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Michael Scott posted:Hello tax thread, 1. No, you can't have both. 2. Try the free-file alliance link at the IRS website, if your income is below the threshold, you can use one of the programs for free.
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Jan 21, 2017 05:53
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sullat posted:1. No, you can't have both. For 2., many of the programs are free only for W2s. More advanced returns require paid software.
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Jan 21, 2017 06:19
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Hi tax thread. I have a question about non-cash charitable contributions. Is there a good step-by-step resource for going about this? My wife and I are looking to donate quite a few items. From what I am reading, if our contributions amount to over 500 dollars, we need a special form and/or receipt? I looked at the Goodwill website, and they have a pdf of the fair market value of different items. Going off of that list, I think we would have at least a 1000 dollars worth of items we could claim. My current plan is to actually go through all of our donations and record the items, along with the fair market value of each item. And then I guess I go to Goodwill and they will give me the forms and receipts necessary? That seems like a lot of work, but I'll do it if it's worth the effort. I also saw that they partner with a moving company to pick up donations for a fee. Has anyone used this before? I'm kind of hoping that they could kind of take care of the value assessment in addition picking up all this stuff. One last question. Is there an easy way to determine if itemizing is worth it without actually going through the work of itemizing? It seems like the common advice is just itemize and compare the result to the standard deduction and go with whichever is greater. Can your average dummy itemize without having scrutinizing the tax code and meticulous record keeping? Thanks for the help in advance guys.
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Jan 21, 2017 17:18
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Michael Scott posted:Hello tax thread, If you have AGI less than $64000, you can use myfreetaxes.com-a United Way project powered by H&R Block software. It will do what you need for free. Is the mileage related to your W-2 job or your self-employment? If it's for self-employment you would list it as an expense on your schedule C and it would reduce your net self-employment income. Then you could also take the standard deduction. If it's for your W-2 job, it is an unreimbursed employee expense and has to go through schedule A, and you only take it if you're itemizing, not taking the standard deduction.
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Jan 21, 2017 17:47
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crack mayor posted:One last question. Is there an easy way to determine if itemizing is worth it without actually going through the work of itemizing? It seems like the common advice is just itemize and compare the result to the standard deduction and go with whichever is greater. Can your average dummy itemize without having scrutinizing the tax code and meticulous record keeping? Thanks for the help in advance guys. If your (donations + mortgage interest + property taxes + state income tax withheld +/- last year's state income tax bill/refund) are less than $12,600, you won't itemize. There are other unusual things on the list too, but those won't matter for like 99% of people under 60.
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Jan 21, 2017 18:11
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urnisme posted:If you have AGI less than $64000, you can use myfreetaxes.com-a United Way project powered by H&R Block software. It will do what you need for free. The mileage is related to self-employment (Uber), thank you! Also myfreetaxes looks great, you rock.
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Jan 21, 2017 18:13
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Michael Scott posted:The mileage is related to self-employment (Uber), thank you! Also myfreetaxes looks great, you rock. Read pub 463 for more clarification if you need. https://www.irs.gov/publications/p463/ch04.html Side note: Watch out for local taxes that might get assessed on the Uber. Here in Oregon we have a Portland/Multnomah County-level income tax - there's exceptions if your gross income from the business is low enough, but you need to file the exclusion form and tell them that. Otherwise they simply send you a $2,000 nastygram in the mail that you can get waived, but it does cause you to freak out when you open it. Doubt the free filing software catches any thing like that.
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Jan 21, 2017 21:15
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Been scouring the web and can't get a straight answer on this question: I originally inherited 34 shares of GE stock on August 22nd, 1996 -- the price of these shares on that date was $14.22 or so. Afterward, two stock splits occurred - one to 70 shares, and then it tripled later to 210, which ultimately became my total amount. Last summer, I sold 103 of those 210 GE shares for $31.04, for a total amount of $3,198.06 -- I used that $3198 to buy and sell other stocks, of which I made roughly $500 or so. My question: I know I need to apply the long-term capital gains tax of 15% to the $3198 --- but what is the gain? Do I subtract the $483 from August 96 (34 x 14.22) for a "gain" of $2,715? Or is it significantly less due to the stock splits, and the fact that it was only 34 shares originally. Any help is appreciated. edit: Yeah, you're right, it's probably 35 shares. Thanks Droo! railroad terror fucked around with this message at 21:59 on Jan 21, 2017 |
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Jan 21, 2017 21:50
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railroad terror posted:Been scouring the web and can't get a straight answer on this question: The cost per split-adjusted share was about $2.30 (34/210 * $14.22), so your cost basis on 103 shares was $236.90, so you realized a capital gain of $2961.16 on the GE sale. The other stock purchase/sale is a separate gain that you report on a second line of the tax form. I should note, a split that turns 34 shares into 70 shares seems weird. Are you sure it wasn't 35 shares you inherited? Not that it matters much.
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Jan 21, 2017 21:55
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If I understand this correctly, if I have ANY investment income, I need to purchase TurboTax Deluxe?
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Jan 22, 2017 02:09
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Michael Scott posted:For 2., many of the programs are free only for W2s. More advanced returns require paid software. Did you go through the available link from the IRS website (https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free) or did you just look at the free option available on each preparation services' site? For example, TurboTax has the Freedom Edition and Federal Free Edition as their two free options. The Freedom Edition is the one linked from the IRS Free File site and is pretty much a fully featured program (supports 1040, self-employment income, investment income, etc), but the catch is your income has to be less than $33k to use it (or $64k for military). On the other hand, the Federal Free Edition is the one that they advertise on their own site and only allows you to do the simplest of returns without paying for an upgrade. They even have their own FAQ question about it: https://ttlc.intuit.com/questions/2572617-what-s-the-difference-between-freedom-edition-and-federal-free-edition A lot of the other major tax preparation services do something similar, the "free" product they advertise on their site has only the most basic functions and you have to pay for expanded functionality. However, they offer a more fully featured product through that IRS Free File page, which is gated by your AGI (the cutoff seems to be around $64k for most). On another note, I tried out CreditKarma's Tax preparation service and it confuses me more than TaxAct, which is what I usually use. So far, I haven't figured out where I can input my individual 401k contributions or how to correctly record my backdoor Roth IRA contribution. I tried multiple combinations of inputs, but it either adds my contribution to my income or adds a penalty to my taxes owed because of an early distribution, sometimes even both. Ancillary Character fucked around with this message at 05:10 on Jan 22, 2017 |
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Jan 22, 2017 05:07
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Ancillary Character posted:So far, I haven't figured out where I can input my individual 401k contributions That''s just box 12 of your W-2.
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Jan 22, 2017 05:53
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baquerd posted:That''s just box 12 of your W-2. Sorry, that should read Solo 401k from my self-employment income, the term just slipped my mind, so it won't show up anywhere on a W-2.
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Jan 22, 2017 07:26
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Ancillary Character posted:Did you go through the available link from the IRS website (https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free) or did you just look at the free option available on each preparation services' site? Yeah I did go through the IRS' website. TurboTax Freedom Edition would be great but $33k is quite a low cutoff, and I make more than that. I'll check out other options.
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Jan 22, 2017 18:24
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I'm trying to set up insurance for my LLC w/ S-corp election that employs my wife and me. Within the S-corp, I draw most of the income and so have a full salary. She works part time and so receives a smaller regular monthly wage. In buying insurance, one of us has to be "single employee" and one has to be "employee with children" - the insurance broker recommended making my wife the "employee with children" but the monthly premium would exceed her monthly wage. The broker said this didn't matter because our incomes are combined marrying filing jointly so as long as total premiums are less than total income, it doesn't have any impact. Looking at the Self-Employed Health Insurance Deduction Worksheet, it makes no mention of joint income and seems to limit the deduction to the reported Medicare wages on the W-2. Is this on a -single- W-2 (i.e. each person calculates the deduction separately) or on both W-2s combined? I referenced this: https://www.irs.gov/publications/p535/ch06.html
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Jan 23, 2017 16:33
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Well I got rejected pretty instantly. "Your AGI is wrong". No, no it's not. It's exactly what I filed in 2015. Except: My wife's name changed last year. When we got married the SSA dropped the ball and to the feds she was still listed under her maiden name. In-state, she had her married name. Driver's licence renewal went "WTF???" due to RealID kicking in so we had to correct it. 2015's filing used her maiden name because it was too much effort to change for no real reason. 2016 has to use her married name now that the SSA records have been fixed. So does her AGI match mine, or is it now 0 due to the name change? I've literally never used the AGI option, I always got the filing code from the IRS and used it. They nuked that option this year and it's already gone to hell. To make my life even more of a living hell, my cellphone is through work (I.E. not in my name) so I can't get 2015's transcript online to see if it matches my records. Is there any way to figure out WTF the IRS wants this year? I really don't want to mail it in after I paid money to e-file. I think the most important question is: The gently caress were they thinking with this change? Harik fucked around with this message at 17:22 on Jan 23, 2017 |
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Jan 23, 2017 17:20
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Hufflepuff or bust! posted:I'm trying to set up insurance for my LLC w/ S-corp election that employs my wife and me. Within the S-corp, I draw most of the income and so have a full salary. She works part time and so receives a smaller regular monthly wage. Your deduction for S Corp SEHI will be limited to the amount of wages that you pay payroll taxes on. EG - SEHI was $12k, you had $10k of W-2 wages, so you only get a $10k deduction on your 1040. If you dig deeper into the SEHI rules, basically ANY insurance paid for your family will qualify, so even if the coverage is in your wife's name and exceeds her W-2 wages, you can put the wages on YOUR W-2 as SEHI.
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Jan 23, 2017 20:18
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AbbiTheDog posted:Your deduction for S Corp SEHI will be limited to the amount of wages that you pay payroll taxes on. EG - SEHI was $12k, you had $10k of W-2 wages, so you only get a $10k deduction on your 1040. If you dig deeper into the SEHI rules, basically ANY insurance paid for your family will qualify, so even if the coverage is in your wife's name and exceeds her W-2 wages, you can put the wages on YOUR W-2 as SEHI. Awesome, so the exact distribution of who gets the insurance for who doesn't matter as long as it's all within the single family - as long as I report the excess she pays on my W-2 instead of hers.
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Jan 23, 2017 20:20
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Hufflepuff or bust! posted:Awesome, so the exact distribution of who gets the insurance for who doesn't matter as long as it's all within the single family - as long as I report the excess she pays on my W-2 instead of hers. I'd ask why she's paying anything if it's just you two on the payroll - just have the LLC pay the whole thing. You put after-tax premiums on, so if your agent setup a pre-tax plan for just the premiums, and you don't have any other employees, you might be wasting money on the pre-tax plan.
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Jan 23, 2017 20:28
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AbbiTheDog posted:I'd ask why she's paying anything if it's just you two on the payroll - just have the LLC pay the whole thing. You put after-tax premiums on, so if your agent setup a pre-tax plan for just the premiums, and you don't have any other employees, you might be wasting money on the pre-tax plan. We haven't set up anything for the time being - but I was under the impression that based on this: https://www.irs.gov/pub/irs-drop/n-08-01.pdf We were required to report any payments the LLC makes on our behalf for insurance as wages (exempt from SS/Medicare) and deduct those payments as SEHI. If we can just have the LLC (with S-corp election) make the payments (and thus have it not be taxed because we would never realize it on either a W-2 or K-1) that would be easiest for all of us.
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Jan 23, 2017 20:36
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Hufflepuff or bust! posted:We haven't set up anything for the time being - but I was under the impression that based on this: Yes, have the LLC pay them. Sorry, the IRS are sticklers for this, and MAKE you put the SEHI on the W-2 to get the deduction on your 1040. It looks like this: LLC - SEHI is a deduction on your K-1 (it's buried in your annual income number - usually doesn't stand out anywhere). W-2 - is grossed UP by the SEHI, effectively netting out the loss from the K-1 above. 1040 - get a "bonus" deduction for SEHI on the front page. So, you subtract it twice, and add it once on the front of your 1040 to come up with proper amount. But for S Corp owners the IRS forces W-2 reporting.
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Jan 23, 2017 20:51
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Well, I won again! Took down a $100,000 prize that will come in on a 1099-MISC box 3 (typically reported as hobby income). Actually it's net $95K currently, and I'll play again next NFL season (Q4) so the amount could change. Hopefully up, but I don't want to count on this success. Anyways, I used TurboTax to figure out estimated taxes, and ended up submitting a new W-4 withholding nearly 90% of my measly paycheck. So I think I have 2017 federal taxes under control, for now. Now I'm wondering about state taxes. I currently live in CT but in all likelihood will move later this year, to either OH or MA. Am I going to have to pay taxes on these prize winnings in CT or my new residence?
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Jan 23, 2017 21:54
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Harik posted:Well I got rejected pretty instantly. Found the answer. The filing "helpfully" set my wife's AGI to 0 since I'm obviously not married to the same person as last year. I figured out how to override it and the submission was accepted. Everything involved in e-filing (especially having to loving pay for it) is bullshit.
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Jan 23, 2017 23:14
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SurgicalOntologist posted:Well, I won again! Took down a $100,000 prize that will come in on a 1099-MISC box 3 (typically reported as hobby income). Actually it's net $95K currently, and I'll play again next NFL season (Q4) so the amount could change. Hopefully up, but I don't want to count on this success. Jesus christ what? Was this some sort of giant bracket pool, if so which pool? Congratulations. How much did you win last time?
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Jan 24, 2017 00:13
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So I'm not sure about Credit Karma's tax package. At least with TurboTax there were buttons that gave you more info on what a particular page was asking for. I'm assuming "Voluntary contributions not reported on W-2 forms" for the "retirement contribution credit' would include Roth IRA contributions?
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Jan 24, 2017 02:33
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Michael Scott posted:Jesus christ what? Was this some sort of giant bracket pool, if so which pool? Congratulations. How much did you win last time? Thanks! Daily Fantasy Sports (DraftKings and FanDuel). I won $20K in November. That was first place out of 23,529 on a $5 entry. This was first out of 441,100 on a $4 entry. I enter a ton of lineups, up to $4K worth per week of the NFL season. A normal outcome would be -33% or so, occasionally I would break even or win a little...and twice I got first. But I also had big losing streaks, was probably reckless in how I used my bankroll, and consider myself extremely lucky for it to have paid off.
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Jan 24, 2017 03:21
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SurgicalOntologist posted:Well, I won again! Took down a $100,000 prize that will come in on a 1099-MISC box 3 (typically reported as hobby income). Actually it's net $95K currently, and I'll play again next NFL season (Q4) so the amount could change. Hopefully up, but I don't want to count on this success. Tax will be whatever state you were in when you constructively receive the funds, so if you have it now it would be CT, if it pays to you after you move it's the other state. If they paid you part now and part later split appropriately. Not sure why they're putting it on a 1099-MISC though, gambling winnings should be a W-2G with withholding taken care of from the winnings for you. "Hobby income" seems like a screwball way to report it since that goes into the whole expense write-off process which technically I'd think gambling losses shouldn't count as. Then again, I swear the number of stupid things I see reported on a 1099-MISC that shouldn't be... 
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Jan 24, 2017 03:51
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But it's not gambling, they swear
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Jan 24, 2017 03:58
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It's probably in part because it's legal only because the UIGEA (internet gambling act) specifically exempts fantasy sports. So with all the negative scrutiny on the industry, some deserved, they don't want to admit in any way that it could be gambling. Even if its tax status and legal status aren't necessarily linked. I didn't realize there was an expense write off for hobby income. Maybe that's not right... It's reported in Box 3 on the 1099-MISC, at least so I'm told as I'm still waiting for last year's form. The advice I heard was you could report it on line 21 or if you want to deduct losses and can back up treating it as a business, use Schedule C. Or maybe I misunderstood. My hope was I could avoid self-employment tax as I don't treat it as a job. I did contact an accountant who works with other players to see if I've got this figured out right. Ninja edit: it's obviously gambling. That's how I treat it.
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Jan 24, 2017 04:05
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Isn't there only expense write off if you otherwise itemize?
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Jan 24, 2017 15:14
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NancyPants posted:Isn't there only expense write off if you otherwise itemize? Correct, but you can do both if the expenses have to do with self-employment business. That's what I'm doing this year. Standard deduction + other expense deductions for self employment  I didn't take the deductions correctly last year and overpaid on my taxes by maybe $50 or $100, I don't consider it worth my time to go through the headache of an amendment process. Wish you could do it all online.
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Jan 24, 2017 15:17
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So, question. I made less than 16k last year (was out of work most of the year due to having a kid and having the worst insurance known to man making it way cheaper to live off my significant others income and get medicaid than to pay more than my yearly income in doctors visits), so I don't have to file. I tried anyway, but due to 2016 being an absolute poo poo show, lost most of my stuff, including last years AGI info. I'm less than 12 months into rehabbing my student loan default, so my return goes to them anyway. Calling the IRS resulted in them not being able to find me. What is going to result in the least hassle in the long run? Submit 8822, get transcript, e-file? File paper return? Not file? I kinda want to file because with the EITC etc, I can get a chunk of my student loans knocked out. Also, once my loans are rehabbed, since I'll be making $0 payments on IBR, can I still deduct the interest on next years taxes?
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Jan 24, 2017 23:59
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I talked to the guy who specializes in taxes for fantasy winners, and I'm a bit confused. We're going to talk again when I actually receive my documents, so nothing is decided. In the meantime I'm mulling over what he told me and wanted some other opinions. He seems to think that I should file my fantasy activity as a business. His website here goes into some of the consideration. While I certainly meet the requirements of a business, in that I keep good records, etc., it's not clear whether that means I'm obligated to report it as a business. The website seems to assume that it's in one's advantage to do so but there's no way that any expenses/losses I could claim would outweigh the self-employment tax (I won't be itemizing in any case). Is there something I'm missing? Could I get away with keeping it as "Other income" for 2017 by behaving less professionally for the rest of the year? Edit: also I've always done my own taxes. He quoted $495. Seems high, no? Are these rates usually negotiable? SurgicalOntologist fucked around with this message at 23:31 on Jan 25, 2017 |
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Jan 25, 2017 23:21
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SurgicalOntologist posted:He quoted $495. Seems high, no? Are these rates usually negotiable? My firm minimum is around that. And once a client tries to haggle with rates in the opening interview I'm going to send them down the road. I don't want to rip you off, but I'm not about to play "let's make a deal" either when I have ten other clients knocking on my door, especially if the guy is a specialist in a niche. As far as his expertise, the IRS and congress look at this differently than any other business. If you get advice from him, GET IT IN WRITING. He might be extremely skilled in this area and follow every court case (in this area I stay away, to be honest) but if he's only going to give you verbal advice, that should set off warning bells in your head. Pigs get fat, hogs get slaughtered. Edit: There is a recent court case where the IRS trounced a poker player, saying it was gambling, not a business. FYI. AbbiTheDog fucked around with this message at 00:14 on Jan 26, 2017 |
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Jan 26, 2017 00:10
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Okay, thanks for the context. I didn't try to haggle just told him I would think about it. I'll probably go for it. Also, he hasn't even reviewed my records (and I'm still waiting on the 1099) so he was clear it was just his preliminary thoughts. Interesting on the court case. I also found a guy online saying quote:I know I personally have filed as a hobby/other income/line 21 of 1040 and got an audit letter from the IRS saying that I owed them self-employment tax and should have filed as a business. I wrote them a response letter and they eventually agreed that I was correct to file it as a hobby, but there are probably a lot of people that could/should file as a business when they are certainly not a pro. SurgicalOntologist fucked around with this message at 00:38 on Jan 26, 2017 |
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Jan 26, 2017 00:35
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I have two rental properties, and it is a passive activity. I am using the new Credit Karma and liking it okay, but am I finding an error? One property has a loss of let's say <$8,500>, the other a loss of <$3,200>. Form 8582 shows $0 losses allowed in row 16 (as I think it should, my MAGI is over $150k). However, Schedule E row 22, which is supposedly pulling from form 8582 is allowing the full <$3,200> loss from the activity, which is then flowing as negative income on 1040. Is this a bug or am I misunderstanding?
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Jan 26, 2017 08:59
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OK, short and very general breakdown on the hobby vs. business thing. The main difference is whether or not you're doing it for profit or not. There's a bunch of things that go into the judgement of that (there's a list of them in Publication 535, nine profit factors if memory serves) and it's more a weighing of all of them than any crisp rule, hence why there tend to be a lot of tax court cases about this sort of thing. Main difference for a business vs. a hobby is the social security/medicare tax which is collected as SE tax on the income tax return for a business, and that business expenses can be taken to the point of a loss on the return while hobby expenses can only cancel out up to the hobby income. For example, a hobby person who has $5,000 in income but $7,000 in expenses can only claim up to $5,000 in expenses, while a business could claim all $7,000 in expenses and thus take $2,000 off their taxable income for the business overall. Also hobby income is listed on line 21 and expenses are taken on Schedule A for itemized deductions (subject to the 2%-of-AGI limit), while Schedule C basically adds up the income and expenses and puts the final profit/loss on one line. Now, that's the general rule. As to your specific case? Ehhhh, it's kinda a judgement call unfortunately. Gambling CAN be a business (professional poker players and the like DO file Schedule C all the time), but there are more factors to it than just having good records. Time/effort for one; I believe the one thing I saw on professional poker players mentioned something like 15-20 hours a week being spent on the business, if you're just spending a couple minutes every night checking your status or the like that may not make it enough demonstrated effort for a business. Also things like expertise (can you prove you're an expert at the activity, or making effort to try to be?), how much do you depend on the income for your livelihood, and especially your history of income/losses. Sure, you have a big win this year, but what's your general income from this sort of thing? One big win in a sea of losses kind of weighs against it being a for profit enterprise unless you can count on that sort of performance at least every so often. Personally my gut feeling would be to call the 1099-MISC stuff as the fantasy sports people trying to be cute and sneak around the gambling laws, and just file the drat thing as gambling income. You could file it as hobby income which would let you add any expenses you pay as part of the sites to the losses, but given that hobby income has the 2% of AGI subtracted from what you can claim rule on Schedule A, unless your non-loss expenses are in the $2,000+ range it's better to just stick to claiming the gambling losses alone which aren't subject to that. For drat sure unless you have been REALLY serious/have an honest to God system about doing this stuff I would not do it on Schedule C as a business; this type of income seems irregular enough by default I'd be nervous calling it that, and for drat sure the extra 15% or so in SE tax would be MURDEROUS so I wouldn't voluntarily jump on that sword. Now can you get hit with a letter by the IRS claiming it's a business? Sure, but A. you can get hit with a letter from the IRS about any drat thing they get a hair up their butt to go after, and for an extra ~$15,000 in what feel like unjustified taxes to me I'd risk that aggravation, and B. forcing them to argue fantasy sports is not gambling kinda gives the IRS the harder end of the argument, I think. Again, a lot of it would boil down to how much real work you put into doing this stuff, but I don't think it is unreasonable to call it gambling with the wrong form submitted to you. As always, take my opinion with the grain of salt that you're talking to a random Internet tax person, and one with about three years experience at this point; honesty compels me to admit if we were doing this with you as my client I would be grilling you extensively on a lot of things before making this call, I am going by just what I understand of the situation as you've explained it here. So, value the advice for what you paid for it .
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Jan 26, 2017 09:11
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Nifty posted:I have two rental properties, and it is a passive activity. I am using the new Credit Karma and liking it okay, but am I finding an error? Were you prompted about how many hours you spend involved in that <$3,200> rental activity per year? edit: software might be treating as you as a real estate professional for some reason. That's the only explanation I can come up with. Admiral101 fucked around with this message at 13:22 on Jan 26, 2017 |
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Jan 26, 2017 13:05
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If I have my own business, with my own office in a separate building from my home, and my father pays my utility bill, can I claim that bill as an expense? Is it any different if my father gifts me money and I then use that money to pay for the bill? Not trying to screw over the IRS, my father is helping me out as I get my business off the ground and I'm trying to determine what approach makes more fiscal sense. Edit: bill is in my name. dpkg chopra fucked around with this message at 16:33 on Jan 26, 2017 |
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Jan 26, 2017 16:30
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MadDogMike posted:Stuff There's been some recent court cases (and by recent I mean over the past five years) where even professional gamblers can't take net losses on a schedule C, since the IRS attacked them for gambling and not as a business. I'd just make sure if OP is tying this he just accepts the fact that some time, some place the IRS will show up and ask questions. If I were OP, I'd ask my CPA what paperwork, documentation, and logs I need to be doing to protect myself.
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Jan 26, 2017 17:43
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