This is the Sixth in a series of posts that have me a bit conflicted.
They could be interpreted as political, and, as advice, some of it may
be considered unethical, but the point of the posts is to point out
things in the law that provide negative incentives, and, at the same
time, point out actions that can have big negative consequences on
someone receiving a Premium Tax Credit (hereafter referred to as a
subsidy.) They are primarily designed to ensure that people don't make
huge mistakes with huge consequences. They should not be interpreted as
me suggesting that you manipulate the rules in any illegal or unethical
way. If you continue reading these posts you will understand what I
mean.
This post is for business owners and/or rental property owners with depreciable assets. Most business owners understand that when you purchase something with a life of longer than one year, you must generally depreciate it over a number of years, rather than take the expense all at once. There are exceptions, though, that allow you to take all or some of it in the current year. One of these is a Section 179 deduction, which allows you to take up to the entire amount (subject to some limitations and restrictions). The other is bonus depreciation (a "temporary" measure designed to stimulate business investment) that allows you to take half of the value in the current year, and then depreciate the rest over the life of the asset.
In the past, the decision on how much to take in the current year, and how much to depreciate, was one of the more complicated parts of a tax return. The Affordable Care Act adds another, very difficult, dimension. My advice to most of my clients was, absent a specific business reason based on expected earnings, or an immediate and tangible tax benefit (such as qualifying for Earned Income Credit or an Education Credit) assets should be depreciated. The rationale is that you never really know what future earnings will be like, depreciation smooths out the fluctuations in taxes, and it simplifies the problems associated with early disposition of an asset. Add Premium Tax Credit (subsidies) to the calculation.
The big problem with this is that you estimate your subsidy based on one tax return, and then reconcile it with the tax return two years in the future! So taking the full amount in one year gets you a big subsidy, that you then have to pay back in a future year (though long term you will end up having the opposite happen - small subsidy but then big payback). This has all the potential to completely screw up your budget and taxes, as your healthcare premium goes up and down year over year as you place assets in service.
Let me illustrate with a fictional family in 2013. Again I will use Rhode Island, since their website is the most user friendly. This is a married couple, with one child who had net earnings from a business of $50,000 before depreciation is taken into account (the only source of household income). The business also placed $10,000 of assets in service that would normally be depreciated over 5 years (I'm using the most common class life). This means their net income subject to taxes can be $40,000 (full section 179 deduction), $45,500 (50% bonus depreciation and the first year of depreciation for the rest) or $49,000 (first year of 5 year depreciation). Theoretically they could have any number between $40,000 and $49,000 since you can take any portion of section 179 you want, but these are the most common amounts.
Note that the $40,000 result leaves no deduction for the future, the $45,500 result gives deductions of $1000 for the next 4 years, and $500 in the fifth year, and the $49,000 result gives $2000 deduction for the next 4 years and $1000 in the fifth year. Basically, if you take it up front, you lose it in the future.
Here are the Rhode Island, MONTHLY, premium subsidies for those amounts:
$40,000 - $764.52
$45,500 - $697.50
$49,000 - $650.37
Those are the amounts, PER MONTH, that the government will pay for your family's insurance, so the difference between full deduction and regular depreciation is $114.15 per month, or $1369.80 per year.
But this is your 2013 tax return. These numbers will be used to determine your subsidy in 2015 which will be reconciled on your 2015 tax return. Who knows if you'll have a $10,000 asset to deduct in 2015! You could end up paying the whole difference back! Also, if you take the $40,000 number, you won't get the $2000 depreciation in 2014, so that will effect THAT subsidy. Kinda sucks to be a small business owner in this world.
So what should you do? I have no fricken clue. I expect long conversations with my clients based on their specific situations. I HOPE to be able to give them some good, solid advice on what to do, but it is simply too complicated to give blanket advice.
The best I can say is this: Be aware that this affects your decision. Run numbers for lots of income situations, trying to anticipate your future earnings and deductions. Keep the exchange informed of changes in family size and income. If you can afford it, take the smallest subsidy possible, knowing you will get the full amount back when you file your taxes.
Please check my numbers and tell me if you don't agree.
Free advice at taxadvisor@email.com
Monday, December 30, 2013
Monday, December 23, 2013
10 Simple Pieces of Tax Advice
If you like the blog, buy my book: Everyday Taxes only $5.99 for Kindle!
Here are a few of my best pieces of advice when it comes to taxes, in no particular order:
1. If you are doing something just for the tax benefit, you're probably making a mistake. Buy a house because it's time, not for the tax break. Buy equipment that makes your business more profitable or efficient, not to get the deduction. By all means, take the break, but don't make it a critical part of the decision.
2. When in doubt, donate it. If you have stuff you don't want, and you're not sure if it's worth the trouble of selling, give it to charity. Make sure to deduct it's REAL fair market value, not what Goodwill is selling it for. Clothes and other used items should be valued based on what a for profit thrift store would sell it for. If you have a garage sale, don't give into the temptation to mark everything down to nothing at the end. Ask a fair price, dicker a little, but don't just give it away. After the sale, while everything left is still on the tables, take pictures of it all, load it in the car, and take it to a charity.
3. Depreciate your rental property. This isn't advice - it's a NO BRAINER! You can't avoid depreciation recapture by not taking it.
4. Have your taxes checked by a professional, or a different professional once in a while. Especially have it checked after some big changes have happened. You can usually find someone to check them for free (hint: ME!) You would be stunned at the errors I've seen made, and the money left on the table. You have three years after the due date to fix it, so don't wait to long.
5. Don't cheat or lie. Claim all income, don't make up deductions. Stretch the rules as far as you can, but don't break them.
6. Along those lines: Don't be afraid of the IRS. If you're not cheating, you have very little to worry about beyond money and hassle. Professionals like to scare you with the IRS, and, if you're cheating, you should be scared. I prefer to scare people with the prospect of not getting all they deserve. Let's put it this way: Say you've got a nice desk to donate to charity. You check some stores and ebay, and the values are between $500 and $1000 dollars. Assuming the $1000 isn't a huge outlier (5 sites between $500 and $550 and one at $1000), take the $1000. It's reasonable, defensible, and not frivolous. If you're in the 25% tax bracket, that's $125 on your tax return. Now let's say the mean old IRS does it's worst, and face to face audits you. The auditor looks at your documents and tells you the desk's only worth $500. You argue a bit, but he insists and you have to pay back the $125, plus a bit of interest. No handcuffs, no jail-time, no yelling or beatings. You shake hands, sign some paperwork and write a check. Now let's pretend we're in Vegas. You find a table that gives you $125, and then spins a wheel, and if you lose you have to give them the $125 back, plus $15, except you only lose 1 out of 100 times! Who wouldn't make that bet? That's the same thing we're talking about with the desk. JUST DON'T CHEAT!
7. Don't count on getting your refund when promised. The IRS gives estimates of 10-21 days from e-filing, but they screw this up regularly, and nothing stops them from reviewing it and adding additional delays. That's also 10-21 days from acceptance, and there are a number of reasons a return might not be accepted.
8. Don't over-complicate your records, and don't obsess about organizing every receipt. Keep a good notebook, or series of notebooks that document income and expenses and deductions. Keep them up to date and save your receipts where you can find them. They don't have to be in perfect order - the odds that you ever need them is pretty slim, so if you get audited, you can match up your receipts with your books. Odds are good you'll only have to do this once in a lifetime (literally).
9. Don't claim kids that aren't yours, even if the parent gives you permission. Your tax guy can tell you what the rules are to claim kids, and, if you don't meet them, don't do it.
10. Pay your child support and your student loans. The number one reason I see for people not getting refunds is delinquent student loans and unpaid child support. If you're marrying someone with kids from a previous marriage, make sure they're up to date on their child support because their problem is about to become your problem, and it's not that easy to get around it.
BONUS: Don't believe everything you hear about taxes. The myths out there are LEGION. Talk to a professional (hint: ME!) or look them up on the IRS website.
Questions: taxadvisor@email.com
Consider leaving a tip if you found this helpful, or let me check your tax returns FREE! (If I find an error I'll tell you how much the difference is and quote you an obligation free price to fix it.)
Here are a few of my best pieces of advice when it comes to taxes, in no particular order:
1. If you are doing something just for the tax benefit, you're probably making a mistake. Buy a house because it's time, not for the tax break. Buy equipment that makes your business more profitable or efficient, not to get the deduction. By all means, take the break, but don't make it a critical part of the decision.
2. When in doubt, donate it. If you have stuff you don't want, and you're not sure if it's worth the trouble of selling, give it to charity. Make sure to deduct it's REAL fair market value, not what Goodwill is selling it for. Clothes and other used items should be valued based on what a for profit thrift store would sell it for. If you have a garage sale, don't give into the temptation to mark everything down to nothing at the end. Ask a fair price, dicker a little, but don't just give it away. After the sale, while everything left is still on the tables, take pictures of it all, load it in the car, and take it to a charity.
3. Depreciate your rental property. This isn't advice - it's a NO BRAINER! You can't avoid depreciation recapture by not taking it.
4. Have your taxes checked by a professional, or a different professional once in a while. Especially have it checked after some big changes have happened. You can usually find someone to check them for free (hint: ME!) You would be stunned at the errors I've seen made, and the money left on the table. You have three years after the due date to fix it, so don't wait to long.
5. Don't cheat or lie. Claim all income, don't make up deductions. Stretch the rules as far as you can, but don't break them.
6. Along those lines: Don't be afraid of the IRS. If you're not cheating, you have very little to worry about beyond money and hassle. Professionals like to scare you with the IRS, and, if you're cheating, you should be scared. I prefer to scare people with the prospect of not getting all they deserve. Let's put it this way: Say you've got a nice desk to donate to charity. You check some stores and ebay, and the values are between $500 and $1000 dollars. Assuming the $1000 isn't a huge outlier (5 sites between $500 and $550 and one at $1000), take the $1000. It's reasonable, defensible, and not frivolous. If you're in the 25% tax bracket, that's $125 on your tax return. Now let's say the mean old IRS does it's worst, and face to face audits you. The auditor looks at your documents and tells you the desk's only worth $500. You argue a bit, but he insists and you have to pay back the $125, plus a bit of interest. No handcuffs, no jail-time, no yelling or beatings. You shake hands, sign some paperwork and write a check. Now let's pretend we're in Vegas. You find a table that gives you $125, and then spins a wheel, and if you lose you have to give them the $125 back, plus $15, except you only lose 1 out of 100 times! Who wouldn't make that bet? That's the same thing we're talking about with the desk. JUST DON'T CHEAT!
7. Don't count on getting your refund when promised. The IRS gives estimates of 10-21 days from e-filing, but they screw this up regularly, and nothing stops them from reviewing it and adding additional delays. That's also 10-21 days from acceptance, and there are a number of reasons a return might not be accepted.
8. Don't over-complicate your records, and don't obsess about organizing every receipt. Keep a good notebook, or series of notebooks that document income and expenses and deductions. Keep them up to date and save your receipts where you can find them. They don't have to be in perfect order - the odds that you ever need them is pretty slim, so if you get audited, you can match up your receipts with your books. Odds are good you'll only have to do this once in a lifetime (literally).
9. Don't claim kids that aren't yours, even if the parent gives you permission. Your tax guy can tell you what the rules are to claim kids, and, if you don't meet them, don't do it.
10. Pay your child support and your student loans. The number one reason I see for people not getting refunds is delinquent student loans and unpaid child support. If you're marrying someone with kids from a previous marriage, make sure they're up to date on their child support because their problem is about to become your problem, and it's not that easy to get around it.
BONUS: Don't believe everything you hear about taxes. The myths out there are LEGION. Talk to a professional (hint: ME!) or look them up on the IRS website.
Questions: taxadvisor@email.com
Consider leaving a tip if you found this helpful, or let me check your tax returns FREE! (If I find an error I'll tell you how much the difference is and quote you an obligation free price to fix it.)
Wednesday, December 18, 2013
Weird Obamacare Incentives and Strategies - 5
This is the Fifth (and definitely not last) in a series of posts that have me a bit conflicted.
They could be interpreted as political, and, as advice, some of it may
be considered unethical, but the point of the posts is to point out
things in the law that provide negative incentives, and, at the same
time, point out actions that can have big negative consequences on
someone receiving a Premium Tax Credit (hereafter referred to as a
subsidy.) They are primarily designed to ensure that people don't make
huge mistakes with huge consequences. They should not be interpreted as
me suggesting that you manipulate the rules in any illegal or unethical
way. If you continue reading these posts you will understand what I
mean.
This is a strategy that deals with people who refuse to obtain, or are unable to obtain, minimum essential coverage. It's not a great strategy, unless you are REALLY die hard about not getting insurance and paying the penalty. The good news is that, if done right, I really can't see any way in which this strategy wouldn't work. It's still not legal, but that's what makes it so interesting, because they can't do anything about it (as best I can tell - you really need to make sure before you try it, I give no guarantees that it's accurate, and I advise against trying it.)
Here's the strategy: Just don't pay the penalty
What? That makes no sense!
Seriously. Don't pay it. Don't send in the form (whatever it will be) proving you have insurance, don't add the penalty to your tax return, and when they send a letter demanding it, just don't pay it.
But they'll send me to jail! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll garnish my wages! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take it out of my bank account! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take my property! Nope, can't do it. It's not allowed for the healthcare penalty.
So what can they do? They can take it out of any Federal refund you get - EVER. They can charge interest. They can send letters demanding payment.
So all you have to do is to make sure you never get a refund. If you owe the government money when you file your taxes, they can't take the penalty out of your refund. Just make sure your balance due is below the amount that gets you an underpayment penalty (I'm not going into specifics because I really don't want you to take this advice. To me, it's simply an intellectual exercise to expose the weaknesses and distortions in the tax portion of the law.) You also can NEVER get a refund - they're not going to forget. But besides that, all they can do is keep asking you to pay.
When I was researching this blog post I came across this article, which I feel I should give credit to since it was so perfectly what I was looking for:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/13/readers-ask-we-answer-what-happens-if-you-dont-pay-obamacares-tax-penalty/
This is a strategy that deals with people who refuse to obtain, or are unable to obtain, minimum essential coverage. It's not a great strategy, unless you are REALLY die hard about not getting insurance and paying the penalty. The good news is that, if done right, I really can't see any way in which this strategy wouldn't work. It's still not legal, but that's what makes it so interesting, because they can't do anything about it (as best I can tell - you really need to make sure before you try it, I give no guarantees that it's accurate, and I advise against trying it.)
Here's the strategy: Just don't pay the penalty
What? That makes no sense!
Seriously. Don't pay it. Don't send in the form (whatever it will be) proving you have insurance, don't add the penalty to your tax return, and when they send a letter demanding it, just don't pay it.
But they'll send me to jail! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll garnish my wages! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take it out of my bank account! Nope, can't do it. It's not allowed for the healthcare penalty.
But they'll take my property! Nope, can't do it. It's not allowed for the healthcare penalty.
So what can they do? They can take it out of any Federal refund you get - EVER. They can charge interest. They can send letters demanding payment.
So all you have to do is to make sure you never get a refund. If you owe the government money when you file your taxes, they can't take the penalty out of your refund. Just make sure your balance due is below the amount that gets you an underpayment penalty (I'm not going into specifics because I really don't want you to take this advice. To me, it's simply an intellectual exercise to expose the weaknesses and distortions in the tax portion of the law.) You also can NEVER get a refund - they're not going to forget. But besides that, all they can do is keep asking you to pay.
When I was researching this blog post I came across this article, which I feel I should give credit to since it was so perfectly what I was looking for:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/13/readers-ask-we-answer-what-happens-if-you-dont-pay-obamacares-tax-penalty/
Tuesday, December 10, 2013
2013 Boomer Deduction Worksheet
Military Submariners serving on two crew ballistic missile or guided missile boats are eligible to deduct lodging and other expenses when their "Tax Home" (the sub) is unavailable. Sometimes this is called the FBM Deduction. There are many discussions of what exactly is deductible, but this worksheet will work in most situations and make it easy to determine what amounts to enter on various forms or enter into tax prep software. If you find this worksheet useful, and it saves you money on taxes, consider making a donation.
Here are links to instructions for entering the results in popular tax software programs:
2013 Boomer Deduction Instructions for Turbo Tax Online
2013 Boomer Deduction Instructions for H&R Block Online
2013 Boomer Deduction Instructions for Tax Slayer
Boomer
Deduction Worksheet for Tax Preparation - 2013
Numbers
are for entries into software or initial form entries.
(A) Days of Refit assist in 2013
__________
(B) Days of Off Crew in 2013
__________
(C) Distance from Home to Off Crew
Bldg __________
(D) Distance from Home to Waterfront
__________
(E) Rent (do not include any
mortgage info here)*__________
(F) Average Monthly Utilities
__________
(G) Do you go home for lunch every
day? __________
(H) Number of people (including wife
and kids) sharing your residence___________
(I) Total Days with boat unavailable
(A) + (B) = _____________
(J) Monthly Housing Costs (E) + (F)
= ______________
Form 2106 Computation Worksheet
Entries:
(K) Lodging and Incidental Expenses ((I)
/ 30 x (J))/H = _____________
(L) Laundry and Cleaning Expenses (I) /
7 x $10 = ______________
(M) Meal Expense (I) x Per Diem Rate
from Table below = ______________
(N) Business Mileage:
If (G) is NO:
( (A) x (D) x 2 ) + ( (B) x (C) x 2
) = ______________
If (G) is YES:
( (A) x (D) x 4 ) + ( (B) x (C) x 4
) = ______________
Per Diem Rates (assumes reasonable
distance form base):
Glynn County, GA $56
Other GA Counties around Kings Bay
$46
Florida (around Jacksonville) $51
Kitsap County, WA $46
King County, WA $71
Pierce County, WA $61
Other counties look up in IRS Pub
1542 or http://www.gsa.gov/portal/category/100120
*You deduct mortgage interest, taxes and mortgage insurance premiums directly on Schedule A
A must read:
American Sniper LP: The Autobiography of the Most Lethal Sniper in U.S. Military History*You deduct mortgage interest, taxes and mortgage insurance premiums directly on Schedule A
A must read:
Monday, December 9, 2013
2013 Boomer Deductions for H&R Block Online
These are specific instructions for entering information from the Boomer
Deduction Worksheet into H&R Block's online tax preparation
at www.hrblock.com. I used the Deluxe version which it said would be $29.99, though you might be able to get it free if you connect from Military One Source or IRS free file. This is my first try at this, so it may be a
complete failure - please let me know if you can't use this for H&R Block Online and where you ran into trouble.
DISCLAIMER:
This is NOT an endorsement of H&R Block! I also make no promises about the accuracy or reliability of the information presented, it is for assistance and education ONLY. You MUST do your own due diligence to ensure your taxes are right. I feel that the assistance of a trained professional is critical in preparing taxes for military members. Feel free to contact me for questions at taxadvisor@email.com. Realize still that even if I answer your questions, I make no promises and bear no liability for the accuracy of the answers. The only way I take ANY liability is if you see me to prepare your taxes in my professional capacity under my employer for whom I work as a tax professional. Making a donation to this site (which I encourage and appreciate if you make extra money from the massive amount of work and expense this takes) does not constitute paying me for my advice.
Glad that's over!
General Instructions:
After logging in and creating an account, you will enter personal information, as well as information from your W-2's and other documents, advancing using the continue buttons. Eventually you will get to the Adjustments and Deductions Section.
***
Adjustments and Deductions
# Click the plus sign next to "Other adjustments and deductions" and a longer list will appear
# Check "Job related expenses
***
Job Related Expenses
# Click the plus sign next to "Add Expense"
***
Employee Business Expense
# In the "Occupation" box, enter "Two Crew FBM Submariner
# Check the "None of These Apply" box
***
Business Travel
# Click "Next"
***
Job Related Travel Expense
# In the "Lodging" box, enter the value from Line (K) of your Boomer Deduction Worksheet
# In the "Laundry and Cleaning" box, enter the value from Line (L) of your Boomer Deduction Worksheet
***
Meals and Entertainment
# Click "Next"
***
Meals and Entertainment
# In the "Meals" box, enter the value from Line (M) of your Boomer Deduction Worksheet
# Check the "No" box under the question about being subject to DOT limits...
***
Other Job Related Expenses
# Click "Next"
***
Other Job Related Expenses
# Enter any other job related expenses here. The software can provide guidance, but, be careful. Uniforms, haircuts and cell phones normally won't be deductible. Mostly all you might get here are professional publication subscriptions and journals.
***
Employer Reimbursement
# Click "Next"
***
Employer Reimbursement
# Click "Next"
***
Vehicle, Home Office and Depreciation
# Check the box for "Car or truck used for business purposes"
***
Your Business Vehicle
# Click the plus sign next to "Add Vehicle"
***
Your Vehicle Description
# Enter your vehicles Make and Model
# Enter the Date you first used the vehicle for business
# Enter the number of months you were on off-crew or refit assist in 2013 (round up)
***
Your Vehicle Purchase
# Check Own or Lease as apllicable
***
Your Vehicle Usage
# Check any that apply
***
Your Vehicle Mileage
# Enter total mileage driven during the year for ANY purpose (12/31 odometer - 1/1 odometer)
# In "Business Miles" box, enter value from Line (N) of your Boomer Deduction Worksheet
# Enter commuting miles from days not in Off Crew or Refit Assist
(Commuting plus business miles should be less than total miles)
***
Reporting Method Used...
# Check Standard Mileage box
(you will only get this page if your vehicle was put in service in 2012 or before. This page and the next have a similar title so don't be surprised if it confuses you. Just be sure to check the Standard Mileage Rate box on any pages that ask for it.)
***
Your Vehicle Reporting Method
# Check the Standard Mileage box
***
Your Out of Pocket Vehicle Expenses
# Click "Next"
***
Your Vehicle Additional Information
# Check the first box if your household has more than one vehicle
# Check the other three boxes
# Click "Yes" for the question that appears asking if your evidence is written
Watch your refund change and see how much I have helped you! You can thank me later :)
***
Your Standard Mileage Deduction
# Click "Next"
***
If you drove more than one vehicle for this deduction you would now add another vehicle and repeat the process. Make sure to divide the business miles between the vehicles if this is the case.
That's it! Hopefully this worked for you. Feel free to ask any questions at taxadvisor@email.com. I will try to answer quickly but I do get busy during tax time, so don't feel slighted if it takes a while. Feel free to ask questions in the comments, that way we can help everyone. Please share with your fellow Boomer Sailors! If you want me to do your taxes, I can do them via mail or email with no payment until you are satisfied and with secure online review and approval. I will also check tax returns for free, and, if I find errors, I will tell you the difference and offer to fix for a price (if I check and find no errors I back it up with my companies standard guarantee.) I encourage you to take advantage of that, I have seen some bad things on Military Tax Returns (I am a retired submarine Master Chief BTW.)
These posts have more info on the Boomer Deduction, with links to references. If you do your taxes yourself, make sure to do your due diligence.
http://supertaxgenius.blogspot.com/2012/10/boomer-deduction-history-and-references.html
http://supertaxgenius.blogspot.com/2012/03/more-boomer-deduction-information.html
Please DONATE - this was a pain! And I still have to buy and test the at home software!
DISCLAIMER:
This is NOT an endorsement of H&R Block! I also make no promises about the accuracy or reliability of the information presented, it is for assistance and education ONLY. You MUST do your own due diligence to ensure your taxes are right. I feel that the assistance of a trained professional is critical in preparing taxes for military members. Feel free to contact me for questions at taxadvisor@email.com. Realize still that even if I answer your questions, I make no promises and bear no liability for the accuracy of the answers. The only way I take ANY liability is if you see me to prepare your taxes in my professional capacity under my employer for whom I work as a tax professional. Making a donation to this site (which I encourage and appreciate if you make extra money from the massive amount of work and expense this takes) does not constitute paying me for my advice.
Glad that's over!
General Instructions:
- Make sure you fill out the 2013 Boomer Deduction Worksheet, found HERE, first.
- The information and answers to various questions apply to the Boomer Deduction only. It is possible that some yes's or no's may be different for you if you have complementing or overlapping situations.
- I don't write everything from each page, but I generally start at the top of the page. Sometimes the page title will use information, such as your name or your car make, so mine won't match. If the page title is long, I may discontinue with a ... but you should be able to tell where I am.
- Generally, when finished entering information on a page you click the "Next" button. I won't always tell you to do that.
- I'll indicate new pages on their site by separating information with three asterisks - ***
- I'll indicate that you should be entering something or clicking a button by using the # sign
After logging in and creating an account, you will enter personal information, as well as information from your W-2's and other documents, advancing using the continue buttons. Eventually you will get to the Adjustments and Deductions Section.
***
Adjustments and Deductions
# Click the plus sign next to "Other adjustments and deductions" and a longer list will appear
# Check "Job related expenses
***
Job Related Expenses
# Click the plus sign next to "Add Expense"
***
Employee Business Expense
# In the "Occupation" box, enter "Two Crew FBM Submariner
# Check the "None of These Apply" box
***
Business Travel
# Click "Next"
***
Job Related Travel Expense
# In the "Lodging" box, enter the value from Line (K) of your Boomer Deduction Worksheet
# In the "Laundry and Cleaning" box, enter the value from Line (L) of your Boomer Deduction Worksheet
***
Meals and Entertainment
# Click "Next"
***
Meals and Entertainment
# In the "Meals" box, enter the value from Line (M) of your Boomer Deduction Worksheet
# Check the "No" box under the question about being subject to DOT limits...
***
Other Job Related Expenses
# Click "Next"
***
Other Job Related Expenses
# Enter any other job related expenses here. The software can provide guidance, but, be careful. Uniforms, haircuts and cell phones normally won't be deductible. Mostly all you might get here are professional publication subscriptions and journals.
***
Employer Reimbursement
# Click "Next"
***
Employer Reimbursement
# Click "Next"
***
Vehicle, Home Office and Depreciation
# Check the box for "Car or truck used for business purposes"
***
Your Business Vehicle
# Click the plus sign next to "Add Vehicle"
***
Your Vehicle Description
# Enter your vehicles Make and Model
# Enter the Date you first used the vehicle for business
# Enter the number of months you were on off-crew or refit assist in 2013 (round up)
***
Your Vehicle Purchase
# Check Own or Lease as apllicable
***
Your Vehicle Usage
# Check any that apply
***
Your Vehicle Mileage
# Enter total mileage driven during the year for ANY purpose (12/31 odometer - 1/1 odometer)
# In "Business Miles" box, enter value from Line (N) of your Boomer Deduction Worksheet
# Enter commuting miles from days not in Off Crew or Refit Assist
(Commuting plus business miles should be less than total miles)
***
Reporting Method Used...
# Check Standard Mileage box
(you will only get this page if your vehicle was put in service in 2012 or before. This page and the next have a similar title so don't be surprised if it confuses you. Just be sure to check the Standard Mileage Rate box on any pages that ask for it.)
***
Your Vehicle Reporting Method
# Check the Standard Mileage box
***
Your Out of Pocket Vehicle Expenses
# Click "Next"
***
Your Vehicle Additional Information
# Check the first box if your household has more than one vehicle
# Check the other three boxes
# Click "Yes" for the question that appears asking if your evidence is written
Watch your refund change and see how much I have helped you! You can thank me later :)
***
Your Standard Mileage Deduction
# Click "Next"
***
If you drove more than one vehicle for this deduction you would now add another vehicle and repeat the process. Make sure to divide the business miles between the vehicles if this is the case.
That's it! Hopefully this worked for you. Feel free to ask any questions at taxadvisor@email.com. I will try to answer quickly but I do get busy during tax time, so don't feel slighted if it takes a while. Feel free to ask questions in the comments, that way we can help everyone. Please share with your fellow Boomer Sailors! If you want me to do your taxes, I can do them via mail or email with no payment until you are satisfied and with secure online review and approval. I will also check tax returns for free, and, if I find errors, I will tell you the difference and offer to fix for a price (if I check and find no errors I back it up with my companies standard guarantee.) I encourage you to take advantage of that, I have seen some bad things on Military Tax Returns (I am a retired submarine Master Chief BTW.)
These posts have more info on the Boomer Deduction, with links to references. If you do your taxes yourself, make sure to do your due diligence.
http://supertaxgenius.blogspot.com/2012/10/boomer-deduction-history-and-references.html
http://supertaxgenius.blogspot.com/2012/03/more-boomer-deduction-information.html
Please DONATE - this was a pain! And I still have to buy and test the at home software!
2013 Boomer Deductions for Tax Slayer
DISCLAIMER:
This is NOT an endorsement of Tax Slayer! I also make no promises about the accuracy or reliability of the information presented, it is for assistance and education ONLY. You MUST do your own due diligence to ensure your taxes are right. I feel that the assistance of a trained professional is critical in preparing taxes for military members. Feel free to contact me for questions at taxadvisor@email.com. Realize still that even if I answer your questions, I make no promises and bear no liability for the accuracy of the answers. The only way I take ANY liability is if you see me to prepare your taxes in my professional capacity under my employer for whom I work as a tax professional. Making a donation to this site (which I encourage and appreciate if you make extra money from the massive amount of work and expense this takes) does not constitute paying me for my advice.
Glad that's over!
General Instructions:
- Make sure you fill out the 2013 Boomer Deduction Worksheet, found HERE, first.
- The information and answers to various questions apply to the Boomer Deduction only. It is possible that some yes's or no's may be different for you if you have complementing or overlapping situations.
- I don't write everything from each page, but I generally start at the top of the page. Sometimes the page title will use information, such as your name or your car make, so mine won't match. If the page title is long, I may discontinue with a ... but you should be able to tell where I am.
- Generally, when finished entering information on a page you click the "Continue" button. I won't always tell you to do that.
- I'll indicate new pages on their site by separating information with three asterisks - ***
- I'll indicate that you should be entering something or clicking a button by using the # sign
After logging in and creating an account, you will enter personal information, as well as information from your W-2's and other documents, advancing using the continue buttons. Eventually you will get to the Deductions portion and a list of sections with "Begin" buttons next to them.
***
Deductions
# Click the "Begin" button next to "Itemized Deductions"
***
Itemized Deductions
# Click the "Begin" button next to "Job Related Travel Expenses
***
Form 2106 Information
# In the "Occupation" box, enter "2 Crew FBM Submariner
# In the "Travel expenses while away from overnight including lodging, airplane, car rental, etc." box, enter the value from Line (K) of the Boomer deduction Worksheet
# In the "Business expenses not included above or in vehicle expenses" box, enter the value from Line (L) of the Boomer Deduction Worksheet
# In the "Enter your Meals and Entertainment Expense" box (the first one with the 50% near it) enter the value from Line (M) of the Boomer Deduction Worksheet
# Click Continue (but first start to notice your tax refund getting bigger! You can thank me later :)
***
Form 2106
# Click the "Begin" button next to "View/Edit Vehicles"
# Enter the make and model in the vehicle description box
# Enter the date acquired
# Enter the total miles driven in 2013 (12/31 odometer - 1/1 odometer)
# In the "Business Miles Driven" box, enter the value from Line (N) of the Boomer Deduction Worksheet
# Enter your daily roundtrip commute in the box that asks for it
# Click "Yes" for "Is your vehicle eligible for the standard mileage rate
# Click Continue
***
Form 2106 Vehicle
# If more than one vehicle used, click the "Add Another" button and repeat steps, if not, Click Continue
***
Form 2106
# Click the "Begin" button next to "Vehicle Questions"
***
Vehicle Questions
# Check the first box if there is more than one car in your household
# Check the other three boxes
# Click Continue
***
That's it! Hopefully this worked for you. Feel free to ask any questions at taxadvisor@email.com. I will try to answer quickly but I do get busy during tax time, so don't feel slighted if it takes a while. Feel free to ask questions in the comments, that way we can help everyone. Please share with your fellow Boomer Sailors! If you want me to do your taxes, I can do them via mail or email with no payment until you are satisfied and with secure online review and approval. I will also check tax returns for free, and, if I find errors, I will tell you the difference and offer to fix for a price (if I check and find no errors I back it up with my companies standard guarantee.) I encourage you to take advantage of that, I have seen some bad things on Military Tax Returns (I am a retired submarine Master Chief BTW.)
These posts have more info on the Boomer Deduction, with links to references. If you do your taxes yourself, make sure to do your due diligence.
http://supertaxgenius.blogspot.com/2012/10/boomer-deduction-history-and-references.html
http://supertaxgenius.blogspot.com/2012/03/more-boomer-deduction-information.html
Please DONATE - this was a pain! And I still have to do HR Block at Home and a bunch of others!
2013 Boomer Deductions for Turbo Tax Online
These are specific instructions for entering information from the Boomer Deduction Worksheet into Turbo Tax using their online tax preparation at www.turbotax.com. I used the Miltary version which it said would be free for E-5 and below, though I can't vouch for that. This is my first try at this, so it may be a complete failure - please let me know if you can't use this for Turbo Tax and where you ran into trouble.
DISCLAIMER:
This is NOT an endorsement of Turbo Tax! I also make no promises about the accuracy or reliability of the information presented, it is for assistance and education ONLY. You MUST do your own due diligence to ensure your taxes are right. I feel that the assistance of a trained professional is critical in preparing taxes for military members. Feel free to contact me for questions at taxadvisor@email.com. Realize still that even if I answer your questions, I make no promises and bear no liability for the accuracy of the answers. The only way I take ANY liability is if you see me to prepare your taxes in my professional capacity under my employer for whom I work as a tax professional. Making a donation to this site (which I encourage and appreciate if you make extra money from the massive amount of work and expense this takes) does not constitute paying me for my advice.
Glad that's over!
General Instructions:
After logging in and creating an account, you will enter personal information, as well as information from your W-2's and other documents, advancing using the continue or Yes/No buttons. Eventually you will get to the Deductions and Credits portion and then shortly you will get to the pages that matter:
***
Did Either of You Use Your Own Money to Pay for Job Expenses in 2013?
# Yes
***
More Pages
***
Employment Expenses Related to W-2?
# Yes
***
More Pages
***
Tell Us About the Occupation You Have Expenses For.
# 2 Crew FBM Submariner
***
Do Any of These Uncommon Situations Apply?
# None of the Above
***
Home Office Expenses?
# No
***
Any Vehicle Expenses or Sales?
# Yes
***
Tell Us About Your Vehicle
# Enter asked for information (should be auto or truck <6000# unless really BIG)
***
When Did You Acquire...
# Enter date
***
When Did You Start Using ...
# If on Boomer when car acquired use choice one, otherwise use choice two.
***
Are You Still Using...
# Yes
***
Is Your ... an Electric Vehicle
# Click Yes or No
***
Did You Purchase New?
# Yes or No
***
Did You Trade In Another Vehicle to Purchase...
# Yes or No
If you click Yes it will ask for the purchase price excluding the trade in
# Enter what you paid in cash or with a loan for the car
***
Personal Use of Your...
Was your ... available during non-working hours?
# Yes
Do you have another vehicle available for personal use?
# Answer Yes if the household has 2 or more vehicles
***
Mileage Records for Your...
Did you keep track of your mileage when you used this vehicle for business?
# Yes (The command letter and Boomer Deduction Worksheet should be sufficient)
Did you document your business miles for this vehicle?
# Yes
***
How Do You Want to Enter Your Mileage?
# I'll enter the total miles I drove for the year
Total miles driven for year
# Enter in the box ALL the miles driven by the vehicle for ANY reason (12/31 minus 1/1 odometer)
Miles driven for JOB
# Enter in box the number from Line (N) on the Boomer Deduction Worksheet
Commuting miles
# Enter in box the total miles driven to and from work when NOT on off-crew or Refit Assist
Round trip average daily commute
# Enter in box how far to and from the pier
***
Was Your ... Used for Hire?
# No
***
How Many Vehicles Did You Use for Business in 2013?
# Click the 0-4 box
***
Rural Mail Carrier
# No
Comment: Take a look at the refund amount, you should start seeing this number change soon, and you can see how much this Boomer Deduction is helping - keep an eye on it. You can thank me later :)
***
Did You Use the Standard Mileage Rate?
# Yes
***
You've Got a Standard Mileage Deduction of...
Do you want to see if your actual vehicle expenses give you a bigger deduction?
# No
***
Vehicle Summary
# If you used more than one vehicle you will need to click Add Vehicle and go through the process again. You will need to make sure to divide the Business Mileage from the Boomer Deduction Worksheet between the vehicles as needed.
# Click Done
***
Did You Buy or Own Any Items for Use on Your Job?
# This is generally NO for military. You can't take haircuts or cell phones as a general rule, and uniforms are generally reimbursed or non-deductible if they can be worn off base.
***
Do You Have any Leftover Deductions from 2012?
# No
***
Any Other Expenses?
# Enter Line (K) amount from the Boomer Deduction Worksheet on the Travel Expenses Line
# Enter Line (M) amount from the Boomer Deduction Worksheet on the Meal and Entertainment Expenses Line
# Enter any other lines as appropriate (though for military it is generally only professional publications)
***
Job Related Expenses
# In the Description Line put "Laundry and Cleaning"
# In the Amount Line put Line (L) amount from the Boomer Deduction Worksheet
***
Reimbursements for Your Expenses
# No
***
Any Special Situations?
# No
***
Job Related Expense Summary
#Done
That's it! Hopefully this worked for you. Feel free to ask any questions at taxadvisor@email.com. I will try to answer quickly but I do get busy during tax time, so don't feel slighted if it takes a while. Feel free to ask questions in the comments, that way we can help everyone. Please share with your fellow Boomer Sailors! If you want me to do your taxes, I can do them via mail or email with no payment until you are satisfied and with secure online review and approval. I will also check tax returns for free, and, if I find errors, I will tell you the difference and offer to fix for a price (if I check and find no errors I back it up with my companies standard guarantee.) I encourage you to take advantage of that, I have seen some bad things on Military Tax Returns (I am a retired submarine Master Chief BTW.)
These posts have more info on the Boomer Deduction, with links to references. If you do your taxes yourself, make sure to do your due diligence.
http://supertaxgenius.blogspot.com/2012/10/boomer-deduction-history-and-references.html
http://supertaxgenius.blogspot.com/2012/03/more-boomer-deduction-information.html
Please DONATE - this was a pain! And I still have to do Tax Slayer, HR Block at Home and a bunch of others!
DISCLAIMER:
This is NOT an endorsement of Turbo Tax! I also make no promises about the accuracy or reliability of the information presented, it is for assistance and education ONLY. You MUST do your own due diligence to ensure your taxes are right. I feel that the assistance of a trained professional is critical in preparing taxes for military members. Feel free to contact me for questions at taxadvisor@email.com. Realize still that even if I answer your questions, I make no promises and bear no liability for the accuracy of the answers. The only way I take ANY liability is if you see me to prepare your taxes in my professional capacity under my employer for whom I work as a tax professional. Making a donation to this site (which I encourage and appreciate if you make extra money from the massive amount of work and expense this takes) does not constitute paying me for my advice.
Glad that's over!
General Instructions:
- Make sure you fill out the 2013 Boomer Deduction Worksheet, found HERE, first.
- The information and answers to various questions apply to the Boomer Deduction only. It is possible that some yes's or no's may be different for you if you have complementing or overlapping situations.
- I don't write everything from each page, but I generally start at the top of the page. Sometimes the page title will use information, such as your name or your car make, so mine won't match. If the page title is long, I may discontinue with a ... but you should be able to tell where I am.
- If I skip pages, I'll write "more pages" so just keep clicking continue and answering questions until you get to the next page I talk about.
- I'll indicate new pages on their site by separating information with three asterisks - ***
- I'll indicate that you should be entering something or clicking a button by using the # sign
After logging in and creating an account, you will enter personal information, as well as information from your W-2's and other documents, advancing using the continue or Yes/No buttons. Eventually you will get to the Deductions and Credits portion and then shortly you will get to the pages that matter:
***
Did Either of You Use Your Own Money to Pay for Job Expenses in 2013?
# Yes
***
More Pages
***
Employment Expenses Related to W-2?
# Yes
***
More Pages
***
Tell Us About the Occupation You Have Expenses For.
# 2 Crew FBM Submariner
***
Do Any of These Uncommon Situations Apply?
# None of the Above
***
Home Office Expenses?
# No
***
Any Vehicle Expenses or Sales?
# Yes
***
Tell Us About Your Vehicle
# Enter asked for information (should be auto or truck <6000# unless really BIG)
***
When Did You Acquire...
# Enter date
***
When Did You Start Using ...
# If on Boomer when car acquired use choice one, otherwise use choice two.
***
Are You Still Using...
# Yes
***
Is Your ... an Electric Vehicle
# Click Yes or No
***
Did You Purchase New?
# Yes or No
***
Did You Trade In Another Vehicle to Purchase...
# Yes or No
If you click Yes it will ask for the purchase price excluding the trade in
# Enter what you paid in cash or with a loan for the car
***
Personal Use of Your...
Was your ... available during non-working hours?
# Yes
Do you have another vehicle available for personal use?
# Answer Yes if the household has 2 or more vehicles
***
Mileage Records for Your...
Did you keep track of your mileage when you used this vehicle for business?
# Yes (The command letter and Boomer Deduction Worksheet should be sufficient)
Did you document your business miles for this vehicle?
# Yes
***
How Do You Want to Enter Your Mileage?
# I'll enter the total miles I drove for the year
Total miles driven for year
# Enter in the box ALL the miles driven by the vehicle for ANY reason (12/31 minus 1/1 odometer)
Miles driven for JOB
# Enter in box the number from Line (N) on the Boomer Deduction Worksheet
Commuting miles
# Enter in box the total miles driven to and from work when NOT on off-crew or Refit Assist
Round trip average daily commute
# Enter in box how far to and from the pier
***
Was Your ... Used for Hire?
# No
***
How Many Vehicles Did You Use for Business in 2013?
# Click the 0-4 box
***
Rural Mail Carrier
# No
Comment: Take a look at the refund amount, you should start seeing this number change soon, and you can see how much this Boomer Deduction is helping - keep an eye on it. You can thank me later :)
***
Did You Use the Standard Mileage Rate?
# Yes
***
You've Got a Standard Mileage Deduction of...
Do you want to see if your actual vehicle expenses give you a bigger deduction?
# No
***
Vehicle Summary
# If you used more than one vehicle you will need to click Add Vehicle and go through the process again. You will need to make sure to divide the Business Mileage from the Boomer Deduction Worksheet between the vehicles as needed.
# Click Done
***
Did You Buy or Own Any Items for Use on Your Job?
# This is generally NO for military. You can't take haircuts or cell phones as a general rule, and uniforms are generally reimbursed or non-deductible if they can be worn off base.
***
Do You Have any Leftover Deductions from 2012?
# No
***
Any Other Expenses?
# Enter Line (K) amount from the Boomer Deduction Worksheet on the Travel Expenses Line
# Enter Line (M) amount from the Boomer Deduction Worksheet on the Meal and Entertainment Expenses Line
# Enter any other lines as appropriate (though for military it is generally only professional publications)
***
Job Related Expenses
# In the Description Line put "Laundry and Cleaning"
# In the Amount Line put Line (L) amount from the Boomer Deduction Worksheet
***
Reimbursements for Your Expenses
# No
***
Any Special Situations?
# No
***
Job Related Expense Summary
#Done
That's it! Hopefully this worked for you. Feel free to ask any questions at taxadvisor@email.com. I will try to answer quickly but I do get busy during tax time, so don't feel slighted if it takes a while. Feel free to ask questions in the comments, that way we can help everyone. Please share with your fellow Boomer Sailors! If you want me to do your taxes, I can do them via mail or email with no payment until you are satisfied and with secure online review and approval. I will also check tax returns for free, and, if I find errors, I will tell you the difference and offer to fix for a price (if I check and find no errors I back it up with my companies standard guarantee.) I encourage you to take advantage of that, I have seen some bad things on Military Tax Returns (I am a retired submarine Master Chief BTW.)
These posts have more info on the Boomer Deduction, with links to references. If you do your taxes yourself, make sure to do your due diligence.
http://supertaxgenius.blogspot.com/2012/10/boomer-deduction-history-and-references.html
http://supertaxgenius.blogspot.com/2012/03/more-boomer-deduction-information.html
Please DONATE - this was a pain! And I still have to do Tax Slayer, HR Block at Home and a bunch of others!
Friday, December 6, 2013
Tax Year 2013's Magic Number
You can interpret this post any way you want to, but, for me, it's just a data point that I like to be aware of. Some may use it for political points, others for planning. For me, it's just something I do every year, for my own personal enjoyment.
What I do is, I calculate exactly how much money a hypethetical family of four can make, and pay no Federal Income Taxes.
My family, let's call them the Magic's, have one income source (though it would work the same with two) and have nothing withheld for Federal Income Taxes. They of course pay the 7.65% Social Security and Medicare Tax, but that's not what this post is about. They have two children, both under age 17 who live at home. They pay no college expenses, no daycare, or have any other fancy credits. They don't itemize, so they take the standard deduction. They do get the Child Tax Credit and the Earned Income Credit, based on their income levels and children.
Mr (or Mrs) Magic can earn $47,849 this year, and still get a $5 refund - this after having NO Federal Income Tax withheld.
Feel free to check my numbers and let me know if I screwed this up (it's happened before).
Feel free to contact me at taxadvisor@email.com
What I do is, I calculate exactly how much money a hypethetical family of four can make, and pay no Federal Income Taxes.
My family, let's call them the Magic's, have one income source (though it would work the same with two) and have nothing withheld for Federal Income Taxes. They of course pay the 7.65% Social Security and Medicare Tax, but that's not what this post is about. They have two children, both under age 17 who live at home. They pay no college expenses, no daycare, or have any other fancy credits. They don't itemize, so they take the standard deduction. They do get the Child Tax Credit and the Earned Income Credit, based on their income levels and children.
Mr (or Mrs) Magic can earn $47,849 this year, and still get a $5 refund - this after having NO Federal Income Tax withheld.
Feel free to check my numbers and let me know if I screwed this up (it's happened before).
Feel free to contact me at taxadvisor@email.com
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