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Daycare and Taxes All things related to Taxes and running a Daycare post here. Topics of tax exemptions, forms, filings, tax write offs, IRS etc.

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  #1  
Old 01-17-2011, 07:30 AM
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Default Real Estate Taxes....and Mortgage Interest

In Tom's book it states we can write off TSP of Real Estate Taxes...I was looking over last years' refund papers and my real estate taxes were used on Schedule L (is this for itemizing? I'm so lost). Does this mean I can't used my real estate taxes to write off in my business? And if that is the case, can I request my accountant NOT to itemize (if that is what schedule L is???) so I can use the real estate taxes in my business.

Last year it was showing the standard deduction for married filing jointly was $11,400 and when he used schedule L it put that number at $12,400. If I used my TSP to claim my real estate for this year I could deduct appx. $1250 off my business expenses. We are VERY close to the cut off for getting earned income credit so I want to get my business profit as low as I can (legally of coarse). I don't really understand schedule L (I thought itemizing was schedule A?)...so if I'm way off base, please help me understand, thanks!

Also..next question is last year (I mean 2009) I was unaware that I could claim my TSP on my Mortgage interest...I was registered in Sept. but I was caring for a child since March of last year (2009). My mortgage interest was a bit over $6,000 last year which is a lot that I lost out on claiming. Is there a way to claim that amount this year (plus my mortgage interest for 2010), or am I too late?
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Old 01-17-2011, 08:47 AM
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Default Schedule L

Schedule L is for certain taxpayers who have disaster losses or purchased vehicles with certain vehicle taxes. This form is filed instead of a Schedule A for itemizing your taxes. In 99% of the cases, you will file a Schedule A to claim itemized expenses.

When claiming real estate taxes and mortgage interest you must claim the time-space% of these deductions on Form 8829 (assuming you do child care in your home) and the rest of these deductions as an itemized expense on Schedule A (or L in rare cases). You have to allocate these expenses between these two forms, you can't claim all on one form or another. So, if your time-space % was 40% you would claim 40% of these expenses on Form 8829 and 60% on Schedule A.

You can claim these expenses in 2009 on Form 8829, so it is worth amending your tax return and getting a refund. However, you can't claim these expenses in 2009 if doing so would create a loss (or increase a loss). If this is the case, you can roll over the unclaimed expenses from 2009 onto your 2010 tax return.
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Old 01-17-2011, 08:58 AM
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Originally Posted by TomCopeland View Post
Schedule L is for certain taxpayers who have disaster losses or purchased vehicles with certain vehicle taxes. This form is filed instead of a Schedule A for itemizing your taxes. In 99% of the cases, you will file a Schedule A to claim itemized expenses.

When claiming real estate taxes and mortgage interest you must claim the time-space% of these deductions on Form 8829 (assuming you do child care in your home) and the rest of these deductions as an itemized expense on Schedule A (or L in rare cases). You have to allocate these expenses between these two forms, you can't claim all on one form or another. So, if your time-space % was 40% you would claim 40% of these expenses on Form 8829 and 60% on Schedule A.

You can claim these expenses in 2009 on Form 8829, so it is worth amending your tax return and getting a refund. However, you can't claim these expenses in 2009 if doing so would create a loss (or increase a loss). If this is the case, you can roll over the unclaimed expenses from 2009 onto your 2010 tax return.
Thank you, I am at a loss why my preparer filled out a schedule L form...we had no disaster loss and I'm not sure about vehicle taxes, we bought our vehicle in 2008, so I'm confused and not sure if I should go back to this accountant if he's doing something wrong. He never once informed me of all I can deduct...that's why I'm doing my homework so I know what I am entitled to.

Last year I had an income of $7800 and showed a profit of $2,483...I probably had so much more I could of claimed and didn't know....so what you are saying is if my 2009 mortgage interest is less than $2,483 (my business profit for 2009) using my TSP, I can claim this for this year, correct?
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Old 01-17-2011, 09:47 AM
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Default Mortgage interest

Although I can't say for sure, it looks like your accountant should have filed Schedule A, not Schedule L.

You showed a profit in 2009 of $2,483 but didn't claim mortgage interest. And you may have not claimed other expenses in 2009 (property tax, house insurance, house repairs, utilities, house depreciation?). You should amend your 2009 tax return and claim all the expenses you didn't, but have some kind of record for. You can claim as many non-house expenses as you have records for in 2009, even if that is more than $2,483 and it creates a loss for 2009. When you claim your house expenses, however, you can only claim expenses that will show up to a zero profit for 2009. For example, your non-house expenses that you add to your amended return are $483. That means you now have a profit of $2,000. You can claim up to $2,000 of house expenses (after applying the time-space %) on your amended return. Any house expenses above this can be rolled over and claimed in 2010. If you don't amend your 2009 tax return, you can't claim any roll over expenses on your 2010 tax return.
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Old 01-17-2011, 10:28 AM
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Although I can't say for sure, it looks like your accountant should have filed Schedule A, not Schedule L.

You showed a profit in 2009 of $2,483 but didn't claim mortgage interest. And you may have not claimed other expenses in 2009 (property tax, house insurance, house repairs, utilities, house depreciation?). You should amend your 2009 tax return and claim all the expenses you didn't, but have some kind of record for. You can claim as many non-house expenses as you have records for in 2009, even if that is more than $2,483 and it creates a loss for 2009. When you claim your house expenses, however, you can only claim expenses that will show up to a zero profit for 2009. For example, your non-house expenses that you add to your amended return are $483. That means you now have a profit of $2,000. You can claim up to $2,000 of house expenses (after applying the time-space %) on your amended return. Any house expenses above this can be rolled over and claimed in 2010. If you don't amend your 2009 tax return, you can't claim any roll over expenses on your 2010 tax return.
Thank you for all this information. I had a light grip on things I could claim last year but wish I would have taken the time to read everything I am entitled to. I claimed my utilities, supplies, and house maintenance....but didn't claim the mortgage interest, nor my car loan interest, or house depreciation because my accountant told me NOT to do the house depreciation (as mentioned in another thread I had on here). So I'm thinking it's time to find a different accountant.
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Old 01-17-2011, 11:30 AM
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Default mortgage interest

Unless the tax preparer corrects his errors, it's time to move on. You could ask this person to amend your tax return, without charging a fee, since he made the mistake of not claiming mortgage interest and house depreciation.
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Old 01-19-2011, 07:17 PM
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Isn't Schedule A for personal items and 8829 business? So when claiming mortgage interest, I should split between both forms instead of taking it as a personal deduction???
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Old 01-19-2011, 08:33 PM
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Default Mortgage interest and property taxes

Mortgage interest and property taxes show up on Form 8829 and Schedule A (if you itemize). You must allocate these two expenses between these two forms based on your time-space percentage. You cannot claim all on Schedule A and none on Form 8829. Since you pay higher social security taxes as a self employed business you are better off having a higher time-space percentage which enables you to claim more of these two deductions on Form 8829.
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Old 01-20-2011, 11:06 AM
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What if we take the standard deduction on our personal taxes and don't use Schedule A?
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Old 01-20-2011, 05:14 PM
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Default property tax

If you don't itemize then you still only claim the t/s% of these expenses on Form 8829 and you don't deduct the personal portion on Schedule A. The standard deduction is supposed to account for this.
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Old 01-22-2011, 05:14 AM
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Ok so when I entered all our personal deductions TurboTax told me we would be better off using the standard deduction as that was more $$ than what we had itemized. So what should I do ?
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Old 01-23-2011, 08:20 PM
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Default Real estate taxes

If Turbo Tax says you are better off using the standard deduction, use it. However, check to make sure you claimed the business portion (t/s%) of your property tax and mortgage interest on Form 8829. You are still entitled to do this even if you use the standard deduction.
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