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UGAmazing posted:I have a general question that I can get more specific with if necessary. Broadly, my question is "Why do I owe $2,100 in taxes when I have taxes withheld from my paycheck at work every pay period?". I have claimed "0" on my tax documents at work at the beginning of the year, but for the past 2 years I have owed taxes come April. Some basic numbers (for 2013): $46420 in wages; $2987 withheld for FIC; $2878 SST; $673 MC; $2311 SIC. Married filing separately (wife didn't work last year at all, was in school until December). Purchased a house in December 2013. Looks like I owe roughly $2100 in taxes this year (and on a related note--I get penalized for contributing to a ROTH IRA through my work; Why in the world is that?). Am I doing something wrong? Is it possible I'm filing incorrectly (should be filing jointly, need to mark a deduction, etc)? I'm OK not getting a refund, I just don't want to owe anything, and clearly I'm failing. I certainly don't claim to be a professional when it comes to taxes, so if I'm being dumb about something, feel free to let me know. There is no penalty for contributing to an IRA (in general - unless you somehow managed to contribute more than $5500 on 46K of income), so you may want to elaborate on where you're seeing/how you're calculating that. Also, don't file MFS going forward, especially given that she got a refund. Also also, your house purchase will have no effect on anything until next year, when you'll get a nice healthy mortgage interest deduction.
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Mar 28, 2014 05:17
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Bisty Q. posted:There is no penalty for contributing to an IRA (in general - unless you somehow managed to contribute more than $5500 on 46K of income), so you may want to elaborate on where you're seeing/how you're calculating that. I think it has something to do with me filing separately, but TurboTax told me since I made over $10,000, that I wasn't supposed to contribute to a Roth IRA. I'm not really clear on it, but the information (see table) here seems to support it: https://www.wellsfargoadvisors.com/financial-services/investment-products/iras/roth-ira.htm Again, I'm not a professional when it comes to taxes or retirement funds. I basically know saving money for retirement = good, and filing taxes = required by law, so if I'm missing something, feel free to scold me so I can learn. edit: Also, something I was wondering; would it be best to go ahead and file my taxes jointly with my wife's information and then cancel her return (via amending, is this possible?), OR to not file a 2nd time and just file an amendment 1040x on my wife's already-filed taxes to change her filing status and to include my information? UGAmazing fucked around with this message at 14:55 on Mar 28, 2014 |
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Mar 28, 2014 14:16
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UGAmazing posted:I think it has something to do with me filing separately, but TurboTax told me since I made over $10,000, that I wasn't supposed to contribute to a Roth IRA. I'm not really clear on it, but the information (see table) here seems to support it: https://www.wellsfargoadvisors.com/financial-services/investment-products/iras/roth-ira.htm Pretty much in your situation you should be filing jointly instead of separately, and then increase your claims to the correct amount on your W4. Most needs-based awards don't actually look at your filing status, and are supposed to consider your household income, not just personal income. (For instance, when filing a FASFA, you are required to put down the sum of you and your spouses AGI, even if you file separately). Also you could contribute way more to your Roth, would probably overall pay less in taxes, and not owe 2k at the end of the year. (As per OP, these are all general statements and may not apply to your specific situation, just advice based on the data already provided. See an accountant yadda yadda)
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Mar 28, 2014 14:54
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TenjouUtena posted:Pretty much in your situation you should be filing jointly instead of separately, and then increase your claims to the correct amount on your W4. Most needs-based awards don't actually look at your filing status, and are supposed to consider your household income, not just personal income. (For instance, when filing a FASFA, you are required to put down the sum of you and your spouses AGI, even if you file separately). Also you could contribute way more to your Roth, would probably overall pay less in taxes, and not owe 2k at the end of the year. Ok, great! Thanks. Also, I added a second question to my above post (in the "edit"); should I file my taxes with my wife's information and then "cancel" her filing and return her refund, or should we amend her filing to change our filing status and then include my information? Does that make sense?
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Mar 28, 2014 14:57
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UGAmazing posted:Ok, great! Thanks. Also, I added a second question to my above post (in the "edit"); should I file my taxes with my wife's information and then "cancel" her filing and return her refund, or should we amend her filing to change our filing status and then include my information? Does that make sense? You would file a 1040X amending her return. There's no reason to file your separate return if you are going to go back and amend it anyway. The instructions for 1040X tell you what to do in this case (Also 1040X is not straightforward, so I suggest you read the instructions anyway.)
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Mar 28, 2014 15:03
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I filed my tax return on Feb 8th, and it was accepted Feb 9. I owed money on my return and on the efile packet, I opted for the lump sum to be directly debited from my account on Feb 15. This money has still not been debited. I called the IRS, who says the return is still processing but they don't see any info on the transcript that shows a direct debit so they told me to call the electronic payment office, and they too do not see any information pertaining to a payment to be directly debited. Did anyone else owe money on their taxes and opt for the direct debit, if so, has the money been taken from your account yet?
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Mar 28, 2014 23:28
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SnatchRabbit posted:I filed my tax return on Feb 8th, and it was accepted Feb 9. I owed money on my return and on the efile packet, I opted for the lump sum to be directly debited from my account on Feb 15. This money has still not been debited. I called the IRS, who says the return is still processing but they don't see any info on the transcript that shows a direct debit so they told me to call the electronic payment office, and they too do not see any information pertaining to a payment to be directly debited. Did anyone else owe money on their taxes and opt for the direct debit, if so, has the money been taken from your account yet? This is why all of my clients refuse the direct debit option on their taxes.
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Mar 29, 2014 00:21
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AbbiTheDog posted:This is why all of my clients refuse the direct debit option on their taxes. Is it something to be worried about or just the generally glacial pace of all things government?
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Mar 29, 2014 00:30
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SnatchRabbit posted:I filed my tax return on Feb 8th, and it was accepted Feb 9. I owed money on my return and on the efile packet, I opted for the lump sum to be directly debited from my account on Feb 15. This money has still not been debited. I called the IRS, who says the return is still processing but they don't see any info on the transcript that shows a direct debit so they told me to call the electronic payment office, and they too do not see any information pertaining to a payment to be directly debited. Did anyone else owe money on their taxes and opt for the direct debit, if so, has the money been taken from your account yet? I efiled my Fed return last Thursday and selected direct debit as a payment option. Payment left my bank account on Wednesday this week.
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Mar 29, 2014 02:22
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AbbiTheDog posted:This is why all of my clients refuse the direct debit option on their taxes. When our clients check the box on the organizer saying they want it, we just ignore them 
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Mar 29, 2014 02:40
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SnatchRabbit posted:Is it something to be worried about or just the generally glacial pace of all things government? Concerns that if you have the IRS take your money, and they mess up and take too much, you'll never get it back before hell freezes over.
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Mar 29, 2014 05:00
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This is a dumb question but I'm a bit confused about what counts as a student. I'm currently "studying abroad" in a program in Japan that doesn't award an degree but is full time. I don't have a student visa in Japan, instead I have a "cultural activities" visa. Am I considered a student? I've been here since September of last year and I worked in the US through mid-August. Also, I got scholarships to cover the cost of the program. Do I have to pay taxes on them? They come from both Japanese and US foundations.
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Mar 30, 2014 13:18
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If I'm using a 1040X to amend my 2010 return and claim additional student loan interest, where exactly do I enter that information in on the form?
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Mar 30, 2014 19:20
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EugeneJ posted:If I'm using a 1040X to amend my 2010 return and claim additional student loan interest, where exactly do I enter that information in on the form? Claiming more student loan interest would change your AGI, so you would put the original amount, net change, and new total on line 1 of 1040x.
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Mar 30, 2014 20:02
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JohnnyPalace posted:Claiming more student loan interest would change your AGI, so you would put the original amount, net change, and new total on line 1 of 1040x. You rock - thank you!
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Mar 30, 2014 20:11
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EugeneJ posted:You rock - thank you! Please read the instructions, you need to include copies of the forms that changed from the original filing. Write/stamp "amended" on them.
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Mar 30, 2014 20:57
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UGAmazing posted:I think it has something to do with me filing separately, but TurboTax told me since I made over $10,000, that I wasn't supposed to contribute to a Roth IRA. I'm not really clear on it, but the information (see table) here seems to support it: https://www.wellsfargoadvisors.com/financial-services/investment-products/iras/roth-ira.htm Married filing separately fucks up a lot of things that people enjoy getting. When you file jointly, you have to make over 178k in order to be ineligible for a Roth IRA. However, that number is suddenly 10k when you are filing separately so you are being penalized because you are not eligible for a Roth IRA when you filed separately. Here is a link through a quick google search that outlines all the stuff you lose when you file separately: https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately (Also has a blurb about the only time when it might make sense to.) (I don't know how you would go about fixing it though since I am not a CPA). EDIT: oh sorry was skimming didn't see someone already answered. Leaving it anyway because most people should not be filing separately.
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Mar 31, 2014 19:27
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Post this in the Student Loan thread, but they didn't really have an answer. I am going to graduate school, and my parents are loaning me the money for it, to be paid back in full. Would it be beneficial to have an official "You are loaning me money, to be paid back later"? Would there be tax advantages to having such a statement?
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Mar 31, 2014 23:36
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Not really. I guess it could have gift tax implications to your parents if it is more than $15k or so a year and the IRS takes the position that the loans are really gifts, but that doesn't seem too likely. Formalizing a loan is primarily about legal protection, not tax. Neither loans nor gifts are (generally) income to you.
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Apr 1, 2014 01:48
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PatMarshall posted:Not really. I guess it could have gift tax implications to your parents if it is more than $15k or so a year and the IRS takes the position that the loans are really gifts, but that doesn't seem too likely. Formalizing a loan is primarily about legal protection, not tax. Neither loans nor gifts are (generally) income to you. Wouldn't the rebuttable presumption under Section 7872 be that if you're lending under the AFR rate, it's a gift loan and the difference between the below-market rate and AFR rate is treated as both (constructively OID) interest income received on the difference and then a gift by the lender/donor for that same amount? I mean, so long as the IRS isn't aware about the loan the parents would be OK, but if the IRS finds out, they'll be screwed. So, wouldn't the proper advice be that Massasoit should, technically, be paying the AFR rate (tables showing such rates as recognized by the IRS can be found here - they use semiannual compounding as of the date that the loan was made to compare to the loan rate in the agreement) and that a formal agreement should exist in case the IRS comes and claims it's a gift loan rather than an arms-length loan? Edit: Note that if you do go this route, the AFR interest is taxable interest income to the parents under Section 61, but there wouldn't be (potential) gift tax implications as well, which would be the point of being compliant. Horseshoe theory fucked around with this message at 03:50 on Apr 1, 2014 |
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Apr 1, 2014 03:25
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Massasoit posted:Post this in the Student Loan thread, but they didn't really have an answer. The big drawback is that you won't be able to deduct the interest on the loan, if any, as student loan interest (with, or without the statement). ThirdPartyView posted:Wouldn't the rebuttable presumption under Section 7872 be that if you're lending under the AFR rate, it's a gift loan and the difference between the below-market rate and AFR rate is treated as both (constructively OID) interest income received on the difference and then a gift by the lender/donor for that same amount? I mean, so long as the IRS isn't aware about the loan the parents would be OK, but if the IRS finds out, they'll be screwed. So, wouldn't the proper advice be that Massasoit should, technically, be paying the AFR rate (tables showing such rates as recognized by the IRS can be found here - they use semiannual compounding as of the date that the loan was made to compare to the loan rate in the agreement) and that a formal agreement should exist in case the IRS comes and claims it's a gift loan rather than an arms-length loan? Absolutely nobody does this poo poo for small time personal loans.
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Apr 1, 2014 04:02
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Admiral101 posted:Absolutely nobody does this poo poo for small time personal loans. I thought this thread is about what you're supposed to be doing legally, not what's actually done in real life? After all, in real life people also don't declare under-the-table self-employment income all the time but I'm not going to tell people in this thread to ignore Section 61 and not declare that self-employment income (and incur the resulting SE and income taxes). I mean, reading the OP: quote:What this thread is NOT for I don't see how I was wrong in explaining the legal position on the matter. If Massasoit decides to blow it off, it's not my concern, but I'm going to provide the technically correct way to approach it in order to be in compliance with practice requirements. Horseshoe theory fucked around with this message at 05:05 on Apr 1, 2014 |
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Apr 1, 2014 04:40
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My wife recently got a job at a casino serving drinks. She makes minimum wage plus tips. The drinks are free, and the casino automatically calculates that she will get tipped $1 for every 5 drinks she serves, in reality she gets $1 for every 15 or 20 drinks served. She has to serve a minimum amount of drinks per hour, so she can't just serve drinks with out reporting it. Her paycheck every 2 weeks is really tiny because so much taxes are being taken out based on the casino's calculation. Do we just keep track of how much in reality she is making, and come tax time will we get the money back? The casino is not going to change their calculation.
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Apr 1, 2014 08:40
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My friend worked three jobs in 2012. One employer didn't get his W2 to him until April 2013, after he had filed income taxes for his other two jobs. At some point he received an amended tax form with his third W2 either from AARP tax professionals or from the IRS, I am not sure which. According to the amended form he owes the IRS roughly $1200. This doesn't make sense to me because he only made $16,800 that year. According to the W2 summary, all employers withheld federal and state taxes. That year, I made about 10k more than him and got a $750 tax return (single employer.) What is going on here? State: West Virginia.
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Apr 1, 2014 12:52
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Chris Awful posted:My friend worked three jobs in 2012. One employer didn't get his W2 to him until April 2013, after he had filed income taxes for his other two jobs. At some point he received an amended tax form with his third W2 either from AARP tax professionals or from the IRS, I am not sure which. According to the amended form he owes the IRS roughly $1200. This doesn't make sense to me because he only made $16,800 that year. According to the W2 summary, all employers withheld federal and state taxes. That year, I made about 10k more than him and got a $750 tax return (single employer.) What is going on here?
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Apr 1, 2014 15:54
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ThirdPartyView posted:I thought this thread is about what you're supposed to be doing legally, not what's actually done in real life? After all, in real life people also don't declare under-the-table self-employment income all the time but I'm not going to tell people in this thread to ignore Section 61 and not declare that self-employment income (and incur the resulting SE and income taxes). I mean, reading the OP: Not to mention if the OP goes to get a bank loan, they and the parents need to sign documents stating that it's either a gift or a loan (they need to pick one) for underwriting purposes.
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Apr 1, 2014 16:06
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SiGmA_X posted:Sounds like those 3 employers, or just one of them, under withheld. And you over withheld. Also, if he claimed EITC it would have been adjusted down due to the increase in income.
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Apr 1, 2014 16:07
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My wife and I live in Pittsburgh, PA, which has as i've come to understand a really confusing local tax system. We filed our 2013 taxes jointly for federal and state. We were married in October of 2013. We each lived in separate places before buying our house and moving in together in the spring of 2013. How should we file our local taxes? Can we file married, separately for these local taxes despite having filed jointly for federal and state? Does anybody have any experience with this? Pretty confused. I don't want to pay the city of Pittsburgh income tax from my paycheck since I never lived there and it was never withdrawn there. ZentraediElite fucked around with this message at 16:30 on Apr 1, 2014 |
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Apr 1, 2014 16:27
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ZentraediElite posted:My wife and I live in Pittsburgh, PA, which has as i've come to understand a really confusing local tax system. I'm actually from and practice in Pittsburgh. Is the house you purchased and moved into in the spring of 2013 located in Pittsburgh? I'm not really clear on this. If the new house is located in a Pittsburgh 3% tax district, you'll both owe 3% local tax on your wages earned from spring of 2013 through December of 2013. Jordan Tax service handles Pittsburgh's tax collection - here's a link: http://www.jordantax.com/Forms/JTS-2013TaxpayerAnnualLocalEITReturnACCTCD.pdf - make sure you fill out the part year resident schedule (note that this can all be done online). However, you and your wife will each separately owe local tax to whichever locality you lived at before moving in the spring. You will owe this other local tax on wages from January through Spring of 2013. You'll likely end up filing 3 returns in total. You should be checking "MFJ" on all three of them. It's just on your local return from January through Spring, your spouse will report -0- wages earned in that locality (since she didn't live there at that time). All this information she be reported on you and your Spouse's W-2's. You did tell your employer to change your local withholding when you moved, right? Does that make sense?
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Apr 1, 2014 17:44
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I'm a full-time graduate student with a question about my taxes. I receive a tuition waiver as part of my research assistantship. Is it correct that this waiver is treated as taxable income (above a certain baseline amount) or am I making a mistake? This seems insane as I'm ABD (as in I haven't taken a class in a couple of years) and the tuition is more of a formality for the internal University accounting. It switches me from being owed about a $1500 refund to owing nearly $800 and makes my effective tax rate somewhere just north of 30% of my gross income.
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Apr 2, 2014 00:55
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I never had to pay taxes on my tuition. Your mileage, etc etc.
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Apr 2, 2014 01:51
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No, tuition itself isn't taxable income, but a waiver or scholarship covering tuition appears to be if its linked to research or teaching. Or at least that's what turbo tax is trying to tell me.
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Apr 2, 2014 01:54
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ThirdPartyView posted:Wouldn't the rebuttable presumption under Section 7872 be that if you're lending under the AFR rate, it's a gift loan and the difference between the below-market rate and AFR rate is treated as both (constructively OID) interest income received on the difference and then a gift by the lender/donor for that same amount? I mean, so long as the IRS isn't aware about the loan the parents would be OK, but if the IRS finds out, they'll be screwed. So, wouldn't the proper advice be that Massasoit should, technically, be paying the AFR rate (tables showing such rates as recognized by the IRS can be found here - they use semiannual compounding as of the date that the loan was made to compare to the loan rate in the agreement) and that a formal agreement should exist in case the IRS comes and claims it's a gift loan rather than an arms-length loan? Even if the IRS audited (and why would they?) it's unlikely there would be any real negative consequences to treating the interest (or even the entire loan, depending on the amount) as a gift. You can give up to $14,000 (each, so a married couple can give $28,000) without impacting your unified exemption (which is currently $5.34 million). But hey, if you want to pay your parents interest, go right ahead. I still don't see any need to pay a lawyer to draft a note.
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Apr 2, 2014 03:27
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spregalia posted:No, tuition itself isn't taxable income, but a waiver or scholarship covering tuition appears to be if its linked to research or teaching. Or at least that's what turbo tax is trying to tell me. It's not and turbo tax has never tried to make it such for me? I think a couple years ago I did something funky and turbo tax accidentally treated it as independent contracting income which is not the case.
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Apr 2, 2014 03:59
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PatMarshall posted:Even if the IRS audited (and why would they?) it's unlikely there would be any real negative consequences to treating the interest (or even the entire loan, depending on the amount) as a gift. You can give up to $14,000 (each, so a married couple can give $28,000) without impacting your unified exemption (which is currently $5.34 million). But hey, if you want to pay your parents interest, go right ahead. I still don't see any need to pay a lawyer to draft a note. Under IRS circular 230 paid tax preparers face a penalty for giving tax advice based on audit risk. *THATS* why you see more technical answers given for some of these questions. You want a thread with answers volunteered by the paid tax preparers that lurk around these boards, please respect the fact we have to abide by certain rules to keep our licenses.
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Apr 2, 2014 15:34
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Admiral101 posted:I'm actually from and practice in Pittsburgh. Is the house you purchased and moved into in the spring of 2013 located in Pittsburgh? I'm not really clear on this. Yes it does, thanks. We did buy in "Pittsburgh" but while our address sometimes resolves to Pgh, we live outside of the city limits so we're in the 1% tax. I did tell my employer that I moved, but the curious thing is her employer sent her W2s that reflected each residence she had, whereas mine only showed one (and it had the local code for Cranberry, where I work).
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Apr 2, 2014 18:31
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My fiancee has a HELOC on her house, that we are going to draw from to pay off my school loan ($27000, at 3% rather than 7.75%). What are the tax implications, if any, of this? I suspect that this would count as a gift to me, and I should technically have to claim it as income. Is that true?
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Apr 2, 2014 21:51
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You don't have to claim it as income, but your fiancee will have to file Form 709. This form is rather complicated and she should probably have a tax professional handle it. She won't owe any tax, since you can give up to about $5.3 million during your lifetime tax-free.
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Apr 3, 2014 00:11
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ZentraediElite posted:Yes it does, thanks. We did buy in "Pittsburgh" but while our address sometimes resolves to Pgh, we live outside of the city limits so we're in the 1% tax. Her employer did it correctly. Your employer sounds like it's doing it entirely incorrectly. They should not be withholding your local tax for where you work, but for where you live (like your wife's employer is doing).
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Apr 3, 2014 12:38
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Dragyn posted:My fiancee has a HELOC on her house, that we are going to draw from to pay off my school loan ($27000, at 3% rather than 7.75%). What are the tax implications, if any, of this? This is not income to you. Nor is it a gift - she's loaning you money that you'll be paying back through payments on the HELOC. This loan from her will be dissolved when you ultimately get married this year or next. I'm assuming you are contributing to her HELOC payments until you two get married, yes? There's no real tax implications to this. She'll still be able to deduct her HELOC interest, and you can still deduct whatever student loan interest you paid when you wiped out the student loan. You should not be filing a gift tax return like this poster is stating: Konstantin posted:You don't have to claim it as income, but your fiancee will have to file Form 709. This form is rather complicated and she should probably have a tax professional handle it. She won't owe any tax, since you can give up to about $5.3 million during your lifetime tax-free.
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Apr 3, 2014 12:48
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