Brian J

My wife retired late this year. Her annual income would have fallen below the AMT threshold but, cashing out her unused vacation pushed her well over. What can we do (if anything) to get out of this AMT situation? She already max'd out her 401k; no dependents; no mortgage; no stock options. Should've planned this a bit better. We're stumped. Any last minute ideas?

The U.S. Treasury will start sending tax rebate checks to Americans next week, ahead of its previous schedule. Previously, the Treasury had planned to begin tax rebate payments in early May as part of a $152 billion stimulus plan passed in February. The checks had to wait until after the Internal Revenue Service processed the bulk of tax returns filed before April 15. The distribution of rebate payments totaling more than $100 billion will be largely completed by the end of June. More than 800,000 electronic payments will be sent to tax filers per day on Monday, Tuesday and Wednesday of next week, with an additional 5 million sent on Friday, May 2.

Many people on this forum complained about their employer not withholding the correct amounts of federal, state, and/or local taxes.

The consensus of the responses was that it's the employee's responsibility to ensure that all tax withholding is correct.

We're 3-1/2 months into the year --- have you verified that your tax withholding will be sufficient to cover your tax liability for the year? If not, submit an updated W-4 form to your payroll department.

For self-employed individuals, the first quarterly estimated tax payment was due April 15th. There's an estimated tax worksheet in Form 1040-ES that you can use to figure out what your quarterly payments should be.

Why do so many people let the IRS withhold too much federal taxes from their paychecks? These same people then turn around and get their own money back in a big tax refund.

Why don't they increase their W-4 withholding allowances by 1 or 2 and have the IRS only withhold the amount of taxes that is necessary to meet their tax liability?

I'd like for anyone to provide me with just one common sense reason -- one that shows a level of personal responsibility -- why someone would give the IRS an interest-free loan for a year -- just to ask for their own money back during tax filing season.

Someone enlighten me, please.

You can choose to get payments of the EIC in your paycheck now instead of waiting to get your EIC all at once in 2009 when you file your tax return for the year 2008. These payments are called Advance EIC payments.

If so, see this IRS information: http://www.irs.gov/publications/p17/ch36.html#publ...

Not if:

1. You owe the tax man money. (If you owe back taxes to the IRS or any state government, you could see your rebate reduced or gone altogether.)

2. You make too much money. (The rebates will begin to phase out for individuals with gross incomes above $75K, and for married couples filing jointly with incomes over $150K.)

3. You don't make enough money. (If you have less than $3K in qualifying income, don't expect a rebate.)

4. You don't file a tax return. (Many people with low incomes are not required to file a return, but will need to in order to receive a rebate.)

5. You're just unlucky. (the IRS warns that a small percentage of tax returns will require additional time to process. For these returns, stimulus payments will not be made according to schedule.)

6. You don't have a valid SSN. (Taxpayers without who use an IRS-generated ITIN will not be eligible for a rebate. If married and filing jointly, each spouse must have a valid SSN to receive the rebate.)

Don't they realize that the basic purpose of this rebate is not to help them pay their bills, or make ends meet, or help them afford school, or anything like that.

The only purpose is to help inject enough money into the economy to ward off a recession (that may or may not already be here).

The government simply calculated how many billions of $$ was needed to do this, divided that by the number of taxpayers, and figured that they didn't need to give any additional money to people with no income, people with too much income, adult dependent college students, etc.

It's purely a mathematical calculation. Nothing personal about it; no attempt to "stick it to" someone (as a recent question indicated).

Nothing more than what minimum $$ amount was needed to help stabilize the economy.

I've seen lots of comments about the Form 8453-OL. Just want to make sure I didn't do this wrong.

I helped my nephew e-file his federal and state taxes (through taxslayer.com) in early February. He's already received his refund. He never -- I should say that I never advised him to -- send in an 8453-OL.

The instructions for that form indicate that "If you are filing a 2007 Form 1040, 1040A, 1040EZ, or Form 1040-SS through an intermediate service provider and/or transmitter and you do not use a self-select PIN, you must file a signed 2007 Form 8453-OL with the Internal Revenue Service (IRS)."

It would appear (from those instructions) that Form 8453-OL is not ALWAYS required for e-Filing, as long as a self-select PIN is used. Since taxslayer.com had him self-select a PIN, I didn't think he had to -- nor did I advise him to -- complete and send in that form.

Did I misinterpret the instructions for that form?

http://www.irs.gov/newsroom/article/0,,id=180592,0...

Approximately 320 IRS offices will be open on Super Saturday to prepare the simple Form 1040A for people who are filing a return solely to receive their stimulus payment. IRS partners such as AARP, United Way of America and dozens of others also are making special efforts on Super Saturday to reach out to those who normally are not required to file a tax return.

Recently, I've seen a number of questions that go something like, "My grandfather hasn't filed taxes for 15 years..... What do we do?" Unfortunately, by the time you ask that type question it's way too late to do anything about it.

Do every one of you request your Social Security Earnings Statement every single year? The government is supposed to send you one just before your birthdate every year. If they don't, you should request it yourself: http://www.ssa.gov/online/ssa-7004.html

Do every one of you request your free annual credit report every single year? You should request your report from all 3 major credit reporting companies every year: https://www.annualcreditreport.com/

The fact that you ask tax-related and financial-related questions on this forum shows that you are interested.

The reports are free. And they might help keep you out of those god-awful financial situations that start off with "I know I should have but I haven't done...... in 10 years."

If a married couple is filing separately, can they split up the mortgage interest deduction anyway they want? i.e., can they choose any split they want? Can one spouse claim it all and the other none.

Both individuals are on the mortgage; both own the house.

If possible, please provide a specific link to the answer source.

Now that you've calculated your 2007 tax liability, it would be interesting to know what your Tax Freedom Day was?

Just in case the question comes up. I sent the IRS my check for taxes due on Saturday (2/16). They cashed it yesterday (2/21). (Looks like they're much slower at issuing refunds.)

If this rebate is actually an advance on 2008 taxes AND if in 2008, taxes will be cut from 10 percent to zero percent on the first $6,000 dollars of taxable income for individual taxpayers -- will those people whose AGIs exceeded the tax rebate threshhold (and therefore didn't get an advance rebate) get a larger tax refund next year?

An earlier post also made the point that:

Sales tax would detriment all previous recipients of tax exempt forms of income (ie Social Security) who now have to face the national sales tax and no increase in income. All members of society not employed in the workforce (ie minors and disabled) would face dramatic tax increases since they never before owed a tax liability. Elderly people receiving distributions from Roth IRAs and other previously nontaxable forms of income would now have to pay tax or otherwise worry about sales tax refunds.

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The last I checked, Social Security income was taxable so, I don't see how that first point can stand.

The dramatic tax increase that is mentioned won't occur. Under the FairTax, the items you purchase will be 23% to 30% less expensive (depending on who is doing the calculating) than they were before the FairTax. This would all but negate the effect of the increased sales tax.

Here are the details. Grandmother was awarded legal custody of the child (at 7 years of age) when his parents divorced. Child is now 19 years old, graduated high school, and is considered "emancipated" by the courts. He now attends college and lives in the college dorms. All eligible tuition expenses are paid for via federal grants. However, grandmother pays all dormitory room and board, transportation, books, supplies, and all other support expenses. Question is, can the grandmother continue to claim him as a dependent now that he is living away from "home?" Did that dependency end when he was emancipated? Or does the child revert back to one of his biological parents being able to claim him as a dependent on their tax returns?

Filing status is married filing separately. Our only energy efficiency purchases in 2007 were $1,958 of exterior windows. On my Form 5695 line 2d, I enter $979 (my half of the purchases); this results in $98 possible credit on both lines 4 and 7. Instructions for line 8 (to calculate the maximum credit) state that for joint occupancy, enter the smaller of (1) line 7 or (2) $500 multiplied by a fraction. (The amount on line 7 is smaller than $500 * 1/2.) In 2006, we had exterior doors replaced, giving me a credit of $127 that year. The instructions for 2007 Form 5695 say to carry that $127 from 2006 to line 9 of the 2007 form. Next, the instructions for line 10 say to subtract line 9 from line 8 --- which gives me zero, but that can't be! I should be able to get up to $100 credit just for the exterior windows (my half of the $200 windows maximum) up to a maximum $250 total credit from all improvemennts (my half of the $500 totals maximum). Where on the 2007 Form 5695 did I go wrong?