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(simple?) tax q

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FLMommy

Member
What is the name of your state? FL

If anyone has a min, I would greatly appreciate a response to these q's that probably have simple answers. Thanks!

- If medical expenses amount to 7% of one's gross income, they are deductible. I read somewhere that health and dental insurance premiums are part of this 7%. Does that also count for health and dental insurance premiums that were taken out (of paycheck) BEFORE taxes? How about life and disability insurance premiums?

- Deductible state taxes: Does anyone know a good website with info on this? Is there a percentage of income that needs to be reached before these can be itemized?

- Tax prep fees (for processing of '05 taxes) are deductible no matter how much it cost?

- $ transferred from overseas accounts to US accounts: does that money need to be reported to the IRS even if taxes on that money have been paid in the country of origin?

Thanks!
 


tranquility

Senior Member
They are not simple questions as each imply other things. The percentage of medical deductions on sch A is 7.5% before you can take anything. This will not include life insurance or pre-tax medical/dentall insurance. Qualified long-term care insurance is deductible, but "disability" were the amount paid is to replace income is not.

The state tax issue is that it will be deductible, but unless you have mortgage interest or an unusual amount of medical expenses or a large income (were you should be having a tax pro do your taxes), you'll find the standard deduction is probably going to be best.

Tax prep fees are deductible if your total miscellaneous deductions exceed 2% of your AGI.

The final question has so many pitfalls I won't even attempt to answer. How much are we talking about? How did the money come in? Where did you get the money? Did you report it on your US tax return? Why or why not?
 

FLMommy

Member
They are not simple questions as each imply other things. The percentage of medical deductions on sch A is 7.5% before you can take anything. This will not include life insurance or pre-tax medical/dentall insurance. Qualified long-term care insurance is deductible, but "disability" were the amount paid is to replace income is not.

The state tax issue is that it will be deductible, but unless you have mortgage interest or an unusual amount of medical expenses or a large income (were you should be having a tax pro do your taxes), you'll find the standard deduction is probably going to be best.

Tax prep fees are deductible if your total miscellaneous deductions exceed 2% of your AGI.

The final question has so many pitfalls I won't even attempt to answer. How much are we talking about? How did the money come in? Where did you get the money? Did you report it on your US tax return? Why or why not?
Thanks so much for answering, let me make sure I got this right, and expand a little bit where needed:

1. Medical deductible: Ok, so any pretax ins (health and dental) premiums cannot be counted toward the 7.5 percent.

2. Tax prep fees - I don't think I understand your answer (sorry). Are you saying that if our total amount of deductions (if itemized) amounts to over 2% of our gross 2006 income, we can also deduct sales tax? If so, how does one do that? By totalling sales tax of saved receipts, even on 'regular' items like groceries (non food)?
(Yes, we do have mortgage interest - bought the house 2 years ago - , and that one along with local/property taxes and charitable giving pushes us over the standard deduction, so we are going to itemize.)

3. Haven't filed tax return yet, and this questions isn't applicable for '06, but will be for '07. Money came in from family (in '06) into foreign account - they were financial gifts for birthdays, etc. Money might be tranferred to an account her in the US in '07. We're talking less than $2000.

Thanks for your time!
 

tranquility

Senior Member
1. Medical deductible: Ok, so any pretax ins (health and dental) premiums cannot be counted toward the 7.5 percent.
That is correct.

2. Tax prep fees - I don't think I understand your answer (sorry). Are you saying that if our total amount of deductions (if itemized) amounts to over 2% of our gross 2006 income, we can also deduct sales tax? If so, how does one do that?
Sales tax is a different category and is not reduced by the 2% floor. If you look at a schedule A you will see a category of miscellaneous deductions. That is where the tax prep fee is placed. Only the misc deductions which exceed 2% of your AGI are deductible. For the sales tax deduction, you need to make a determination between the better of income tax or sales tax calculations. Go to the IRS website and search for sales tax to get a publication to show you the calculation.

3. Haven't filed tax return yet, and this questions isn't applicable for '06, but will be for '07. Money came in from family (in '06) into foreign account - they were financial gifts for birthdays, etc. Money might be tranferred to an account her in the US in '07. We're talking less than $2000.
For those reasons and for that amount, no you would not need to report it.
 

BlondiePB

Senior Member
How can a FL taxpayer compare the percentage of sales tax to the amount of paid state income tax when FL does not have state income tax? :confused:

That would be great!!!
 

BlondiePB

Senior Member
I missed that. Sorry. Clearly there would be no comparison in a state with no income tax.
That, no state income tax, was not stated by the OP. You didn't miss a thing. FL is just one of the very few states that doesn't have state income tax.

Shucks, now I'm disappointed for there not being a way to deduct sales tax on my federal return. :(
 

tranquility

Senior Member
I know Florida has no personal income tax, I was just careless.

Shucks, now I'm disappointed for there not being a way to deduct sales tax on my federal return.
If you live in a state with no income tax, you can deduct sales tax. (If you can itemize deductions.) When President Bush signed the change into law (regarding sales tax) a lot was made about his and his brother's history as govenor. (TX & FL, both no income tax.) It's only when you live in a state with income tax that you need to do the comparison to choose the best option for your situation.
 

BlondiePB

Senior Member
I know Florida has no personal income tax, I was just careless.
Don't ya just hate that mental pause. :D
Originally Posted by tranquility

If you live in a state with no income tax, you can deduct sales tax. (If you can itemize deductions.) When President Bush signed the change into law (regarding sales tax) a lot was made about his and his brother's history as govenor. (TX & FL, both no income tax.) It's only when you live in a state with income tax that you need to do the comparison to choose the best option for your situation
Now, you just made my day. Thank goodness most of my receipts weren't thrown away, which is just what was planned for the near future. The hoopla about the "Bushy's" is just a bunch of hoopla. Don't know about TX, but FL would have to change it's constitution for there to be a state income tax. That has been tried several times with the voters voting it down.

Here's a funny. For the last several years, legally, I did not have to file taxes (non-taxable income) but did so anyway. The IRS sent me a letter basically telling me not to do this (file a tax return). The letter was ignored, and I filed anyway. They, the IRS, took me off their mailing list. I haven't received my tax booklet for at least 3 yrs. This year, legally, I must file taxes and will go to the library to get the booklet again and the other forms needed.
 

FLMommy

Member
Speaking of mental pause hehe, I must have had quite a large one of those... I completely mixed up state tax and sales tax... how dumb... I am sorry for the confusion! And yeah I know I don't pay any state tax... for some reason I was thinking sales tax is also deductible if it meets a certain percentage or whatever.

Anyways, thans Tranquility for your helpful answers. They were very helpful.
 

FLMommy

Member
Ok, now wait, now I'm re-reading for the so manieth time and Tranquility is saying one CAN deduct sales tax in FL? :confused: I threw away half of our receipts (except big purchase ones...)...
 
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tranquility

Senior Member
Look at a publication from the IRS regarding sales tax. Everyone throws away their receipts and there is a calculation you can use to estimate your taxes paid. Along with adding any special amounts for county or city additions and for adding any large purchases. Get the publication. I have software which does the calculations so I can't tell you what the numbers are offhand. Go to www.irs.gov and search for sales tax and read until you get to the proper publication.

Oh heck, I'll do it. Go to the sales tax calculator at:
http://apps.irs.gov/app/stdc/

or find out the exact dealio at Publication 600 at:
http://www.irs.gov/pub/irs-pdf/p600.pdf
 

FLMommy

Member
Thanks, before I actually read your latest post, I tried to find some info on the IRES website, but I don't see anwhere where it says that a FL resident can use both income and sales, as you suggested earlier. It seems to indicate, even the publication to which you gave the link, that it is either or, no matter what state one lives in?
 

tranquility

Senior Member
but I don't see anwhere where it says that a FL resident can use both income and sales, as you suggested earlier.
Hold on there missy, where did I write that? You must have missed in all of your "manieth" times reading where I wrote:
For the sales tax deduction, you need to make a determination between the better of income tax or sales tax calculations.
and:
Clearly there would be no comparison in a state with no income tax.
and:
If you live in a state with no income tax, you can deduct sales tax. (If you can itemize deductions.)
and:
It's only when you live in a state with income tax that you need to do the comparison to choose the best option for your situation.
Perhaps you should have someone help you with your taxes this year.:eek:

Info edit:
Oh, I see what you're saying--nevermind. The calculation is based on general purchases of a person. You would not add your general purchases to that calculationn number. However, if you buy a large item like a car, you can add that amount to the calculation as it is not really reflected in the assumptions.
 
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FLMommy

Member
Info edit:
Oh, I see what you're saying--nevermind. The calculation is based on general purchases of a person. You would not add your general purchases to that calculationn number. However, if you buy a large item like a car, you can add that amount to the calculation as it is not really reflected in the assumptions.
So I can ignore the 'missy' part also :rolleyes: :) Seriously, thanks for your help. This will actually the first year we'll be prepping our taxes ourselves, and I guess I was just wanting to find the most deductions as possible (I'm cheap, but then who isn't, right?). I think $150 to have HRBlock do our taxes is slightly ridiculous, and if we leave out this 'sales tax' stuff, our filing should be quite straightforward. Thanks for your help, and sorry for the confusion.
 

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