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Comrade Flynn posted:I started an LLC with a partner a few months ago which is starting to generate significant income. The business itself has very little expenses (very specialized consulting), so almost all of the revenue is just passing through to us. The problem with outright buying the sports car are the luxury auto depreciation rules, which severely limits the amount you can "write off" (to 3,160 or 11,160 the first year, roughly 5k the second year, and lower numbers afterwards). These rules apply to any vehicle with a gross vehicle weight of less than 6,000 lbs, which is going to include most sports cars. With leases, you can simply write off the amount that's paid on the lease with no limitations. The only significant issue with this, from a tax perspective, is a relatively minor lease inclusion adjustment which, at the end of the day, increases your taxable income by about a few hundred dollars per year, depending on how expensive of a sports car you buy. From purely a tax perspective, leasing is going to be the better deal. With all that said, you better keep extremely good records, because I generally roll my eyes when a client mentions a "exclusively business use" sports car - mainly because I've yet to see a sports car that wasn't purchased for 90% personal reasons. The IRS will generally take a similar view of this unless you can come up with very convincing reasons. Please note that regular commuting to work is not "business use". If this is your only car, then it's going to be an EXTREMELY hard sell to say that this vehicle is more than 50% business use. Also please note that you will want any such vehicle to be titled in the name of the business, and not your personal name. Admiral101 fucked around with this message at 04:16 on Sep 29, 2014 |
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Sep 29, 2014 04:13
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Admiral101 posted:The problem with outright buying the sports car are the luxury auto depreciation rules, which severely limits the amount you can "write off" (to 3,160 or 11,160 the first year, roughly 5k the second year, and lower numbers afterwards). These rules apply to any vehicle with a gross vehicle weight of less than 6,000 lbs, which is going to include most sports cars. I mainly work from a home office unless I'm meeting clients or on a job site, and I have a second, cheap car for normal use. Is having it in the business name a requirement or just nice to have?
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Sep 29, 2014 05:06
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Comrade Flynn posted:Is having it in the business name a requirement or just nice to have? It's pretty much a rebuttable presumption that not having it under the business name means it's personal use.
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Sep 29, 2014 12:06
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Comrade Flynn posted:I mainly work from a home office unless I'm meeting clients or on a job site, and I have a second, cheap car for normal use. It is not a requirement, but would help your tax position. What car does your partner drive? I should also note that you have a third option of deducting your mileage in lieu of expensing the vehicle. Essentially, you'd get a 56 cent tax deduction for every mile you drove for business. In your situation, however, it likely would not give you a better tax deduction than expensing the lease.
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Sep 29, 2014 12:19
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ThirdPartyView posted:It's pretty much a rebuttable presumption that not having it under the business name means it's personal use. Not to mention the IRS will dig through your LLC agreement for how Unreimbursed Partnership Expenses (UPE) are to be treated. Rumor has it listed UPE on E2 is asking for an audit.
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Sep 29, 2014 16:53
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ThirdPartyView posted:It's when they suspect that you've somehow messed up (IE: apportioned income between the states incorrectly, etc), lied or, alternatively, if you messed up the Federal 1040 and the IRS notified the states of the gently caress-up. Basically, they're trying to verify that you legitimately owed that tax liability to WI and therefore were entitled to the credit. If not, they'll demand the difference and you'll have to amend your WI return before the statute for refunds (typically 3 years from the due date of the return with any extensions taken) to get the refund. The reason they're sending the correspondence audit now is because they only have until April (or October if you took an extension) of next year to go after you for any liability due, and states (and the IRS) tend to wait towards the end to accrue as much interest as possible. Oregon sends out letters like this all the time. They got burned bad a couple years ago with a lady and a fake W-2 and since then they ask for paper backup for lots of stuff, even stuff they already have. http://www.oregonlive.com/politics/index.ssf/2012/06/human_error_to_blame_in_2_mill.html
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Sep 29, 2014 16:55
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AbbiTheDog posted:Oregon sends out letters like this all the time. They got burned bad a couple years ago with a lady and a fake W-2 and since then they ask for paper backup for lots of stuff, even stuff they already have. Hahaha, how did I not hear about this?? A debit card with 2 million dollars on it, wow. My refund was way more modest than that. Oh and I found my old return and I apparently got a refund from WI so I'm not sure how to show them a check I didn't write.  Probably just going to call them and make sure I've got everything.
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Sep 29, 2014 19:45
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HondaCivet posted:Hahaha, how did I not hear about this?? A debit card with 2 million dollars on it, wow. My refund was way more modest than that. There's more hidden to the story. The lady just completely dummied up the W-2, and Oregon gets a copy of all the payroll returns filed. The computer tossed it out for review, and FOUR employees looked at it and said "Nah, she's good." One employee got demoted, nothing else happened to the other three, IIRC. She was caught because not only did she lose the card, she lost it TWICE. It was the second time she called it in lost that Intuit said "Hey, maybe there's something going on here."
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Sep 29, 2014 19:51
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Admiral101 posted:It is not a requirement, but would help your tax position. What car does your partner drive? He drives a Range Rover. Alright, I can register it under the LLC I guess.
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Sep 29, 2014 20:25
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Admiral101 posted:It is not a requirement, but would help your tax position. What car does your partner drive? Don't forget the auto lease inclusion rules.
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Sep 29, 2014 23:30
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AbbiTheDog posted:Don't forget the auto lease inclusion rules. I covered it in my first response. Probably a safe bet that the inclusion amount is going to be a trivial factor in this decision of his. Comrade Flynn posted:He drives a Range Rover. Last thing - you mentioned that you have an LLC, and called your co-owner a "partner". Is this business a partnership or s-corp or? Depending on the percentage of personal use of this vehicle, you may have personal use of company car income considerations. This is something that you're going to want to talk with your accountant about before deciding. Admiral101 fucked around with this message at 01:13 on Sep 30, 2014 |
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Sep 30, 2014 01:10
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AbbiTheDog posted:Oregon sends out letters like this all the time. They got burned bad a couple years ago with a lady and a fake W-2 and since then they ask for paper backup for lots of stuff, even stuff they already have. I remember New Jersey doing a correspondence audit once where another area of the NJ Division of Taxation had received the documentation several weeks earlier (it was an amended return for mitigation purposes as the taxpayer ended up getting audited by NY and had to reapportion income to NY); the best part was the auditor in the area that requested it saying "Oh, we don't talk with those other areas.  ".
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Sep 30, 2014 02:16
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ThirdPartyView posted:I remember New Jersey doing a correspondence audit once where another area of the NJ Division of Taxation had received the documentation several weeks earlier (it was an amended return for mitigation purposes as the taxpayer ended up getting audited by NY and had to reapportion income to NY); the best part was the auditor in the area that requested it saying "Oh, we don't talk with those other areas. We just efiled a multistate return for Colorado and they required us to go online and submit a PDF of some items, since they didn't accept it from our software. What a pain in the rear.
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Sep 30, 2014 16:32
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Admiral101 posted:I covered it in my first response. Probably a safe bet that the inclusion amount is going to be a trivial factor in this decision of his. Guess I skipped that part. Given he's trying to buy a luxury auto, not sure how trivial it is. IRS and the states loooooove to dig into auto records on audits.
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Sep 30, 2014 17:34
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AbbiTheDog posted:Guess I skipped that part. Given he's trying to buy a luxury auto, not sure how trivial it is. IRS and the states loooooove to dig into auto records on audits. http://www.irs.gov/irb/2013-12_IRB/ar07.html Even if he buys a 235k car, the inclusion is only going to be $118. I don't really understand why this exists anymore.
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Sep 30, 2014 23:19
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I'm 29, single, no dependents. Just started a new job, not sure what I should initially set my withholding to; W-4 makes me think 1 allowance is right. Make sense as a starting point?
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Oct 1, 2014 00:14
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Nur_Neerg posted:I'm 29, single, no dependents. Just started a new job, not sure what I should initially set my withholding to; W-4 makes me think 1 allowance is right. Make sense as a starting point?
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Oct 1, 2014 01:33
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SiGmA_X posted:Did you hold another job this year? If not, 1 should be good. If so, calculate it out. Being it's so late in the year you may get away with less withholding (more allowances) and probably should consult the IRS calculator after your first check. This is technically my second gig of the year, I just got brought on full-time from a contract role with my company. I was also unemployed for the first 5 months of the year, so my gross income this year is only gonna be something like 40k. I had them withholding from my unemployment as well, but they only withhold 10%.
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Oct 1, 2014 19:16
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Nur_Neerg posted:This is technically my second gig of the year, I just got brought on full-time from a contract role with my company. I was also unemployed for the first 5 months of the year, so my gross income this year is only gonna be something like 40k. I had them withholding from my unemployment as well, but they only withhold 10%. http://apps.irs.gov/app/withholdingcalculator/
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Oct 1, 2014 21:36
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Called the Oregon DOR, they got back to me and told me the problem which was that I claimed a credit incorrectly. I was confused about how the "taxes paid to another state" thing worked.  Yay for owing almost $700. I think I made the same mistake with Wisconsin, hopefully they don't notice I guess? Or maybe they're lazier about chasing people who move out of state?
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Oct 1, 2014 23:18
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Admiral101 posted:http://www.irs.gov/irb/2013-12_IRB/ar07.html Ignorance of the law is no excuse! Part of why we follow some of the immaterial tax laws in my firm isn't about the numbers, it's to show the auditors that we're "by the book" and following the laws as closely as possible. Helps smooth out the audit. If an auditor starts finding small laws here and there that are ignored, they might dig deeper. On the other hand, all of the auditors floating around here all quit after a couple years, so they send out brand new auditors who don't know half the rules.
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Oct 2, 2014 20:41
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I am a grad student. This year, half of my income is normal income (shows up on a W-2) from teaching assistantships. But for the last six months of this year, I have been getting my income from an NSF Fellowship which sends out a 1099. I have heard wildly conflicting reports from the other NSF funded grad students about how our taxes are supposed to work. - One person is paying quarterly, I think using the "Estimated Tax" stuff on the IRS website - Two people are paying annually, and one is getting "hosed" because the IRS is counting their tuition rebate as income (I think this is not supposed to happen). I don't have any stocks or bonds. My only foreign account is a Canadian bank account (I am a dual citizen) with CA$300 in it. It seems like the interaction of the W-2 and 1099 might be horrible? Since I am a stupid child, I didn't look into the paying quarterly stuff before I started drawing NSF money. Dealing with taxes makes me really anxious. Should I just go find a nice CPA in town? Or is this less annoying/complicated than it seems, such that I can easily do it myself?
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Oct 4, 2014 20:59
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bartlebyshop posted:I am a grad student. I am a grad student who previously had an NSF GRFP. It's not terribly complicated, there's just a lot of misinformation, and even accountants will gently caress stipends up because they are unlike most income they see. You are definitely supposed to pay estimated taxes quarterly on the fellowship. I am surprised you get a 1099, but it will actually make your tax return a bit more straightforward. Your friend who is counting the tuition rebate as taxable income is a moron. Don't stress out about the estimated tax payments you've missed, though, just start now by paying more for the January deadline. It's not that hard to do the return yourself, and I'd honestly suggest it because I've had friends get their returns badly mangled by chain accountants. BRAKE FOR MOOSE fucked around with this message at 18:53 on Oct 7, 2014 |
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Oct 7, 2014 18:50
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disheveled posted:I am a grad student who previously had an NSF GRFP. It's not terribly complicated, there's just a lot of misinformation, and even accountants will gently caress stipends up because they are unlike most income they see. You are definitely supposed to pay estimated taxes quarterly on the fellowship. I am surprised you get a 1099, but it will actually make your tax return a bit more straightforward. Your friend who is counting the tuition rebate as taxable income is a moron. Thank you! So I will do my annual return with my W-2 from the TAing, and then pay for my so-far 2 quarters of NSF tax in January, then quarter-by-quarter after?
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Oct 8, 2014 03:14
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As an independent contractor, I'm paying the bills and saving for taxes, but I'm also looking to expand my work into other fields. I've been buying a lot of hardware to do this, but I think it's getting to the point where the catch-all 'self-employed' is less desirable than a real umbrella of a business. Does this fall under the purview of a tax consultant? I figure triaging my scenario would be covering my rear end regarding taxes, and then looking at options for how to build my work into a real business without burning myself. Alternatively, I don't know if I should be figuring out my business first and then working on catching up on the red tape re:taxes afterwards.
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Oct 10, 2014 19:25
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Cheekio posted:As an independent contractor, I'm paying the bills and saving for taxes, but I'm also looking to expand my work into other fields. I've been buying a lot of hardware to do this, but I think it's getting to the point where the catch-all 'self-employed' is less desirable than a real umbrella of a business. Probably, if not mainly to have someone to walk you through the process of incorporating in your state, and to handle the various tax filing associated with it. Unless your business has some unique circumstances, however, the high level advice will likely just be some flavor of "form an S-Corp".
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Oct 11, 2014 14:50
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Admiral101 posted:Probably, if not mainly to have someone to walk you through the process of incorporating in your state, and to handle the various tax filing associated with it. Unless your business has some unique circumstances, however, the high level advice will likely just be some flavor of "form an S-Corp". An LLC has less stringent requirements, especially to begin with (no required annual meeting minutes is what the attorneys will harp on). Plus, you can take office in home with the LLC if you leave it alone and don't need a payroll like you would with an S corp. Nice thing about the LLC is you can elect to legally stay the LLC but be treated on your taxes like any other entity (C or S Corp). If you form the LLC early in the year you can even make some of the elections retroactive (for S Corps, see rev. proc. 2003-43). So you can start 2015 as an LLC, see how the year is going, and then retroactively pull all of the income into a different form of taxation later in the year.
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Oct 11, 2014 17:29
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I've been wondering about this for years, but it's basically unsearchable on the internet because all that comes up is tax software review sites. Sorry if this has been covered before in the thread, it's hard to search through 110+ pages for it. (I got through the last 25 and then gave up) Let's say someone sets up a site where they review things, like cell phones or toasters or whatever. There are some obvious things that are tax deductible, like website hosting costs, advertising costs, etc. What I've been curious about is deductions for the reviewed items themselves, in a few different scenarios: 1) The items are bought and reviewed, never sold. 2) The items are bought and reviewed, and then sold. 3) The items are rented and reviewed, and then returned. I'm not looking for long and crazy detailed answers because I haven't and don't intend on doing this, but my curiosity finally got the better of me so I thought I'd ask here.
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Oct 13, 2014 17:40
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My quick opinions 1) Expense if not material, capitalize if material 2) If this is a common practice for the review site, I would personally treat it as an inventory transaction. Recognizing the cost of the item once sold. 3) rent expense Disclaimer, I haven't done any real research. I'm just explaining the most likely scenario of how the firm I work at would handle it.
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Oct 13, 2014 19:11
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Dr. Eldarion posted:1) The items are bought and reviewed, never sold. Edit for thinking some more: I guess it would depend on the type of entity you're setup as, since each one has rules about how you treat distributions of assets for nonliquidation. Assuming you're a sole proprietor: 1) I'd ask what happened to the things. If you take them and use them for personal use after the review, I'd have a hard time taking the full amount as a deduction. If you CAN find a listing from someone else (amazon, craigslist, etc.) that shows someone trying to sell a gently used item that you bought, I'd take the difference as the tax deduction, I guess. AbbiTheDog fucked around with this message at 20:52 on Oct 13, 2014 |
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Oct 13, 2014 20:46
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I have a general question about total number of allowances claimed on W-4's. I am married and we file jointly at the end of the year. We are both full-time employed and no kids. Do we both claim 2 allowances on the W-4? I am currently claiming 2, 1 for myself and 1 for my spouse. I am confused as to whether she should do the same.
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Oct 14, 2014 23:03
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Quick question about the underpayment penalty (and whether it will apply to me): Doing a few quick calculations, it looks like my wife and I will owe around $1000 for this year. This is mostly because we married part of the way through the year and were each withholding at a different (single) rate for most of the year. Do we need to go ahead and have a little extra withheld from the last two month's paychecks to avoid underpayment penalties? We've already set our withholding to married with 0 exemptions, but that seems to not be sufficient.
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Oct 14, 2014 23:14
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Sleipnir posted:Quick question about the underpayment penalty (and whether it will apply to me): To avoid the penalty you have to pay either 90% of the current tax due this year, or 100% of whatever your tax due was last year, whichever is smaller.
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Oct 15, 2014 00:06
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HexDog posted:I have a general question about total number of allowances claimed on W-4's. I am married and we file jointly at the end of the year. We are both full-time employed and no kids. Do we both claim 2 allowances on the W-4? I am currently claiming 2, 1 for myself and 1 for my spouse. I am confused as to whether she should do the same. Generally, you'll want to use the "Two-Earners/Multiple Jobs Worksheet" to properly calculate withholding unless you are making under $50k together.
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Oct 15, 2014 03:06
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baquerd posted:Generally, you'll want to use the "Two-Earners/Multiple Jobs Worksheet" to properly calculate withholding unless you are making under $50k together. For as good as the tables are, you're better off using a dartboard.
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Oct 15, 2014 18:16
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Missing Donut posted:For as good as the tables are, you're better off using a dartboard. From my own experience and calculations, if you follow them exactly you'll be +/- 1000 USD at the end of the year, which avoids penalties. You have to pre-figure tax deductions out of your salary though before you use the table lookup.
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Oct 15, 2014 18:29
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NE uses the federal w4 form but my new employer has me still fill one out for NE. I am single with no dependents so I want to just list one exemption. Putting a 1 on each form won't do something stupid, will it? Would it cause me problems to give different exemptions on each form? Sorry this is the first time I've worked in this state.
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Oct 16, 2014 02:52
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Hey, I'm a retard when it comes to federal income taxes and tax brackets, etc. I recently got around a 10% raise at work and after taxes, I'm noticing my paycheck is definitely not as much as I thought it would be. If I calculate my federal income tax withheld on my older paychecks, it is about 14.2 - 14.7% of my pay. After my raise, it's now 16% of my pay. FICA is about the same, no state tax here. I went from about 51.5k to 57.2k. I'm reading something about now being over the alternative minimum tax threshold, but no idea how to understand what that is or means. I'm withholding at single 0, no dependent a if that makes a difference.
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Oct 16, 2014 17:35
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The problem is that you can't just look at your total federal tax percentage to see how much they should take out of your raise. Federal tax rates are marginal, meaning if your pay goes up by $100, the percentage of that new $100 that you pay in taxes depends on your total income up to that point. See http://en.wikipedia.org/wiki/Rate_schedule_(federal_income_tax)#cite_ref-11 . Assuming you're single, if you were making $50k, your federal tax is $5,081.25 + 25% of the amount over $36,900. That's $5,081.25+$3,275 = $8,356.25, or about 16.7% of your total income. Going from $50k to $55k you'd be taxed at an additional 25% of the $5k raise, i.e. an extra $1,250, making your tax liability $9606.25, or 17.4% of your total income. A whole lot of other stuff gets thrown into the way your actual paycheck gets calculated, but that's the general principle behind the reason that your total tax rate can go up after a raise even if you stay in the same tax bracket.
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Oct 16, 2014 18:02
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Arcturas posted:The problem is that you can't just look at your total federal tax percentage to see how much they should take out of your raise. Federal tax rates are marginal, meaning if your pay goes up by $100, the percentage of that new $100 that you pay in taxes depends on your total income up to that point. See http://en.wikipedia.org/wiki/Rate_schedule_(federal_income_tax)#cite_ref-11 Also, you are nowhere near anywhere where AMT is a 'thing' for you, so don't worry about that. The amount you mentioned was probably the AMT Exemption level that you're now over, but you have to hit a very high amount of income before AMT takes effect.
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Oct 16, 2014 18:41
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