Paying His Way

Read more in "The Boom Was a Bust For Ordinary People" (Feb. 3).

Tax Tips 2008

Last month, I chatted with tax expert Paul V. Thompson. We ran out of time, but he answered leftover questions from the chat:

Q: I own some property outside of my primary residence that is in my name. I also formed an LLC in 2007. The original intent was to have these properties owned under my company (LLC) name, but I was told the financing for a new company must be under the name of the individual for new companies until the company establishes a credit history. My name is also on the deed. I was wondering if these properties and all deductions associated could be filed under my corporation tax return instead of my personal return?

A: I am assuming that your LLC is a Corporation. In order for the Corporation to report the income and deductions, the property needs to be titled in the corporate name. Have you considered forming an LLC as a single member LLC? Seek a tax professional with experience and get some sound advice. The National Society of Accountants, located in Alexandria, VA can provide you with some recommendations (1-800-966-6679).

Q: I moved to D.C. for work in January 2007. I haven't yet gotten a new driver's license (I still have one from South Carolina). Will I need to file taxes in both D.C. and S.C.?

A: The filing requirements for any state are based on earnings received in that state and not on your driver's license. If you have income from both states, then you will need to file state returns for both.

Q: I have heard for every $1,000 in mortgage interest per year, you should claim one exemption...is this a good estimate?

A: No. You should take into account all of your deductions and number of people in the household. There are no set rules for everyone.

Q: I won $5,000 on a slot machine in October. Unfortunately, I didn't have them take out Federal taxes. Also, I've been unemployed for most of the year, so the $5,000 is a significant chunk of my income for the year (i.e., no way I will have paid 90% of taxes). Am I going to get hit with a penalty for underpaying my taxes? And in retrospect, should I have filed a one-time estimated payment for the 4th quarter?

A: That depends on your total income and deductions for the year. If you are a single person, you have a standard deduction of $5,350 and an exemption deduction of $3,400 or a total of $8,750 for 2007. If your total income is below that amount, you will owe no tax.

Read the chat transcript here.

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