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Does anyone here have tips on the best way to calculate the number of ISOs to purchase to stay under the AMT crossover point? It seems like I basically have to figure out what our household income will be for the year, run through all the deductions we would take, and then calculate the spread of the FMV and strike price and see what pushes things over? It seems rather painful to try to guess, but would be super valuable. We have a few things that make the complication not so straightforward. We're married filing jointly, had raises in our jobs at different times through the year. My spouse will be quitting her job part way through the year to be a full time student. I'd love to exercise some options and avoid the AMT if possible, but am struggling to find an easy way to do so. In reality, I'll probably goto a tax planner to figure it out, but any initial tips to get us started would be helpful!
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Jul 2, 2016 23:56
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I might be an independent Canadian contractor working remotely for an American company soon. I've read into it a bit and it looks like I'm only obligated to pay Canadian income tax, but there was a bunch of caveats I didn't really understand. Another thing is what would the differences be for me tax wise to work as an individual versus forming an LLC or something and working through that. I've tried reading the tax codes but it's just unreadable to me.
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Jul 3, 2016 17:52
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Ethereal posted:Does anyone here have tips on the best way to calculate the number of ISOs to purchase to stay under the AMT crossover point? It seems like I basically have to figure out what our household income will be for the year, run through all the deductions we would take, and then calculate the spread of the FMV and strike price and see what pushes things over? Not for AMT, but to calculate how much cap gains I could get at 0% I make a rough copy of form 1040 in excel and played with the starting numbers. You could probably do the same thing with the AMT form.
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Jul 4, 2016 00:35
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Methanar posted:I might be an independent Canadian contractor working remotely for an American company soon. Generally, income for the performance of services is sourced to the location where the services are performed. So, if you will be performing the services while you are physically present in Canada, the income you earn should be Canadian source income and should not be subject to withholding in the US. Give the US employer a w8ben to certify that you are not a US citizen or resident. They may also request that you state that all services are provided outside the US on your invoice in order to document why they have not withheld in case they are ever audited by the IRS. US Tax should not drive the decision whether to earn this income through an entity. If you were to set up an LLC, it would primarily be for liability protection. Note that a US LLC with a single owner would likely be disregarded for US tax purposes, but there may be some reporting complications I haven't thought through.
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Jul 4, 2016 18:33
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Xenoborg posted:Not for AMT, but to calculate how much cap gains I could get at 0% I make a rough copy of form 1040 in excel and played with the starting numbers. You could probably do the same thing with the AMT form. Yup, that's basically what I did and will take off a percentage as an extra safe guard. It's definitely worth the hassle to minimize the tax burden.
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Jul 4, 2016 20:18
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1099 question: If a 1099 isn't listed in a persons income tax (like if the form is lost or never received, but the IRS is informed of the income), will the IRS recalculate taxes, or is that an immediate audit? I recently found out I am one of the Plaintiffs in a class action so if/when I get my payment I want to make sure that I file it correctly. My understanding is that if I get a check and no 1099, I should still list the money as income. (And I need to tithe it too.) This is a really old case and I have changed my address more than once. I have a feeling that they ran a skip-trace in me but they did track me down! Three-Phase fucked around with this message at 03:54 on Jul 6, 2016 |
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Jul 6, 2016 03:26
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I have nothing to say here
Beerdeer fucked around with this message at 21:24 on Jul 6, 2016 |
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Jul 6, 2016 19:59
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Three-Phase posted:1099 question: If you don't report income on your return and it is later reported to the IRS, they will send you a polite letter asking you if the info is correct and if so, can you please pay the additional taxes? But if you already know what the amount is, so you don't have to wait. Include it on the return or send in a 1040x if it was ready filed. As far as tithes are concerned, render unto Uncle Sam what is Sam's, and render unto God what is God's, but I don't know if he considers proceeds from a lawsuit to be taxable income or not. You may need to consult with a spiritual advisor to determine whether that needs to be tithed.
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Jul 6, 2016 22:45
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Double check that the lawsuit money is taxable income (I believe it's generally punitive damages that are taxable), but as far as reporting it you're fine even without a 1099, the burden on reporting forms is on the people reporting not you. As long as you report the income the IRS doesn't really care if YOU have the form in question (let's face it, there aren't many people who will lie to the IRS by claiming they made MORE taxable income). Include a note or a brief description on the "other income" line if you're concerned and you will be OK.
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Jul 8, 2016 19:12
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Gotcha, gotcha. I am going to need to see if this tax money is punitive or not. I may need to look through the court documents that were filed. Now here's something odd: let's say that for some reason they send me a check with an attached 1099. Let's say that it gets lost in the mail. They report a 1099 for, say, $1000, but I have no idea and fill out my taxes normally. Based on what you said, Sullat, I would get the aforementioned "Hey, where is our money?" letter. (I'm not sure what the difference is between that and a correspondence audit? I am thinking the IRS could contact them too and say "Hey, did Three Phase cash that check you sent him and reported to us?" My understanding with class action settlements is that part of their jobs is getting money out (including skip-tracing people who ar heard to find or moved) as well as verifying the disposition of checks - whether they were cashed, returned to sender, lost, etc. I am going to keep a close eye on that situation and if I don't receive a check/1099 around the end of the year I will contact the company that's been hired to do the money distribution things. (Hopefully they are on-the-level and not too fly-by-night. But they were involved with getting money out for a large number of class action suits and settlements.) To summarize: What happens if a business/organization reports a 1099 for someone to the IRS, but that person never received a form or the associated payment? Three-Phase fucked around with this message at 03:26 on Jul 11, 2016 |
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Jul 11, 2016 03:12
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Three-Phase posted:Gotcha, gotcha. I am going to need to see if this tax money is punitive or not. I may need to look through the court documents that were filed. The IRS will just issue a notice to you with a balance due based on the tax incurred from the 1099. You will have to then send the IRS correspondence stating why you didn't pick the money up in income along with some kind of proof.
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Jul 11, 2016 11:28
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MadDogMike posted:Double check that the lawsuit money is taxable income (I believe it's generally punitive damages that are taxable), but as far as reporting it you're fine even without a 1099, the burden on reporting forms is on the people reporting not you. As long as you report the income the IRS doesn't really care if YOU have the form in question (let's face it, there aren't many people who will lie to the IRS by claiming they made MORE taxable income). Include a note or a brief description on the "other income" line if you're concerned and you will be OK. Lawsuit settlement income screws you over. Technically you're supposed to pick up the gross income for stuff like this (you'll need to read the terms of the settlement, but if it's not for injuries you tend to get nailed) and then you claim the lawyer's part on schedule A as a 2% deduction, which usually tosses you into AMT. It sucks.
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Jul 12, 2016 17:20
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If two non-married people create a joint brokerage account and always deposit/withdraw the same amount of money at the same time into/from the account, would the IRS consider both people to have half the beneficial ownership of the account, and split the tax liability 50/50 between the two? Would this eliminate any worries about gift taxes when money is withdrawn?
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Jul 13, 2016 17:35
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Admiral101 posted:The IRS will just issue a notice to you with a balance due based on the tax incurred from the 1099. You will have to then send the IRS correspondence stating why you didn't pick the money up in income along with some kind of proof. Huh. If they never sent me a check, would I simply tell them that I never received any payment? You can't prove a negative. I could provide bank statements that show no check was received or cashed but that doesn't mean I could have just taken it and cashed it at some other place. (I am assuming that the person issuing the check would have to show that the check was cashed on their end.) Three-Phase fucked around with this message at 14:01 on Jul 15, 2016 |
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Jul 15, 2016 13:51
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Something like a year later, finally sorted out the issues with my 2014 tax return and am getting the $5k I've been chasing down. Would've been nice to have this money to have invested or even earned interest during that time, but better late than never. Once again, gently caress furushotakeru for abandoning me after getting me into the exact problem I hired him to avoid.
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Jul 15, 2016 20:44
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Three-Phase posted:Huh. If they never sent me a check, would I simply tell them that I never received any payment? You can't prove a negative. You would want something in writing from the firm distributing the lawsuit proceeds that the check they issued you was never cashed and was subsequently voided in the tax year the 1099 was issued. You would also want to explain separately that this check was missed by you due to multiple address changes, and that you weren't simply "holding" the check. The IRS may or may not deem the income to be taxable to you anyway under the constructive receipt doctrine, but the above would at least give you solid footing in abating any penalties that get assessed. Admiral101 fucked around with this message at 13:18 on Jul 16, 2016 |
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Jul 16, 2016 13:14
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My wife and I file jointly each year, both W2 employees. We've ended up owing some additional tax at tax time despite claiming 0 exemptions, usually $1-3k. Her salary increased substantially starting this month, to the point where additional withholding on a regular basis is probably a better idea. Through the W4 worksheet, when it calculates your additional withholding, is that the amount that should be withheld across both paychecks, or from each person's paycheck? So for example, when we do the calculation, we get an additional $7910 that should be withheld for the year. Does that mean it should be half that per person for the year, or $7910 in additional withholding each?
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Jul 20, 2016 15:30
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Not really a tax question, more of a rant. I don't live in the US but a few of my clients have LLCs in the US and so their tax returns are filed by US accountants. Is it just standard practice for accountants in the US to file taxes for corporations past the deadline? This has happened twice already with different accountants and the first time I was willing to write it off as a mistake, but now it's pissing me off. I mean, it's a relatively small penalty considering the income reported and I realize that the IRS isn't about to do an audit on us because of that, but in neither case did they send me an email warning me that the deadline was near or anything like that, and in the latest case they were still asking for additional documentation as laste as june. Again, it's not a huge deal, but I'm wondering whether these are just lovely accountants or whether in general accountants for corporations don't really pay much attention to the actual deadline and just file whenever + the penalty. They just kind of matter-of-factly sent me an email "Your tax is $X oh and also you have penalties for $Y. Have a nice day."
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Jul 20, 2016 19:24
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This won't answer your question and is for my own curiosity, but what scenario is that? Are you waiting on someone else's accountant to file your own taxes?
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Jul 20, 2016 19:56
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NancyPants posted:This won't answer your question and is for my own curiosity, but what scenario is that? Are you waiting on someone else's accountant to file your own taxes? No, two clients of mine have LLCs in the US. They each have their own accountant that does the tax returns for the LLC. I need the tax returns of those LLCs and have been asking for them since march and the US accountants have recently emailed them to me. Besides the amount of taxes owed, they both mentioned that the LLC owes penalties for, I presume, late filing. I was just surprised (and annoyed) that both of them had decided to file late without any prior warning. I know it's not my problem, but in practice I'm the one that's going to end up having to explain to the client why he's paying penalties for something that should've been done on time.
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Jul 20, 2016 21:23
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They could be filing automatic six-month extensions before the LLC's normal deadline.
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Jul 20, 2016 21:29
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saltylopez posted:They could be filing automatic six-month extensions before the LLC's normal deadline. This is reasonably common isn't it?
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Jul 20, 2016 22:52
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Couldn't the penalty be for not paying quarterly estimated taxes?
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Jul 20, 2016 23:06
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SiGmA_X posted:This is reasonably common isn't it? Very common in my office.
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Jul 20, 2016 23:40
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If they were filing after the due date or not making quarterly payments then they should've emailed us before not doing so since both result in basically having to pay more money. Neither the client nor me know US tax law which is what they're presumably being paid for. In either case, let's just drop it. It was a dumb post I made in the heat of the moment and I've already emailed the involved parties asking for an explanation. Sorry for the E/N.
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Jul 20, 2016 23:42
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Ur Getting Fatter posted:If they were filing after the due date or not making quarterly payments then they should've emailed us before not doing so since both result in basically having to pay more money. Neither the client nor me know US tax law which is what they're presumably being paid for. If they're incurring penalties for late filing, and then passing those penalties on to you, that is stupid and dumb and you should be mad at them.
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Jul 21, 2016 01:09
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kaishek posted:If they're incurring penalties for late filing, and then passing those penalties on to you, that is stupid and dumb and you should be mad at them. The accountants probably off-handed mentioned "penalties" and he likely assumed that they're, of course, penalties incurred due to them filing in the late, late month of July. I'm going to venture to say that his US clients are probably dysfunctional and/or apathetic when it comes to tax compliance, and probably didn't make timely estimates or couldn't provide accurate/timely information. If it's a "relatively small penalty" - then it's definitely not late filing or late payment penalties (ie: penalties where its the accountants' fault), since those are rather steep.
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Jul 21, 2016 01:38
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I have a foreign earned income exemption question, specifically about form 2555, line 13. As a U.S. citizen, if I work abroad and do not pay foreign taxes, but the exemption is provided by some institution-country agreement and not because I have been declared nonresident by the country, do I still qualify for the exemption? The organization is not governmental or consular. My reading of the instructions would indicate that I am exempt, however I am deeply suspicious of not paying taxes to either my local country or the U.S. For those that are familiar: I am trying to asses the value of employment at CERN in Geneva. As an American, it seems like that by living in Switzerland I can avoid paying taxes to both Switzerland and the United States on the first ~100k. Is my understanding correct?
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Jul 21, 2016 16:30
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Admiral101 posted:The accountants probably off-handed mentioned "penalties" and he likely assumed that they're, of course, penalties incurred due to them filing in the late, late month of July. It might also be the case of the tax preparers requiring positive communications from the client that yes, the client will be using the tax preparer this year, in order for the tax preparer to file an extension for the clients. For us, the IRS extension is pretty easy to do (check a box, click a button, and efile it) but for us the hassle is the state minimum tax payment and explaining to the clients that no, this tax is not new, no, it's not our fee for the extension, and yes, you need to pay it every year and have done it for the last five years at least.
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Jul 21, 2016 17:43
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AbbiTheDog posted:It might also be the case of the tax preparers requiring positive communications from the client that yes, the client will be using the tax preparer this year, in order for the tax preparer to file an extension for the clients. Add in "no this isn't because of Obama" and I think that hits all of them. Extension time is super super fun!
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Jul 21, 2016 21:02
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Epi Lepi posted:Add in "no this isn't because of Obama" and I think that hits all of them. Extension time is super super fun! Oh man. Some of our clients freaked when he got elected and started draining their IRA accounts. When I asked why, I got the response "That brown man in the white house is going to take my retirement to pay down the national debt." And yes, all of these clients were over 80. 
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Jul 26, 2016 17:07
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Question about 403b and solo 401k contributions: I work both a W2 job and moonlight as an independent contractor. I have an employer sponsored 403b plan in addition to a recently opened solo 401k. If I max out my $18,000 in 403b employee deferrals, what amount can I contribute to my solo 401k? 20% of my net income regardless of the amount? What if I split the employee deferrals between the two plans for cash flow flexibility? Could I defer $18,000 + 20% of my net income no matter the amount, even if my 1099 net income is less than $18,000 + 20%?
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Jul 29, 2016 01:41
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$18,000 is the total amount you can contribute to both 401(k) and 403(b) plans, plus 6k if you're over 50. So if you're putting 18k in your 403(b), you can't put anything into your 401(k). IRA plans have an unconnected limit, so if you want to contribute more than $18,000 you can use your 403(b) and one of those up to their limits ($5,500 total for IRAs). Read here for more details.
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Jul 30, 2016 16:11
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MadDogMike posted:$18,000 is the total amount you can contribute to both 401(k) and 403(b) plans, plus 6k if you're over 50. So if you're putting 18k in your 403(b), you can't put anything into your 401(k). IRA plans have an unconnected limit, so if you want to contribute more than $18,000 you can use your 403(b) and one of those up to their limits ($5,500 total for IRAs). Read here for more details. Solo 401ks work differently than plain old employer sponsored 401ks/403bs. Since I am the employer and the employee, I can make both my employee salary deferral of $18,000 plus an employer contribution as a percentage of the net profit up to a total of $53,000. The thing I am having trouble understanding or finding a clear explanation on is how large the employer contribution is allowed to be if the total taxable profit of the independent enterprise is something like $20,000 and there is another source of W2 income and employer sponsored 403b/401k deferrals involved? Can I still contribute $18,000 + 20% of the profit, even if that adds up to more than the total profit of the enterprise, as long as my total taxable income from all sources is more than $18,000? If I defer $10,000 from my day job, can I defer $8,000 + 20% employer contribution?
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Jul 30, 2016 17:34
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BEHOLD: MY CAPE posted:If I defer $10,000 from my day job, can I defer $8,000 + 20% employer contribution? You mean being able to put in a whole 20% employer contribution on the whole 18,000 as opposed to just the 8,000 you put into the solo 401k? 20% on just the 8,000 is pretty straightforward - yes you can. 20% on the whole 18,000 - that's a good question. I'll see if I can dig something up on Monday. My gut says no, though.
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Jul 31, 2016 11:50
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Admiral101 posted:You mean being able to put in a whole 20% employer contribution on the whole 18,000 as opposed to just the 8,000 you put into the solo 401k? Exactly - I can't find a clear examination of this situation anywhere although it must be a reasonably common question for people with side jobs. The cash flow and contribution flexibility advantages of the solo plan are huge so I'd rather just sock the money away there instead of dealing with paycheck deferrals to the extent that it's allowed to do so. I appreciate you looking into it.
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Jul 31, 2016 14:17
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BEHOLD: MY CAPE posted:Exactly - I can't find a clear examination of this situation anywhere although it must be a reasonably common question for people with side jobs. The cash flow and contribution flexibility advantages of the solo plan are huge so I'd rather just sock the money away there instead of dealing with paycheck deferrals to the extent that it's allowed to do so. I appreciate you looking into it. My understanding is that the maximum amount that you can put into your Solo 401k cannot exceed your self-employment income. So for example (with round numbers so I don't have to do real math and the assumption that you can put away the full $18k through your W-2 job if needed): Example 1: Your SE Income is less than $18k SE Income - SE Tax Deduction: $10,000 Solo 401k Employee Deferral Max: $10,000 Solo 401k Employer Contribution Max: $2000 Maximum Solo 401k Contribution: $10,000 Most Tax-Advantaged Space While Maximizing Solo 401k: $2,000 (Solo 401k Employer) + $8,000 (Solo 401k Employee) + $10,000 (W-2 401k) = $20,000 In this case, you can't put the full employee $18k contribution in your Solo 401k because that would exceed your max allowed contribution. Example 2: Your SE Income is more than $18k, but less than $18k + 20% SE Income - SE Tax Deduction:: $20,000 Solo 401k Employee Deferral Max: $18,000 Solo 401k Employer Contribution Max: $4000 Maximum Solo 401k Contribution: $20,000 Most Tax-Advantaged Space While Maximizing Solo 401k: $4,000 (Solo 401k Employer) + $16000 (Solo 401k Employee) + $2,000 (W-2 401k) = $22,000 You can put the full employee $18k contribution in your Solo 401k, but that would limit the amount of your employer contribution since the total would exceed your max allowed contribution. If your W-2 job's 401k is terrible enough, you could just forgo contributing to it and sacrificing the additional tax-advantaged space. Example 3: Your SE Income is more than $18k + 20% SE Income - SE Tax Deduction:: $30,000 Solo 401k Employee Deferral Max: $18,000 Solo 401k Employer Contribution Max: $6000 Maximum Solo 401k Contribution: $24,000 Most Tax-Advantaged Space While Maximizing Solo 401k: $6,000 (Solo 401k Employer) + $18,000 (Solo 401k Employee) = $24,000 At this point you can spread the employee portion between the Solo 401k and your W-2 job's 401k however you'd like to take advantage of fund choices and expense ratios. Obviously, things like employer match from your W-2 job can change which distribution is most beneficial to you. Also employer matches plus a sufficiently high SE income can put you at risk of running into the $53k 401k limit, but at that point, you're rolling in the money. Ancillary Character fucked around with this message at 16:12 on Jul 31, 2016 |
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Jul 31, 2016 16:09
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That's really helpful, thank you. I will just defer the minimum possible into my employer W2 (which is perfectly fine with vanguard as a custodian option) necessary to maximize my solo account with the 20% contribution. I'm in the range of example 2 this year which is the tricky spot.
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Aug 1, 2016 01:54
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Ive started a business. Mostly webpage maintenance. Some image and video editing. Some hardware geek stuff. Anyway, what all can i deduct? Hardware, software, mileage to meetings w clients, client meal/entertainment, cell and net %, home office %, std office supplies, business cards, website fees, apparel. What am i missing? I dont want to go overboard, just hoping im not missing a big one
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Aug 6, 2016 00:38
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Similar to the guy above me, I'm a PhD student and I'm considering buying a computer that will be exclusively for work. Would I be able to deduct this at the end of the year? I'm not sure if I'm technically a university employee anymore because while I get paid through the university, the money comes from a government agency and I'm no longer financially supported by my advisor. I'm not sure if that matters.
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Aug 7, 2016 19:35
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