jasdlm Posted April 8, 2009 Report Share Posted April 8, 2009 Client has $76,881 in Wages, $7,855 in Interest, $42,433 in Dividends ($39,302 of which are qualified), a $3,000 net capital loss and a $12,754 farm loss (because of bonus depreciation on a Tractor) . . . Itemized deductions of $55,873 because of a $36,000 investment management fee (sheesh). Total tax: $199. This is really not right. I hope one of you is going to tell me I've done something wrong, but I don't think so. Client is not going to like this . . . he can afford to pay taxes and is paying less than many who truly can't afford what they're paying. I'm also really nervous and haven't signed off on the return yet . . . it just seems like it can't be right. Am I doing something wrong? Quote Link to comment Share on other sites More sharing options...
David1980 Posted April 8, 2009 Report Share Posted April 8, 2009 What's the filing status? (I seem to be getting different numbers than you, still low tax but not that low.) Any kids? Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 9, 2009 Author Report Share Posted April 9, 2009 Sorry . . . 1 wife; 2 kids . . . both kids over 16. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted April 9, 2009 Report Share Posted April 9, 2009 You must be doing something wrong. I get AGI of 116,415 less 55873 ID and 14000 exemptions is taxable income of $46542. and tax is $723. Looking at the worksheet behind the line, regular tax would have been only on $7240, because the tax rate on qualified dividends and net cap gains is zero for 2008, and that is $39302 of the taxable $46542. The tax on the remaining 7240 is $723. Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 9, 2009 Author Report Share Posted April 9, 2009 Thanks, KC. I can't come up with the $116,415 AGI. I'm going to give up and try again tomorrow. Thanks for taking the time to work through it. Hopefully tomorrow I'll get it right. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted April 9, 2009 Report Share Posted April 9, 2009 I got the AGI directly from your numbers, Line 7 81881, opps, sorry, I used my 'Test' return, and forgot I had another W-2 in there. OK, now it's AGI of $111415, and the tax goes to $224, same logic. Look at the worksheet behind line 44, to see it more clearly. Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 9, 2009 Author Report Share Posted April 9, 2009 KC, you rock. Thanks very much. Quote Link to comment Share on other sites More sharing options...
David1980 Posted April 9, 2009 Report Share Posted April 9, 2009 I'm getting $224 as well. AGI: $111,415 Taxable income: $41,542 Did the qualified dividend & capital gains worksheet from the 1040 instructions manually. Line 1: 41,542 Line 2: 39,302 Line 3: 0 Line 4: 39,302 Line 5: 0 (Is there anything on 4952 line 4g? I assumed not.) Line 6: 39,302 Line 7: 2,204 Line 8: 41,542 Line 9: No 2,240 Line 10: 39,302 Line 11: Yes skip 11 through 14 Line 15: 224 Line 16: 224 Line 17: 5,426 Line 18: 224 So looks like we're matching up, or at least really close to that $199. If it's any consolation, without the 0% capital gains rate the tax would have only been about $2,189 - basically the taxpayer saved $2,000 thanks to the 0% capital gains tax rate. Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 9, 2009 Author Report Share Posted April 9, 2009 David, thanks so much. I appreciate the expert advice on this Board more than I can say. Quote Link to comment Share on other sites More sharing options...
RitaB Posted April 9, 2009 Report Share Posted April 9, 2009 Client has $76,881 in Wages, $7,855 in Interest, $42,433 in Dividends ($39,302 of which are qualified), a $3,000 net capital loss and a $12,754 farm loss (because of bonus depreciation on a Tractor) . . . jasdlm (wow, say that three times fast) - I know this is not your question, but have you considered passing up the bonus depreciation on the tractor? I mean, he may need the deduction more in the future. He's not getting much, if any, deduction for SE tax there (unless it's one heck of a tractor, which it could be). I'd at most take section 179 in whatever amount gets his Farm income down to $400 and quit there. Actually, I would probably just take the conservative regular depreciation. At least I think that's what I'd do. There may be other considerations and I'm missing something. I'm subject to do that in April... Hey, maybe I can run it by my hairdresser later when she picks up her return... Quote Link to comment Share on other sites More sharing options...
jasdlm Posted April 9, 2009 Author Report Share Posted April 9, 2009 Rita, that's a good idea. I think I will talk with him about not taking the bonus depreciation. . . I'll run it by my hairdresser first, though! Thanks so much! Quote Link to comment Share on other sites More sharing options...
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