COVERITLIVE.COM

1:00

Jamie Downey -

Welcome my fellow tax procrastinators. Like you, I will be trying to put the finishing touches on my tax return this weekend. My wife is very anxious for its completion as she wants to get her hands on our refund so she can procure a new Coach handbag.

Feel free to ask any tax related questions. If I can not get to all of your questions in the allotted time, you can also submit them via the Managing Your Money section of boston.com. You can also reach me by email. Best of luck.

1:01	[Comment From Kevin] Forgot to add excise tax to 2007 return. Can I just add it to my 2008 return?

1:02	Jamie Downey - Unfortunately Kevin, you can not add this to your 2008 tax return. The proper way to handle this is to amend your 2007 tax return and include the excise taxes in that tax year.

1:03	[Comment From Maria] Can a 401(k) be rolled over into an IRA? If so, is there any tax penalty in doing so?

1:05

Jamie Downey -

Typically, you can not take an in service distribution. However, if you no longer work for the company where you have the 401(k) funds, then you can roll this over to an IRA and not receive any penalty. There are some specific rules to doing this, so talk to the company where you will be rolling the IRA money and have them assist you with the transaction.

1:06	[Comment From Nancy ] Was laid of Dec 2007. During 2008 collected unemployment and worked some weeks on Temporary assigments thryu an agency. On Sechedle A can I include my COBRA health insurance payments paid to my prevoius employer?

1:08	Jamie Downey - Yes, you would be allowed to take an itemized deduction for health insurance premiums on your schedule A. You typically receive a deduction for amounts in excess of 7.5% of your adjusted gross income.

1:09

[Comment From novice landlord ]
I sold an investment property in 2008 and am having a difficult time figuring out the cost basis... it was a rental home - single family dwelling. How does one determine the value of the land versus the cost of the dwelling? I'm tempted to use the insurance company's figures... that is, the property insurance insured the dwellings for less than I acutally paid for the property, based on some sort of replacement cost figures for the dwellings. Can i use their numbers? Will the IRS accept this as legit? thank you!

1:12

Jamie Downey -

The amount allocated between land and the dwelling should have already been done on previous years tax returns. Take a look there first.

In determining the value of the land vs. dwelling, I believe any legitimate policy would appropriate and your method of using insurance sounds as good as any. People also will use their real estate tax assessments which value the dwelling and land. You may also look at the appraisal done when you acquired the property as this may have an appropriate breakdown as well.

1:13	[Comment From Jay ] What is the limit for gifts without being taxed and can a son or daughter make gifts to parents.

1:15	Jamie Downey - The limit for 2009 is $13,000 per person. A gift can certainly be made by a child to his or her parents. So a son can give $13,000 to each parent in 2009, for a total of $26,000.

1:16	[Comment From karl ] I know that Obama’ stimulus package would give people more money in their paycheck every week. I know quite a few people who are getting more money in their paycheck. However my paycheck is exactly the same. Why are some people affected by the package while others are not?

1:19	Jamie Downey - The "Making Work Pay" tax credit starts to phase out for single workers at $75,000 and for married couples at $150,000. You probably make more than this and will not receive the credit.

1:20

[Comment From insolvent ]
i filed my taxes on feb 1. later in the month i received a 1099 for income from a company that forgave part of my debt. i sent this 1099 and my student loan info to show i was insolvent and excluded from including this income as taxable. recently i received an amended 1099 from the said company stating the income for debt forgiveness was $0 (zero) Would the IRS have forwarded this information to said compnay and requested a revised 1099 be sent to me? I understand the IRS is becoming more taxpayer friendly lately?

1:23

Jamie Downey - No. The American Economic Recovery Act of 2009 passed by Congress in February changed some of the rules of debt forgiveness. This may have impacted your 1099 and is possibly why you received this amended return. The other option is that the company just made a mistake.

The IRS certainly is not that adroit.

1:24	[Comment From hoping to avoid an audit! ] would it be a legitimate schedule c expense for a self-employed professional to include the costs of a pair of prescription glasses that are used only in the workplace to complete work tasks? I have other px glasses that I wear everywhere else... thanks!

1:25	Jamie Downey - If it is a legitimate business expense, I do not see any reason why you could not deduct it.

1:27

[Comment From Kathleen ]
My husband and I got a 1099 from Schwab in which we were assigned $3,500 in capital gains on investments that obviously lost a lot of money in 2008. We didn't sell any of them off, which I am told by my sister was a mistake. She said we should have sold enough shares of these mutal funds at a loss to offset this "gain," even if we immediately re-purchased them. Is this a sound strategy? What should we be doing for 2009?

1:31

Jamie Downey -

This is somewhat sound advice, except you typically can not purchase securities that are substantially identical within 30 days before or after the sale. So if you sell shares near year end, you will need to wait 30 days to reacquire the shares. If you do not wait the 30 days, you can not take the loss.

1:31	[Comment From Brian ] What is the best plan of attack if you haven't filed your 2007 return yet? I will be filing my 2008 reurn this week and then to need t o resolve the 2007 return? What advice do you have?

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