Originally Posted by JohnnyCash
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Touché.....
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Touché.....
6 - INCOME
OK let's finish our return & get it filed before the Feds run out of $ and declare the Bankers Holiday. Finish up the INCOME section listing all reported income (or, all the reported income you're comfortable listing). Don't overlook bank interest which will be reported on Form 1099-INT. Investment income will likely show up on Form 1099-DIV. If you paid mortgage interest last year it will be reported on Form 1098, and that means: they presume you paid the interest with Federal Reserve currency (would look odd if you had only $5000 income and paid $11000 in mortgage interest).
At the end of the section you get to Other Income - Miscellaneous and it's here you enter total redeemed Lawful Money for the year, as a negative amount. A simple total of LM amounts/checks either cashed or deposited. But once again, no more LM than was listed on income lines above. In the description I put: Demand for Lawful Money 12 USC 411. This will create a page titled Other Income - Supporting Details for Form 1040, Line 21 for you to file, like this ...
7 - DEDUCTIONS
Next we're asked questions about Deductions, as shown on the list below. Then you'll be asked if you wish to Itemize or take the Standard Deduction. This year (2014), the standard deduction rises to $6,200 for single & married taxpayers filing separately. The standard deduction is $12,400 for married couples filing jointly and $9,100 for heads of household. We took the standard deduction but if you paid large amounts on medical, charities, interest, etc., then try the Itemized deduction - it may give a better refund.
Educator expenses
Certain business expenses of reservists
Health savings account deduction
Moving expenses
Deductible part of self-employment tax
Self-employed SEP, SIMPLE, qualified plans
Self-employment health insurance deduction
Penalty on early withdrawal of savings
Alimony paid
IRA deduction
Student loan interest deduction
Tuition and fees deduction
Domestic production activities deduction
Other miscellaneous deductions
Standard deduction
Exemption allowance
Itemized deduction - Medical/dental expenses
Itemized deduction - Taxes you paid
Itemized deduction - Interest you paid
Itemized deduction - Gifts to charity
Itemized deduction - Casualty and theft loss
Itemized deduction - Miscellaneous
Itemized deduction - Other miscellaneous
8 - CREDITS
Next section of the Federal Q&A tab are the Credits. The program will ask questions about various credits you might be eligible for, as listed below. We usually get a few of these Credits. The Earned Income Tax Credit (EITC) is available to lower income filers. For example, married filing jointly with an AGI less than $52,427 qualifies for an EITC of up to $6143. The maximum Earned Income Credit for individual filers this year is $496. http://www.irs.gov/Individuals/EITC-...ax-Law-Updates
Illegal aliens can file returns (for the past 3 years) and get the EITC returned as a refund, once they obtain a SSN: http://savingtosuitorsclub.net/showt...et-IRS-refunds
NOTE that as you go through, TaxACT occasionally offers various features & upgrades at additional cost. I answer "No" or "Skip" to these and find the free software does a great job.
Foreign tax credit
Child and dependent care expenses
Education credits
Retirement savings contributions credit
Net premium tax credit
Child tax credit
Residential energy credits
Other credits
Federal income tax withheld
Estimated tax payments/prior year applied
Earned income credit
Additional child tax credit
American opportunity credit
Amount paid with extension
Excess social security and tier I RRTA:
Fuel tax credit
Other payments
Last edited by JohnnyCash; 02-15-15 at 05:17 AM.
9 - TAXES
Next is the Taxes Examiner questions (summarized below) to determine if you're liable for any other odd taxes. Of interest here is the Self-employment tax. If you have income from "self-employment" then you'll owe SS & Medicare taxes on it so it's advantageous to avoid having such "income."
Alternative minimum tax
Excess advance premium tax credit repayment
Self-employment tax
Unreported social security and Medicare tax
Additional tax on qualified plans
Taxes for household employees
Repayment of first-time homebuyer credit
Individual shared responsibility payment
Additional Medicare tax
Net investment income tax
Other taxes
We have some reports of TaxACT not presenting the "Student Status" and "Can you be claimed as a dependent on someone else's return?" questions under the Basic Info tab in the "Personal Info" area. May be a glitch in the program. If you experience this, go Back to the first screen in this section and remove the "Date of Birth" entry; should fix it.
Last edited by JohnnyCash; 02-15-15 at 07:58 PM.
10 - Miscellaneous Examiner
The final Federal Q&A section is Miscellaneous. Most folks have no reason to deal with anything here. But take a look and see if anything applies.
Lump-sum payment of social security benefits
Excess farm loss
2015 estimated tax payments
Underpayment penalty
Reduction of tax attributes due to discharge of indebtedness (Form 982)
Claim for a refund due a deceased person (Form 1310)
Multiple support declaration for claiming a dependent
Release/Revocation of release of claim to an exemption
Injured spouse relief
IRS installment payment plan request
Third party designee
In care of (To have your refund sent in care of another person)
Combat zone
Disaster designation
For clarification, regardless of the LM demand or not on all checks received making up the entire income from Self-Employment minus deductions, Schedule SE is required and one must pay SS and Medicare taxes? The LM demand can not provide any reduction with FICA or Medicare and SS taxes? The LM demand reduction is only for federal income taxes. Also what is your recommendation, "to avoid having such self-employment income"? thanks
Got my state refund today! Don't think I ever got one this early. Did federal return on paper along with redeemed lawful money evidence and waiting on that. State offers a free e-File.gov so I started it but noticed it would not allow a negative amount for Other Income lawful money, so decided to just not include my LM receipts as income. Worked great.
Salsero, once I began redeeming lawful money i realized it changed the nature of my income. It wasn't federal income anymore, it wasn't "self-employment" income anymore and did not need to be included on tax return. Redeeming LM also changed my own nature but that's a whole nother story.
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