Question about taxes

[MrBurns10]

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I have a quick question I was hoping some of the more finances saavy could answer. The way I understand taxes to work is that you can either get a standard deduction or you can itemize. So let's say I'm married, no kids, and drive > 50 miles to get to work (meaning I can deduct gas). Would it be more beneficial for me to take the standard deduction or to itemize? Do I get a tax break for being married if I itemize?

Also, do you all use TurboTax or hire a CPA? I just want to make sure we're getting the most refund possible (as everyone is), and I'm so ignorant when it comes to this sort of thing I was thinking maybe hiring a CPA would be worth it.

Thanks, guys.

 

[NotAProgDirector]

If you use a computer based tax package, it will calculate both for you and then choose the larger. I have no stock/financial interest in any company, but I use TaxAct which is free for federal.

It really depends on whether you have a mortgage. Without mortgage interest, you're unlikely to benefit from itemizing.

In any case, you cannot deduct the cost of gas for driving to work no matter how far it is.

 

[gutonc]

If you don't own a home, have significant investment income, or your spouse is not an independent contractor/freelancer you're unlikely to benefit much from CPA or other tax preparer. You're also unlikely to qualify for anything over the standard deduction if you itemize.

I'd personally use TurboTax (online) or other similar software.

Also, agree with aPD. Unless there's something new in the tax code this year about it, you can't deduct gas or mileage for a regular commute, only for driving done during the work day as part of your job (and no, driving from hospital 1 to hospital 2 doesn't count).

 

[NotAProgDirector]

(and no, driving from hospital 1 to hospital 2 doesn't count).

Actually, I think that if your job requires you to be at two different sites in the same day, then you can deduct this. But, you need to keep pristine records to do so -- exactly how many miles on which days. You can't just say "about 200 miles in a year".

But I easily could be wrong.

 

[smq123]

Moving to Finance.

 

[avatarftw]

As the other posters have said, itemizing works to your advantage if your deductions are greater than the standard deduction.

For physicians, if I'm correct, it is generally better to have a CPA do your taxes since they can get pretty complicated. For less simple tax returns, there are a lot of free online filing forms on the IRS website that you can use. (Use Free File Tax Software. This program is available if your AGI is $58,000 or less🙂

http://www.irs.gov/efile/article/0,,id=118986,00.html?portlet=6

Also, if you own a business or have a C-corporation, for example, you can deduct business expenses like driving your car to work. I believe its 50 cents/mile as per the IRS.

I have a quick question I was hoping some of the more finances saavy could answer. The way I understand taxes to work is that you can either get a standard deduction or you can itemize. So let's say I'm married, no kids, and drive > 50 miles to get to work (meaning I can deduct gas). Would it be more beneficial for me to take the standard deduction or to itemize? Do I get a tax break for being married if I itemize?

Also, do you all use TurboTax or hire a CPA? I just want to make sure we're getting the most refund possible (as everyone is), and I'm so ignorant when it comes to this sort of thing I was thinking maybe hiring a CPA would be worth it.

Thanks, guys.

 

[avatarftw]

Also, now is the only time that you'll be able to deduct student loan interest, when you are a resident. When you make above a certain amount, like 90,000 or so, you cannot do so. 2,500 of loan interest is tax deductible, which will save you a few hundreds bucks in residency. Also remember to max out your ROTH IRA (5,000/year, greater if you are older) each year so you can have tax free growth. Well, you're paying taxes now, but they are so negligible right now and presumably less than when you are older.

http://www.irs.gov/taxtopics/tc456.html

I have a quick question I was hoping some of the more finances saavy could answer. The way I understand taxes to work is that you can either get a standard deduction or you can itemize. So let's say I'm married, no kids, and drive > 50 miles to get to work (meaning I can deduct gas). Would it be more beneficial for me to take the standard deduction or to itemize? Do I get a tax break for being married if I itemize?

Also, do you all use TurboTax or hire a CPA? I just want to make sure we're getting the most refund possible (as everyone is), and I'm so ignorant when it comes to this sort of thing I was thinking maybe hiring a CPA would be worth it.

Thanks, guys.

 

[MrBurns10]

Thanks for the advice, guys. (Also, finance forum? Where have I been?)

Anyway, I'll have to check into the gas thing because I heard from two different people that a commute over 50 miles could be deducted. I'm not saying they're correct, I'll just have to look more into it.

I'll check out the tax software. Just out of curiosity, people say to stay away from H&R block...any ideas why?

Thanks again!

 

[penguin24]

Don't forget to use the tax credit for the school tuition that you paid for Spring 2010. This is in addition to deducting your student loan interest paid. Also, I doubt your itemized deductions as a resident will be greater than just taking the standard deduction.

 

[RabbMD]

If you don't own a home, have significant investment income, or your spouse is not an independent contractor/freelancer you're unlikely to benefit much from CPA or other tax preparer. You're also unlikely to qualify for anything over the standard deduction if you itemize.

I'd personally use TurboTax (online) or other similar software.

Also, agree with aPD. Unless there's something new in the tax code this year about it, you can't deduct gas or mileage for a regular commute, only for driving done during the work day as part of your job (and no, driving from hospital 1 to hospital 2 doesn't count).

Actually you can deduct mileage on driving required for your work two ways. First, if you are a 1099 employee and file a schedule C (or various other self employed set ups) you can deduct mileage on the schedule C. Second, if you are a normal w-2 employee, and if your job requires you to go from one location to another (or even an office to a location) during the day, you can deduct those miles. You must keep careful records, and it counts as a miscellaneous itemized deduction on schedule A, subject to a 2% AGI minimum. This means that in order to get a deduction this way, you need to itemize and not take the standard deduction. Second, if you make say $200,000 AGI you need at least $4000 in miscellaneous schedule A deductions before you can add any amount to your schedule A itemized deduction. This is possible, very very unlikely in practice (unless you have a lot of job seeking expenses as these also count as misc schedule A deductions).

So in practice very few people on w2s without a sched C deduct commuting mileage.

You are not allowed to deduct mileage from home, to one work site, and back however. That is a normal commute per the IRS....

All this is just my opinion and interpretation of IRS tax code. Please consult your personal tax adviser for applicability to your personal situation.

 

[TooMuchResearch]

Thanks for the advice, guys. (Also, finance forum? Where have I been?)

Anyway, I'll have to check into the gas thing because I heard from two different people that a commute over 50 miles could be deducted. I'm not saying they're correct, I'll just have to look more into it.

I'll check out the tax software. Just out of curiosity, people say to stay away from H&R block...any ideas why?

Thanks again!

The H&R Block "tax professionals" are taking the information you give them and inputting it into H&R Block's tax software. This is effectively the same as doing your own taxes with Turbo Tax.

 

[mshheaddoc]

Also, if you own a business or have a C-corporation, for example, you can deduct business expenses like driving your car to work. I believe its 50 cents/mile as per the IRS.

It's actually $.51/mile for 2011, just a little FYI. 😉

I agree with everyone else, unless you have alot of deductions (house, investments) or a 1099 job (contract, freelance) it's not worth it to itemize.

I really hope they don't take away mortgage interest deduction this year. 🙁

 

[touchadream]

I have a quick question I was hoping some of the more finances saavy could answer. The way I understand taxes to work is that you can either get a standard deduction or you can itemize. So let's say I'm married, no kids, and drive > 50 miles to get to work (meaning I can deduct gas). Would it be more beneficial for me to take the standard deduction or to itemize? Do I get a tax break for being married if I itemize?

Also, do you all use TurboTax or hire a CPA? I just want to make sure we're getting the most refund possible (as everyone is), and I'm so ignorant when it comes to this sort of thing I was thinking maybe hiring a CPA would be worth it.

Thanks, guys.

Mint.com will allow you to download all your info from your banks and credit cards into Quicken for free, which then links to Turbotax. Great system, time saving, to get started right with your own bookkeeping. You should then keep this for your personal financial upkeep, and add business version Quickbooks when in practice. A CPA is only as good as the information you supply. Once you have organized it this far, Turbotax should do it for free for you for a while. I can only guess you have confused the 50 mile rule from moving expenses, as you cannot deduct the cost of commuting to "work," if you mean to your w-2 job as resident. They don't even allow you to deduct the mileage if you are called back in 4 times in one call night. Locums might be different depending on timing. To begin to learn about taxes, I suggest you go to IRS.gov, search Schedule A, and there are the itemized deductions, on the form, then there are "instructions" for Schedule A, for a quick read. Another search there for automobile expenses will be very informative. Turbotax is going to automatically ask you the right questions, though, to fill out correct.
Get a health savings account for you and one for your wife, if you can. Even with Obamacare, this can save you $ on things you are already spending on, or better yet save it to supplement your savings for retirement. You can put $ in each year, but it can also grow until you want to use it...better than mileage, its $ in the bank, and affordable to residents. If you can afford and you qualify get each of you an IRA, and don't invest in mutual funds, just ETFs. You will be ahead of your peers if you begin to learn about these funds. Happy reading.
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