Taxes Q & A thread.

**Totien** · 2013-12-30 10:14

So this is the first year I've ever gone through my spending and will be claiming any deductables. Stupid, I know. But come to find out, I'm not the only one. I just started using Quicken last week and I'm going through and categorizing all of my purchases from 1/1/13 to today. I have a few questions right off the bat.

1) There is several hundred dollars I've had to pay out of pocket for some mental therapy. Court ordered. Don't ask. Quicken says: Deductible medical service fees paid to doctors, dentists, surgeons; the cost of hospitalization and related fees (lab, therapy, etc.); medical insurance premiums paid. Only deduct actual out-of-pocket expenses less reimbursements.

I would think this would qualify, but I have no idea to be honest.

2) It's seeing items that have been returned (clothing and such) as Other Income. I'm sure it shouldn't be reported as such, but I don't know how else to categorize it.

3) (probably most importantly) I've started a bit of a small business fixing computers, providing remote support, etc. for friends and family. I haven't registered my business with the state yet and would like to avoid it if I can. (do I have to?) Most of the income I've made doing this has been cash and doesn't show on my statements, but there is one business I've worked with that has given me direct deposit. I'm not officially on their staff or anything though. I would like to be able to claim EVERYTHING under the category Electronics & Software, but don't really know how to do that either. The research I've done tells me that I need to list everything under a form 4562 under section 179 to be reimbursed. Does that sound right? Is there an easier way?

Be gentle.. I'm really a n00b at this.

**Cream Soda** · 2013-12-30 10:22

Originally Posted by Totien

Be gentle..

good luck

**Totien** · 2013-12-30 11:03

Thanks. I know that's asking a lot from BG.

**Melena** · 2013-12-30 12:02

Unless you've made retarded amounts that you've been depositing right into the bank, don't worry about your "self business" yet since it's not registered. Also don't be afraid to compared itemized deductions versus the general standard deduction. Sometimes you can lose more by itemizing versus taking the standard deduction.

**nasomi** · 2013-12-30 12:11

Taxes. Oh how I love taxes.

First off, if you don't own a house and pay a mortgage, it's going to be better for you to take the standard deduction. Itemizing all day long might get you close, but 99% of the time, standard will be better without mortgage interest to deduct. Because of that, dont' worry about all those little "deductable" things. The federal government gives a generous standard deduction to anyone who wants it, and calls it the "average", but in reality it's way over what most people could deduct otherwise.

Second off, if you didn't get a W2, it's not income. You get a w2 from yoru employer, it's taxable income and you must pay taxes because the government knows about it. Your little side business is super neat, but it's not really income. And by that I mean the government doesn't know about it so gl to them.

I'm not a tax accountant, but I've been doing advanced level taxes for over a decade. I do my parents, which gets squirley when they make 15k/yr off social security and buy a $150k rv because htey have assloads of retirement savings. There's loop holes, work-arounds, etc, that are easy to take advantage of. First off, get a copy of a paper tax form. Then read it. Then read the back with all the caveats. Most of the information you need is in there.

If you own a home and pay a mortgage, itemize. Deduct the bullshit out of everythign whether you did it or not. You can have up to $500/yr in charitable donations WITHOUT any paperwork to back it up. So bam, there's $500 on top of your mortgage interest. Basically minimize income and maximize dedcutions. You use your clel phone for work? deduct the cell phone bill. I have a spare room in my house that is my "home office", deducted. home internet because i work from home sometimes, deducted. Pay automotive registrion fee's? Everyone does. And it's deductable.

I highly reccomend turbotax. You can seriously go to town witht hat and it'll give you warnings and flags that if you massaged the numbers a little bit to much, it'll tell you.

Good luck.

**Quixon** · 2013-12-30 12:55

^^^

Thanks for that info Nasomi. I have a mortgage and last year I still didn't have enough to itemize -_- First year I did though. I was unaware of the $500 Charitable w/o receipts. So I am going to assume I'm missing a shit ton of other deductions the Tax Person didn't feel like telling me about.

I'm going to use Turbo Tax this year instead of H&R Block. Can you deduct the cost of Turbo Tax Software the same as you can the cost of hiring a professional for tax preparation?

**RKenshin** · 2013-12-30 13:02

Originally Posted by Quixon

I'm going to use Turbo Tax this year instead of H&R Block. Can you deduct the cost of Turbo Tax Software the same as you can the cost of hiring a professional for tax preparation?

Yes, although that would typically be something you deduct when you file taxes for 2014, since you're not actually incurring the expense in 2013.

**Totien** · 2013-12-30 13:54

Originally Posted by nasomi

If you own a home and pay a mortgage, itemize. Deduct the bullshit out of everythign whether you did it or not. You can have up to $500/yr in charitable donations WITHOUT any paperwork to back it up. So bam, there's $500 on top of your mortgage interest. Basically minimize income and maximize dedcutions. You use your clel phone for work? deduct the cell phone bill. I have a spare room in my house that is my "home office", deducted. home internet because i work from home sometimes, deducted. Pay automotive registrion fee's? Everyone does. And it's deductable.

I highly reccomend turbotax. You can seriously go to town witht hat and it'll give you warnings and flags that if you massaged the numbers a little bit to much, it'll tell you.

Good luck.

I've used TurboTax for years and have always used claimed my w2s and clicked submit without much thought. I've loved TurboTax, and now that I've got Quicken I love it that much more that I've got the ability to sync them. Regardless, I'll probably take your advice and not itemize.. I've only got about $400 income reported from the business I support, and I can easily change that category so it doesn't get taxed.

My concerns with your quoted text revolve around the word 'sometimes.' I do work from home 'sometimes,' I 'sometimes' use my personal cell for work, I 'sometimes' use my internet for remote support. Would I claim a percentage of the cost or the full amount?

Also, if you could tell me more about the automotive fees, I'd appreciate it. I totalled my car at the beginning of the year, is the insurance payout taxable? I bought two cars for $1000 each and registered them both. Is the $1000 deductible or just the tax I had to pay for that?

Thanks for the protip about the charitable donations.

**Quixon** · 2013-12-30 15:00

Originally Posted by Totien

My concerns with your quoted text revolve around the word 'sometimes.' I do work from home 'sometimes,' I 'sometimes' use my personal cell for work, I 'sometimes' use my internet for remote support. Would I claim a percentage of the cost or the full amount?

Also, if you could tell me more about the automotive fees, I'd appreciate it. I totalled my car at the beginning of the year, is the insurance payout taxable? I bought two cars for $1000 each and registered them both. Is the $1000 deductible or just the tax I had to pay for that?

Thanks for the protip about the charitable donations.

I claim Home Office for deductions. The square footage of your home is deductible. You take the percentage of your Home Office, and basically go from there. My home office is like 30% of my home since I have a small house. So I successfully deducted the following for the past 2 years (in regards to the Home Office Deductible)

Mortgage interest, insurance, utilities, repairs, and depreciation. Basically 30% of the total I paid out for the year for each of those categories.

2013 has changed though. You can find that on the IRS Website, but basically it looks like if your Home Office is 300 Square Feet or less, you can claim $5/sqft instead of itemizing everything as a percentage of your house.

Now to legitimately claim a home office:

-The space claimed must be used for Business use ONLY.
-You cannot be charging rent to your employer for the use of said space.
-You must perform a significant amount of your business in the space, to the benefit of the employer. (Ie. Your company doesn't have space for you to work there, so they have you work from home x days a week).

Whether you want to be strict or lenient in regards to filing is up to you.

For the cell phone I claim the full amount of my cell bill for the year. Never had any issues, and never had any tax professional tell me otherwise.

**Sqwunk** · 2013-12-30 15:14

Anything relating to a home office is a little tricky, or at least thats how we were taught in the class I had to take. Its an easy way to flag yourself for an audit if you dont document correctly. I think it has something to do with how you need its square footage and then show what percentage of your house that is to say how much to deduct. Its something I would avoid unless you went from "sometimes" to "frequently". Im going to take a guess and say that trying to figure out how much to deduct will be more time consuming and less beneficial to you unless you were constantly working from home.

Also I'm a fan of turbotax, easy software to use that, as stated above, will let you know when theres something youve entered that might be wrong. It has a pretty detailed listing of everything you can do with good explanations to go with it. Ive used it for about 5 years now I think.

**Quixon** · 2013-12-30 15:53

Here is the direct link I got the above info from regarding the Home Office:

http://www.irs.gov/Businesses/Small-...fice-Deduction

**nasomi** · 2013-12-30 23:06

The registration fee's that you pay when you register your car is dedutable. The tax you paid is not. Insurnace payouts from wrecking a car is not taxable income.

Deducting personal phone, home internet, etc as unreimbursed workplace expenses is a very grey area.

**bluefan** · 2013-12-31 00:27

Not sure how it works in the USA, but my company fills out the form that states I pay for all the necessary tools I need to work from home. Like the phone, internet, headset, computer, work space etc... It's not really gray if your work can provide the necessary documentation. Gotten a nice return last two years I've been working from home full time.

**Minions** · 2013-12-31 02:06

"If you don't get a W-2 it's not income"

That is wrong on so many levels.... you are even supposed to list items sold on Ebay/Amazon, and list taxes to be paid for said items if you were not taxed at the point of sale. If you are self employed you will not have a W-2. I had a friend never file taxes for his "side job". He got find $10,000+ and nearly went to jail 3 years later.... when they audited him "randomly". They look 5+ years back at your tax history.

You can claim a specific "office" area of you house. They can request pictures, documentation showing that the space is indeed specifically for your business. Really it is a pretty large PITA. Don't self file if you plan on doing any of this. If you don't have an accountant to back up your paperwork you are asking for trouble. Claiming car/office/utilities raises your chances of an audit by something like 75%. Just something to keep in mind. I could have claimed a room the past year or so when I was doing repair work, but I didn't due to the hassles involved and the increased chances of an audit. Nothing like them asking for all your receipts from the past 5 years that you claimed...

**Totien** · 2013-12-31 08:01

What about clothing? I've always worked at places that have provided some sort of uniform, or simply didn't care how I've dressed. My current employer, however, has a 'business casual' dress code, and I had to spend a few hundred throughout the year on acceptable clothes and shoes. Deductible?

Don't have a clear answer yet on the therapy I had to pay out of pocket for as described in the OP either.. deductible?

What about returned items, and the insurance payout for the car I totalled. My dad told me I'd better claim it as income because the insurance company will certainly make mention of it. That's several thousand dollars I'd like to avoid being taxed on if possible though.

**Quixon** · 2013-12-31 09:28

The only clothing cost that can be deducted is the cost to purchase clothes used in the job search process.

The home office really isn't that big of a deal to back up with documentation. Your utility bills, and a photo of the room set up as a true office (per IRS Guidelines) is what you need. If you claim your cell phone, obviously those receipts are needed as well.

I already have all of those things printed and filed for when I do go to file my taxes, so it's a matter of just keeping them. The government is making it EASIER this year to claim a home office, now this doesn't make it any safer/more dangerous in regards to an audit.... but it lessens the need for really anything other than evidence (photograph) the space is a true office (IRS Guidelines).

**Stromgarde** · 2013-12-31 12:04

Originally Posted by Totien

What about returned items, and the insurance payout for the car I totalled. My dad told me I'd better claim it as income because the insurance company will certainly make mention of it. That's several thousand dollars I'd like to avoid being taxed on if possible though.

Had my RAV4 totaled courtesy of an epileptic Silverado driver a few years ago and didn't pay a dime on the tax from that check, despite getting audited that year over something unrelated.

**Quixon** · 2013-12-31 12:13

I never claimed income from insurance pay outs either. Wasn't sure if that was by the book or not, but I've never been hassled. Judging by the above it seems pretty clear that it is not taxable though.

**Bardicrune** · 2013-12-31 16:09

Generally insurance payouts are only taxable if the premium is payed as a pre-tax payroll deduction. If you pay the premium using income earned after income taxes were withheld, you do not have to pay tax on the benefits (i.e. payout after wreck).

**Ksandra** · 2013-12-31 19:09

I may be crazy but I am 99% positive that when you buy the quicken software don't you get free access to a call center? (Or was that like Turbo tax or something.)

If so, it might be a good idea to ask them the questions for the legit answers. I doubt they help people with "fudging" though.

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