April is almost here, and I haven’t finished doing my taxes yet. Tsk, tsk. I’m actually about 90% done with my return, but I am still trying to track down every single receipt possible in order to reduce my tax liability. They are legit business expenses, but I really need to work on my bookkeeping skills. After reading up on the rules I am not messing with the home office deduction for 2005.
I would just file a tax extension to October 16th, but I underwitheld on purpose this year and will be owing taxes (without penalty). That means I have to pay what I owe by April 17th even with an extension. If you followed some of the deals from my blog this past year, here are some things you may want to note:
Sharebuilder Offer – They won’t send you a 1099-DIV if your dividend income was less than $10, but you are still supposed to report that on your taxes. I have 53 cents of dividends from EEM. Not sure how much I’d stress over this, but there ya go.
ex24 iPod Offer – I didn’t get a 1099 for the iPod Shuffle, but I did also have some dividend income from my one share of Costco. It was less than 50 cents though, so that was basically nothing (you are allowed to round to the nearest dollar).
Treasury Bills and Bonds – I had over $10 in interest from T-Bills, but I didn’t get a 1099 from the Department of the Treasury. I had to go online and print them out myself. Go figure, the government is the only financial institution to leave me hanging. Are they exempt or something? Be sure to note them as Treasury Interest which is exempt from state and local income taxes.
The rest of the bank bonuses all mailed me 1099-INTs. Ameritrade was the only annoying brokerage which made a corrected 1099-DIV form just a couple weeks ago. There are plenty of other fuzzy tax areas (like credit card cashback rebates) that I am not going to give any advice on as I am not a tax professional by any stretch of the imagination.
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ING does not mail out 1099s for their savings accounts. You have to go online to get the details.
I asked my Dad (a lifelong CPA) about the cashback rebates because Discover card sent me a statement of my cashback rebates to help me get ready for tax season. You do NOT have to report the credit card cashback rebates, unless they send you a 1099, which you would have to report. One bank sent me a 1099-MISC for the referal bonus. 1099-MISC’s can be a headache on a 1040) He equated the cashback bonus like using a coupon at a store. If you bought a $1 item and used a $5 coupon on it, assuming you received $4 for the transaction, you would not declare $4 or even $5 income to the government, now would you. Same thing is true of the rebate. The CC company is just giving you a $100 coupon on that first purchase.
I haven’t done my taxes either yet. This could be quite painful.
I did receive a 1099 from ex24 for the iPod offer. IIRC, it was listed in the 1099-Misc part.
did you know that if you were charged a fee for a 0% BT, and then you used the money from BT to make an investment (e.g. put into savings), that fee is deductible as investment interest expense?
I’m curious to know how you underwithheld without penalty. I tried to do that once.. obviously I was penalized 🙂
Hey–
Do you know if you have to pay taxes on the $50 from Sharebuilder as well? I have this listed as a div, tentatively.
mc – You’re right, I think they sent me an e-mail instead.
SanDance – That is comforting. I know that the IRS clearly states that a rebate from the manufacturer on a purchase price is not taxable. On this, the IRS does not give clear guidance either way. I’m personally not treating it as taxable, but again this is not my advice to anyone else.
Mike – Really? I should be more clear – I got a 1099, but the value of the iPod was not on there, just the value of the referrals I got was. So they added $99?
kappy – That’s interesting to know too, although I still don’t want those fees 🙂
Tim – I’m writing that as my next post.
Anon – Well, Sharebuilder did not treat it as dividend or interest income, because if they did then I would have gotten a 1099. But technically, any income you receive is taxable. And that’s all I’m saying…
Hey–
Just got off the phone with Sharebuilder. They said discuss it with your tax advisor.
Anon – What a surprise =)
Here is a simple rule to follow:
When you receive money (or whatever the term would be, each is different) for opening a bank account from a bank, etc., this would be a taxable transaction and should be reported on your tax return as “other income.”
When you receive money for opening a credit card account with a credit card company, etc., this would be a non-taxable transaction and should not be reported. Just like a coupon, like the previous commentor stated.
A more simple rule would be this, if you receive a 1099 (or can retrieve a 1099 online), report it. If you don’t receive a 1099 (or cannot retrieve one online), don’t report it. When in doubt, leave it out.
kappy,
There is the threshold for investment expenses deduction – 2% of AGI. And of course you need to itemize in the first place.
Hey, i have a small amount(around 250 dollars) in sharebuilder for some savings, and was wondering how to go about in paying taxes(i am a high schooler.)
I just checked my 401K’s performance online and this is what I found out:
Personal Rate of Return from 01/01/2006 to 03/30/2006 is 8.2%
🙂 if only it was always like this!
Hey Jonathan… why are you not diving into the home office deduction?
Jim – If you’re a dependent, ask your parents since they’ll be filing for you.
methodmuse – I am in 2006, but not in 2005. Given the high audit rates for Sole Proprietorships that take the HO deduction, I am going to wait until I have full documentation of for that deduction.