Idiot's guide to tax forms?

Discussion in 'Finance and Investment' started by Rogue_Leader, May 9, 2008.

  1. Rogue_Leader

    Rogue_Leader Silent Sentinel

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    Does anyone have any suggestions as to where I can get some explanations on how to fill out the tax forms for withholding taxes from my salary? (W4 Employee Withholding allowance certificate). I keep reading over it, and I have no idea how to do things. Does anyone have a site which will walk me through it like I was 3 years old?

    My particular issues are do I classify myself as single or head of household, or both? It says head of household is for unmarried peoople paing more than 50% of home upkeep costs. This includes apartments too, right? Not just homes you own? And deductions, how do I know if I'm going to be itemizing deductions? It says I can itemize state and local taxes, but how do I know how much that's going to be? This is also one of those things where I make seperate deductions whether I'm "single" or "head of household". I'm getting that feeling that I'm going to be audited by this time next year.
     
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  3. Hoo\/er

    Hoo\/er if($profit){replicate();}

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    W4 Assistant
    W4 Calculator

    Head of Household: "You can claim the Head of Household (HOH) filing status on your tax return if you are unmarried, have cared for a dependent for over half the year, and paid more than half the cost of maintaining a home."

    If you're single and just paying a rent or mortgage you don't qualify for HOH.

    As for deductions, unless you're operating a business you probably shouldn't itemize. You can itemize, however, but keep in mind that you'll be expected to keep records of all of your deductions. In most cases as an employee, you shouldn't have to itemize. There is a standard deduction amount and most people are fine just taking that.

    See this link for a list of allowable deductions.

    One last thing -- I highly recommend you find a decent CPA.

    =)
     
  4. buckley

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    I know exactly how you feel! I hated those forms so much when we had to turn them in. I had to research if I am a "resident alien" (ET come home!!! hahaha :) ) and deal with all sorts of jargon.

    At the end though it was stil the PC who was most helpful and told me, just put "0"...
     
  5. You mean "ET phone home." :)
     
  6. buckley

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    :laugh:whoooops there i go again! my bad...just the other day, i had my friends roaring in laughter as I told them of my adventures in Ame-dee-ka! Traveling is definitely eye-opening, even for a country with so much media mileage.

    I'm thinking maybe it's a Freudian slip, though...God, I know a phone call will not suffice!:eek: Thank you for the webcam...and the scores of people who promised they would visit (erhm, erhm, cough, erhm!:D)

    Back to the thread: Do you really need to hire a CPA? Can't the hospital's employee office handle it? That seems to be the case for my program. And I'm more than relieved.
     
  7. 3dtp

    3dtp Senior Member
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    Almost. Itemizing can be useful if you own a house and have a mortgage and pay property, income or sales tax.

    You can just select 0 on your W4 form and they will withhold the maximum amount. Bonus is you will get a big-ish refund when you file your income tax returns. Downside is the goverment doesn't pay you any interest on your loan to them.

    Get a tax preparation program like TAX ACT (just google it or check with www.irs.gov for suppliers). The basic form packages will walk you through the process, digitally fill out forms and allow you to estimate your taxes. I keep one of these on hand and run it once a quarter, compare that to what's been withheld and what I expect to owe at the end of the year. Then I compare this to what's been and will be withheld and adjust my W4 accordingly. If it looks like I'll owe more than a hundred bucks or so, I decrease my withholding allowance and if it looks like I'll get a refund on the same order of magnitude, I'll increase them, thus keeping more cash for now.

    While the tax code is complex enough to befuddle rocket scientists, these programs will provide a reasonably close assessment for free or less than $15 or so, keep you from underwithholding (and the penalties and interest for that). The bonus is, come January, when you get all the forms you need, you can just correct the final values and press the print key or e-file and your return is done.

    Once you are in practice, however, a CPA may prove useful. Or you can marry a tax lawyer. I'm not sure which is the better deal.
     
  8. drlisa0318

    drlisa0318 Member

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    One thing no one has mentioned....you can only classify yourself as ONE of those, NOT BOTH. Head of Household is a special classification which is a much lower tax rate than Single. It is intended to help those who are LOWER INCOME single head-of-household. There is an income threshhold (I'm not sure what exactly - I'd have to look it up) in addition to other qualifications that must be met in order to file as Head of Household.
     
  9. 3dtp

    3dtp Senior Member
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    To be a Head of Household you must meet all of the qualifications:

    1. Be unmarried.
    2. Provide more than half the cost of keeping a home (or apartment).
    3. Be able to claim a qualifying dependent.

    EG. You are divorced and have sole custody of your minor child and do not receive any child support payments, provide and pay for a place for them to live and they minor does not have earned income above a certain threshold. The qualifying dependent must be related to you by blood or marriage or adoption. Cousins don't count.

    The Head of Household provision was designed for single parents caring for minor children. The most clearcut example would be a parent of a minor child who is widowed and provides all the financial support for the household. Check the IRS rules for details or your friendly and cheap tax-prep software package which will walk you through.
     

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