I made $26K this year and want to know how my tax filing-ability status might be affected....?

Question

I usually file around Feb 5 -- as soon as I get my W-2 form form my employer and since I'm well below the AMT tax income threshold, I was wondering how I might be affected?

I do have some deductions however, that seem to bring my AGI to around $4K.

Any feedback would be greatly appreciated.

I have about $10K in clothing donations, $8K in business expenses and $4K in stock market losses

Answer 1

1) Capital losses are limited to $3k per year

2) Clothing donations are valued at current value not original cost and for a donation that large, you would need a certified appraisal.

3) If you have only business expenses and no business income, you probably have a hobby and not a business.

You may want to call the IRS now and schedule that audit if you put down the $10k and $8k in donations and expenses.

Answer 2

Plan on being audited on that $10k clothing donation. That's such a huge red flag that an audit would be nearly automatic at your income level.

If you want to get a good idea on the values that will pass muster on clothing donations, look at the used clothing prices at any Goodwill or Salvation Army store. They're typically 10 cents on the dollar. Proving that you actually had $100,000 worth of donated clothing (at original cost) at your income level could get VERY interesting.

Ditto for the business expenses. That's WAY high for your income.

About the only one that won't raise too many eyebrows is the CG loss. Keep in mind that you only get to take $3,000 of that, the remaining $1,000 will carry forward to next year.

Answer 3

If your total income for the year was $26K, you shouldn't be affected by any AMT-related delays since you would not be subject to AMT.

I'm a little curious though about those $22K of adjustments that bring your AGI to around $4K - something doesn't sound right there.