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From Roth IRAs to bankruptcy, WalletPop experts have the answers


IRS checksFor those who follow the Lunar calender, Feb. 14 ushered in the Year of the Tiger. That means 2010 will be a year of great social and personal upheaval. Get a handle on financial affairs, at least, by tackling your taxes now. WalletPop experts are on hand to answer your questions about Roth IRA withdrawals, refunds, and bankruptcy.

Question: I cashed in a Roth IRA at a loss. I know that I am not liable for income taxes on it, but can I deduct my loss on my return?
-- Joe


Answer from Barbara Weltman of The J.K. Lasser Institute: Because Roth IRA contributions are made with after-tax dollars, you can take a loss on investments in the account, but only if you take a complete distribution of all amounts in all your Roth IRA accounts. The amount of the loss is the difference between the distribution and your total contributions. The loss, however, is not treated as a capital loss. Instead, it is a miscellaneous, itemized deduction, which means you only get to claim the write-off if you itemize your personal deductions and the total amount of your miscellaneous itemized deductions is more than 2% of your adjusted gross income. What's more, you'll lose the benefit of the write-off if you're subject to the alternative minimum tax (AMT), because miscellaneous itemized deductions are not a subtraction for the AMT.

Question:My now-girlfriend filed a joint return with her husband two years ago. They filed a joint return at H&R Block, but he cashed the check from the government without her being present. She has never seen any of the money. We assume that she would be entitled to half of the return. She definitely was not present to cash the check, so we are wondering if he forged her signature. Would she have needed to be present to sign the check, or would he be able to sign the check without her signature? Can a joint return refund be cashed by only one of the parties?
-- Toby

Answer from Frank Armstrong, founder and CEO of Investment Solutions: Her tax preparer, H&R Block, should be able to discuss how the refund check should have been processed, and who it was made out to. There are at least three possibilities. If the check came from H&R Block via instant refund, she might have unknowingly signed off on the transaction when she signed off on the return. If they overpaid their taxes and were due a refund, it might have been applied as a credit to the following year's return, in which case there would have been no check. If she filed a joint return, then the IRS should have made the check out to both of them.

Question: Is there help for people who want to file bankruptcy, but cannot afford the $2,000 it costs to do it?
-- Kay

Answer from Bob Meighan, CPA and vice president of TurboTax: There are often free legal aid clinics and non-profit groups that provide guidance and counseling in the area of bankruptcy (and foreclosure). Check your local government for possible leads. If you use a fee-based service, be particularly careful with any agreement you sign and any prepayments you may be required to make. There has been a lot of fraud in this area. This is a great question, and we have tax and tech experts live on Twitter to help all season long @TeamTurboTax.

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5 Steps to Navigate the Healthcare Marketplaces

To navigate the Health Insurance Marketplace, you have to know what you want from a health plan. Have your previous plan handy to make comparisons, as well as household and income information. If this is your first health plan, be aware of your needs and know your tax situation. Eligibility depends on the size of your family and combined income from all sources.

What Is Form 8941: Credit for Small Employer Health Insurance Premiums

Small business owners who subsidize the cost of employee health insurance premiums may be able to get some of that money back by claiming the credit for small employer health insurance premiums on their taxes. Some of the eligibility requirements, however, limit the number of people a business can employ and the average annual wages they earn. Qualifying as a small employer can reduce your tax bill by the amount of the credit you report on Form 8941.

What Is Form 8911: Alternative Fuel Vehicle Refueling Property Credit

In light of rising gasoline prices and environmental concerns, consumers have become more receptive to buying cars and trucks that run on types of fuel other than gasoline. The U.S. government introduced a tax incentive to encourage the installation of facilities to store or dispense alternative fuels in 1992. That incentive has evolved into a tax credit that also applies to equipment that recharges electric cars. If you equipped your home or business to accommodate alternative fuel vehicles, you may be able to use Form 8911: Alternative Fuel Vehicle Refueling Property Credit to reduce your federal tax obligation.

What Is Form 8885: Health Coverage Tax Credit

The health coverage tax credit is a program in place for tax years from 2002 to 2013 to help eligible individuals and families by paying a portion of premiums for qualified health insurance programs. Since the legislation authorizing the credit expired in January 2014, tax returns filed in 2014 for the 2013 tax year represent the last time eligible taxpayers can claim the credit.

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