Tax Season 2008

AlphaFrog · #1 12-26-2007, 03:04 PM

It's right around the corner...

Want to rant, discuss, question the GC "experts", or express joy over your refund? I do.

Here's a random question to get started:

I do the payroll for my company (well, I do the calculations and entry, we outsource for DD and tax purposes), and I have access to the reports for the final payroll of the year as of 10 minutes ago - which means I will have all of the info to fill in my Tax Return. Is it illegal to file your tax return before even receiving your W-2? I mean, it's not like I'm going to do it tomorrow or anytime this week, but it would be nice to have that money in pocket (or better yet - invested) ASAP.

Benzgirl · #2 12-26-2007, 04:24 PM

My mom is the tax expert and since I'm at her house, you have your answer. No, it is not illegal if you are filing electronically. But, she cautioned, make sure the figures are correct. She said there were many times people came to her office (to have their taxes done) with their last paychecks, only to have adjustments occur by the time W2s came around.
Her words are, "be cautious"

AlphaFrog · #3 12-26-2007, 04:26 PM

I'm not sure what kind of adjustments there would be - I've never had mine adjusted - and since I'd be the one who had to call the payroll company to make the adjustment, I think I'd be safe. Still, I think I'll wait until I get the payroll entered into the computer at least, so I don't have to hand-add anything.

AGDee · #4 12-26-2007, 05:11 PM

I usually do mine in Turbo Tax ahead of time and just wait for the second that the W-2 gets here to click that Send button. It helps to make sure your mortgage interest, day care costs, etc. all jive with the receipts and statements that they give you.

This year and next, I'm going to be royally messed up tax wise because of liquidating some of my mother's IRAs (inheritance) to pay off my home equity loan and all other debts that I had. Royally messed up I tell ya. BUT, it's only for one year and that stupid home equity loan is a 25 year loan at 16.9% interest, so it's worth a really bad tax year (next year will be worse than this year).

#5 12-27-2007, 08:10 PM

Ok got a question this past yr i have been on unemployment from a lay off (1/1/07 to 5/1/07) and each check i recv'd i checked to have taxes taken out so i dont have to deal with it at the end. Can unemployment along with my W2's from the current job i am on be filed as income? Any tax professional GC'rs know the answer?

Benzgirl · #6 12-27-2007, 08:17 PM

I am not a tax professional (and no longer sitting at my mom's house), but know a little about taxes from analysing returns for many years.

You only should file one tax return. Unemployment Income must be claimed on the same form (Line 19 of your 1040) as your other income.
http://www.irs.gov/pub/irs-pdf/f1040.pdf

summer_gphib · #7 12-27-2007, 09:31 PM

Yea!! Tax time! *LOL* I've worked in the tax industry for four years, and own The Tax Store. I'm soooo happy to finally be able to have an income again for the year. I'm not an accountant, but I live and breathe taxes.

Cutiepatootie-- just be aware that unemployment is unearned income and therefore is not part of calculating EITC (Earned Income Tax Credit).

AGDee-- be careful with Turbo Tax. It doesn't automatically find all of the credits that you may be able to get. I've had clients come in with their Turbo Tax prepared documents, who just want me to e-file it for them. I'll make a deal, I'll e-file it really cheap, if I find no mistakes. But they have to pay me full price if I am able to find more credits. They've always ended up paying me full price. If you have children, it doesn't autofind the child tax credit or the additional child tax credit.

Also with liquidating IRAs, did you hold back taxes for that? It's usually 20 percent tax plus 10 percent penalty for early withdrawl, unless certain circumstances apply.

AlphaFrog-- Yes it's illegal to send it to the IRS without having the W-2. Even when we do pre-file loans, we have to have the W-2 in hand before submitting the info to the IRS. Not that there aren't preparers and people who do it. I know one preparer in particular that's already doing it, and has done over 50 returns to be submitted on Jan. 11, when we open up for transmitting. I wouldn't advise it however, because if your W-2 doesn't match the information you have, you'll have to prepare an amended return. Those are a pain in the ass.

BuckeyeTriDelta · #8 12-27-2007, 09:58 PM

How much is making too much?

AlphaFrog · #9 12-27-2007, 10:06 PM

Quote:

Originally Posted by BuckeyeTriDelta

How much is making too much?

$54,000

BuckeyeTriDelta · #10 12-27-2007, 10:14 PM

Haha sweet..free for me...

Thanks AF.

AGDee · #11 12-27-2007, 10:02 PM

Yes, I'm definitely having taxes withheld when I'm liquidating things. Since they are inherited IRAs, I don't have the 10% penalty and some of them will be rolled over to new IRAs. It's all a big headache though because it's not just IRAs either. Some life insurance claims are taxable, some are not. There's an annuity, some life insurance policies and some IRAs, etc. Some liquidated in 2007, some will not liquidate until 2008, some will stay invested for up to 5 years. Some give me the option to choose any percentage of taxes I want withheld, some have set choices. I'm just glad I'm not my brother (the executor of the estate). And then there's the condo that's up for sale but could take a long time to sell (very long time in fact). It's all really hard to predict.

icelandelf · #12 12-28-2007, 01:28 AM

Quote:

Originally Posted by summer_gphib

AGDee-- be careful with Turbo Tax. It doesn't automatically find all of the credits that you may be able to get. I've had clients come in with their Turbo Tax prepared documents, who just want me to e-file it for them. I'll make a deal, I'll e-file it really cheap, if I find no mistakes. But they have to pay me full price if I am able to find more credits. They've always ended up paying me full price. If you have children, it doesn't autofind the child tax credit or the additional child tax credit.

I can't stand turbo tax! We tried using it one year and somehow did it incorrectly. We ended up owing quite a bit of money plus interest for being late. I think this year we're going to go back to one of the tax prep businesses like HR Block since we always manage to make mistakes

summer_gphib · #13 12-28-2007, 07:56 AM

Quote:

Originally Posted by icelandelf

I can't stand turbo tax! We tried using it one year and somehow did it incorrectly. We ended up owing quite a bit of money plus interest for being late. I think this year we're going to go back to one of the tax prep businesses like HR Block since we always manage to make mistakes

To be honest, I hate HR Block and Jackson Hewitt, because they charge way, way too much. Maybe because they are my direct competition... but I would recommend a "mom and pop" place. You are more likely to get an experienced preparer (instead of a first year), good service (you aren't treated like a number), and better pricing. I know for some of my clients, if they've gone from getting a huge refund every year to suddenly owing, I will drastically reduce my price, or even prepare their return for free. You can't do that at the bigger places. They also will put pressure on to get instant cash or a bank product that you may not need. That's because the preparer makes a commission from the bank. Most of those places pay only $10 or less an hour.... so that commission is important. Mom and Pop shops make most of their money from actual preparation so any incentive a bank may pay... that's less important to them individually. (If I can make a customer for life by not pressuring them, why am I going to push a bank product so I can make $3 more dollars?) They will quote $70 but they actually charge by the form. I've seen a simple return go as high as $400, because of the nickel and diming.

Also ask what software they use. In my opinion Drake is the best, because there are a lot of safeguards to prevent errors. That doesn't mean errors don't happen, but there are a lot of details built in the program that are helpful.

If you do go to an HR Block, ask how much experience your preparer has had. An unexperienced preparer can really cause problems, so if they do have under a full year, ask that the return be reviewed by someone who knows what they are doing.

#14 12-28-2007, 12:02 PM

All i have to say is yeah for Child tax credit. with what little i did make i get my tax credit for him. I treat him to a big day at disneyland once a yr with refund money for his contrubution

GeekyPenguin · #15 12-28-2007, 03:14 PM

For those of you GCers who are still in school (or just out and maybe not making the big bucks yet) I'd recommend going to a VITA site if there is one near you. Just about every law school has one and most cities have them at community centers and churches. You can find one by Googling VITA + your state. I ran the VITA site at my law school last year and it was a really rewarding experience.