Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Author: eurobask Two stars, 250 posts Old School Fool CAPS All Star Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121598  
Subject: various tax filing questions Date: 2/24/2009 11:53 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Got some questions as I'm filing my federal and state taxes.

1) In 2007 we received a $989 refund on my state & local returns (Indiana). Turbo Tax asked me what my refund was last year, I noted it, and they determined that this full amount is considered taxable on my 2008 federal return. Why would that be?

2) My wife and I spent $4890 in day care expenses in 2008 for our child. Through my employer, I was able to contribute pre-tax to my dependent care FSA flexible spending account $4280. Shouldn’t that mean I’d still have $610 in day care expenses that could count towards the child & dependent care credit? Turbo Tax noted that we don't qualify for any credit, and I'm not sure why. We also received the $1000 child tax credit (1 child).

3) Property taxes - my wife and I sold our home in early 2008 (Home A) and bought/moved into our current home then (Home B). I'm trying to ensure we've noted accurately in Turbo Tax exactly how much we paid in property taxes. We don't do escrow, so I have always just received the bill every 6 months and paid here in Indiana. We didn't pay any property taxes for Home A in 2008 from separate bills received in the mail, but we did pay 2 separate bills for Home B and have noted this in Turbo Tax. But I'm curious if during the closing for either house, in our HUD statements and among all the line items, is it standard for buyers / sellers to pay any property taxes on the home we sold (Home A) or home we bought (Home B)? I looked at the HUD statement and saw "$3033" for "Adjustments for items unpaid by seller" for County Property Taxes 1/1/7 to 3/14/08 (date of our closing on Home A). If so, I suppose I could increase by $3033 (above what I've already noted of ~$2600 in Turbo Taxes my total property taxes paid in 2008 for Home B?

thanks
eurobask
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 104685 of 121598
Subject: Re: various tax filing questions Date: 2/25/2009 5:06 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 6
1) In 2007 we received a $989 refund on my state & local returns (Indiana). Turbo Tax asked me what my refund was last year, I noted it, and they determined that this full amount is considered taxable on my 2008 federal return. Why would that be?

Because you deducted those taxes on your schedule A.

Let's take an extreme example. Say you make $100k in income. Then you send in a check to your state for $100k and deduct that on your federal tax return. That would leave you with no taxable income and no federal tax. But of course, that's too much and your state refunds $95k. If you didn't have to report that refund as income, you could abuse the system and avoid federal tax on all of your income.

If you didn't itemize deductions AND get a tax benefit from the deduction for those state income taxes that were later refunded, you don't have to report the refund as income.

2) My wife and I spent $4890 in day care expenses in 2008 for our child. Through my employer, I was able to contribute pre-tax to my dependent care FSA flexible spending account $4280. Shouldn’t that mean I’d still have $610 in day care expenses that could count towards the child & dependent care credit?

Yes, if you have two or more children who need day care so you can work. The child care credit is limited to $3000 per child for no more than two children. But the FSA limit is $5000, no matter how many children are involved. So if you have only one qualifying child and contribute more than $3000 to a FSA, you will not get a child care credit.

Turbo Tax noted that we don't qualify for any credit, and I'm not sure why. We also received the $1000 child tax credit (1 child).

Turbo Tax is correct.

3) Property taxes - my wife and I sold our home in early 2008 (Home A) and bought/moved into our current home then (Home B). I'm trying to ensure we've noted accurately in Turbo Tax exactly how much we paid in property taxes. We don't do escrow, so I have always just received the bill every 6 months and paid here in Indiana. We didn't pay any property taxes for Home A in 2008 from separate bills received in the mail, but we did pay 2 separate bills for Home B and have noted this in Turbo Tax. But I'm curious if during the closing for either house, in our HUD statements and among all the line items, is it standard for buyers / sellers to pay any property taxes on the home we sold (Home A) or home we bought (Home B)?

Yes, that is quite normal. Property taxes are often prorated between the buyer and seller.

I looked at the HUD statement and saw "$3033" for "Adjustments for items unpaid by seller" for County Property Taxes 1/1/7 to 3/14/08 (date of our closing on Home A). If so, I suppose I could increase by $3033 (above what I've already noted of ~$2600 in Turbo Taxes my total property taxes paid in 2008 for Home B?

Correct.

But don't forget to look for a similar item on your purchase. The seller may have reimbursed you for his share of the property taxes on your current house. If so, you need to reduce your deduction by that amount.

--Peter

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Advertisement