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Items on this page are provided by speakers at various education sessions as supplemental or additional background material.

January 2010 - Last Chance
Q&A

Q) 1. Is there a worksheet that was developed to cover the different scenarios for line 10 and the standard deduction to take for this year?

2. If 2007 (or prior) and 2008 taxes were paid in 2008 - is the real estate std ded of 500 or 1,000 for 2008 taxes only or is it prorated on a % of the individual years paid to the total tax paid?

A) We did NOT develop a worksheet for the line 10 scenarios - there are so many of them. They all come under the tax benefit rule as noted in Pub 525 - page 22 is the one specific to our MI situation.

If 2007 and 2008 taxes were paid in 2008 and used as part of the standard deduction, AND there was a refund of 2008 taxes on the 2008 CR, the first step is to see if the 2007 taxes are more than the $500/$1000. If they are, you are done. If they are not, then you do a %. The excess needed to reach the $500/$1,000 over the total tax for 2008 times the refund on the CR will give you the Line 10 amount for 2009.

January 2010 - Last Chance

Changes Page 7 Answers:

Entire amount of $489 gave tax benefit. Therefore, entire refund of $293 taxable on 2009 Federal return line 10.

Paid $2,221. Tax benefit of only $500. $2221 less $500 = $1,721 gave no tax benefit. Refund of $1,200 - no tax benefit = nothing to report on Line 10 of 2009 Federal return.

Another view: $2221 total paid less refund of $1200 = $1,021. Only $500 usable = no refund since no benefit.

$800 of $1,300 paid in 2008 and got tax benefit of all $800 on Federal return. $800/$1,300 x $700 refund is tax benefit refunded for 2008 = $431 to Line 10 of Federal return for 2009.

Step 2: The amount deductible for 2009 is the balance paid less the amount refunded in the same year. $500 paid less balance of refund ($700 - $431= $269) = $231 to deduct in 2009 PLUS any summer 2009 taxes paid plus any winter 2009 taxes paid.

In most cases it will not make a difference on the return if you do the following:

Paid $1,300 and only got tax benefit of $1,000. Therefore $300 gave no tax benefit. Refund was $700 less $300 no benfit = $400 of income on 2009 return and deduct full $500 paid in 2009. This will change your tax return if you have items based on AGI (taxable SS, medical on Schedule A, Misc on Schedule A, etc. for 2009.

Example #4

Harriett got no tax benefit in 2008 since she did not pay her taxes until 2009. In 2009 she paid $1,600 and got her rebate of $900 so her net cash outgo in 2009 was $1,600 less $900 = $700 which is what is deductible in 2009.

Anyone wanting to pose questions/examples can do so. They will be answered as time permits.

Marilyn Meredith, EA

MI-NATP

September 2009 - Two for One

GM MTLQQ Prices / Basis (MS Excel^® format)

October 2008 - Beyond the 1040 Loss limitation chart PTP basis worksheet (MS Excel^® format)

September 2008 Two for One Seminar Alice Orzechowski & Marilyn Meredith Answer slides to: Schedule C - deductible or not Vehicle Questions

2007 MI Annual Convention:
Susan Scioli, EA - Ethics - IRS 6yr Enforcement Policy Presentation Handout


January 2010 - Last Chance Q&A Q) 1. Is there a worksheet that was developed to cover the different scenarios for line 10 and the standard deduction to take for this year? 2. If 2007 (or prior) and 2008 taxes were paid in 2008 - is the real estate std ded of 500 or 1,000 for 2008 taxes only or is it prorated on a % of the individual years paid to the total tax paid? A) We did NOT develop a worksheet for the line 10 scenarios - there are so many of them. They all come under the tax benefit rule as noted in Pub 525 - page 22 is the one specific to our MI situation. If 2007 and 2008 taxes were paid in 2008 and used as part of the standard deduction, AND there was a refund of 2008 taxes on the 2008 CR, the first step is to see if the 2007 taxes are more than the $500/$1000. If they are, you are done. If they are not, then you do a %. The excess needed to reach the $500/$1,000 over the total tax for 2008 times the refund on the CR will give you the Line 10 amount for 2009.
January 2010 - Last Chance Changes Page 7 Answers: #1 Entire amount of $489 gave tax benefit. Therefore, entire refund of $293 taxable on 2009 Federal return line 10. #2 Paid $2,221. Tax benefit of only $500. $2221 less $500 = $1,721 gave no tax benefit. Refund of $1,200 - no tax benefit = nothing to report on Line 10 of 2009 Federal return. Another view: $2221 total paid less refund of $1200 = $1,021. Only $500 usable = no refund since no benefit. #3 $800 of $1,300 paid in 2008 and got tax benefit of all $800 on Federal return. $800/$1,300 x $700 refund is tax benefit refunded for 2008 = $431 to Line 10 of Federal return for 2009. Step 2: The amount deductible for 2009 is the balance paid less the amount refunded in the same year. $500 paid less balance of refund ($700 - $431= $269) = $231 to deduct in 2009 PLUS any summer 2009 taxes paid plus any winter 2009 taxes paid. In most cases it will not make a difference on the return if you do the following: Paid $1,300 and only got tax benefit of $1,000. Therefore $300 gave no tax benefit. Refund was $700 less $300 no benfit = $400 of income on 2009 return and deduct full $500 paid in 2009. This will change your tax return if you have items based on AGI (taxable SS, medical on Schedule A, Misc on Schedule A, etc. for 2009. Example #4 Harriett got no tax benefit in 2008 since she did not pay her taxes until 2009. In 2009 she paid $1,600 and got her rebate of $900 so her net cash outgo in 2009 was $1,600 less $900 = $700 which is what is deductible in 2009. Anyone wanting to pose questions/examples can do so. They will be answered as time permits. Marilyn Meredith, EA MI-NATP
September 2009 - Two for One GM MTLQQ Prices / Basis (MS Excel^® format)