The Small Business Tax Help Blog

Archive for June, 2010

Question: What line does taxes withheld for a 401K distribution go?

Hi,
I read online to put the taxes on line 64 but that is Earned Income Credit. That seems weird to me.

I am referring to the 20% withheld from a 401K Distribution rollover for Form 1040

Answer: The total amount of the distribution goes on lines 15a and 15b. The 20% federal income tax withheld from your distribution will be reported with all other taxes withheld from forms W-2 and will appear on line 62.

Guilty plea for false tax returns

Terry A. Miller, 47, of Hampton, Va., pleaded guilty Monday to making and subscribing false tax returns that omitted hundreds of thousands of dollars embezzled from his former employer, Virginia Home Medical.

Dancing Liberty Waver

Question: Part-time self-employment vs being claimed as a dependent?

We live in CA and this year in filing our taxes, my husband and I got slammed because we’re in the highest tax bracket!

I am self-employed, but only work sporadically on various projects and earn a meager income each year (about $20K after expenses).

Question – would it be better for me to not work at all so that my husband can claim me as a dependent? Would we receive a better tax deduction?

Currently we have no children, don’t own a home, and are in the highest tax bracket.

Thanks in advance for your sage advice

Answer: If you are married then your husband can’t claim you as a dependent. You would simply file a joint return and claim both of your incomes and both of your exemptions. The only other option you have would be married filing separate which has such a high tax rate it is seldom beneficial.

Consumer, Health and Family

Regulators will clamp down on excessive interest rates charged on credit and store cards, according to new plans laid out by the government.

Chuck Norris Endorses Mike Huckabee And The FAIRTAX

Question: What are the tax rules on settlements??? Please Help!!!!?

My fiance got a settlement from his previous employer that included some compensatory damages. He also drew unemployment for a while. How is this going to affect him on the upcoming tax year??? Should he try and pay some estimated tax on this money so he doesn’t get penalized?? They said that they would send him a 1099 form but he is afraid that he willhave to pay his unemployment back if he has to report it on this form. Does anyone know?? Your answers will be a great help to us as we try to plan for our wedding and the purchase of a home with some of this money. Thanks!!
$10,000 backpay with taxes already taken out so he got a check for $7,800.
$30,000 comp. damages b/c he had to move, drive furthur to work etc…
Does this help??

Answer: It depends on what he is being compensated for. Compensation for injuries would not be taxable. Compensation for wages due would be taxable just as the wages would be. As a rule, if you would have been taxed on whatever you are being compensated for, you are taxed on the compensation. You can generally avoid penalties by having extra withheld from your current paycheck to cover what you would have sent as a quarterly estimated payment. Without some details, it is difficult to give a precise answer.

Second scandal rocks ConDem coalition as Chief Treasury Secretary admis dodging tax

David Cameron’s ConDem coalition is reeling today from a second expenses scandal – barely 24 hours after David Laws became the first Cabinet casualty.

Why Ron Paul is a Loon – Part 1: He Supports Spoilt Brats