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ButtWolf posted:Ive started a business. Mostly webpage maintenance. Some image and video editing. Some hardware geek stuff. Anyway, what all can i deduct? Hardware and Software= yes, you can expense if under 2,500 on a per item basis per invoice, capitalize if over 2,500 (there are ways to get around the 2,500 rule) Mileage= yes, you can take the federal rate of .54 cent per mile, or the greater of actual expenses and depreciation Client Meal and Entertainment= yes at 50% Cell and internet= yes, these are tricky watch out for "bundles" don't deduct the entire bundle amount just the cable/dsl amount. Home office= just use the safe harbor, it is better for like 99.99% of people and you don't have to keep track of your depreciation on your personal residence and recognize it as recapture on the sale of the residence Office Supplies, Cards, Website= Yes Apparel= if you mean things that have your company logo on them yes, but like suits /dress shoes/ ties then no. I assume you are going to file on a Sch. C? If so remember that if you meet other criteria you can move your health insurance from Sch A (or paid w/ pretax) to Adjustment to Arrive at AGI, also you have some different options for retirement that normal W2 employees wont have (with certain criteria met) Lord of Garbagemen fucked around with this message at 05:26 on Aug 9, 2016 |
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Aug 9, 2016 05:22
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yeah, its just a side thing and will not be primary income, so I'm just tacking it on to myself as a sole proprietor or whatever.
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Aug 9, 2016 15:21
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I moved jobs earlier this year. The new job did not have a 401k at the time, so I did a rollover to both traditional and roth IRAs (previous job's 401k was mostly roth, except for employer match). Before this I had no money in my traditional IRA, and every year I would do the backdoor roth conversion to be able to get anything into the roth IRA. My new company recently got a 401k. If I move everything in the traditional ira to the new 401k, can I continue to do the backdoor roth conversion as before? I have not made any ira contributions yet this year. Pardot fucked around with this message at 19:03 on Aug 9, 2016 |
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Aug 9, 2016 18:59
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Pardot posted:I moved jobs earlier this year. The new job did not have a 401k at the time, so I did a rollover to both traditional and roth IRAs (previous job's 401k was mostly roth, except for employer match). The calculation on the IRA - > backdoor conversion takes into account ALL IRA funds, not just the one you're trying to backdoor. Read Form 8606 carefully.
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Aug 9, 2016 19:42
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Pardot posted:I moved jobs earlier this year. The new job did not have a 401k at the time, so I did a rollover to both traditional and roth IRAs (previous job's 401k was mostly roth, except for employer match). AbbiTheDog posted:The calculation on the IRA - > backdoor conversion takes into account ALL IRA funds, not just the one you're trying to backdoor. Read Form 8606 carefully.
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Aug 9, 2016 20:47
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Pardot posted:I moved jobs earlier this year. The new job did not have a 401k at the time, so I did a rollover to both traditional and roth IRAs (previous job's 401k was mostly roth, except for employer match). I would be careful, step transaction doctrine and Roth Conversions can be a tricky item to deal with. I tell clients to use the old and cold method to make it seem like they are not one transaction. Sure you pay a little bit of tax on the growth but its better than the IRS coming back retroactively and saying its all fubar.
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Aug 9, 2016 21:12
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Have you ever heard of this happening for a Roth conversion? I know it's possible but I've never heard of a real case. So many people do the backdoor Roth and convert immediately that I feel like they would be hard pressed to prosecute all of it.
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Aug 9, 2016 21:50
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potatoducks posted:Have you ever heard of this happening for a Roth conversion? I know it's possible but I've never heard of a real case. So many people do the backdoor Roth and convert immediately that I feel like they would be hard pressed to prosecute all of it. No there has never been a recorded case (it could have been settled before court), but its a risk thing. I usually go ultra conservative because I deal with others money and planning not my own. But even if it were my own I would wait six or seven months pay the tax on the growth (usually almost nothing) and consider it a fee for a little more insurance if the worst were to happen. If we were talking 1,000 in tax maybe the story would be different but its usually such a minuscule amount.
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Aug 9, 2016 22:15
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Lord of Garbagemen posted:No there has never been a recorded case (it could have been settled before court), but its a risk thing. I usually go ultra conservative because I deal with others money and planning not my own. But even if it were my own I would wait six or seven months pay the tax on the growth (usually almost nothing) and consider it a fee for a little more insurance if the worst were to happen. If we were talking 1,000 in tax maybe the story would be different but its usually such a minuscule amount.
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Aug 9, 2016 22:42
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SiGmA_X posted:If he puts his non-Roth IRA's (all that he may have, like you are referring to) back into his new 401k, then yes he can backdoor. As I understand from 8606, at least. Yes, if his new 401(k) administrator allows outside funds into the plan. 401(k) funds are exempt from the calculation. If he's married, he can have his spouse do it instead, if she doesn't have an IRA yet. Side note: IRS does NOT track Form 8606 nor carry forward the info. Once you go down that path, forever will it dominate your tax destiny.
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Aug 9, 2016 22:48
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I received a US Treasury check today for my tax refund, except I filed for direct deposit back in January when I filed. The deposit went into my account in early February. Is this a screw-up on the IRS part or was I actually owed more? (I'm calling the IRS in the morning, but I was wondering if anyone else has had this happen)
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Aug 10, 2016 01:50
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Egbert Souse posted:I received a US Treasury check today for my tax refund, except I filed for direct deposit back in January when I filed. The deposit went into my account in early February. Did it come with a 3 page (ish) letter stating the changes they made to your return? If not then don't cash the check until you call and talk to someone. I have seen it happen and its usually due to ID theft returns being filed. But don't start panicking , call the IRS and talk to them and get a good idea what is going on on your account.
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Aug 10, 2016 05:59
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I got married this year and had a few questions about married filing separately. Due to student loans and IBR/PSLF eligibility we are going to file separately for at least a few years. Since we have no mortgage or kids. Would having a joint bank account effect anything re: MFS? I started a Roth IRA last year, but now that we're going to MFS is there any way I can still contribute to the Roth? There's some overlap in threads this could be posted to but I'm going to start here for now.
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Aug 11, 2016 16:10
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Joint bank account has no bearing. You will have to look into the backdoor Roth IRA contribution method. It only works if you don't have any traditional IRA balance (or if you xfer it to a 401K or similar account). edit: make sure you're not on REPAYE because that particular plan takes spousal income into account even if you file separately, unless you are truly "separated".
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Aug 13, 2016 02:08
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Are there any other tax preparers in here who have clients who are musicians? Can you PM me if so, I have some questions and I'd rather not shout them to the void.
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Aug 15, 2016 18:04
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Epi Lepi posted:Are there any other tax preparers in here who have clients who are musicians? Can you PM me if so, I have some questions and I'd rather not shout them to the void. As in "play gigs at the bar," "trying to sell some CDs out of a guitar case on the sidewalk" or "I'm on a multi-state tour" kind of musician?
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Aug 15, 2016 18:32
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AbbiTheDog posted:As in "play gigs at the bar," "trying to sell some CDs out of a guitar case on the sidewalk" or "I'm on a multi-state tour" kind of musician? He's a rap musician who says hes opened for one or two bigger players, done shows but I don't know exactly how many. I do know he's formed an LLC and has paid out the rear end to record the masters for his EP, way too much to just expense, but the rules about capitalizing sound recordings are confusing me.
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Aug 15, 2016 19:08
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I'm starting a company. The catch is, it's a Spanish company (cofounders are Spanish, first clients are in Spain, I'm a US citizen). I'm trying to figure out - what's the best way to get my equity? As an individual, with a personal LLC, or should we have some kind of multinational corporate structure (i.e. with one subsidiary entity)? I assume this question has tax implications. - similarly, what's the best way to get paid from the company's account? Obviously I'm trying to get some counsel here but I keep getting referred to some other specialist who then takes a while to get back to me. I think I finally got a line on the person I need to talk to but he's on vacation. We might get an investor soon so I really need to get in on this before we have any value or things could get complicated. We've talked to counsel in Spain but I was just told I need to submit 8802 but I'm not sure if I should do so as an individual or what. Spanish counsel was out of her depth on the US aspect. Any advice would be appreciated.
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Aug 15, 2016 19:18
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Epi Lepi posted:He's a rap musician who says hes opened for one or two bigger players, done shows but I don't know exactly how many. I do know he's formed an LLC and has paid out the rear end to record the masters for his EP, way too much to just expense, but the rules about capitalizing sound recordings are confusing me. Dont have any musician clients but for my own curiosity does it fall under IP rules? If so you could set the life based upon usefulness.
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Aug 15, 2016 19:37
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Thanks everyone for the help with my question last week.
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Aug 15, 2016 20:51
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Lord of Garbagemen posted:Dont have any musician clients but for my own curiosity does it fall under IP rules? If so you could set the life based upon usefulness. Pretty much my only resources that I have found have been this essay from 2007; http://www.howlandtax.com/articles/cdcosts.htm; and the Entertainment Audit Technique Guide on the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/entertainment-audit-technique-guide. Both reference a Safe Harbor provision for capitalizing a sound recording, but the essay says you just have to file your return with "Three-Year Safe Harbor Adopted Under The Provisions of Notice 88-62" at the top of Form 1040, Schedule C, Page 1 and the Audit Technique Guide says you have to request permission to use this provision. The first option is easier, though it makes it that we can't electronically file this return, but it's from 2007 and I can't actually find the Notice that it refers to to see if there has been a revision. If the ATG is correct, which it probably is, I've never had to seek permission from the IRS to use a provision before so I don't know how that works or how to do so. It's all very tricky since there's a good chance the IRS will just say it's a hobby gently caress you, even though the guy is pouring tens of thousands into this venture, is making sure his lawyer copyrights all his music, etc etc. Honestly before I started digging into this I thought it would just be an Intangible Asset amortized over 15 years.
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Aug 15, 2016 21:18
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I'm not a tax person and this is all way above my knowledge level. Does he turn a profit from his musical activities? If so, would that impact the hobby decision? Hobby business rules can be a real bitch, that much I do know... Good luck.
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Aug 15, 2016 22:53
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Epi Lepi posted:Pretty much my only resources that I have found have been this essay from 2007; http://www.howlandtax.com/articles/cdcosts.htm; and the Entertainment Audit Technique Guide on the IRS website: https://www.irs.gov/businesses/small-businesses-self-employed/entertainment-audit-technique-guide. I've done artists with CDs here and there, or small club bands, but nothing this big - and if he hits it big, he'll want someone who specializes in it. Multi-state and/or international taxation for big tours is a bitch. If he has an attorney that's doing the legal legwork, go to the attorney and ask for a CPA referral - if the attorney is involved in the industry, he'll know one or two.
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Aug 15, 2016 23:44
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Is it true that Michael Phelps has to pay like... $50,000 in Income Tax after doing so well in the Olympics?
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Aug 16, 2016 02:44
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peramene posted:Is it true that Michael Phelps has to pay like... $50,000 in Income Tax after doing so well in the Olympics? He is likely in the 39.6 bracket and likely has a lot of investments so another 3.8.
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Aug 16, 2016 06:18
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SurgicalOntologist posted:I'm starting a company. The catch is, it's a Spanish company (cofounders are Spanish, first clients are in Spain, I'm a US citizen). I'm trying to figure out Oh boy, lots of issues here. You absolutely need to talk to your own tax advisor on this one. Do you have your own legal counsel? Tax aside, if there's an investor involved and principals in another country, I would absolutely want a good lawyer to look over the documents to make sure you don't get hosed. From a tax perspective, the answer is that it depends. A few initial questions that come to mind: What will this business be doing? Will you be working with customers in Spain? Europe? US? Worldwide? Do you anticipate losses/profits short term? Long term? What will you be doing? Are you contributing money to this business? Is there any IP involved (patents, copyrights, code, etc.)? Are you providing your own services to the business? Will you be paid a salary? Will you be working from Spain or attending board meetings, etc. in Spain? Is the Spanish company an SA? SL? Partnership? Will you be getting dividends? How are you handling your foreign exchange issues? If you were my client, I would want to spend at least an hour in person or on the phone to discuss these issues, your plans, etc. before giving any advice, and I would also want to talk to my colleagues in Spain. A Form 8802 is used to obtain a certificate of US tax residence. which is used to obtain benefits under the US-Spain tax treaty, which could come up if you claim reduced rate of withholding tax on dividends, or exemption from tax in Spain on your salary/business profits, among other things. Some other things to consider include how will the Spanish entity be classified for US tax purposes? Corporation or Partnership? Do you need to file an 8865/5741, 8621, 8938, FBAR, etc. as a result of this investment? Will you be claiming tax credits? Pursuing a deferral strategy or a passthrough strategy? If there is IP involved, where is it being developed? Where will it be used? Who will own the IP? Anyway, this poo poo gets complicated pretty fast and you need to talk to someone ASAP. This is compliance busy season for most international tax specialists, so just keep pestering them until they get back to you. If they are completely non-responsive, or blow you off, get your own outside counsel, most mid to large size accounting/law firms can handle this stuff. If you already have a lawyer/CPA, ask them for a reference. Otherwise, try the Spanish counsel (Garrigues? If so, they can definitely put you in touch with someone). Let me know if you have questions about how the international tax system works in general, but I can't give any direct advice.
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Aug 17, 2016 01:19
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I appreciate the response. Made me aware of even more issues I hadn't thought about. I did finally talk to a lawyer, we just had a short conversation and he's looking into the situation before getting back to me. So hopefully that will start to make the path more clear. For now I'm still confused. I may as well answer your questions. We are providing data-oriented consulting to sports teams, eventually in the form of an interactive app but for now in personalized reports, presentations, and meetings with coaches and managers. We only need one client to get started and have a few promising leads. Most likely the first will be Spanish; Italy is another possibility. US eventually as well, although we aren't trying to grow quickly, so once we have 2-4 clients we will work on development for a year or two before expanding more. We hope to get the first revenue from a client by the end of the year; operating expenses will be minimal. We're doing this part time but I'll probably go full time in 6 months or so when I finish my Ph.D. I'm the one writing all the code; my two co-founders are providing the domain knowledge and connections. My co-founders have registered a SC (partnership) in Spain but there are no assets yet. I am supposed to be figuring out how to get involved (e.g. as individual or entity) and then I'll buy in or if it turns out to be a better idea we'll incorporate another entity here. I assume there will be occasional travel at some point but no, I'll be working from the US. As will another co-founder, a fellow student on an F1 visa which obviously brings some issues for him. We do hope to pay ourselves from our revenue but whether that's dividends or salary depends on what's more advantageous. Foreign exchange: no idea. The rest of your questions; well, hopefully I can find someone to help answer them. If I had a question besides direct advice I guess it would be how new small businesses work with lawyers/accountants just at a practical level. If we need counsel on taxes, IP issues, and even immigration, should we be seeking different lawyers/firms or is it expected that once we find someone we want to work with they will redirect our questions as needed? How far can we get without paying for advice? We hoped to get started with client revenue rather than a loan or investor but if we can't get to the point of signing a client without paying serious sums to a lawyer that might not be the case. Basically counsel is our only expense. Obviously these are questions I'll ask during the longer conversation with the lawyer but I'm just trying to get a sense of the range of possibilities here. What kind of range should we expect to budget yearly for legal/tax counsel? Since it probably matters let's say we have yearly revenues of say low-mid 6-figures (euros) and very low expenses (<<1% of revenue) before trying to get paid ourselves and not yet hiring employees. At least for the first 2-3 years. At that kind of size can we expect to hire a firm to handle everything or should we expect more of a "call me with questions and I'll bill you as needed" relationship?
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Aug 17, 2016 02:38
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SurgicalOntologist posted:If I had a question besides direct advice I guess it would be how new small businesses work with lawyers/accountants just at a practical level. If we need counsel on taxes, IP issues, and even immigration, should we be seeking different lawyers/firms or is it expected that once we find someone we want to work with they will redirect our questions as needed? How far can we get without paying for advice? We hoped to get started with client revenue rather than a loan or investor but if we can't get to the point of signing a client without paying serious sums to a lawyer that might not be the case. Basically counsel is our only expense. Obviously these are questions I'll ask during the longer conversation with the lawyer but I'm just trying to get a sense of the range of possibilities here. Your CPA will be able to handle your compliance issues with domestic taxes and other questions as well. Free advice? Not going to happen, especially when the risk to the CPA is so high if they give you the wrong advice. Plan to fork over a retainer before they really do much for you, and they size of that retainer would vary from firm to firm. You might get a complimentary 30-60 minutes for a meeting, but after that it's pay to play.
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Aug 17, 2016 16:30
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Yeah, I can only really give you the big firm perspective. We would typically ask for a retainer and go from there. We would typically have a few meetings/calls to understand the business and your goals, then develop some alternatives/recommendations and work with legal to implement. Following implementation, we would provide ongoing compliance assistance and ad hoc consulting as needed. I don't think you need to spend a fortune at this stage, but a lot of the decisions you make now will have bigger ramifications later on, it's a lot easier to implement a structure at the beginning than a few years down the road.
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Aug 17, 2016 18:11
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It sounds like that's what's happening here. We were asked for a retainer and to sign a letter of engagement which outlines their cost per billed hour. Is it OK for me to ask them to estimate how much it will cost to guide us through incorporation and reviewing the contract with our first client? Obviously an estimate would not be binding in any way and come with many caveats, and I can understand why they might be reluctant to give one, but we'll need to raise this cash from our own savings so we need a ballpark. If it's too high then maybe we need to go to VC earlier than we thought and that changes our whole plan. Is this an unreasonable ask?
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Aug 23, 2016 03:24
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SurgicalOntologist posted:Is this an unreasonable ask? It's not their first rodeo on the incorporation, so they should be able to give you a reasonable estimate on that. However, reviewing the contract with the first client could be very difficult to estimate. Assuming that you are dealing with an ethical group of lawyers (insert overused lawyer ethics joke here) you should be able to provide a fixed limit of billable hours to your engagement, where they would need your approval to proceed past your budget.
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Aug 23, 2016 04:34
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You can reach out to your local Small Business Development Center for advice. An import/export center might be able to help you too since you're international in scope. They can't give you legal advice, but they can give you advice on low hanging fruit that you'd otherwise get charged for from a lawyer to investigate. To take full advantage of those services you might get told you'll need 51% ownership of the company.
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Aug 23, 2016 04:58
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Missing Donut posted:It's not their first rodeo on the incorporation, so they should be able to give you a reasonable estimate on that. Just be aware of "engagement creep." If you start asking them other questions, don't be shocked when the invoice comes in higher than what they quoted you.
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Aug 23, 2016 18:12
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SurgicalOntologist posted:Is this an unreasonable ask? Not at all. My clients routinely ask for estimates before approving projects.
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Aug 23, 2016 21:09
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Is there a site that can calculate your estimated tax return for the upcoming year based on your current paychecks? I have a standard deduction and 0 allowances so I just want to somewhat get an idea of what to expect.
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Aug 23, 2016 21:18
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SaltLick posted:Is there a site that can calculate your estimated tax return for the upcoming year based on your current paychecks? I have a standard deduction and 0 allowances so I just want to somewhat get an idea of what to expect.
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Aug 24, 2016 02:56
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That's the one thanks
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Aug 24, 2016 05:25
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I'm trying to say as little as possible about this as possible because of an NDA, so is there a good reference for how lawsuit settlements are taxed? Not personal injury. It was a class action. 22 Eargesplitten fucked around with this message at 23:09 on Aug 30, 2016 |
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Aug 30, 2016 22:59
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Try IRS publication 4345 to start. On my phone, but if that is not detailed enough, let me know and I can link you to the IRS audit guide tomorrow.
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Aug 31, 2016 03:21
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That answers some questions. Do liquidated damages count as lost wages, or are those separate? I'm going to email the paralegal to ask another question about the suit, hopefully she can help there.
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Aug 31, 2016 06:52
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