Tax preparation tips

[HollyP]

It is helpful to get organized before you start preparing your tax return. Let’s review some of the information that you can gather now to save time when working on your taxes.

First, make sure that you have the Social Security numbers and dates of birth for you, your spouse, and your dependents.

Next, gather all documents related to your income from wages, investments, state and local tax refunds, unemployment, alimony (if the divorce was finalized prior to January 1, 2019), business or farming, retirement distributions, rental properties, Social Security benefits, the sale of property, and any other miscellaneous sources. 

It is also important to gather information regarding adjustments to your income such as contributions to retirement and pension plans, student loan interest payments, contributions to Medical Savings Accounts (MSA), moving expenses, self-employed health insurance premium payments, alimony payments (if the divorce was finalized prior to January 1, 2019), and educator expenses.

Then you’ll want to collect your information for itemized deductions and credits. This includes child care costs, education costs, adoption costs, energy-efficient home improvement costs, home mortgage interest payments, investment interest expenses, charitable donations, casualty and theft losses, medical and dental expenses, and other miscellaneous tax deductions.

You should also get together any information about the taxes that you’ve already paid. This includes state and local income taxes, real estate taxes, estimated taxes, and personal property taxes.

Lastly, you will need your direct deposit information and any foreign bank account information. 

For more details on everything that you will need to quickly and accurately prepare your tax return this year please check out our article, Tax Preparation Checklist.

[helioresearch]

I want to ask a question about filing status when filing for a person with dementia

[email address removed]

[helioresearch]

With a spouse who has dementia and therefore a dependent, would there be more financial benefit to file jointly as we always,  or to file as a single person with a dependent? 

[VolvoGirl]

If you are married you can not file Single.  You still file a Joint return.

[Tatabox8]

Hi,

I have a question for filing a zero tax return for a terminated (cancelled) LLC. We started an LLC at the end of 2021 and purchased equipment. We didn’t end up having time to setup and start our business with full time jobs and other commitments. We decided to cancel our LLC. I was wondering if I can still claim the business expenses even though we never earned income?

Thank you for your time!

[TeresaM]

No, you are only able to deduct business expenses or start-up costs in the year your business is open and there is income generated. If that has not happened by Dec 31st of that tax year, no expenses are deductible.

For further information, please see Chapter 7 of the IRS publication for Business Expenses.
IRS Publication 535
 

[Tatabox8]

Thank you for that information! 

I was told that I have to file a final zero return for the state of California. If I purchase turbo tax Business, will the software guide me how to fill out the form as it does my usually personal taxes.

Thanks!

[Tatabox8]

The return form is 568. I forgot to mention it above.

[MichelleLO]

California Form 568 is included in TurboTax Individual (Personal) tax products. For more information on when Form 568 will be available, please see the below help article.

State forms availability table for TurboTax individual (personal) tax products

@Tatabox8

[andrejules2]

I received payment for a medical settlement from a law firm in Texas. It came because I had suffered from Non-Hodgkins Lymphoma, which was due to my use of Round-Up. How do I list the 2 payments?  

[Vanessa A]

Settlement payments for physical illness is not taxable.  Unless, you took a medical expense deduction in a previous tax year, there would be no need to report your settlement.

If you did itemize your expenses, then you would only report an amount equal to your itemized medical expenses in previous years. You would report this amount as Miscellaneous Income by clicking the following:

• Federal
• Income
• Scroll down and click show more next to less common income
• Start next to Miscellaneous Income
• Walk through the steps to enter your income

[ccesenag01]

I have completed my Federal tax and when I finished my refund was lowered by $1400 after I entered the information requested on the amount received of my third stimulus check, which was $1400. I thought the stimulus checks were not taxed and did not have to be paid back. Please advise

[ColeenD3]

The stimulus amounts are neither taxed nor repaid. You are reporting that you did, in fact, receive the stimulus and that you do not need it to be added to your return. Many people did not receive it and will have it added to their refund.

[VolvoGirl]

It is not taxable and you aren't paying it back.  Your 2021 return starts out by assuming you didn't get any Stimulus payments so it gives you credit for the full amount and your refund was too high.  Then near the end you enter how much you actually got so it only gives you the difference if any.  So you don't get it again.

[warrendf1]

Re: In TurboTax 2021 Premier

Refinance primary mortgage in Dec 2021.  Received two 1098s (one in regard to 1st mortgage and another in regard to the new mortgage).

On the 1098 for the loan that was paid off, the mortgage balance is $0.00.  However, TurboTax will not let me enter $0.00 as a valid value for Box 2 of the 1098.

[Kim5960]

I had to re-file my 2020 federal taxes by mail after the IRS rejected my e-filing with TT.  The IRS thought there might be a duplicate 1099-R listed on my return. There was not a duplicate 1099-R, so I didn't change anything on my return, which meant that I had to re-file it by mail.  I sent in my 1040-SR along with a payment voucher and check for taxes owed.  That check cleared the bank about a week later, so I assumed my return was accepted. Now, 8 months later, I just received a Notice CP80 from the IRS saying that they had credited the taxes owed to my tax account, but did not receive my tax return.  The instructions said to send "a newly-signed copy" and "be sure to attach copies of all schedules and other documents you included with the original return." Question #1 - do I include the original notice that my e-file was rejected and why, or would that just open up a new can of worms? and, Question #2 - I have since made quarterly Estimated Taxes this past year. Those amounts do not show up in my tax account, just the original taxes owed for 2020. Should I inquire about those now, or wait until this lost tax return issue is resolved? (I hate to 'poke the bear'  😬)

[AmyC]

1. Your check showed up and was cashed quickly. The return failed to make it where it needed to go within the department. You will need to send everything you sent the first time.

2. Estimated payments made in 2021 are for 2021 so they will not show up for a 2020 return. They should be showing in your account history though. If you are feeling brave, 

Payments IRS  800-316-6541

[Kim5960]

Thanks, I will send it all again.....but I'm not brave enough to ask about the quarterly est pmts yet. It makes sense that they won't show up with this notice. Once I know they have accepted my return, I'll bring that up. Thanks for the 800 number too!

[SCurling1]

I've recently had unusual issues with the IRS, not unlike what you have had.

I don't know what is causing, what I fear is, an increasing number of internal errors.

In the last two years (and I'm 66 yrs old) I've had them miss a full quarter of tax filings, and told me I owed the entire quarter of taxes, even though my bank account showed the IRS receiving the deposits.  I still had to prove it to the IRS.

I also received a letter saying the IRS never received my 2020, 1040 filings which I E-Filed.  So, I had to send them a paper copy, and the E-Mail receipts for the e-file transmissions to TT and IRS showing they were received and accepted.

So, good luck to everyone...

[Bobbitt1945]

Im doing my taxes for 2021 and i have an error that I can't get passed. 2 

Schedule 8812 Advance payment received must be entered box. its for advance child tax credit pymts received from letter 6419. it's a blue box. I can't get past this problem  to complete my taxes until it entered. I didn't enter any child tax credits. nor do I have any but Turbo says it's an error to be fixed. I can't fix it.  what can I do?

[DoninGA]

Enter a 0 (zero) when asked for a value on the Schedule 8812.  This should take care of the error so that you can file your tax return.

[compairable]

HELP! I can't e-file my 568 form. Any assistance would be helpful

[RobertB4444]

@compairable you can efile form 568 using TT home & business but only one form 568 can be included in the efile.  If you have more than one you'll have to print and mail it.

Here is TurboTax's guidance on how to fill out the 568.

[Kosetife]

Before 2018 Foreign Social Security Pensions were reported in Form 1040 line 21. From 2018 on, with the new Form 1040 must it be reported in line “8 Other income from Schedule 1 line 10”? And in such Schedule in line 8z?.

Any comments or confirmation is greatly appreciated.

[LoganathanB]

You report your foreign pension under less common income. It will carry it to Schedule 1

• Open your tax return
• Click on Wages and Income 
• Click on the less common income
• Click on Miscellaneous income
• Click on other reportable income
• Enter the foreign pension 

[LoganathanB]

You report your foreign pension under less common income. It will carry it to Schedule 1

• Open your tax return
• Click on Wages and Income 
• Click on the less common income
• Click on Miscellaneous income
• Click on other reportable income
• Enter the foreign pension 

[ARK4]

Based upon my renovating a family home, it was determine that I would be paid the rent.  Although I do not owe the house, the property manager issued me a 1099-MISC for the rent payments.  Please confirmed that I must file this as income on my Federal and State taxes - Maryland (resident) and Alabama (state income was generated).  What forms should I files and how do I report the expenditures for maintaining the house - insurance, utility bills, security monthly service, repairs and materials?  Thanks in advance

[MarilynG1]

Be sure to set up Alabama as a state you also earned income in. You report the Rental Income/Expenses on your Federal return.

You will not be able to claim depreciation on the home, since you don't own it.

Major improvements can be added to the Cost Basis of the rental property. 

Click this link for more info on Reporting Rental Income/Expenses. 

This link has details on How to File a Non-Resident State Return. 

[jwillett96]

need to speak to a live person about a rejected return

[kcschrowang]

Daughter is special needs.  After transitioning out of school there was no agency that could help with her care.  I had to take early retirement.  I took out full pension.  My employer, Verizon, did not have any tax help for me so I didn't realize taking my pension was a bad idea.  They took 20% out for federal and nothing for state.  So now I am looking at another 20% to come up with to go towards State and Federal.  Is there anything that could help me in this situation?

[Dick1938Jude1939]

I am having trouble with Turbotax and the stimulus payment. I get all finished and get a message that I have one error. I answer yes to the question did you receive a disaster distribution but then it says you'll need to revisit this area. Unfortunately changes related to qualified disaster distributions werent ready in time to include them in this release. Please revisit this area later. So it won't let me file yet. Any help out there. Thanks.

[FangxiaL]

The error message you got sounds like it is related to Form 8915-F. If you took money out of your retirement plan (including IRA accounts) and want to pay tax on the distribution over 3-year period, the second 1/3 or it will be reported on Form 8915-F on 2021 tax return. The form won't be ready for e-file till 3/31/2022. 

Now the question is, did you withdraw from your retirement account in 2020 and you qualified for the Covid-19 related distribution? 

If this does not fit your situation, go back to change your answer to No instead. 

@Dick1938Jude1939

[Rickk2]

How do you attach a schedule that will be efiled ? I have 10 pages of sales of securities.  Would like to either attach schedule or import from my excel spreadsheet. I am a retired CPA and my software when I was practicing allowed me to do that.  I understand that your professional software does that. Can't find it in your program.  If not in the program why not?

?

[loosier]

I am trying to file my 2021 taxes and I have "foreign tax paid". TurboTax keeps telling me I have errors and takes me to Form 1116 which requires the name of the countries and the dates.  My 1099-Div shows only the amounts with no dates and shows "various" for the countries. Can anyone tell me how to complete the 1116?

[email address removed]

[FangxiaL]

If you are using TurboTax Online, after you entered the summaries of the sales sections, the following screen will ask you to upload your 1099-B as an attachment. You can also directly import the sales transactions from the brokerage.

@Rickk2

[zzapolski]

I recently installed solar on my home. The install started in December  2021 but was not finished and on line until January 2022.  Which year can I apply for the solar tax credit.

[MarilynG1]

You can apply for the Solar Energy Tax Credit the year you paid for the installation.

1. Open or continue your return, if you don't already have it open
2. In TurboTax, search for energy improvements (Don't search for energy credit as this will take you to the wrong place)
3. Select the Jump to link in the search results
4. On the Energy-Saving Home Improvements screen, answer Yes and continue. Follow the instructions on the next screens
   • The first part of the interview covers improvements like doors, windows, furnace, air conditioning, and heat pumps. If you're looking for other improvements like solar, geothermal, wind, and fuel cell, just keep going—we'll ask you about these soon

Here's more info on the Solar Energy Tax Credit.

[traunsee]

I have tried several times to import data from my Schwab accounts. The answer is always "Login temporarely not availble, try again later etc". I contacted Schwab and I was told to get some explanation from Turbotax.

I hope somebody can help.

Regards

JF

[codyisourdog]

where do I put my 2020 overpayment applied to 2021 on my 2021 NY tax return

[Simply1deep]

Hi I had my baby April 2021 but did not get the breakdown of the child tax credit throughout the year for him, but I did get it for my 13 ur old son. Was I supposed to receive it for both? Thank you in advance

[dvorakrw]

It is very difficult to leave part of the refund with the IRS for next year