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Posted by Margaret on February 13, 2008, 1:59 pm
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Hi RC, pls see comments within....
R. C. White wrote:
> The Part B premiums go to "Schedule A: Doctors, dentists, hospitals", since
> the tax return does not require - or even provide a line for - a breakdown
> between insurance premiums and other medical expenses. TurboTax does
> provide a Medical Expenses Worksheet, but this is not a required part of
> Form 1040; the heading includes the phrase, "Keep for your records". We
> should, of course, keep such a worksheet, but we don't get much help from
> Intuit in doing this.
For a few years now, I've been doing a breakdown in a special Medical
Expenses report that I created. I've recently started using
tags/classes, and I got a great tip from "JM" over in the Quicken
forums. After creating the correct tags, say, for medical insurance
premiums, I give each one a number. As a result, they get broken out as
a separate instance of "Schedule A: Doctors, dentists, hospitals" in the
Tax Schedule report. I'm using this tactic also to break out medical
aids such as eye glasses, etc., & other medical expenses, so I can
complete that Sched A properly w/o too much use of my papertape
calculator. :-)
Q's Help says numbered tags are to be used for tracking multiple rental
properties, but thanks to JM's tip, I'm using it for other things, too,
for example:
* Breaking out cash donations with no receipt from those for which I
have a receipt. This way, I can track my total cash donations but make
sure the ones w/o receipt don't get accidentally included as a deduction
on my return.
(I hope my explanation was clearer than I think it is....)
> As to the more complicated parts, as I've already said, disability benefits
> have many a crook and turn in the tax provisions for them. To be sure of
> handling them right, you need (1) a knowledge of all the facts and (2) a
> very detailed understanding of the tax provisions regarding of each of
> those
> facts. Some disability payments are fully taxable, others are fully exempt
> and the rest fall somewhere between.
My dis ins policy premiums were paid 100% by my employer, so the
payments are fully taxable for me. The policy is coordinated with SSDI,
so I'm expecting my SS benefits to be taxable (85%). We'll see how it
all shakes out. Fortunately the dis ins co is pretty knowledgeable (and
helpful) about this stuff and will even send me a detailed "claim of
right" letter (along with a big bill!) once they get my SSDI award
letter and have recalculated my benefits. (I'm still waiting for said
award letter, though I've received my Medicare card and a big dump of
retro benefits. 25% is withheld to pay the attorney, and assuming
there's something left, I guess I will receive the remainder of that 25%
at some point. Currently the $$ are sitting in a savings account, as
they -- and more -- belong to the ins co and not to me!)
Because my SSDI benefits are retro to 02/01/2005, I became eligible for
Medicare on 02/01/07. The SSA told me that my first benefit amt will be
auto-deposited to my checking acct in Feb, but they will be deducting
Medicare B premiums back to 02/01/2007. It's my understanding that
because these premiums will have been paid in 2008, they will be
deductible on my 2008 tax return. (Got that from a CPA over in
"misc.taxes")
Re my initial question of creating a SS "paycheck," I realize that SS
benefits are not a paycheck per se. Since I used the paycheck wizard to
create my LTD benefits income, I just wanted to be consistent. I did
use a simple split transaction for the upcoming SS deposit in Feb
(fourth Wed for me), due to retro Med-B premiums. Thanks much for your
explanation and confirmation of the correct tax line item. :-)
> The claim of right doctrine is a pretty esoteric subject. Even most
> general practitioner CPAs and other tax professionals have not dealt
> with this and will not even recognize the phrase. You probably have
> already researched it, but here is the first hit from Google on "claim
> of right".
> http://www.nysscpa.org/cpajournal/2004/1004/essentials/p42.htm
Yes, I've been doing as much research as I can, mostly collecting
documents for later review, etc. Didn't have this link though, thx.
> With both this and the disability questions, you are in pretty deep and
> may be in over your head, even though you obviously are quite
> competent. Most CPAs that I have known would not charge for an initial
> consultation to discuss your situation and determine whether they can
> help you. Are there CPAs in your area who specialize in income taxes?
Yes, I'm afraid I most likely am very well over my head. That TPs and
CPAs may not even recognize the "claim of right" term is not terribly
encouraging. So far, I've got a couple names of CPAs to check out.
That they *may* do an initial consult for free, is very good, as my plan
is to learn as much as I can, so I can tell a CPA who may *think* and
*say* they can do a "claim of right" from one who really knows their
stuff and has some experience doing it competently. I'm in Lansing, MI
and have no idea about which CPAs might specialize in income taxes.
Another topic I will be researching soon! :-)
> There have been many cases where I was able to save clients far more
> than my fee. And there were other cases where proper reporting required
> the clients to pay more taxes. It was not unusual for me to prepare
> amended returns for several years Clients often expressed relief at
> just being able to sleep, confident that their returns have been handled
> properly.
This is exactly how I feel. For me to attempt this myself and risk
doing it incorrectly is just not worth it. I have no desire to be
penny-wise/pound foolish, and I will be very relieved knowing it will be
handled correctly. Nevertheless, being me, I can't just hand over
everything blindly, as I won't sleep at all, if I do that! ;-)
Another reason for my wanting to learn as much as I can about this is so
I can track it all in Quicken. Not only do I want this info for myself,
I want to be able to hand over detailed, clear reports (and other
supporting docs) to whomever will be doing my 2008 taxes.
Thx and Regards, RC. It really helps to be able to "talk" about this
especially confounding subject! You've been a tremendous help, and I
welcome any additional thoughts you may have.
Take good care,
Margaret
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