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Taxes: Why does $3 in interest cost me $7 on my refund?

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Taxes: Why does $3 in interest cost me $7 on my refund?

Old 02-01-06, 09:29 PM
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Taxes: Why does $3 in interest cost me $7 on my refund?

So I have most of my tax info loaded into Turbo Tax. I still need to finalize some things before I finish it up. So far I am due a refund of $2377.

I opened up an ING Direct account at the end of December. I was checking my balance online and I noticed they had a line saying I earned $3.54 in interest in 2005. I thought "Oh, I never got a 1099 for that...I'll just add it on my taxes before I forget."

So I created a line for ING and inputed the $3.54 in interest and suddenly my refund goes down to $2370. Huh? Why does $3 in interest cost me $7?

Any tax gurus care to explain why this is?

Should I bother claiming the $3.54 in interest or is less than a certain amount not even issued a 1099?
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Old 02-01-06, 09:34 PM
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there are tax tables with income ranges and tax liability. you must have been bumped into the next range.
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Old 02-01-06, 09:35 PM
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Originally Posted by Jadzia
So I have most of my tax info loaded into Turbo Tax. I still need to finalize some things before I finish it up. So far I am due a refund of $2377.

I opened up an ING Direct account at the end of December. I was checking my balance online and I noticed they had a line saying I earned $3.54 in interest in 2005. I thought "Oh, I never got a 1099 for that...I'll just add it on my taxes before I forget."

So I created a line for ING and inputed the $3.54 in interest and suddenly my refund goes down to $2370. Huh? Why does $3 in interest cost me $7?

Any tax gurus care to explain why this is?

Should I bother claiming the $3.54 in interest or is less than a certain amount not even issued a 1099?
You need to make at least $10 or more in a calender year(2005) in interest in order to receive a 1099.


You get a 1099 if you are...
The primary owner of one or more deposit account(s) that earned in total more than $10 in interest in 2005. A deposit account can be either an Orange Savings Account or an Orange CD.


Log into your account and click on "tax info". The info will be there.
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Old 02-01-06, 09:37 PM
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Go to ING and tell them that you wish to return their interest. If they question why, tell them that you can't afford them to give you money

One thing that it might be is that the program might calculate it as 'provisional' income (and multiplies that over a full year). I know that in Australia, if you earn a certain amount from investments, the tax office sometimes assumes that you're going to earn that much next year and takes a portion of next year's income.

Edit: I think we actually got rid of it and it's no longer an issue in Australia.
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Old 02-01-06, 09:44 PM
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I believe you don't have to claim any interest or dividends if they are under $10.
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Old 02-01-06, 10:25 PM
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You're supposed to claim any interest, even under $10. You're supposed to, but if no 1099-int was sent the interest wasn't reported to IRS. You make the call.

By the way, when was the limit raised from $5 to $10?
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Old 02-02-06, 12:32 AM
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When some little boy called the IRS a bunch of "bitch asses"



I love crossover threads.

I would still claim it. But I am pretty cautious.
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Old 02-02-06, 05:29 AM
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I hear ya... I noticed on my taxes too it seemed that the interest I earned cost me more off my taxes than what i made in interest.
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Old 02-02-06, 07:30 AM
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Multiple choice:
A) The IRS sucks
B) Life's a bitch
C) Your taxable income is in the range where use of the tax tables are compulsary. They are computed in $25 increments of income, and the tax rounded to the nearest dollar. Your $3.54 in interest bumped you a $25 bin in the table.
D) All of the above
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Old 02-02-06, 08:12 AM
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Originally Posted by OldDude
C) Your taxable income is in the range where use of the tax tables are compulsary. They are computed in $25 increments of income, and the tax rounded to the nearest dollar. Your $3.54 in interest bumped you a $25 bin in the table.
So... Find $4 in "donations" (don't need a receipt if they are that small, right?) and get the $7 back.
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Old 02-02-06, 09:20 AM
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Actually last night I found another mortgage interest statement (we bought a new house in April and pre-paid some interest as well as taxes). Once I added that on, now the $3.54 doesn't seem to matter.

Oh and when we moved, I donated 20 huge garbage bags of stuff to Salvation Army. I had originally lowballed that donation to $500 but last night I used the "It's Deductible" program that came with my copy of Quicken and even just by doing a cursory listing of what I donated (I know I am leaving off a ton but I am being conservative), my donations was more in the $1100 range!

So now my refund is up to $2842!
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Old 02-02-06, 09:35 AM
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be careful with donations

anything over $500 I believe you need a statement of value from the charity. It's not legal, but what you can do is just take $500 per year in donations for the next few years. Otherwise the IRS may ask you for proof of value of the items that is signed by the Salvation Army.
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Old 02-02-06, 09:42 AM
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I have a receipt from the Salvation army, noting there were 20 bags.

I thought It's Deductible was the correct way to detail that donation? They make it sound like their worksheet is valid for the IRS rules.
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Old 02-02-06, 09:42 AM
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Originally Posted by al_bundy
there are tax tables with income ranges and tax liability. you must have been bumped into the next range.
^^ correct answer
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Old 02-02-06, 09:45 AM
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Originally Posted by al_bundy
It's not legal, but what you can do is...
I love tax advice that starts like this.
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Old 02-02-06, 11:20 AM
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i've seen accountants do a lot worse, knowingly commit fraud to get the average joe a nice refund
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Old 02-02-06, 11:55 AM
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Originally Posted by Y2K Falcon
So... Find $4 in "donations" (don't need a receipt if they are that small, right?) and get the $7 back.
The donation would come off the personal deduction side, so it would only matter if the OP itemizes.

I still take the standard deduction so it wouldn't help me.
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