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The 7 - Random - A question for the tax savvy
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JayJayDean
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#1 Posted on 22.1.04 1726.37
Reposted on: 22.1.11 1727.37
Every year until now I've only had to use the 1040EZ to file my taxes and I've telefiled for as long as it's been available. Easy, right?

However, 2003 brought me a dependent AND a new house to write off. What form do I use for that? I think it's a 1040A, but the IRS website has a bunch of technical mumbo-jumbo and really isn't any help, and the local branch phone numbers lead to a "well get back to you in a couple of days" message. No one I know personally does their own taxes (with a house and child factored in), but it occurred to me a wiener might.
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Corajudo
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#2 Posted on 22.1.04 1753.57
Reposted on: 22.1.11 1755.19
You can only file the 1040A if you earn less than $50k and you don't plan on itemizing deductions. So, if you plan on writing off the mortgage interest (plus charitable deductions), then you will be itemizing deductions. If your income is below that level and your mortgage interest payments + charitable deductions are below the standard deduction, then you can (and probably should) use the 1040A because you can still take the deduction for the dependent, plus some other tax credits.

Personally, I'd get TurboTax to do the 1040, if you have to file that one instead of the 1040A. You should be able to find the TurboTax version you need for less than $20, and it's really easy to follow and use (much easier than following the 1040 form itself). Plus, it's good about pointing out the various rules and helping you get back as much of your money as possible. Also, after you put your information in one year, it will remember your information in subsequent years. Lastly, if you haven't done so yet, it's probably good to put some money in a Roth IRA (as much as you can, up to $3,000, depending on your income level). You don't have to pay tax on any gains on those investments. Also, until April 15 of this year, you can put money into a Roth IRA for last year.

Edited for correction. My apologies and thanks to Moe. This reminds me why I use Turbotax. Also, for the past couple of years they did offer a rebate for those filing electronically. Don't know if that's true this year, but I'd assume so.


(edited by Corajudo on 22.1.04 1755)

(edited by Corajudo on 23.1.04 0816)
MoeGates
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#3 Posted on 22.1.04 1919.25
Reposted on: 22.1.11 1920.51
I thought Roth IRA's weren't tax deductable when you make the money, only when you withdraw the money. Traditional IRA's (and 401k, 457s, and 403b) are tax deductable when you earn the money, but not when you withdraw it.

Am I missing something about the Roth I should know for my taxes?
Guru Zim
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#4 Posted on 22.1.04 1946.42
Reposted on: 22.1.11 1947.30
    Originally posted by MoeGates
    I thought Roth IRA's weren't tax deductable when you make the money, only when you withdraw the money. Traditional IRA's (and 401k, 457s, and 403b) are tax deductable when you earn the money, but not when you withdraw it.

    Am I missing something about the Roth I should know for my taxes?


I think you have it right. Still, the Roth is a good idea anyway. They remind you to do it, if I remember correctly - they don't tell you it will get you anything at this time.
Von Maestro
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#5 Posted on 22.1.04 2107.06
Reposted on: 22.1.11 2110.02
    Originally posted by MoeGates
    I thought Roth IRA's weren't tax deductable when you make the money, only when you withdraw the money. Traditional IRA's (and 401k, 457s, and 403b) are tax deductable when you earn the money, but not when you withdraw it.

    Am I missing something about the Roth I should know for my taxes?


If I remember correctly:

A traditional IRA is a tax deductibal item the year you put it away, but when you claim it down the road the money (both the monies originally invested & the money earned on the investment) is taxable.

A Roth IRA is regular taxable income (when they were first introduced you were able to pay the taxes on the amount over 3 years, but not any longer), but when you claim the investment when you retire everything earned in the Roth is tax exempt (not tax deductable).

If you don't need to take the current tax deduction, the Roth is definitely the way to go... IMHO :-)
Sec19Row53
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#6 Posted on 22.1.04 2114.05
Reposted on: 22.1.11 2115.22
Something else to watch for is that the IRS is working with many on-line tax preparation sites. They offer free filing if you go to the site by way of links at the IRS web site. I did my taxes this way last year, and it didn't cost me the expense of buying any programs.

For the record, that was using Form 1040, itemizing deductions, the whole ball of wax. I believe it was at TaxAct.com. But, go there by way of the IRS to qualify for free filing.
Scooter Trash
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#7 Posted on 23.1.04 0756.11
Reposted on: 23.1.11 0757.12
The main thing to consider Jay Jay is your comfort level preparing your tax returns. From what you have discribed, there may be several issues or credits to consider that may come into effect in preparing your taxes this year, as well as in the future.

In the past, when your returns were pretty basic, preparing a 1040EZ is not that big of deal. Generally, as people get older and have a family, issues relating to their finances increase.

If you have some background in tax law or tax preparation, and feel comfortable preparing your tax forms, go for it. But if you are unsure, or worry that you may be shorting yourself from credits or deductions that may be present for you, then it may be time to go talk to a tax preparer.

Like everything else in life, there are tax preparers that range from cheap to expensive. If or when you decide to go the route of a tax preparer, remember to look at what your needs are and what you expect from a tax preparer.

Feel free to PM me if you have any specific questions. I'll be glad to help as much as possible.


whatever
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#8 Posted on 23.1.04 0757.04
Reposted on: 23.1.11 0757.13
I've always filled out my own taxes and now I handle the taxes for my wife as well.

I miss the days of the 1040EZ, life was so much simpler then. I've had a house for 4 years now and had to fill out the 1040 as a result. It is amazing the difference in itemized deductions versus the standard deduction when you have the house factored in, especially the first few years. Make sure you read the 1040 book carefully as there are several worksheets and schedules (schedule A is where ou itemize your deductions) that you want to use to take full advantage of your deductions (house loan, student loan repayments, medical costs, donations to charity, etc.). Just take your time, read carefully, and you'll be fine.

I am also looking forward to our new deduction in about 1.5 months as well.
(edit - spelling is my friend)

(edited by whatever on 23.1.04 0857)
wordlife
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#9 Posted on 23.1.04 1211.13
Reposted on: 23.1.11 1211.17
    Originally posted by whatever
    I've always filled out my own taxes and now I handle the taxes for my wife as well.

    I miss the days of the 1040EZ, life was so much simpler then. I've had a house for 4 years now and had to fill out the 1040 as a result. It is amazing the difference in itemized deductions versus the standard deduction when you have the house factored in, especially the first few years. Make sure you read the 1040 book carefully as there are several worksheets and schedules (schedule A is where ou itemize your deductions) that you want to use to take full advantage of your deductions (house loan, student loan repayments, medical costs, donations to charity, etc.). Just take your time, read carefully, and you'll be fine.

    I am also looking forward to our new deduction in about 1.5 months as well.

    (edit - spelling is my friend)

    (edited by whatever on 23.1.04 0857)


I am a tax accountant actually and I have to agree with everything this guy said....you should be able to do this type of 1040 by yourself

Use a regular 1040, and get the Schedule A....you should receive a 1098 stating the amount of mortgage interest that you can deduct (and if you have an escrow account, it should also state the amount of real estate tax on it also), if not, just call you tax assessor's office in your town and you can get what you paid for the year...best of luck to you
Mike Sweetser
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#10 Posted on 23.1.04 1216.59
Reposted on: 23.1.11 1219.24
You think this is fun? I had to file a business tax return this year for the first time.
Mike
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