Also in this playlist...
This transcript is automatically generated
Exactly did a couple of weeks away yesterday is a sorry to remind you many of the people in our radio TV audience.
We asked them for questions on their about the Texas and they -- bed so remember from now until tax day.
Which is April 17 not the fifteenth this year because the fifteenth on weekends it was the seventeenth.
We're going to answer some of your tough tax question joining me now Fox Business network's Tracie burns and wealth health managing director rich prop -- And what I want to start with is.
The place where.
Back in the day -- used to -- taxes for living.
You always start with last year's return to see if used to make sure you remember everything that you had -- last year's return.
But but also.
The kind of review what's changed since last year what any big -- -- congress.
Done much not you know there was -- talk at the end of 2010 -- the planet just left everything pretty much a status quell.
But bunch of things people will see I think the one big thing is the cost basis reporting now when you get your 1099 -- have to start reporting what you originally paid for this stuff.
So that's for stocks reits foreign securities next year you're gonna see it for mutual funds -- trip people up a little it does it.
So another -- -- they're gonna say you paid.
A hundred dollars a share offers stock and -- sold it for.
Something more something less so that the iris knows if you have a gain right.
The law courses for only purchases going forward but they -- gonna start to keep track and again that's an extra number that might throw people -- -- -- with -- but it's gonna -- Yet so it requires an -- -- basically to the schedule.
And that's a new form that you basically just a list allies Tracy said the security the basis that's been reported if it's been really -- already on and on the capital gains form it was -- -- already on now you have to have a new filing form four whether it will be rewarded by the custodian.
Or your reporting your basis yourself.
And any adjustments that you're making a basis for.
English what you -- -- essentially what you paid for a break plus or minus a major purchaser wedding and now it's not it's not like there's an additional tax one other thing to be it was your members if they -- converted their Roth IRA -- second part if by chance they split into two.
The second part of the conversion you're gonna owe tax on it might catch people off guard.
Right but the important thing there too is that what you're talking about is it is right for 2010 if you decided to buy for -- attacks over two years.
The second part is do not but if you converted.
This past year in 2011.
The full taxes do you don't have that option.
So when you convert from a regular -- to a Roth IRA right there is going to be some tax you need to pay.
The that all the past yeah basically the good the passing it haven't dated let's get these questions and to make and -- and -- -- question said.
How about those abuzz that made a total of 141000.
Dollars or 6600.
Of that was unemployment.
Ten I still have to pay -- So.
Unemployment insurance taxable right.
Totally and the -- I think is that a lot of people don't elect to have federal tax is withheld when they start collecting their checks so they really get hit global sometimes.
Unaware you can you can ask to have state taxes withheld to -- if you are unemployed and you have no taxes without make the change immediately federal and state you want without.
But you but they're out there already.
Financially desperate and they're they're gonna want every penny now well that -- -- what -- hammer that comes down surprise on them come tax day.
Right now and that's one of the biggest problems is people are you know in need of all -- that they can get under these circumstances and they may not withhold but the reality is you're gonna have a liability do people don't know the unemployment.
Income is taxable so that's that is a problem.
The outlook for hat and there is she might qualify for the earned income tax credit.
So even though she's reporting this income about 5000 -- it might be wiped you know she might end up getting credit for 5000 -- -- -- -- -- much in the -- Is she is it easy -- -- a earned income tax credit.
There and editors and other form.
There's -- -- form of course that was happy support platform but you know she may not have a huge liability they Tracy said you have to.
In between your standard deduction and near exemptions and you know we don't know a lot about you know the caller but the person who wrote in but it might be that there's not a lot of liability -- see you really have to run the numbers but recognize that kind of the -- -- -- don't know it's something like tentatively chop it into like a terrible attacks -- tax cut and have -- attendants go.
There will figured out alright John since in the questions as I am supporting my elderly mother.
I pay for her utilities and help her with her groceries.
Can I taker as a dependent on my tax return and rich.
-- you know most people think they know what are -- is until you open up the internal revenue code I think it is one of the more complicated sections of the code.
Defining what is a dependent.
By Adam I'm smile because you know I think that all the time every time that someone asked about the -- you think right away -- -- my child or you know I pay for things for a mom.
Reality as you know I -- the book yesterday because the definition is forever long and is something you can't memorize you really have to go back to book all the time but there's.
A number of tests in this case for a mom and it's really what you're looking at a qualified relative and there's a there's a relationship tests which she falls under his mom there's a litany of people that would qualify -- there's a gross income test so.
As long as the mom is making less than the exemption amount which this year's 3700 dollars and then there's a support tests.
Whereby you know if you're supporting more than 50%.
Of moms needs then that could potentially qualify.
As a dependent and so we're not clear here whether paying for groceries and some of the utility bills is more than 50% of the support.
But it's important to noted it's not an easy -- their -- test that have to be met.
And then it -- mom has retirement accounts she's getting money from or interest or dividends from the savings account.
It might be better for mom to have that the did dependence production rather than give it to the sun.
Right and that's a thing -- so unfortunately it's hard to tell right now paying utilities and groceries doesn't sound like more than 50%.
Support to me.
But again this is something as -- saying you -- -- you have to sit down around these numbers and -- Turbotax or tax cut any of those Opera Software programs can help you through this.
Give you another words.
John can't get the dependence deduction and mom can't get her on her own return -- -- one or the other take your pick to meet you gotta run the return to couple before.
Well agreed to be independent -- don't forget.
Often times they don't want to -- Yes.
And -- and elderly moms to be very independent yeah.
The little boy I'm gonna tell you what to do not which -- Tracy -- we're gonna continue this next week with more tax questions thanks for coming by today.
Filter by section