The Tax Questions Blog

Posts Tagged ‘rebate’

Question: Wages earned by a worker at a casual fast-food restaurant are taxable nontaxable?

13: Wages earned by a worker at a casual fast-food restaurant are
A. Taxable
B. Nontaxable
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14: Tips earned by a server in a fashionable restaurant are
A. Taxable
B. Nontaxable
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15: Overtime pay earned by a construction worker for working extra hours to complete a project on time is
A. Taxable
B. Nontaxable
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16: Bonus given to a salesperson for making the most sales during the month is
A. Taxable
B. Nontaxable
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17: Free lawn care service for a month for a mailroom employee who developed a handbook for new employees is
A. Taxable
B. Nontaxable
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18: Interest income is earned on all of the following except
A. U.S Saving Bonds.
B. rental properties.
C. deposits in savings accounts
D. deposits in credit union accounts.

Answer: All income, from whatever source derived is taxable. Thus, in questions 13 through 16, the income would be taxable.

In question 17, I am assuming that the lawn care was somehow given in exchange for the rights to the handbook. If this is the case, then the value of the services would also be taxable.

In question 18, all yield interest income except B, rental properties, which would yield rental income. However, the interest income on a US savings bond can be tax free under certain circumstances.

Tips before converting to a Roth IRA

I recently wrote about a change in the tax code allowing high earners to convert their traditional IRAs and similar workplace retirement saving vehicles to Roth IRAs.

Silver is UnTaxable

Question: Do I need to report a workers comp settlement as earned income on my California unemployment form?

I just received a check for a workers comp settlement relating to an on-the-job injury some time ago. Do I report this as earned income on my California unemployment form? It's not earned income, nor is it taxable income, but I want to do the right thing here. Any advice?

Answer: No it is not earned income but an insurance settlement.

Fitch Rates Jacksonville, FL's Special Rev Bonds 'AA'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns a rating of 'AA' to the following Jacksonville, Florida special revenue bonds: --$51,690,000 series 2010A-1; --$40,865,000 taxable series 2010A-2 (direct payment Build America Bonds). The Rating Outlook is Stable. The bonds are scheduled to sell via negotiation on Sept. 15. In addition, Fitch affirms the following ratings with a Stable Outlook ...

Tips from the IRS-Unemployment Compensation

Question: Is unemployment compensation considered adjusted gross income?

I lost my job in April 2009. In the first 4 months of the year, I earned $7,386.36, of which I had $793 withheld for federal income tax. After that, I earned $10,360.00 in unemployment compensation, which I collected from April to January of 2010. I know that the first $2,400 of unemployment is not taxable, but is the remaining amount, $7,960.00 considered part of my adjusted gross income?

I'm worried I'll have to owe money for the unemployment collected, even though it was barely enough to get by.

Answer: Yes, the remaining amount of your unemployment will be taxable. Your AGI would 15356. However, you will probably still be able to get a refund. I do not know all the details that affect your tax situation. However, if you are single and are not someone else's dependent, then you can take a standard deduction of $5700 and a personal exemption of $3650. Your tax liabilty then turns out to be $598. But, you already had $793 withheld so you would be due a refund of almost $200. Additionally, you would qualify for the special Make work pay credit (like a stimulus) which is $400. So, your federal refund would be $595. Please again be aware that I have had to make assumptions to calculate this refund. Your refund may be different depending on your life situation.

Untaxed unemployment

A disturbing tax surprise for many folks who collect unemployment benefits is that those payments count as taxable income. For 2009 taxes, however, the first $2,400 of such compensation is tax-free.

Question: Is the TaxCut program right when it comes to the National average Wages, Interest, Dividends, Unemployment?

I was using TaxCut 2005 and the cost of living adjusted amounts for the most recently released stats (tax year 2003) below were presented to me:

National Average
Wages $67,182
Interest Income 1,465
Dividends 2,308
Taxable pensions and annuities 22,921
Unemployment compensation 4,981

How is it there are that many people with that high of:
interest income
Dividends
and Unemployment comp?

I hope there isn't someone out there with these exact amounts or there is something wrong here.

Does the taxable pensions and annuities line most likely just reflect retired people?

These figures scare me.

Answer: Those numbers do sound high. Is it possible that this is the average family income for a family that pays income taxes? I'm pretty sure it's not average income of everybody in the country, but since most very low-income people don't pay taxes,this could just be possible. For example, last year any individual making under $8200, and any married couple filing jointly making under $16,400, would not have paid income taxes, unless they were dependents of someone else, and many dependents would still not have paid tax. And for a large number of people, their social security income is not taxable. Take all of the people in those categories out of the calculation, and might be right.

Also, remember that "average" can mean numerical average (add up the numbers and divide by the number of entries, so the very rich skew the figure), median (the middle value if you line all the values up numerically - this is normally used for average wages or income), or mode (the most common, not likely what's being used here).

New Year to bring higher unemployment tax rates

Florida's beleaguered Unemployment Compensation Trust Fund is now depleted and the state's 465,000 employers will be helping it recover when new tax rates take effect Friday.

IRS TAX TIPS: 2009 Unemployment Compensation (ASL, Captions & Audio)

Question: If a company offers educational reimbursement, can I still use the Lifetime Learning Credit on my tax return?

I was reimbursed for TUITION and BOOKS only, and I've spent a lot more money on fees (registration, technology etc. )(over $1000). I'm wondering if I can use the Lifetime Learning credit in this situation ? LLC is clearly applicable to fees, tuition, and books, according to the IRS.

Answer: Tuition and fees are eligible expenses. Books and supplies usually are not - they're only eligible if they MUST be purchased FROM THE INSTITUTION as a condition of enrollment or attendance. Books that you purchase from the school bookstore are not eligible expenses. Books and supplies only count if their cost is basically rolled into the tuition and course fees charges. Read the IRS instructions carefully, and read the examples regarding books and supplies.

You should be able to use the Lifetime Learning Credit for your course fees, though, since they were not reimbursed. You can't, of course, claim the credit for anything you were reimbursed for.

Tax changes of new year include IRA conversions

The new year brings many tax changes. Many tax breaks are phased out. The changes below are the current state of the law. It is always possible for Congress to act to extend or replace disappearing provisions.The House passed a bill that extended many of these provisions, but the Senate was unable t...