In a few years when we start taking money from retirement accounts it will be a whole different story....

 

[Martha]

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?

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?

Yup. The problem is that if I guess too low on the amount of taxes to pay by April 15 I will pay a penalty. The fact that I did not pay estimated taxes is only loosely related in that I have to come up with a big check in the next couple of weeks as I have paid nothing towards 2009 taxes. Previously I always paid estimated taxes and the amount was high enough that I never had to pay any additional in by April 15th. Instead I always got a refund.

I did pay estimated state taxes for Arizona and Minnesota. The Arizona estimates will be about right but Minnesota is too low due to the large real estate transaction.

 

[Dawg52]

Someone remind me next year not to file my tax return until before April 1. Just received a correction of ordinary dividends and qualified dividends for 2009. Filed my tax return just a week ago because I got my final k-1 statement. What a headache for such a minor difference. Time for a med.

 

[jebmke]

No, it's not fair.

One year I got a corrected 1099 that was mailed on April 16th!!!!!!

Some mutual fund had screwed up it's numbers.

So, yes, we had to file an amended return. We had just filed our taxes a few days before! Turbo-tax made the process pretty straightforward, fortunately.

Now we wait until pretty late March to start our taxes to be sure we don't get corrected 1099s, and we don't file (electronically) until pretty close to April 15. Didn't have that trouble last year, but for a few years before there always seemed to be some change.

Audrey

I wait even longer than this. For a few years after I repatriated to the US I kept getting corrected W-2s through the summer. Now I often just file for an extension and top off my estimated payments and wait and file later in the summer.