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Doing own taxes

Jessica4Bama

Jessica4Bama

Hall of Fame
Nov 7, 2009
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Alabama
I'm going to try again this year to do my own taxes, but I have a few questions if anyone would be so gracious to answer. I'm waiting on my 1099 forms before I can start on them, but I wanted to get answers beforehand.

1. What program is best? I'm thinking TurboTax Federal Free edition, but open to others. I don't have much to count except two 1099's (one through my bank; the other through Morgan Stanley) and two charitable contribution forms.

2. Is last year's federal refund considered taxable income that I must include in this year's refund? I didn't receive a state refund. I had to pay into the state.

3. If yes to number 2, how do I enter it?

Just to note I had an accountant do them last year so I don't know if she included the federal return as income.
 
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Another question if someone knows. I got a raise in 2015 so when doing my 2014 taxes the accountant didn't itemize since I got a better refund just doing standard. Can I include my donations from previous years on this year's return as long as they weren't calculated on any other return?
 
TideMom2Boys said:
We always use Turbotax, it walks you through everything.
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Jessica4Bama said:
Another question if someone knows. I got a raise in 2015 so when doing my 2014 taxes the accountant didn't itemize since I got a better refund just doing standard. Can I include my donations from previous years on this year's return as long as they weren't calculated on any other return?
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Only in the year you made the donation but you can amend last years to see if you get more. You have three years to amend.

Sent from my XT1254 using Tapatalk
 
I have used H&R Block online for several years now, and it makes things easy and accurate (about as much as can be said about tax prep software)
 
The answers above are true about donations, etc. Since I don't need programs like Turbo, I don't use them, just use the IRS's fillable forms. As a general rule, refunds received from state and local are federally taxable on the 1040. It's on line 10. Conversely, federal tax refunds are includible on the Form 40 AL income tax return...
 
TIDE-HSV said:
Conversely, federal tax refunds are includible on the Form 40 AL income tax return...
Click to expand...

You are typically one of the last people on this board I would disagree with. But, I am a CPA, and this is incorrect. Every state does things a little bit differently, so if you are filing a state return other than Alabama, this may not hold true. But, in Alabama, you do not have to include your prior year federal tax refund in your Alabama income. The reason is that when you do your Alabama tax return, you get a deduction for your current year federal tax liability on line 12. Since you are deducting your current year tax liability rather than taxes paid, you are getting the deduction for the correct amount of tax in the current year. On the flip side, the reason that you typically have to include your state refund in your federal income is that in the prior year, you deducted the state taxes paid. And, if you got a refund, that deduction was too much. So, you have to make up for it the following year by including the state refund in your federal taxable income. But, on Alabama, since you are deducting the current year liability rather than the taxes paid, it all "works itself out" in that year. I think this may have changed fairly recently as I know one of our partners mentioned one time that it use to not be that way. As long as I have been doing this though (11 years), it has been that way.

Jessica, if you had a balance due on your state taxes for 2014 and you paid it in 2015, you can include those state taxes as a deduction on your 2015 federal return. Also, the reason that your accountant probably took the standard deduction for you in 2015 was that the standard deduction was higher than what your itemized deductions would have been. As someone else mentioned above, you cannot take a deduction for donations on your 2016 return that were made in a prior year.

The people who mentioned that your state refund is taxable on federal are correct if both of these occur: 1.) You itemized your federal deductions in the prior year on your federal return AND 2.) You took a deduction for state taxes paid rather than sales taxes paid on your prior year federal return.
 
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Okay so I finally received all my 1099 forms so I started on my taxes this evening. I had a 1099-DIV form and on box 3 it had $13 listed so I entered that into the software. After I completed everything I got a message saying the following:

Box 3 on form 1099-DIV is a non taxable return of cost. Please reduce your cost or other basis by this amount. If your basis is zero, this should be treated as capital gains.

Can someone please tell me what that means, and what I need to do?
 
TideHead said:
You are typically one of the last people on this board I would disagree with. But, I am a CPA, and this is incorrect. Every state does things a little bit differently, so if you are filing a state return other than Alabama, this may not hold true. But, in Alabama, you do not have to include your prior year federal tax refund in your Alabama income. The reason is that when you do your Alabama tax return, you get a deduction for your current year federal tax liability on line 12. Since you are deducting your current year tax liability rather than taxes paid, you are getting the deduction for the correct amount of tax in the current year. On the flip side, the reason that you typically have to include your state refund in your federal income is that in the prior year, you deducted the state taxes paid. And, if you got a refund, that deduction was too much. So, you have to make up for it the following year by including the state refund in your federal taxable income. But, on Alabama, since you are deducting the current year liability rather than the taxes paid, it all "works itself out" in that year. I think this may have changed fairly recently as I know one of our partners mentioned one time that it use to not be that way. As long as I have been doing this though (11 years), it has been that way.

Jessica, if you had a balance due on your state taxes for 2014 and you paid it in 2015, you can include those state taxes as a deduction on your 2015 federal return. Also, the reason that your accountant probably took the standard deduction for you in 2015 was that the standard deduction was higher than what your itemized deductions would have been. As someone else mentioned above, you cannot take a deduction for donations on your 2016 return that were made in a prior year.

The people who mentioned that your state refund is taxable on federal are correct if both of these occur: 1.) You itemized your federal deductions in the prior year on your federal return AND 2.) You took a deduction for state taxes paid rather than sales taxes paid on your prior year federal return.
Click to expand...

So since I had to pay the state of Alabama $62.00 last year, you're saying I can count that on this year's federal return? Where does it go?
 
Box 3 on Form 1099 DIV is for "nondividend distributions". The amount there is basically a return of capital that reduces your cost basis in the stock, which will affect your gain or loss on disposition of the stock. If you still own the stock, the nondividend distribution has no effect on your current tax return.
 
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