ThatBootsGuy's Tax Knowledge Bar

As many of you know I am a tax professional and have been for a number of years now. I run a small company in NY and do primarily personal income tax returns (federal form 1040 et al.).

One of my biggest pet peeves is the abhorrent spread of misinformation regarding tax preparation. Specifically in how it works and what you can do to benefit/prepare yourself. Not just in the general public but with some tax pros as well.

“Well I’ll have the baby in June so I supported it last year when I was pregnant so I should get the tax benefits”. Believe it or not I’ve had people in my office that think this…

So I’m here to educate people on US personal income tax preparation as people ask questions and whatnot.


I’ll start this off with a topic that came up in discussion recently: the Affordable Care Act (ACA). Also known as obamacare. I’m not an expert on the entirety of the law, just how it affects the 1040 and other relevant documents.

The layman’s reading of the law basically boils down to: everyone needs some form of health coverage unless certain exemptions apply, if one doesn’t have health coverage and doesn’t qualify for an exemption then there is a fine. The fine was the greater of 695 USD or a certain percentage of your income obviously adjusted if you had coverage for part of the year. The fine started smaller and was phased in over the years in which it was in effect. I say “was” because the fine has now been rendered effectively 0 as a result of the Tax Cuts and Jobs Act. It’s still in the code, but the values have been changed to render it 0 so if they wanted to, they could very easily bring it back.

So what were the exemptions to the fine?

  • if it was deemed unaffordable (the threshold for this was extremely low so while most people couldn’t actually afford it the gov determined they could).
  • If you’re a resident alien (working here on a visa or similar)
  • Incarceration
  • Not being alive for a portion of the year
  • Short gap in coverage (2 months or less in a year with no coverage)

and a couple others. Most of them are pretty rare occurrences with the sole exception of the short gap, at least in my office.

If you didn’t qualify for any exemption how do you avoid the fine?
You would need to have some form of qualified health coverage. “Qualified” meaning that it had to provide what the gov. determined to be “sufficient” coverage. Most people got this through their or their spouse’s workplace or if they’re old/disabled then through medicare/medicaid. If not there, then you could get your own personal plan but that route is usually quite expensive. If your employer didn’t provide you with health insurance and you couldn’t afford a personal plan, then you’d have to go with what is called a “marketplace” plan.

So, how a marketplace plan (aka obamacare) works is you calculate your affordability and make payments each month with the taxpayer supplementing your payment to reach a certain level of coverage. At the end of the year when you bring your 1095-A to someone like me, we go through and put all that information in. Based on that, you may get a credit if you overpaid, a fee if you underpaid, or possibly a zero-sum. This portion of the ACA is still very much in affect for tax purposes as I know right now (seminar doesn’t happen until the end of the year, but I haven’t seen anything to state otherwise as of yet).


God Damned socialized overpriced health insurance. I’m very happy this year I’m finally able to get my own el cheapo plan…

What’s with the voluntary internet and out of state sales tax Bologna? Its federal law states can’t tax sales on out of state companies AFAIK. I’ve never filled that one in.

Actually, there was a Supreme Court ruling that tossed the last 230 years of precendent out the window because… reasons… That now allows states to demand any vendor selling in their state to collect and remit sales tax.

Regardless of that though - your state can, and some do, require YOU to remit sales tax if it was not collected by the vendor and this is not “voluntary”, its just poorly enforced because its difficult to track. If they end up tracking it for whatever reason, you can find yourself on the receiving end of an audit and back taxes for the prior 3 (to 4 in practical terms, but legally 3 “tax years”).

NE states, running out of other people’s money were pushing into big online vendors (newegg for example) prior to that ruling that made all their harassment moot, but the result was that those vendors were getting nasty letters and threats from states and turning over customer records in response.

This is not tax or legal advice, I am not a tax professional of any sort, but there is no such thing as “voluntary” taxes.

This was the abomination of a ruling and further expansion well beyond the bounds of the Constitution a state’s power has now been expanded. Woodrow started us down this “progressive” path to damnation. FDR obliterated any limit on Federal Power by getting the courts to rule that “interstate commerce” covered “anything we feel like” (including “opportunity cost”) now being interstate commerce and thus under Federal jurisdiction.

Alright, let’s talk about Retirement accounts. Since @diceman asked.

First some terms:

  • Pretax: money put in before it’s taxed. This means a contribution to a pretax account lowers your taxable income

  • Post tax: money put in after it’s taxed. This means a contribution to a post tax account does not lower your taxable income, but it’s also not taxed when you take it out.

  • Contribution: putting money into an account

  • Distribution: taking money out of an account

  • Qualified distribution: a distribution without penalty

  • Unqualified distribution: a distribution with penalty

  • Earnings: the interest accrued in the account (basically the amount that exceeds your contributions)


This is an employer supplemented retirement account for employees. You contribute some money and they’ll match up to a certain percentage. It is a pretax account. Generally the best first option to contribute money to. Generally you can’t take money out of this account without penalty until you reach age 59.5. There may be a catch-up period as well once you reach age 50 like with IRAs, but I’m not positive. Your employer could tell you more about the specifics of your policy.

Traditional IRA

This is an individual account you have to set up somewhere yourself. This is a pretax account. There are, however, contribution limits. The limit for 2020 is $6,000 between ALL your traditional AND roth IRAs. This amount increases to $7,000 during the catch-up period beginning at age 50. The distribution rules are the same as a 401(k) with some additional restrictions. With a traditional IRA you have to start taking money out after age 70.5 and can no longer put money in. If you make a contribution after age 70.5 or exceed your contribution limit you will be subject to an additional amount. Excess contributions are taxed at 6% per year as long as the excess amount remains in the accounts.

Roth IRA

I, unlike my “boss”, love roths. If you want to contribute money toward a retirement, but can’t stomach not being able to touch your money or want to be able to take money out when you’re retired and don’t have to worry about tax a roth is the way to go. It follows the same contribution restrictions as a traditional IRA. Unlike a tradtional IRA, however, a Roth is a post-tax account. You don’t get to lower your taxable income for the year in which you make the contribution. So why bother with one? The main benefit is you don’t pay any tax on your contributions (since they’ve already been taxed) as well as the earnings. You also don’t have to take money out ever and can always put money in.

The distribution rules are very different from the 2 previous accounts as well.

  1. A distribution is qualified once you reach age 59.5 OR after you’ve had the account for 5 years, whichever is later (since you can open one whenever. So if you open one when you turn 55 you won’t be able to take money out until you’re 60 for example).

  2. You can take out your contributions at any time with no penalties or restrictions. This is because a Roth is a post tax account. It will, however, result in an additional form or 2 on your return for auditing purposes.

  3. There is no required minimum distribution unlike a traditional IRA (you have to start taking money out at 70.5)

  4. If a distribution is qualified you pay no taxes. If it’s not, you only pay taxes on the portion of the distribution that is earnings.

So what happens when you take these out?

You get a 1099-R form. You’ll have to specify that they take out a percentage for federal (and state where applicable) income tax if it’s not from a Roth account. This gets added to your taxable income and the withholdings to the withholdings like any normal W-2 form unless it’s a Roth. If it is a Roth, then it’s added to income, just not taxable income and obviously no withholdings.

This is a simplified summary, there are many exceptions and fringe cases when dealing with retirement for tax purposes, but these are the general rules for most everyone.

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Man that just annoys me.

So let’s talk about Itemizing today.

When they said the TCJA was going to simplify the tax code, this is where they made that happen. There used to be a whole section on the schedule A for deductions subject to a 2% of income floor. Basically deductions that qualified as this deduction (unreimbursed employee expenses and whatnot) that exceeded 2% of your (M)AGI (can’t remember if it’s straight up AGI or Modified AGI for this one atm).

Let’s go through the Schedule A section by section and I’ll try to remember how these things work.

Medical and Dental Expenses

Medical and dental expenses used for health purposes, not cosmetic (sorry plastic surgery and botox don’t count) that exceed 7.5 of your AGI can go here. There is a medical mileage rate set at 20 cents so if you’re driving to the hospital frequently you may want to log the mileage you drive there. Do note, these expenses all have to be paid by you so while you may have health insurance, if it’s paid through work then it doesn’t count for the purposes of this section.

Taxes You Paid

So with taxes you paid you have a choice @Heimdallr. You can either choose to go with your state tax withholding on your w2, or general sales tax. Typically state income tax withholding is more unless you make a big purchase like a vehicle. You also get to include real estate taxes and personal property taxes (if your state has any). After adding the amount up you can take the lesser of that or $10,000.

Interest You Paid

Generally you only fill this section out if you own a home. In the case one does own a home they typically receive a form 1098 reporting the interest, principal, mortgage insurance, etc. You may have to fill out line 8b if you have the mortgage through a private party in which case you have to have their name, address, and ssn in addition to the interest you paid if you intend to claim it. You may also be able to claim some investment interest expenses which are limited to net investment income from property held for investment. That deduction is figured on a form 4952.

Gifts to Charity

Rule 1. You need to have a receipt. Without a receipt you can’t claim anything.
Any gifts have to be made to a qualified organization. That being: science, religious, charitable, educational, or literary in purpose. Also organizations which work to prevent cruelty to children or animals. Basically you can’t gift to Steve down the street unless he does the aforementioned things. Also if you get something in return you can’t deduct it. So if you go to an auction for charity you’re SOL.

This section is broken down into 2 main categories. Donations by check or cash, and donations other than by check or cash (i.e. goodwill/salvation army/school clothing drop boxes/etc.). There is an income limitation that they raised significantly so it’s like 40% or something ridiculous like that. In the event you go over $500 in donations other than by check or cash, you must also fill out form 8283. If you donated clothes and got a receipt but didn’t calculate the value of your donations you can obtain a form from salvation army or other similar organizations online that gives the typical range of value for various goods and then you just ballpark it based on that. Please do that before doing your taxes (especially if you’re taking it somewhere).

Casualty and Theft Losses

Has to be from a federally declared disaster area (basically just hurricanes for the most part). Fill out a form 4684 if this applies to you.

Other Itemized Deductions

These deductions are not subject to any AGI floor, however they are either extremely fringe and not worth discussing, or gambling expenses which are limited to the amount of your reported winnings. You either need to keep a huge box of scratch-offs, lotto tickets, or go to the casinos you frequent and obtain a win-loss statement.

That seems like a lot of work why would anyone want to itemize?

In doing your taxes you have a choice. You can either opt for the standard deduction for your filing status, or itemize your deductions. Standard deductions are up iirc 200 or 300 from last year’s amounts.

2018 standard deduction amounts are as follows:

  • Single and MFS $12,000
  • Head of Household $18,000
  • MFJ and QW $24,000

ONLY ITEMIZE IF YOUR ITEMIZED DEDUCTIONS EXCEED THE STANDARD DEDUCTION otherwise you’re leaving money in the government’s pocket and not yours.

Because of the stupid cap on taxes you paid many people can’t itemize, or if they do it’s much less than what they’re accustomed to.


Got ya so with my w-4 having 2 exemptions federal and state… I prolly am better off not itemizing huh? Just based off this post.

I’ve gotten over taxed this year due to pay mess ups so in theory I’ll get a return vs being near even.

Generally yeah. If you had a mortgage it’d be different, but with the taxes paid capped at 10k you need to come up with near 3k in other deductions before itemizing becomes advantageous.

Tax bracket and income level have nothing to do with whether itemizing would be better or not. It’s solely about how much you can beat the standard deduction by. Generally people with more money can spend it on things like real estate and before the tax cap was added they could claim all their withholdings (also the standard was about half of what it is now so it was easier to go over to begin with).

That makes a lot of sense thanks for the free drop

Whats the requurement to file head of household? Can one of us file as mfs and the other head of household?

Let’s look at filing status requirements then.


As the name suggests you have to be unmarried, divorced, or legally separated. If you’re just separated but not legally you’ll have to go with MFS.

Married Filing Jointly (MFJ)

You have to be married and agree with your spouse to file jointly. In the year one spouse dies, the surviving spouse may file as MFJ.

Married Filing Separately (MFS)

In the event that 2 spouses don’t agree to file jointly they can choose to file separately. It could also work out better for them if they file separately as opposed to jointly (it’s rare but I’ve seen it a couple times, generally people where both spouses are earning 6 figures with children). You can also have one spouse file MFS and the other HoH if certain requirements are met, we’ll get into those under the HoH section since it’s the most complex filing status.

Head Of Household (HoH)

This filing status has nothing to do with home ownership. It is one of 2 “dependent related filing statuses” along with QW. You have to be unmarried or considered unmarried for tax purposes. For HoH you can still legally be married, but the other spouse has to live outside the home for at least the last 6 months of the year. Dependency for the purposes of HoH is slightly different than the general dependency rules. You must not only have a dependent (or otherwise qualifying person in the event that the dependency has been transferred to the other spouse either voluntarily or by court order), but provide more than half of their support. The dependent must live with you in the home more than half the year, UNLESS it’s a dependent parent in which case they can live on their own, but you must be able to prove you provide more than half their support. An additional rule for HoH is you have to be related to the HoH qualifier. You can’t claim your girlfriend/boyfriend, and you can only claim their child if you’re also a parent of that child (i.e. you partook in the creation of said child). Temporary absences don’t take away from the child’s time living with you (i.e. they went to college and lived on campus. That still counts as living with you). And in the event you’re sharing household expenses with others you must prove you paid more than half the cost of supporting the home, not just most. So if you split the costs 3 ways and you ended up paying 40% and the other 2 paid 30% each, you can’t claim HoH as you didn’t pay more than half even though you paid more than anyone else. Costs included in calculating this are things like: rent, mortgage, real estate taxes, insurance, repairs, utilities, food eaten in the home, etc. Stuff you don’t include are: clothing, education, medical treatment, vacations, life insurance, or transportation. The rules for dependency and tiebreakers are very complex and I don’t have my book here to properly go through them all (also that’s a related but different topic anyway).

Qualifying Widow(er) with Dependent Child (QW)

The final filing status available to taxpayers and the least often used because the circumstances in which one can use it are rare (relatively speaking). In order to claim this you must have a deceased spouse and have been entitled to filing a joint return in the year they died (you don’t actually have to file jointly but why one wouldn’t I have no clue). You must not have remarried for any period of time during the period in which you qualify as QW. That period is the next 2 years after the one in which your spouse died (so to qualify in 2019 your spouse could’ve died in 2017 or 2018). You have a child or stepchild you can claim under all the rules with 3 exceptions: They had income exceeding the exemption amount, they filed a joint return, you could be claimed as a dependent on someone else’s return. The child must have also lived with you all year (unless they were born/died in that year or kidnapped and still qualify). You also must have paid more than half the cost of keeping up the home for the year.

Hey if you have multiple jobs multiple incomes in multiple states. What’s the best way to do the taxes? Idk where to start

So, your federal always comes first. That’s done how it normally is.

As for the states, you’ll have to figure if you’re a part year resident or non-resident based on each states individual rules. You then have to figure out how each state deals with income earned in other states be it a credit, simply subtracting the other state’s income, or whatever.

So you’ll end up with 1 federal return and 2 state returns.

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I hate states. Anyways I’m part year Idaho until the month after I moved to Utah and established residency there so idk where to proceed from here. I assume I owe a percentage of tax to each state. This is a stumper. I’ll have to do a ton more research or just use HR blocks free service this year.

No. You have to look at each state’s rules for determining residency. Depending on when you moved and how their rules work you could potentially be full year for both.

You certainly have tax liability in each state, but again, it depends on how much they took out for each whether you owe or not.

I’ve never done an Idaho or a Utah so I have no clue on their specifics.

Good luck getting this one done for free lol


That’s just stupid. This is why I hate states. Yeah I moved in Sept October time frame from Idaho to Utah. Got my driver’s license a month later and what not. God I’m looking at this page and it’s horrible to navigate. Here’s to hoping Idaho and utah have a reciprocity agreement.

@ThatBootsGuy I became a resident in the end of the year in utah. My pay was initially taxed to Idaho by the air Force by mistake then it switched to Utah once I moved it over. So that’s gonna confuse the shit out of me. Man I might as well try to do Idaho resident… Utah non resident… credit to Idaho and what not. I think that’s what I have to do


So since you moved in Sept you’d definitely be an Idaho resident Utah part year/ non resident depending on how utah determines residency (like if they figure it on the last day of the year or something or based off of how many days you were a resident of the state).

I fail to see the mistake. You lived in idaho so your pay should’ve been taxed to idaho, then once moved to utah it was taxed there. Now if you were living in idaho and working in utah then it gets a bit more complicated (and here’s hoping there’s a reciprocity agreement since that’s really the only time it comes into play and if there is it should be reflected in your w-2). If not then your w-2 should show the amount earned in each state so you’re only taxed on that amount per state rather than the full amount you claim on the federal return.

Ah Utah still has the shitty “domicile” definition. Luckily it’s only applicable to the period in which you were domiciled.

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Okay well then I suppose I can just do a return being Idaho resident then Utah part year/ NR then. Problem is I domiciled since I got taxed Utah so the question is will I owe taxes to anybody? This is very confusing.