Ask Me Anything: Your tax questions answered

March 19, 2013 10:45 am by Lance Knobel
Hank-Levy

Hank Levy: answering our readers’ tax questions

Tax preparation is rarely an eagerly awaited part of the year. But Berkeleyside is offering you some help this time, with an “Ask Me Anything” question and answer session with local CPA Hank Levy from Henry C. Levy & Company.

Hank will be live in the comments on this post from 11 a.m., providing some guidance on your tax questions. If you want to pose your question, just drop it in the comments below.

This is Berkeleyside’s first Ask Me Anything — with acknowledgement to Reddit for the idea — and we’re eager to hear what you’d like to see for future Ask Me Anything sessions.

In future weeks, we hope to bring you more answers from specialists, be it lawyers, interior designers, realtors, dog groomers, therapists, contractors or landscapers. Let us know in the comments what experts you would like to hear from. (You can also share your ideas on the Ask Me Anything Live Facebook page.)

Want to be an Ask Me Anything Live host/sponsor on Berkeleyside? Get in touch with Wendy Cohen at wendy@berkeleyside.com to learn how.

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  • Kate

    My husband got a nice sized hiring bonus in a stock grant that vests over a period of 4 years. The first portion vested in 2012, and quite a bit was taken out for taxes. I think around 43%. In the past I have used Turbo Tax to prepare our filing, but I am thinking me might be ready to move up in the world (In addition to this grant I also took a higher paying job this year and we had a baby). Any advice on limiting the amount we pay for the shares granted and when it is time to seek professional help?

  • http://www.berkeleyside.com/ lknobel

    And another from Pragmatic Progressive: Some investment advisors recommend putting foreign stock holdings in taxable accounts so as to capture the foreign tax credit. Your thoughts?

  • Hank Levy

    It’s the exercise of the options that trigger a possible tax consequence, not the vesting. I have found that non-qualifying options (NQs) are fairly simple, you can do with Turbo-Tax. But ISO’s are harder, as they effect AMT. Many people seek my advice for the timing of when they exercise, so yes, you may want to consider getting some consulting for that. But, again, you may still be able to save money by doing the tax preparation yourself..

  • Oren

    26 year old full time UC santa cruz undergrad, received $12,000 of scholarships and a Pell Grant. …. can he deduct books? tuition? associated fees paid to UC, computer(s) (is a computer science major)…

  • Hank Levy

    Yes, that sounds wise. The foreign tax credit won’t do any good inside of a tax-deferred account.

  • http://www.berkeleyside.com/ lknobel

    Another one from Pragmatic Progressive: If an employer offers a salary deferral plan, under what circumstances do you advise using it?

  • Hank Levy

    So, there are only two relevant places to think about tax benefits for higher education: Tuition and Fees deduction (or adjustment to Income). For that see Form 8917. You can see that qualified expenses include tuition, books, supplies and equipment if required to be paid to the institution etc. Also, some student fees, etc. Look at the instructions for that Form. The only other place for a tax benefit is as a Credit (either a American Opportunity Credit or a LifeTime Learning Credit. There’s a ton of information on the IRS web site on this.

  • Hank Levy

    Almost always if the person can afford it and/or if the employer matches it to any extent. Of course, it gets more complicated if one wants to invest in things which cannot be done inside of a tax-deferred plan (mortgaged real estate, collectibles, art, etc.).

  • PragmaticProgressive

    Lance, thanks for posting my questions — I was away until 2 minutes before noon!

    Hank, it’s true: you can only buy $10K of I bonds through ordinary channels, but you can buy an additional $5K with your refund.

    See the first FAQ here: http://www.treasurydirect.gov/indiv/research/faq/annualpurchaselimitchangeqa.htm

  • http://www.berkeleyside.com/ lknobel

    Whew. That was a whirlwind. Thanks for everyone who lobbed in questions and thanks to Hank for providing such pithy answers.

  • PragmaticProgressive

    Thank you VERY much for hosting this! And thanks to Hank for the informative answers!

  • Hank Levy

    Sorry I didn’t get to every question. In real life, I have more than a few seconds to answer a question!!

  • http://berkeleyside.com Tracey Taylor

    That was a very successful inaugural Berkeleyside Ask Me Anything Live session!

    Thanks again to Hank Levy for fielding lots of great questions so well — and to the many readers who participated.

    We aim to hold another Ask Me Anything Live session soon. Let is know what type of expert you want to quiz. And if you are an expert who wants to be a host/sponsor like Hank, get in touch with Wendy Cohen at wendy@berkeleyside.com. Thanks everyone!

  • FiatSlug

    The instruction for IRS Schedule A (Line 6, Real Estate Taxes) says this:

    Include taxes (state, local, or foreign)
    you paid on real estate you own that was
    not used for business, but only if the taxes
    are assessed uniformly at a like rate
    on all real property throughout the community,
    and the proceeds are used for
    general community or governmental
    purposes. Pub. 530 explains the deductions
    homeowners can take.

    The instructions also say that you cannot deduct:

    (1) Itemized charges for services to specific property or person (like garbage collection) and

    (2) Charges for improvements that tend to increase the value of your property (for example, an assessment to build a new sidewalk). However, a charge is deuctible if it is used only to maintain an existing public facility in service (for example, a charge to repair an existing sidewalk and any interest included in that charge).

    If you’ve read ballot measure language for many of the Special Assessments on your property tax bill you will know that they are typically assessed on the basis of your property’s square footage or are a parcel tax. Very few of the Fixed Charges/Special Assessments listed fall into the two exceptions listed above. “CITY REFUSE COLLN” is one of those items that cannot be claimed as a Real Estate Tax deduction. But looking over the list of charges it is hard to see where there would be any other similar charges that would fall under one of the two exemptions noted above.

  • PragmaticProgressive

    Did the tax credit for energy efficient improvements go away? There was one for a while that covered window replacements, insulation, and the like.

  • 4eenie

    I think PragmaticProgressive should volunteer to be the expert next time!

  • http://www.berkeleyside.com/ lknobel

    I think he/she was too valuable in providing the questions.

  • Mayra

    Can a high school mandate that parents submit their income taxes to them? Additionally can same school fail a child in a specific class or give them a zero if the parent refuses to submit their personal income taxes? Thnx!

  • http://www.berkeleyside.com/ lknobel

    The “ask me anything” on taxes ran live from 11 to noon today. We’re not taking more questions now. Sorry about that.

  • http://berkeleyside.com Tracey Taylor

    Hi all. We will close this comment thread now so as not to confuse people who stumble upon it and think it may still be live. Thank you and goodnight!

  • http://berkeleyside.com Tracey Taylor

    Mayra: The time-slot for questions was 11-12 today. Hank Levy was answering readers’ questions in that hour in the Comments section. Sorry you missed the boat! Hope you get an answer to your question.

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