The IRS Deductions Blog

Question: Why do I owe 2009 tax?

I just found out that I owe IRS $5K for year 2009. Last year I got refund $2K. My husband and I claim zero exemption. Why I still owe 2009 tax? How can I avoid and reduce owing tax FY 2010? For both Year 2008 and 2009, we have W-2, $200 interest income, no mortgage, no kids. Nothing changed. Below are tax info of year 2008 and 2009. Please help.

Year 2009
zero exemption
Status: MFJ
No dependent
Gross income 108,615
Standard deduction 11,400
exemption 7,300
taxable income 89,391
Total tax 14,719
Total payment 9,885
Amount owe 4,834

Year 2008
zero exemption
Status: MFJ
No dependent
Gross income 31,653
Standard deduction 10,900
exemption 7,000
taxable income 28,194
Total tax 0
Total payment 2,344
Federal refund 2,344

Thank you.

Answer: I would suspect it has something to do with Obama’s new tax laws but…..Seriously when you make 100k you can afford to hire a professional to do your taxes and answer your tax questions I would not rely on the info you get on yahoo answers..

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Question: Depreciation method que for TAX purpose.?

What is the difference between these depreciation method, when can it be used? GDS MACRS, straight line, 27.5 years & ADS MACRS, straight line, 40 years

Ex
Bought a property in Dec 2003
converted to rental in January 2005
Tax prepare used 100,000 (fake figure) as a base and in line 19h of form 4562 wrote 1-1-05, 100,000, 27.5, MM, S/L in subsequent column and In column (g) of the same line (19h) he wrote 2500 as depreciation deduction.

Which above (GDS/ADS) method did he used? Why is he depreciating property over 40 year but writing 27.5 years as a recovery period? I’m confused. Pl advice.

Is Interest on Line of credit (home equity) of this home used to bring down the principle of other rental property fully deductible?

I got a form 1098-T (full time), In box 1 it says $1000 and in BOX 4. IT SAYS 10.25. what’s the effect of the amount in box 4.

Answer to any question will be helpful, Thx

Answer: Residential real property is always depreciated on the 27.5 year schedule. Commercial real property is depreciated on the 40 year schedule. In either case, only the value of the improvements (buildings) are depreciated.

He had to use GDS since it’s a residential rental.

If he took a depreciation deduction of $2,500 it would look like he assigned $68,750 as the value of the improvements unless this was the first year of depreciation. (It would be apportioned in the first year depending upon when the asset was placed in service.) Ask him how he arrived at his numbers, he should be able to explain it easily enough.

Any interest expenses on the rental are deductible. You are not limited to mortgage and HELO interest. You can also deduct credit card interest and personal or other loan interest that is attributable to the rental property. When I was a landlord I maintained a credit card for exclusive use on my rentals to keep the bookkeeping simple.

Box 4 on Form 1098-T are for prior years. You might need to amend a prior year’s return. See IRS Pub 970 for further information.

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Question: Can I claim my auto insurance deductible on my taxes?

I was in a car accident earlier this year. They hit me and then took off so I had to pay my deductible out of pocket. Can I claim that on my taxes?

Answer: You may be able to claim the loss on your taxes. It will depend on your total income, and the amount of the deductible. You can only claim a casualty loss if the amount of the loss exceeds a certain percentage of your income.

Consult a tax adviser for details!

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Deductibles and Coinsurances

Question: Need major medical but…..have some ?s?

So I was being offered MM through BCBS at my previous employer, I was hit by a car (ex girlfriend) and lost my job and my MM due to being in the hospital and some other issues I was unable to continue doing what I was doing. Now I need MM, my new job hasnt picked up $$ wise and want something that is good but yet still fairly cheap. What companies can you recommend.
Also to add to the mix, I have had ear problems all my life (23 years) and will be needing more surgeries in the near future. I am a smoker but just started months ago and plan on quitting. Will that make a huge impact on the price.

Some companies I have been looking at are Assurant, NAPA, and BCBS. Does anyone know of some other companies. I do currently have AFLAC policies which would cover some of the burden of the deductibles. Thanks for any light you can shine on my little problem.

Answer: Why can’t you get disability for you problems? What about the car insurance?

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