Working on my taxes today, and I have a few questions. I’ve done them myself intermittently using TurboTax through the years (using the prior year’s professionally prepared filings as a guide).

I have a 21 and 19 year old college students, and because of my income (with my wife), I don’t  qualify for any of the tuition related deductions/savings. Would it be better for my kids just to file independently and not claim them as dependents? I’m wondering if they would get a refund because of their college expenses and low earnings.

When I was in that position my tax accountant ran the numbers both ways and it worked out better for us to claim them. That was over ten years ago so I've forgotten some of the details. 

If you have the software I think you can run the numbers both ways. 

19 minutes ago, Texsox said:

When I was in that position my tax accountant ran the numbers both ways and it worked out better for us to claim them. That was over ten years ago so I've forgotten some of the details. 

If you have the software I think you can run the numbers both ways. 

Yeah. It’s going to be a pain, but that’s what I plan to do. At least I have time.

It sucks that no matter what I do, it always seems like whatever changes they make to the tax codes negatively affect (or at least don’t help) me.

I seem to fall into this weird pocket where no matter what I do, at the end of the year I always owe something. So annoying.

8 hours ago, Middle Buffalo said:

Yeah. It’s going to be a pain, but that’s what I plan to do. At least I have time.

It sucks that no matter what I do, it always seems like whatever changes they make to the tax codes negatively affect (or at least don’t help) me.

I seem to fall into this weird pocket where no matter what I do, at the end of the year I always owe something. So annoying.

One thing I always remind myself. Refund or paying is a function of withholdings not total taxes paid. If there was a way to be certain of your tax bill in advance your reconciliation would always be zero. 

We have owed less that $150 each year for most of the decade. If we increased withholding we could receive a bigger return but we prefer to to. 

 

1 hour ago, Texsox said:

One thing I always remind myself. Refund or paying is a function of withholdings not total taxes paid. If there was a way to be certain of your tax bill in advance your reconciliation would always be zero. 

We have owed less that $150 each year for most of the decade. If we increased withholding we could receive a bigger return but we prefer to to. 

 

You need to compare what the 2 kids would gain by claiming themselves with what you would lose by not claiming their exemptions.  But it seems like you know that.

13 minutes ago, Stinky Stanky said:

You need to compare what the 2 kids would gain by claiming themselves with what you would lose by not claiming their exemptions.  But it seems like you know that.

Thanks. Looks like I have a few more hours of tax prep. I’ll have to figure out how to do it without having to totally redo mine.

2 minutes ago, Middle Buffalo said:

Thanks. Looks like I have a few more hours of tax prep. I’ll have to figure out how to do it without having to totally redo mine.

In Block you just start a new return. 

22 minutes ago, Texsox said:

In Block you just start a new return. 

This. Start a new return and run with different settings. 

Just did this with my youngest who turned 19 last year. She's in a unique situation where she didn't start her first job until 2020. So she didn't get either one of the stimulus checks last year. And we also didn't get to claim her as a dependent for the stimulus either. It only applied to dependents 16 or younger. 

She's in college now and if we claim her as a dependent, she doesn't get the stimulus money added on to her refund. So we didn't claim her and let her file as single so she can get it.

Thanks. I should just become a billionaire and not have to pay taxes.

5 minutes ago, Iwritecode said:

Just did this with my youngest who turned 19 last year. She's in a unique situation where she didn't start her first job until 2020. So she didn't get either one of the stimulus checks last year. And we also didn't get to claim her as a dependent for the stimulus either. It only applied to dependents 16 or younger. 

She's in college now and if we claim her as a dependent, she doesn't get the stimulus money added on to her refund. So we didn't claim her and let her file as single so she can get it.

This is where I’m at. My 21 and 19 year olds are clearly dependent college students, and we don’t get the stimulus for them because of their ages, and they can’t get it because they are dependents. It really doesn’t make sense.

I only got a little bit for my 16 year old because of my wife any my income, but even a little bit helps.

My take home check is literally a third of my gross. I know I should increase my withholding, but I can’t really afford it. My wife and I contribute the maximum to our 401k ($39k total plus another $11k  to repay a loan we took from it when we bought our house). So, our AGI is reduced around $50k as a result. I can’t do much more to itemize to save on taxes. I played around with donations, and that didn’t do much.

Our tax system really is crazy.

14 hours ago, Middle Buffalo said:

Working on my taxes today, and I have a few questions. I’ve done them myself intermittently using TurboTax through the years (using the prior year’s professionally prepared filings as a guide).

I have a 21 and 19 year old college students, and because of my income (with my wife), I don’t  qualify for any of the tuition related deductions/savings. Would it be better for my kids just to file independently and not claim them as dependents? I’m wondering if they would get a refund because of their college expenses and low earnings.

I'm in the exact same situation. We have a 21 and a 19 away at college. We use turbo tax and ran both sets of numbers last year and it was slightly better to claim them. Nothing really significant though. We haven't done it yet this year. You are right about none of the changes seem to ever help.

I've also noticed this year that Turbotax's "free" version isn't free if you have any sort of variation that makes your taxes not simple anymore.

My foster brother had a bonus that he got a 1099-MSC for. Made it not free.

Oldest daughter got a $19 payout from a retirement fund from when she worked at Little Caesar's. Made it not free.

Youngest daughter added in expenses for college (mostly books). Made it not free.

 

I'm thinking of having my youngest try out FreeTaxUSA instead. The state taxes we can do for free on the IL state website.

 

45 minutes ago, Iwritecode said:

I've also noticed this year that Turbotax's "free" version isn't free if you have any sort of variation that makes your taxes not simple anymore.

My foster brother had a bonus that he got a 1099-MSC for. Made it not free.

Oldest daughter got a $19 payout from a retirement fund from when she worked at Little Caesar's. Made it not free.

Youngest daughter added in expenses for college (mostly books). Made it not free.

 

I'm thinking of having my youngest try out FreeTaxUSA instead. The state taxes we can do for free on the IL state website.

 

I just spend the 35 for HR Black tax cut every year.  That way I have it on the computer, and I don't have to worry about anything.

29 minutes ago, southsider2k5 said:

I just spend the 35 for HR Black tax cut every year.  That way I have it on the computer, and I don't have to worry about anything.

Of course I have to complicate everything. Three different computers in three years. Importing hasn't been easy. And neither one of our employers are one line for easy download. 

2 minutes ago, Texsox said:

Of course I have to complicate everything. Three different computers in three years. Importing hasn't been easy. And neither one of our employers are one line for easy download. 

I put all of my old computer ones on an external hard drive.

2 minutes ago, southsider2k5 said:

I put all of my old computer ones on an external hard drive.

You plan ahead. I think oh I'll have this computer next year. Lol

1 minute ago, Texsox said:

You plan ahead. I think oh I'll have this computer next year. Lol

I have about 50,000 pics on my PC at anytime.  I don't want to lose those or a lot of my docs.

Anyone know when the 10.2k fed exemption on unemployment info will be available?  I'm trying to file my taxes but want to avoid doing so until after the exemption is implemented.

On 2/22/2021 at 10:34 AM, southsider2k5 said:

I just spend the 35 for HR Black tax cut every year.  That way I have it on the computer, and I don't have to worry about anything.

I use that as well and just save it in the cloud.  About to start the prep and with a 20 year old college student I need to look at claiming him or not.

Does not claiming him open up and funding for student loans or grants for him?

53 minutes ago, pettie4sox said:

Anyone know when the 10.2k fed exemption on unemployment info will be available?  I'm trying to file my taxes but want to avoid doing so until after the exemption is implemented.

I don't think there is a date, but yes if you can can wait I would.

Had to file the deceased return for my mom (by mail) in March 2020, got contacted in November 2020 that I needed so submit more info, looking forward to getting her tax refund around the World Series.

1 hour ago, Heads22 said:

Had to file the deceased return for my mom (by mail) in March 2020, got contacted in November 2020 that I needed so submit more info, looking forward to getting her tax refund around the World Series.

I had to do that for my ex wife.  She'd have spun in her grave if she knew I received the overpayment. Lol

If you paid for health insurance through the marketplace with post tax income, do you get a tax break by any chance?

On 3/15/2021 at 11:35 AM, pettie4sox said:

Anyone know when the 10.2k fed exemption on unemployment info will be available?  I'm trying to file my taxes but want to avoid doing so until after the exemption is implemented.

Ya, same.  I basically ran all my stuff and am ready to file but am not actually going to until the 10.2 k exempt is on there and it isn't yet.  You'd think that would have been something they'd add in right away.