Consolidated Tax Guide List

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Contractors Tax Guide (1099 MISC)
Real Estate Agent Tax Guide
Taxes and Divorce (Tax Advice for Divorce Lawyers)
Rental Property Tax Guide (for people renting out former homes)
MLM Tax Guide (Avon, Pampered Chef, Amway etc.)

Common Tax Return Errors - Updated

Don't rely on this list for tax prep - it is just a brainstorming guide - do your due diligence

Military:

South Carolina Tax Treatment of Working Spouse

Military Spouses Residency Relief Act Mistakes

• Not establishing domicile
• Not the same state as military member
• Shifting residence to state that is tax free to mil but not spouse (AZ, CA, MI etc.)
• Not taking advantage of MSRRA

Not taking Sales Tax Deduction

Not adding tax-free allowances to income for Sales Tax Deduction

      (Subtract W2 wages from YTD entitlements on Dec LES to get amount)

Not getting all taxes back from certain states (exclusions apply):

     ME, MI, NY, NJ, CA, AZ, ID, IL, KY, MN, MO, MT, NM, OH, OR, PA, WV, CT, AR (in 2014)

Not filing required returns:
     MI is good example since you can get EIC even with all income excluded
     PA is another example that requires copy of orders

Not subtracting Military Wage Deductions (these are portions not full exclusions)

     AR, IN, LA, MD*, CO*, VA

     *Need to meet overseas conditions

Boomer Deduction

Not getting $120/month MN deployment credit (actually a direct payment.)

Repayment of Bonuses (Claim of Right repayment)
Not taking National Guard and Reserve travel expenses for >100 miles from home

Dependents/Filing Status:
Not properly accounting for children claimed by non-custodial parent
Not having 8332 for claiming children as non-custodial parent
Filing Single when married
Claiming dependents who provide more than half of their own support (college students with big loans)
Not claiming Head of Household when unmarried for tax purposes
Not taking advantage of EIC for multi-generational households
Not including Dependent Care Benefits on W-2 and 2441
Not taking dependent care credit for 2 kids under 13 even if only one is in daycare

Retirement Pay:

Tax treatment of federal, state, local, military retirement pay

Treatment of employee contributions to retirement (worksheet)

Roth distributions

5329 - medical expenses, IRA exceptions

For SC - not deducting retirement pay from reserve time periods

Itemized Deductions:

Failing to claim Goodwill contributions

Undervaluing Goodwill (FMV is not what the Goodwill store sells it for)

Failing to claim Employee Bus Expense (especially mileage)

Deducting Commuting Mileage

Missing Health Insurance Deduction

Failing to claim Fertility Treatments

Failing to claim Glasses and Contacts

Failing to claim Birth Control Pills

Failing to claim Auto Taxes

Failing to claim Points paid by seller (points always go to buyer)

Failing to claim Taxes paid by seller (taxes always go by date of ownership)

Failing to claim VA/FHA funding fee

Not amortizing points on a refinance

Moving Expenses not taken

HSA and 1099SA not properly entered (Almost always need 1099SA if Code W in Box 12 of W-2)

Rental Property:

Not depreciating - not adding improvements to basis

Missing: HOA, Termite Bond

Not properly accounting for things that are rent

Not deducting Sch E and associated forms cost as expense (from prior year tax return)

Deducting vice depreciating items

Not adding out of state rental loss back to SC

Adding out of state rental loss back to states not required (GA)

Not realizing what "Active Participation" means and thus not getting $25000 loss allowed

Not tracking or accounting for passive losses not allowed in prior year

Completely messing up the sale of rental property

Allocation of first year expenses

Your roommate is often your tenant!

Businesses (Sch C):

Hobby vs. Business

Missing mileage (Use Mile IQ app to track mileage!)

Office in Home mess-ups (there is a Safe harbor now)

Failing to take tax prep fees from prior year as expense (allocable to the business)

Failing to depreciate items

Not properly figuring out best use of Sec 179 or bonus depreciation

EIC considerations

Likelihood of conversion or sale

Future income level considerations

Inventory/Cost of Goods Sold issues

Investments:

Improper treatment of Qualified Dividends or Long Term Capital Gains
Not maximizing 0% Capital Gains rate

Not reporting Gross Proceeds or improperly calculating basis

Failing to take foreign tax credit

Failing to exclude municipal bond interest from residency state

Failing to add back municipal bond interest to state tax return (except as above)

Messing up Schedule K-1's

Failing to carryover capital losses

Missing Education Credits or deductions (books etc.)

For SC:

Subsistence allowance for FF/Police

Base security are often police for the above

Volunteer FF deduction

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State Tax Statements on Same Sex Marriage

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I have been getting a lot of questions regarding same sex marriage now that DOMA has been overturned, so I wanted to do a post on tax filing since things have now gotten...complex.

First things first, with DOMA out, you have to file your Federal return as if you were married if you were married in a state that legalized same-sex marriage at the time you were married, and you have not gotten a divorce.  Marital status is determined as of 12/31 of the tax year.  You can't just ignore it, even though it probably feels like that's what's been going on for several years.  This means you have to file Married Filing Jointly, Married Filing Separately, or Head of Household (but only if you meet VERY SPECIFIC requirements regarding not living with your spouse and maintaining a home for children.)  Single is right out.

Second, if you live in a state that recognizes same sex marriage (either by making them legal, or recognizing them for tax purposes (CO and MO)) you file the same way as you filed on the federal return (generally... some states let you go joint on one and separate on the other, but you just follow states rules.)  Again, Single is right out.

What about the other states.  Well, that's more complicated.  Generally they require you to file Single or Head of Household, depending on your circumstances.  Some require you to make a pro forma (this means fake) Federal return using the same status you use for state, in order to get the right numbers for the state.  If you have different residency states, it only gets more complicated.

Rather than go over every situation, I'm going to try to provide a link to every state that doesn't fully recognize same-sex marriage so you can check what your state wants.  I'm including Missouri and Colorado's regulations, since they allow you to match your Federal status, even though they don't recognize same-sex marriage.

These links are probably only good for 2013 taxes, and may even change for them, so double check when you file.  (Montana deleted their link between the time I typed the state name, and the time I went to copy the address!)

UPDATE - Utah, it would seem, is allowing same sex couples to file jointly in 2013, though this is probably subject to change.  Welcome to the UtahCoaster! 

ARIZONA
CALIFORNIA  (different rules for Registered Domestic Partners)
COLORADO
GEORGIA
HAWAII
IDAHO
INDIANA
KANSAS
LOUISIANA
MICHIGAN
MINNESOTA
MISSOURI
MONTANA
NEBRASKA
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
RHODE ISLAND
SOUTH CAROLINA
UTAH
VIRGINIA
WISCONSIN

Hope this helps!  If it does, leave a TIP!  Questions: taxadvisor@email.com

Affordable Care Act, Obamacare update and advice

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Update for 2014 filing season HERE

I wanted to do an update post on the Affordable Care Act now that the marketplaces are open.  Since I'm a tax expert, and this is a tax blog, I am primarily focused on the tax implications of the law, but I will put in my 2 cents on any area I think I can help.  This is not a political blog, so I don't intend to praise or criticize the law and if I seem critical or enthusiastic about something, it is not meant as an indictment or endorsement of the law, I am merely trying to pass on useful information.  Please do not use the comments feature to voice your political opinion on the law.

Before going further, you should read my original piece I wrote after reading the law (yes, I am a glutton for punishment.)  I am writing this post as an expansion to that one, so it won't make a ton of sense if you haven't read the first one.  Here's a link: ACA 1

Right now, the health care marketplaces are open, though many of them have some glitches and delays as would be expected.  California and Hawaii seem fluid and smooth, Alabama and South Carolina I was unable to get past the "There are a lot of people applying, please wait" screen.  I didn't try every state.

The easiest way to access the marketplaces is via www.healthcare.gov.  The big "Apply Now" button is hard to miss.  Just below that is a "Want to Learn More" statement with a "Start Here" button.  I highly recommend clicking it and reading the information.  In addition, at the bottom of that page, you can put in your zip code to find local help centers (most are not up and running yet, but soon should be.)

If you don't have insurance, and can't get it through your job, this is the place to start.  It will work you through the subsidy (called the Premium Tax Credit) available.  You can get a subsidy if you are ineligible for insurance from another source (generally your employer or another government program), and your income is below 400% of the poverty level for your family size.  You may also be eligible for Medicaid if you are below 133% of the poverty level.  You can also use the marketplace if you have insurance available, but you won't get a subsidy - I'm not sure if you can get a better deal here than your current insurance, but you can try.

Here's an IRS FAQ on the subsidy:  http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-the-Premium-Tax-Credit

The biggest points I will make on it are:

• Keep the Marketplace notified about changes to your income or family status.
• You don't have to get a Silver Plan.  You get the same subsidy no matter which plan you choose

To clarify the second point, the subsidy is designed to cap your out of pocket costs for a Silver plan at 9.5% of your income.  If you get a lower tier plan, you will have lower out of pocket costs for premiums, but higher costs for care.  If you get a higher level plan, you will have higher costs for premiums, but lower costs for care.

The first point is the big one, though.  The subsidy goes right to the marketplace, is estimated based on 2012 income, and gets reconciled on your 2014 tax return.  Any changes that increase your subsidy between 2012 and 2014 get you a bigger refund, but, if your income goes up from 2012 to 2014, you have to pay back the difference in subsidy!  This is the BIG pitfall that MUST be avoided.

I think I covered the tax penalty well enough in the first post.  If you don't have insurance, you could face a penalty, which will go up dramatically in the next few years.  Here is the IRS FAQ on the subject: http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision

So here's my overall advice:

• If you don't have access to insurance, or are unhappy with your insurance, check out the marketplaces
• You might want to wait until November to give things a chance to calm down
• Don't wait much later than November and especially make sure you get there by Mar 1st
• Use the most accurate income information you have when applying for a subsidy
• Keep the Marketplace informed of changes in income and family size if getting a subsidy
• If you and your family expect minimal medical expenses, get a lower tier plan.  
• If you expect to have higher expenses, get a higher tier plan
• If you have trouble with the marketplaces, use the "Want to Learn More" section and put in your zip code to find local help
• If you think you might not want to get insurance, talk to your tax guy about what the penalty amount might be

As always, I'll try to answer any questions at taxadvisor@email.com
If this helps you, consider leaving a Tip!
You can download a pdf of this post combined with the original post HERE.  If you download the pdf, I would really like a Tip!

Healthcare Law, Obamacare, Affordable Care Act Info

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Things I Learned from Reading the Affordable Care Act

Update for 2014 filing season is HERE

The act is nearly incomprehensible in its legalese form, so it is possible I misinterpreted or misread some of this stuff. Please let me know if you have any questions or think I've made a mistake.

The rules for eligibility for Medicaid will change in 2014 such that anyone earning less than 133% of the poverty limit will be eligible. The takeaway is that if someone earns below 133% of the poverty level, they should apply for Medicaid in October of 2013 before applying to a Health Care Exchange. (The Supreme Court declared this mandate to the states unconstitutional so individual states may refuse the additional funding for this and opt out of the increased eligibility.)

The term subsidy really refers to the refundable Premium Assistance Tax Credit (PATC)

Open Enrollment for Health Care Exchanges starts on 10/1/2013 and ends on 3/31/2014. For subsequent years it will be from 10/15 to 12/7 of the preceding year.  The default basis for determining eligibility for the advance PATC will be the 2012 tax return information, but the actual credit is determined based on 2014 income.

The PATC is calculated on a monthly basis using 1/12 of the annual income for 2014.

The PATC may be applied directly to premiums for insurance obtained through the exchanges. The 2014 tax return will reconcile the amounts paid with the actual credit eligible and the difference applied to 2014 tax.

If the taxpayer received too much credit, they will have to repay the excess as an additional tax on their 2014 return. My research indicates that this amount could be in the tens of thousands of dollars! The good news is that if the taxpayers income is below 400% of the poverty level, the repayment is capped at between $300 and $2500 depending on filing status and income.  Still, if they go above 400% of poverty level, they could be in REAL TROUBLE!

To avoid the above, it is vital that the taxpayer keep the exchange informed of changes in income, marital status and family size on a month to month basis if they occur.

I ran 2 scenarios using numbers from various exchanges. My worst case scenario involved a 62 year old family of 4 where a significant (somewhat unrealistic) increase in income from 2012 to 2014 could result in a repayment in excess of $30000. I also ran a 55 year old single man, with 2012 income of $35000 and 2014 income of $46100. This fairly plausible scenario would result in a repayment of just under $7000.

The Healthcare Exchanges will offer plans categorized as Bronze, Silver, Gold and Platinum based on the percentage of costs covered. In any case, out of pocket expenses will be capped annually at a fairly reasonable amount.  Some of the exchanges don’t specifically or obviously use these categorizations, but they do specify cost, subsidy, deductibles, and caps.

The PATC is calculated based on the second cheapest Silver plan price for the state exchange the taxpayer uses. The credit is designed to cap out of pocket expenses for insurance premiums for this plan at between 2 and 9.5% of income for persons below 400% of the poverty level (2% for persons below 133% ranging up to 9.5% for people at 400%)

The PATC is calculated per above regardless of the plan actually accepted. This means that accepting a lower tier plan will result in lower out of pocket expenses for premiums while a higher plan will cost more out of pocket for premiums.

Filing a 2012 tax return is the best way to make applying at an exchange simple and easy.

Taxpayers should go to www.healthcare.gov in October of 2013 if they need to use an insurance exchange. This is where the best information will be available.

MOST IMPORTANT: I said this above, but I cannot emphasize enough how important it is for someone receiving the PATC to keep the Healthcare Exchange informed if their income changes significantly or their family status changes.

Example of why it's incomprehensible. They say, "taxpayer whose tax is determined under section 1(c)" instead of saying, "Single" in the excerpt from the law below.

‘‘(i) IN GENERAL.—In the case of an applicable taxpayer whose household income is less than 400 percent of the poverty line for the size of the family involved for the taxable year, the amount of the increase under subparagraph (A) shall in no event exceed $400 ($250 in the case of a taxpayer whose tax is determined

under section 1(c) for the taxable year).

Some information on the Health Care Exchange Plans:

  -Bronze level will cover 60% of expenses for covered services

  -Silver level will cover 70%

  -Gold level will cover 80%

  -Platinum level will cover 90%

  -Out of pocket expenses for covered services are capped annually at $5950 for individuals and $11900 for families.

  -The Secretary of Health and Human Services will specify required services to be covered, but they will include, at a minimum: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative services, laboratory services, preventive care and disease management, and pediatric services including eye and dental care.

Some information on the penalty for failing to have coverage:

  -In 2014, the penalty for not having qualifying health insurance will be the larger of:

     1% of income -or-

     $95 dollar per adult and $47.50 per child in the household up to $285 max

  -In 2015, the penalty for not having qualifying health insurance will be the larger of:

     2% of income -or-

     $325 dollar per adult and $162.50 per child in the household up to $975 max

  -In 2016, the penalty for not having qualifying health insurance will be the larger of:

     2.5% of income -or-

     $695 dollar per adult and $347.50 per child in the household up to $2085 max

  -The penalty is calculated on a monthly basis for each month of non coverage, however, there is no penalty for any one period of no more than 3 months of non coverage for each year. (If the 3 months is exceeded you pay the penalty for all 12 months, it's not a 3 months free exception.)

  -There is no penalty if your income is below the filing threshold

  -There are other exceptions for hardship (to be defined later), incarcerated individuals, religious objectors (very restrictive rules), illegal aliens, Native Americans and persons with very limited income (out of pocket expenses for premiums would exceed 8% of income.) There are other exceptions, but these are the big ones.

  -There is an IRS form to be determined later that will detail insurance coverage and periods that will be required to be sent by insurance providers to taxpayers by January 31st of the tax filing season. This form will list the persons covered by name and SSN and provide the dates coverage was in force.

 

  -There is a provision for the IRS, with the assistance of the Secretary of Health and Human Services to inform taxpayers without coverage as of June 30th of each year that they are not covered and to provide information on services available through Health Care Exchanges.

  -The IRS will not be allowed to enforce the Health Care Penalty through liens or levies.

I have published an update now that the exchanges are open HERE
You can download a pdf of this post combined with the update HERE
If you download the pdf, please leave a TIP!

2013 Military State Tax Guide

State Guidelines for Military (2013 values)

This information is provided by the author and does not necessarily represent the opinion of the IRS, State Dept's of Revenue, or the author's employer. Information is for general guidelines only and should not be relied upon for filing taxes without referencing state or federal instructions. Questions may be asked via email at taxadvisor@email.com

Consolidated list of military posts is HERE

Military Spouses Residency Relief Act (MSRRA)

Most states have begun to treat this in a similar manner to each other. In general, the spouse of a service member has two choices for state of residency: the state they are stationed in, or the military member's state of residency. In order to claim the military members state, they must have established a domicile in that state at some time before moving to the current state. For those qualified to make the election to claim the military members state, it is important to weigh the benefits properly, for example, a spouse who works in SC married to a military resident of MI might assume that since MI does not tax the military member that they should choose this state. This would be wrong because MI will tax the non-military income of the spouse. SC is far more generous to the spouse of a service member stationed in SC. Expert assistance may be required making this determination. It can also be difficult to get the current state to stop withholding from the spouses wages. Each state Dept of Revenue has different procedures for handling this.
 

Residency

A military member normally retains residency in the state they resided in when they joined the military unless action is taken to change this. The W-2 can generally be relied upon as to the state of residence of the military member. The states in which a service member are stationed will not tax the members military income unless they are residents. They will tax any income earned from other employment or business activities conducted in the state by the member and their spouses (subject to the MSRRA discussed above.) The discussions below talk about the taxation of military income for residents of the respective state.

 

Filing Requirements:

Not having to file discussed below assumes there is no withholding from the given state. A member may file even if not required and should do so if they have withholding from the given state so they can get the money back. If a member would not be required to file except for the existence of withholding, they should adjust their state withholding through MyPay so no taxes are withheld from that state. They may also consider stopping withholding even if they are required to file, for states that do not tax their income (MI for example.) Many people do not file required tax returns when there is no refund or balance due. This could result in a letter from the state requesting a return but rarely any penalties – but there can be!

 

Death Benefits:

Many states exclude death benefits and military pay for service members killed in a combat zone or while on active duty. The specifics are not discussed here. Survivors of service members killed on active duty can obtain assistance for this from CACO personnel.

States with Blue names either require a tax return or other document to be filed by military residents, or a tax return should be prepared to determine if any refundable benefits are available from that state.

 

Alabama:

Alabama treats military residents the same as all other residents

 

Alaska:

Alaska does not have an income tax. Alaska Permanent Funds Dividends are taxable on the Federal Return.

 

Arizona:

Arizona does not tax active duty military pay, and does not require filing if the only AZ source income is active duty pay.

 

Arkansas:

The first $9000 of Military compensation is not taxed to AR. Total military income is reported on line 9 and the income -$9000 is reported on line 8 (but not less than 0).  Starting on January 1st, 2014, Arkansas will no longer tax active duty military pay, so, if you are an Arkansas resident you can go to MyPay and stop state withholding.

 

California:

California does not tax military pay of CA residents stationed outside of the state of CA. They do tax military income of their residents when stationed in CA. They also treat military spouses generously, similar to SC. Form 540NR is used to account for this. You write “MPA” to the left of column A for non-resident military income and enter the military income in column B but exclude it from column E.

 

Colorado:

Colorado taxes military residents the same as other residents unless the member is stationed outside the US for >305 days in the year.

 

Connecticut:

Connecticut allows resident military personnel stationed outside of CT to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in CT for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of CT for the entire year. 3) Spend no more than 30 days in CT for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other CT source income.

 

Delaware:

DE taxes military residents the same as all other residents.

 

Washington DC:

DC taxes resident military personnel the same as all other residents.

 

Florida:

Florida does not have an income tax, however they do have an intangibles tax. Most military members will not have any filing requirement.

 

Georgia:

GA taxes military residents the same as all other residents however Reserves or National Guard called to active duty for more than 90 days may be able to take a credit against their individual income tax based on their income from the National Guard or Reserves.

 

Hawaii:

Hawaii taxes military residents the same as all other residents except that they do not tax the first $6076 of reserve pay or HI national guard pay.

 

Idaho:

ID residents stationed in ID pay taxes on all military income; however, if the member was on active duty >120 days and stationed outside of Idaho they can exclude any military income earned while stationed outside of ID. If they are stationed outside of Idaho the entire year they do not need to file an ID tax return, however Idaho has a Grocery Credit that a military member is eligible for that is refundable so it is possible to get a refund from Idaho even though their was no tax withheld.  This makes Idaho one of the States that a military member should file even when not required to. 

 

Illinois:

IL does not tax military pay; however, the member must file a tax return if they file a Federal return. Military members with children who get Federal Earned Income Credit may get up to 7.5% of the Federal amount even if they have no taxes due to IL.

 

Indiana:

Indiana taxes military income but allows a deduction of the first $5000 of military income for the taxpayer and/or the spouse ($10000 for military couple.) If a military member changes state of residency to another state they must submit the DD Form 2058 with the tax return for the year they changed state of residency.

 

Iowa:

IA does not tax military income and military income is not used in determining filing requirements (if the only significant sources of income are military income, a tax return is not required.)

 

Kansas:

Kansas taxes military income but allows a deduction for recruitment, sign-up and retention bonuses paid that are included in Federal taxable income (if the bonus was tax free to federal do not deduct it from KS. Kansas starts with Federal AGI so it is already excluded.)  The subtraction is made on Adjustments line A21.

 

Kentucky:

Beginning with 2010, KY does not tax military income and does not require a tax return if the only KY source income is military pay.

 

Louisiana:

Louisiana requires a tax return from military personnel the same as any other resident; however, LA gives an exclusion of up to $30000 of military pay if the person has been on active duty outside of Louisiana for at least 120 days during the tax year. The subtraction is taken as a Schedule E subtraction, Code 10E, by entering military pay up to $30000 on the schedule.

 

Maine:

Maine allows resident military personnel stationed outside of ME to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in ME for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of ME for the entire year. 3) Spend no more than 30 days in ME for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other ME source income. Maine calls this the General Safe Harbor Rule.

Maryland:

Maryland taxes military residents just like other residents; however, they allow a subtraction for up to $15000 of military pay earned outside of the U.S. (Military Overseas Income.) The deduction phases out dollar for dollar as ALL military income goes above $15000 and there is no exclusion if the total military income exceeds $30000. The subtraction is taken on Form 502SU and the Military Overseas Income Worksheet is used to calculate the deduction.

 

Massachusetts:

There are no special tax benefits for military, however, the Massachusetts Dept of Veterans Affairs will give a one time payment of $500 to any resident after they served at least 6 months active duty in the military. They also have a $1000 benefit for personnel who serve in Iraq or Afghanistan.

http://www.mass.gov/veterans/benefits-and-services/bonus/bonuses-only/

 

Michigan:

Michigan requires military members to file a tax return; however, they subtract active duty pay from income (Schedule 1, Line 11). Military members with children who receive Earned Income Credit on their Federal return may collect 6% of the federal amount, even if they pay no taxes to MI. (This was 20% for 2011 and prior years.)

 

Minnesota:

Minnesota subtracts Active Duty Military pay from income of MN residents. If Gross Income on Federal return other than military is less than $10000, no MN return is required.

Minnesota pays $120 per month a military resident spends in a combat zone. This is paid separately from the tax return and is claimed on Minnesota form M99

http://taxes.state.mn.us/Forms_and_Instructions/m99_onscreen.pdf (2011 Form)

http://www.revenue.state.mn.us/Forms_and_Instructions/2012/m99_12.pdf (2012 Form)
http://www.revenue.state.mn.us/Forms_and_Instructions/m99_13_onscreen.pdf  (2013 Form)

 

Mississippi:

Mississippi taxes military residents the same as other residents except that they do not tax National Guard and Reserve pay up to $15000.

 

Missouri:

MO allows resident military personnel stationed outside of MO to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in MO for the entire year (a parent's house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of MO for the entire year. 3) Spend no more than 30 days in MO for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other MO source income. If your spouse works but claims MO as your state of residency through the MSRRA their income is taxable to MO and must file a tax return if they earn more than $1200.

 

Montana: 

Montana requires military residents to file a tax return but exempts active military pay from taxation on Schedule 2, Line 8. Verification of active duty status must be attached to the return.

 

Nebraska:

Nebraska taxes military residents just like other residents.

 

Nevada:

Nevada does not have an income tax.

 

New Hampshire:

NH does not have an income tax but they do tax interest and dividends. Generally these would need to exceed $2400 for an individual and $4800 for a couple.

 

New Jersey:

NJ allows resident military personnel stationed outside of NJ to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in NJ for the entire year (a parent's house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of NJ for the entire year. 3) Spend no more than 30 days in NJ for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other NJ source income.(NJ does not consider barracks maintaining a permanent place of abode outside NJ)

 

New Mexico:

New Mexico does not tax active duty military pay however; NM residents are required to file a NM return if they were required to file a Federal return.

 

New York:

NY allows resident military personnel stationed outside of NY to be treated as non-residents for tax purposes. This can be confusing but the point is that they are still a resident, just not treated that way for tax purposes. In order to be treated as a non-resident they must meet all three of the following requirements: 1) Not maintain a permanent place of abode in NY for the entire year (a parents house is not a permanent place of abode.) 2) Maintain a permanent place of abode outside of NY for the entire year. 3) Spend no more than 30 days in NY for any reason during the year. If they meet these requirements they can file as a non-resident and exclude any military wages from gross income and need not file unless they have other NY source income. NY specifically excludes barracks as an abode outside of NY for the purpose of this rule. Also, if a NY return is required to be filed to get back state taxes withheld and this exemption results in zero income (as it usually does) the return will have to be mailed in vice electronically filed.

 

North Carolina:

NC taxes military residents the same as other residents.

 

North Dakota:

ND taxes military residents the same as other residents, however, National Guard and reserve members called to active duty can exclude their active duty pay form ND income.

 

Ohio:

Ohio does not tax military pay of OH residents stationed outside of the state of OH. They do tax military income of their residents when stationed in OH.

 

Oklahoma:

Oklahoma allows military members to exclude active duty pay. This exclusion is accomplished using Schedule 511-C. Military members are required to file an OK tax return if they were required to file a federal return.

Oregon:

Oregon allows a subtraction of all military pay earned while stationed outside of OR and up to $6000 earned while stationed in Oregon (Subtraction Code 319). OR also allows military residents to be treated as non residence if they spent less than 31 days in OR, did not have an abode in OR and had a permanent abode outside OR the entire year.

 

Pennsylvania:

Pennsylvania does not tax Active Duty Military Income of residents stationed outside of PA and does not require a tax return; however, they do require the service member to mail or fax a copy of their orders stationing them outside of PA and their W-2. If filing a tax return a copy of the orders must be included when mailing the return, or sent separately to the address below.

PA DEPT OF REVENUE

NO PAYMENT OR NO REFUND

2 REVENUE PLACE

HARRISBURG PA 17129-0002
May also be faxed to : (717) 772-4193

 

Rhode Island:

Rhode Island taxes military residents the same as other residents.

 

South Carolina:

SC taxes military residents just like regular residents except that it does not tax reservist drill pay. SC is very generous to the spouses of military (residents of another state) in that they allow you to exclude the active duty income of the non-resident military member from the calculation of what percentage of deductions to allocate to the spouse. This generally results in 100% of the deductions against only the spouses SC income. It is very difficult to get tax software to handle this correctly. Line 1 of the SCNR should have no active duty military income in the Federal column.

 

South Dakota:

SD does not have an income tax.

 

Tennessee:

TN does not have an income tax but they do tax interest and dividends. Generally these would need to exceed $1250 for an individual and $2500 for a couple.

 

Texas:

Texas does not have an income tax.

 

Utah:

Utah taxes resident service members the same as other residents.

 

Vermont:

Vermont does not tax military pay of VT residents stationed outside of the state of VT. They do tax military income of their residents when stationed in VT. Military pay is subtracted on line 32. A tax return is not required if the only income is military pay while stationed outside VT.

Virginia:

Virginia taxes military residents just like other residents except that they give a subtraction of basic military pay of up to $15000. The subtraction phases out dollar for dollar as income goes from $15000 to $30000 and is completely gone at $30000 of income. (If a military member made less than $15000, it would all be subtracted. If they made $20000, they get to subtract $10000.) The subtraction code is 38.

 

Washington:

Washington does not have an income tax.

 

West Virginia:

West Virginia taxes military residents unless they spent less than 30 days in WV. In this case they file as a non-resident. WV does not tax military income of reserves or national guard called to active duty by Executive Order of the President.

 

Wisconsin:

Wisconsin taxes military residents the same as other residents except that they do not tax military pay of reserves or national guard called to active duty. Rent paid by the military member in a state other than WI is allowed to be used for the School Property Tax Credit (not military housing.) If a military member is stationed outside the United States, they may take a credit of up to $300 for pay received while stationed outside the U.S.

 

Wyoming:

WY does not have an income tax.

 

Feel free to send questions to Kirk at taxadvisor@email.com

I am available to prepare taxes via mail, e-mail, fax and online approval. No fees are charged until the return is complete and you are 100% satisfied. If the fees are too high, refund too low, or we determine that a cheaper filing method is appropriate, I will return all materials and charge no fees.

I will check any individual tax return from 2010, 2011, 2012 or 2013 for free. If I find an error, I will offer to fix it for a fee if desired

 

I have made every effort to ensure the above information is 100% accurate, but I am human and the various governments love to change the rules. If you think something is wrong please inform me via e-mail at taxadvisor@email.com

If you like the blog, buy my book: Everyday Taxes only $5.99 for Kindle!  

2013 Boomer Deduction Instructions for Turbo Tax Home Software (store purchased)

These are specific instructions for entering information from the Boomer Deduction Worksheet into Turbo Tax using their home software tax preparation.  I used the Deluxe version linked below (which offers a 10% bonus if you use some of your refund to buy an Amazon gift card).  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:

• 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 software by separating information with three asterisks - ***
• I'll indicate that you should be entering something or clicking a button by using the # sign

Page 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:

***
How Do You Want to Enter Your Deductions and Credits?
# You can either click "Easy Guide" and go through all the deductions until you get to the page titled "Employment Expenses", or you can select "Explore on my Own" and go down the list and click on "Start" next to "Employment Expenses"
***
Employment Expenses
# Yes
***
Teacher Expense
# No
***
Employment Expenses Related to W-2?
# Yes
***
Other Types of Expenses
# 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)
***
Do You Own...
# Answer as applicable
***
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 had to pay $107 for the software just to test it!

2013 Boomer Deductions for H&R Block Home Software (store purchased)

These are specific instructions for entering information from the Boomer Deduction Worksheet into H&R Block's at home tax preparation that you would purchase in a store and install on your computer.  I used the Deluxe version linked below (which offers a 10% bonus if you use some of your refund to buy an Amazon gift card).  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 At Home 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:

• 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

Page 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 Deductions Section.

***
Deductions
# Check "Job related expenses" box
***
Job Related Expenses
# Click the plus sign next to "Add Job"
***
Job Related Expenses
# In the "Occupation" box, enter "Two Crew FBM Submariner
***
Do Any Special Situations Apply
# Click "None of the Above"
***
Job Expense Assistant
# Click the "Quick Entry" button
***
Enter Your Job Related Expenses
# In the "Overnight Travel" box, enter the total of Lines K and L from the Boomer Deduction Worksheet
# In the "Meals and Entertainment" box, enter the amount from Line M from the Boomer Deduction Worksheet
***
Were You Reimbursed
# Click No
***
Department of Transportation Limits
# Click No
***
Job Related Expense Summary
# Click Next
***
Work Related Home Office
# Click Next
***
 Vehicles Used in Employment
# Click the plus sign next to "Add Vehicle"
***
Tell Us About This Vehicle
# 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)
***
Owned, Leased or Provided
# Check Own or Lease as applicable
***
Check Any that Apply
# Check any that apply
***
Your Vehicle Mileage
# Enter total mileage driven during the year for ANY purpose (12/31 odometer - 1/1 odometer)
# In "Miles Driven for Business" 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)
# Enter daily round trip commute mileage
***
Standard Mileage in First Year
# Check Yes
(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.)
***
Choose Your Vehicle Reporting Method
# Check the Standard Mileage box
***
Tell Us Your Out of Pocket Vehicle Expenses
# Click "Next"
***
Your Vehicle Additional Information
# Check the 2nd box if your household has more than one vehicle
# Check the other three boxes
***
Your Standard Mileage Deduction
# Click "Next"
Watch your refund change and see how much I have helped you!  You can thank me later :)
***
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 Turbo Tax home software!

Last Chance for 2010 Tax Money

If you haven't filed your 2010 taxes and you are due a refund, April 15th is your last chance to claim it!

If you filed your 2010 tax return, and didn't get every penny you were due, April 15th is your last chance to get it.

Unless you had the simplest of tax returns, now is the time to get a professional to double check your tax return and make sure you didn't miss anything.  If he finds you more money, you can get it back as long as you send the amendment in by April 15th.

Or you could check it yourself.  You could use my list of common errors for a start.  I've conveniently linked it HERE.

If it helps you find more money, leave me a tip, or buy something using the Amazon search box in the upper right hand corner.  Might I recommend one of my favorite books:

Parliament of Whores: A Lone Humorist Attempts to Explain the Entire U.S. Government (O'Rourke, P. J.)