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*** Ask TaxMama Volume 7, Issue #298 March 5, 2005 ***
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Deadlines LOOMING - http://taxmama.com/taxcalendar.html
March 15, 2005 - S-Corp Elections Due
March 15, 2005 - Corp taxes due
03.31.2005 California
Tax Amnesty ends
http://www.taxmama.com/AskTaxMama/294/article2.html
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JOB OF THE WEEK http://taxmama.careerbank.com/
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Y-M-C-A,....you know the song. They need a senior accountant.
http://taxmama.careerbank.com/seeker/view_job.cfm?id=129693
Check out the 2004 Salary Survey results to see where you stand.
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Dear Family,
Since it's my birthday this weekend, I have a present
for you - your own virtual greeting cards to play with.
http://cards.123greetings.com/cgi-bin/cards/sendcard.pl?log=taxmama
You can trick your family, friends and business
associates into thinking you're considerate and
you remembered their birthdays and anniversaries.
Just set up all your cards every two months - and
you'll look so good!
Did you see this week's West Wing? (Come on my friends,
you must - you'll be tested on it each Friday.)
http://taxmama.blogspot.com/2005/03/elect-west-wing-writing-team.html
Most IRS proposed regulations don't get much attention.
But the one they issued this week will. It's about
offering you the opportunity to put some or all of
your 401(k) contributions into ROTH-IRAs. I touched
on just the surface of these issues in this week's
MarketWatch article. Click here - http://snipurl.com/d7q3
And speaking of IRS - Federal Reserve Chairman Alan
Greenspan said that the tax code has to be simplified.
(No kidding?!) http://snipurl.com/d7q6
In response, Internal Revenue Service Commissioner Mark
Everson simplified taxes to their lowest common denominator -
donuts. If Johnny gets one doughnut and Bobby gets two,
how many will there be? (none, silly - they'll be eaten!)
What, you don't think IRS has a sense of humor?
http://snipurl.com/d7q5
Oh, that reminds me - several of you loved learning
about IRS's EFTPS program last week. If you haven't
read about it - please do. And sign up now, even if
you're not sure you're going to use. There's no
obligation to use it once you sign up - but if you
need to pay IRS quickly for anything, it will be
there waiting for you.
http://www.taxmama.com/AskTaxMama/297/article1.html
A couple of things I learned from this week's
questions to TaxMama (both those that are posted
here and those that aren't).
1) Please get advice BEFORE you take any financial
actions! Afterwards, it's usually too late.
2) Don't prepare your own tax return if you have
a business or rentals - especially if you have a
home office. It's MUCH cheaper to pay a professional
who will get it right. Even the best programs can't
prevent you from doing amazingly dumb things.
The truth is, some of the self-prepared tax returns
I've seen have people doing things on them that no
tax analyst who develops the software could ever
imagine. So, it's really hard to build in protections.
You can't imagine just how imaginative real people
can be - in all my years doing taxes, I could never
have dreamed up some of these scenarios.
But if you are going to do it yourself, Turbo Tax
is one of your best options. I know some of the
people behind it - and they have done a great job
of trying to interview you within the program, as
if you were meeeting with a tax pro.
http://taxmama.com/Articles/FilingOnline.html
But please, please, please, if you ARE going to
prepare your own tax return, please read the book
before you do. Small Business Taxes Made Easy
http://www.taxmama.com/AskTaxMama/book/
will help you get your records in order and to
arrive at the right amounts, before you try to
plug them into the software. AND if you follow
the guidelines, your records will also be in
good shape if you ever get audited.
That's it for now. Time to build my March To Do
List - you'll find it on MarketWatch on Monday.
Best wishes,
Eva Rosenberg, EA
Your TaxMama is watching...out for you.
P.S. THE BOOK is out - if you're in business, you need it!
http://www.taxmama.com/AskTaxMama/book/
P.S.S. Drop by TaxMama's Shopping pages
http://taxmama.com/resources/shopping.html
P.P.S. TaxMama is scheduling speaking/teaching
engagements for summer 2005. (Calendar is filling up)
mailto:taxwriter@gmail.com?Subject=Speak4Bucks
**************************************************
To comment on any articles in this issue, please,
DON'T send me back the whole issue. Send a note to
mailto:taxmama@taxmama.com?subject=AskTaxMamaComment
**************************************************
ADDRESS CHANGES - Please, do NOT send them to me to do.
There is a link at the bottom of this issue. Please click
on it and you will be able to make updates and changes
yourself. And faster.
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In 2003, Americans OVERPAID their taxes by more than $500 MILLION!
Did
you?
Play a simple, two minute game and learn what tax professionals call
"the most overlooked tax deduction in America." ItsDeductible will put
$300 to $1200 back in your pocket -- guaranteed -- or your money back.
http://1deg.net/ht/id1/taxmama/
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Media Tour and Classes
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Join me Saturday March 12, 11:00 am EST for an hour on
Hints From Heloise - http://heloise.com/ - call in
and chat.
http://www.heloise.com/radioshow.html
---
Reserve the date! March 23, 2005 at 1:00 p.m. Eastern Time
Tax Issues Affecting Internet Businesses with Eva Rosenberg
You're invited to a live online class - as my guest
http://www.ipwseminars.com/week.php?cid=&catid=2&d=25&w=4&m=3&y=2005&s =
To register, please click here and "Take the Free Test Drive"
http://taxclass.ipowerworld.com/
[If you need help signing up, please contact Donna Woodbury.
You can reach her at donna.woodbury@gmail.com or 707.884.4696 ]
---
Read articles and columns at www.WomensWallStreet.com
where you can even join in the discussion about the questions.
[Coming soon: Columns on www.WomensRadio.com ]
[Yes, someone kindly pointed out that my TOOTS pages
haven't been updated since 2003. Sorry - been too busy
living to write about it.)
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New York State Unclaimed Funds
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A note from Tax Pro Abe Fasten of NY
Many people have accounts held by New York State Unclaimed
Funds and don't even know about it. Check out if you or
your parents, grandparents, or othr close relative has
such unclaimed funds. All you have to do is find the
claim in the enclosed link, print the claim form, and
send it in signed and notarized.
http://www.osc.state.ny.us/cgi-bin/db2www/ouffrm.d2w/input
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-------------------------------------
SCAM ALERT - DOMAINS
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You're probably seeing notices in your e-mail
from the Domain Update Center. They look like
invoices and they say FINAL NOTICE.
They are very official-looking with bold letters
across the screen saying:
IN ACCORDANCE WITH THE UNITED STATES LEGAL CODE
Delete it immediately.
The deceptive folks at domainupdates.us are just
scamming you. There is nothing to lose if you
ignore them. No one will take your domain.
They are trying to intimidate you into calling them
and to sell you a .US domain. (They don't even give
you a link - just a phone number to call, urgently.)
If you really want one, you can get a .US domain
from GoDaddy for as little as $6.95
http://www.godaddy.com/gdshop/registrar/search.asp?isc=tmagdban1
So avoid these guys like the plague they are.
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How To Be Net Savvy - and Save Money
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Speaking of bad domain sellers, let's talk about
the good ones.
If you're reading this, odds are that you have a
website - even if it's one that comes for free
with your e-mail address from your Internet Service
Provider (ISP). Using their free site as your
primary contact with the world is like being held
hostage. What's if you're ever not satisfied with
their service? You can't leave because your website
and identity are there. Free holds you captive.
Of course, many people have those free sites from
Hotmail, Tripod or other places that throw out
pop-up after pop-up to your visitors. Free is nice,
but it's really, really annoying.
Or you might actually have a real website. But the
domain name is registered with Network Solutions ($34.99).
Register.com ($35),Dotster ($15), even Yahoo ($9.95).
Sheesh, that's expensive. And customer service doesn't
exist. Ever try calling them for help?
Why would you pay all that much for your domain?
And put up with such bad service?
GoDaddy is one of the largest domain registrars in the
business, so they're secure and going to be around for
a long time - and they only charge you $8.95.
http://www.godaddy.com/gdshop/registrar/search.asp?isc=tmagdban1
Heck, if you pick up one of their additional services,
you can get your own web address for as little as $3.95
And you get 24/7 customer service. When YOU need it.
The neat thing is, that using their service, you can
control that domain yourself. Even an idiot like me
can get into their tools and point that domain over
to your free domains. Yes, that's right, you don't have
to move your existing site. All you need to do is
log in and click on "manage domain forwarding", then
click on your domain name - and type or paste in the
address of the domain you're using now.
And when you want to leave your host or webmaster,
you don't have to wait until they feel like moving
you, or until you're forced to pay them for work you
weren't happy with - just to get your website back.
Even if you've just renewed your domain - if you move
it now, they'll just add a year to your existing
expiration date. And they'll only charge you $7.95
to transfer your domain registrations.
http://www.godaddy.com/gdshop/registrar/search.asp?isc=tmagdban1
Think of what a cool gift it would be to someone
to give them their own name...or as incentive to
start a business.
And hey, even if you sell only on eBay, wouldn't it
be great to have your own page to feature some of
your hot products and, then, send them over to
eBay to buy it. But your regular customers will
find you more easily if you have a catchy name.
http://www.godaddy.com/gdshop/registrar/search.asp?isc=tmagdban1
Hmmm....save money, get control, have fun...
and get service. I like this!
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It Always Depends
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Last week, Sharon from Kentucky asked about using her
daughter as a dependent.
http://www.taxmama.com/AskTaxMama/295/article1.html
<TaxPro Replies>
Dear Eva,
Depending on the tax consequences, why doesn't the husband
file an amended return, using a 1040X and report his
income using the MFS (married filing separately) status?
The mother might be eligible for the EIC and the Child
and dependent care credit too. Moreover her filing status
would be HOH (head of household), another improvement.
I can't really figure this out without the numbers from
everybody, and their situation.
Best regards,
Roger Adams,EA
Portugal
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IRA to ROTH, with Attitude
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From: Minneapolis, MN
Dear TaxMama,
I converted a traditional IRA to a Roth last year.
This IRA was funded with about 30% non-deductible
after-tax funds.
In filling out Form 8606 it appears I am being
taxed again on these after-tax funds. Form 8606
does not have me establish my basis in the IRA fund
I am converting and then subtract that basis from
my total conversion to determine the amount
I should be taxed on.
[TaxMama translation: It doesn't let him show
how much of his IRA money was already taxed.]
Instead I add up my total traditional IRAs plus
my conversion amount and then divide that figure
into my total non-deductible contributions.
Then I multiple this figure by the conversion
amount to determine the amount that won’t be
taxed. This doesn’t seem right.
Will you explain why this is done this way?
Brian
<TaxMama Replies>
Dear Brian
I honestly haven't a clue.
Nor do I want to.
I have done everything in my power to convince
everyone around me to NEVER pay taxes in
advance unneccessarily. So far, I've always
been proven right in the ROTH conversion arena...
except once.
That guy was inheriting in a bundle and his
income upon retirement was going to be really
high, even before he drew money from his IRA.
It made sense to convert the account earlier,
when his income was lower.
[And then his mother died sooner. And he took
all the monies he inherited and put them into his
house. Which he sold at a nice, non-taxable profit
and did that again...and will continue to earn money
tax-free. So, as it turns out, he won't have a high
income when he retires. So, I was right - he
prepaid the ROTH conversion for nothing.]
So, I can't help you. Because I've shied away from
all those computations.
If your income is so high that you want to pay taxes
in advance, you can darn well afford to pay someone
to do the silly computations for you.
Besides, if they get them wrong, you're covered
because you did the responsible thing and got a
professional to do it for you.
(Besides that, I doubt if anyone at IRS knows how
to do the darn fool computation either.)
Have fun!
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
The BOOK is out!
Small Business Taxes Made Easy - read all about it!
http://www.taxmama.com/AskTaxMama/book/
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Capital Error
-------------------------------------
From: Austin, Texas
Dear TaxMama,
I made a mistake on my 2003 Schedule D.
My losses were greater than I reported.
Since I already took the maximum $3,000 loss for
2003, the only number affected is my capital loss
carryover (not my 2003 Adjusted Gross Income).
It doesn't look like there is a line to fill in
on the 1040X for this situation.
Should I attach an amended Schedule D and refer
to it in the explanation of changes section instead?
After I submit an amended return for 2003, do I
use my updated Capital Loss Carryover when
preparing my 2004 taxes, or do I need any kind
of acceptance of my amended return from the IRS?
Thanks for your help.
Jean
<TaxMama Replies>
Hi Jean,
Yeah, you really should amend the 2003 return before
you file 2004.
Yes. Prepare the corrected Schedule D and attach it
to the 1040X. For the reason for filing - just explain that
you omitted a capital loss and need to establish the correct
capital loss carryforward.
Then, using the amended 2003 Schedule D, prepare your
2004 tax return.
No, you don't need to wait to hear from IRS.
You've got it exactly right. I am so proud of you.
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
The BOOK is out!
Small Business Taxes Made Easy - read all about it!
http://www.taxmama.com/AskTaxMama/book/
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Home, Sweet Mess
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From: Penfield, New York
Dear TaxMama,
My parents bought a house in 1952, mortagage paid
off in 1983.
My Dad passed away in 1995 and for estate planning
purposes the house was gifted to my son (her grandson)
in 1996 with life use. The deed was transferred and
Form 709 (gift tax) was filed by my mother.
In 2004 the house was sold by my mother.
For convenience, since her grandson lives out of town,
and to make the sale easier, the house was re-gifted
and deeded back to my mother.
The sale price was 63,500.
My mother has lived in house for 52 years, responsible
for all taxes, improvements, utilities, and insurance.
It is the only house she has ever lived in or owned.
Since she maintained life use, is she elgible for
the home exclusion?
Roger
<TaxMama Replies>
Dear Roger,
You guys SO messed this up. With a value this small,
whose idea was it to so urgently move it out of her
estate? There was no reason to do that! If this is
the biggest asset in her estate, it isn't large
enough to tax.
Did anyone discuss any of these moves with a tax
professional? Or did you just read the instructions
on the Gift Tax form and think you were being so
clever?
For Mom to get the personal residence exclusion,
she'd have to both live in it and own it for at
least two of the last five years.
She qualifies on the one hand, but not on the
ownership side.
The Good News:
At least, one thing is in her favor. The tax basis
of the house is the fair market value at the date
of your dad's death. So what was the house worth
at that time?
Add the cost of any improvements she made since 1995.
Add all the selling costs and commissions. That will
be her gain. It probably won't be much. But,
at least, it will be long term, since the holding
period will that of the person who gave her the gift.
Roger, you guys really need to get advice BEFORE
doing things, not afterwards. Please, in the future...
Take better care of each other, OK?
Best wishes,
Eva Rosenberg, MBA, EA
http://www.TaxMama.com
The BOOK is out!
Small Business Taxes Made Easy - read all about it!
http://www.taxmama.com/AskTaxMama/book/
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Because We Care
----------------------------------------------------------------
Don't let yourself or your friend feel helpless.
Share the Power - SCHOLARSHIPS FOR SELF-DEFENSE TRAINING AVAILABLE
SHARE THE POWER:SELF DEFENSE TRAINING is gaining POWER!
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Helping Seniors keep their pets
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The Jeremiah Society asks "Who Will Care for the Children?"
Today, many of these people outlive their parents. And therein
lies the problem. Once their loving caregivers are gone, who
will care for them? And will they be able to care for themselves?
The Jeremiah Society, is working to help enhance and enrich the
lives of developmentally disabled teens and adults in the Jewish
Community Please Call Rose Lacher, (714) 997-8193
http://www.jccoc.org/adults.html
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MONEY FUNNIES
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POLISH DIVORCE
A Polish man moved to the USA and married an American girl.
Although his English was far from perfect, they got along
very well until one day he rushed into a lawyer's office
and asked him if he could arrange a divorce for him -
"very quick."
The lawyer said that the speed for getting a divorce would
depend on the circumstances, and asked him the following
questions:
LAWYER: "Have you any grounds?"
POLE: "JA, JA, acre and half and nice little home."
LAWYER: "No," I mean what is the foundation of this case?"
POLE: "It made of concrete."
LAWYER: "Does either of you have a real grudge?"
POLE: "No, we have carport, and not need one."
LAWYER: "I mean, What are your relations like?"
POLE: "All my relation's still in Poland."
LAWYER: "Is there any infidelity in your marriage?"
POLE: "Ja, we have hi- fidelity stereo set and
good DVD player."
LAWYER: Does your wife beat you up?"
POLE: "No, I always up before her."
LAWYER: "Is your wife a nagger?"
POLE: "No, she white."
LAWYER: "WHY do you want this divorce?"
POLE: "She going to kill me."
LAWYER: "What makes you think that?"
POLE: "I got proof.
LAWYER: "What kind of proof?"
POLE: "She going to poison me. She buy a bottle
at drugstore and put on shelf in bathroom.
I can read, and it say, 'Polish Remover'."
----
Contributed by Blakely Sanford, EA of San Diego
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IRS and Tax NEWS
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Courtesy of IRS
FREE HELP FROM THE IRS
Sometimes you just need a little help preparing your
federal tax return. The IRS offers free assistance by
computer, telephone, fax and in person. The IRS can
assist you with obtaining forms, publications and
answers to a wide range of tax questions. If you
qualify, IRS can even help you find free tax preparation.
ASSISTANCE WITH YOUR RETURN
You may be one of millions of taxpayers who will be
able to prepare and file their 2004 federal tax returns
electronically this year — for free. The IRS and the
Free File Alliance, LLC, a private-sector consortium
of tax software companies, have formed a partnership
to help qualifying taxpayers electronically prepare
and file their federal tax returns for free.
http://www.irs.gov/efile/article/0,,id=118986,00.html
Free tax preparation is available through the Volunteer
Income Tax Assistance (VITA) and Tax Counseling for the
Elderly (TCE) programs in many communities. Volunteers
help prepare basic tax returns for taxpayers whose
incomes are $36,000 or less. Call 1-800-829-1040 to
find the VITA or TCE site nearest you.
You may also call AARP — the largest TCE participant
— at 1-888-AARPNOW (1-888-227-7669) or visit the
AARP Web site to find the nearest Tax-Aide site.
http://www.aarp.org/money/taxaide
Personal Computer
You can access a wealth of other free tax information
on IRS.gov. Check out the “1040 Central” page for one-stop
information. Go to “Forms and Publications” to download
the forms, instructions or publications you need.
http://www.irs.gov/formspubs/index.html
To get answers, go to “Frequently Asked
Questions” on the “Individuals” page.
http://www.irs.gov/faqs/index.html
Telephone
You can call the IRS Tax Help Line for Individuals,
1-800-829-1040, to get answers to your federal tax
questions. [TaxMama - that's 1-800-TAX-1040]
Help for small businesses, corporations, partnerships
and trusts who need information or help preparing
business returns is available at the Business and
Specialty Tax Line at 1-800-829-4933.
http://www.irs.gov/businesses/small/index.html
Order free forms, instructions and publications by
calling toll free 1-800-TAX-FORM (1-800-829-3676).
TTY/TDD users may call 1-800-829-4059 to ask tax
questions or to order forms and publications.
TeleTax
Call 1-800-829-4477 to hear pre-recorded messages
covering various tax topics, or to check on the
status of your refund.
TaxFax Service
Using the phone attached to your fax machine, you
can receive forms and publications by calling
1-703-368-9694. (This is not a toll-free number)
Taxpayer Assistance Centers
When you need to talk with the IRS face-to-face,
representatives at local Taxpayer Assistance Centers
can help resolve tax problems and answer questions
about how the tax law applies to your individual
tax return. To find your local office:
http://www.irs.gov/localcontacts/index.html
For more information about services provided by
the IRS, review Publication 910, Guide to Free
Tax Services. Download a copy or call the number
listed above for ordering forms and publications.
http://www.irs.gov/pub/irs-pdf/p910.pdf
Whichever method is best for you, the IRS
is there to meet your tax information needs.
---------------------------------------------------------------
E-Books and Workshops - all Yours - No Charge
-----------------------------------------------------------------
Fifty Easy Ways to Promote Your Website, By MERLE
http://www.websitetrafficplan.com/ebook.htm
This is one woman who's done well.
And she's not charging you a dime for
her years of experience.
---
New Year's Resolution Time - Budgets!
Money For Life, a novel about budgeting...
along with some interesting tools for you.
http://giftsurf.com/Specials/Money4Life.pdf
--
For more:
http://taxmama.com/workshops/
-------------------------
Not-So-Fr*e Books
-------------------------
http://taxmama.com/resources/shopbook.html
eBook - TaxMama's Secrets:
Ten Businesses to Start Online Without Spending One Thin Dime
hhttp://www.1automationwiz.com/app/aftrack.asp?afid77528
For more:
http://taxmama.com/resources/shopbook.html
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TaxMama On the WWW & Tooting Her Own Horn
http://taxmama.com/toots/index.html
TaxMama is teaching - in person and Online:
http://taxmama.com/toots/meettaxmama.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Critical Dates http://taxmama.com/taxcalendar.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Ask TaxMama is published by the good folks at http://taxmama.com
ISSN 15320790 © copyright, Eva Rosenberg, 1999 - 2004
TaxAnxiety Inc. P.O. Box 280549, Northridge, CA 91328
Written (e-mail) permission is required to copy or redistribute this
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However, you are encouraged to forward an intact copy to all your
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