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Ixian posted:When I was in the US Army I got nailed for this by Virginia even when I was stationed overseas. It is the number 1 reason careerists (I wasn't) buy houses, etc. in Texas once they get stationed there (if you are in long enough, chances are you'll be at Ft. Hood or Houston for some of it) to claim residence. At some level I appreciate both the IRS and state's efforts to attempt to be strict about people doing real dumb poo poo when it comes to having multiple homes to avoid taxes, but the rules and interpretations can make legitimate movements of US citizens that are/were residing in certain states moves abroad a tax compliance nightmare.
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Jun 30, 2017 21:29
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mishaq posted:Not an accountant or a lawyer but this can get messy fast Yeah I'm very familiar with the state tax issues, I'm in the foreign service.  Trying to think of ramifications of my wife continuing to work in the private sector during my next overseas assignment. The company is on board. This is a while away if it even happens. Not trying to game anything or trick anyone, just trying to think through the best way to do it.
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Jun 30, 2017 21:31
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Ur Getting Fatter posted:I'm a non-resident US citizen that resides in country A. Basically I only pay Federal taxes every year because I do not work inside any US state. Good news, Florida has no state income tax, so it's a moot point. mishaq posted:At some level I appreciate both the IRS and state's efforts to attempt to be strict about people doing real dumb poo poo when it comes to having multiple homes to avoid taxes, but the rules and interpretations can make legitimate movements of US citizens that are/were residing in certain states moves abroad a tax compliance nightmare. Gah, don't remind me, the fancy footwork on "domicile" drives me nuts on state income tax; tremendous headache in my state classes.
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Jun 30, 2017 23:22
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IRA question for y'all. This coming year I'm getting married, and my finacee is going to graduate school. We will be filing separately. I make enough money that I am not eligible to directly contribute to a Roth IRA. She will be making some money through potentially work-study employment and summer internship programs. Assuming that she makes over $5,500, she would be able to contribute $5,500 to a Traditional IRA, but not to a Roth IRA. Is this a correct understanding of the situation, or will she be able to contribute to her existing Roth IRA?
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Jul 10, 2017 12:32
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KYOON GRIFFEY JR posted:IRA question for y'all. The bigger question is why you're thinking of filing separately in the first place. Since you're making at least $133k and she isn't anywhere near that, there would have to be something significant in your financial life to make MFS beneficial. Doubly so if you live in a community property state. For MFS, deductible IRAs are phased out at $10,000, same as Roth IRAs.
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Jul 10, 2017 13:29
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In the eyes of the IRS if you get married as late as 11:59pm December 31st you were married all year and as Missing Donut says there's usually no reason to file MFS, in fact there are quite a few disadvantages (lower standard deduction, you don't have access to a host of credits, lower IRA limits, and so on). MFS can make sense in very special circumstances but chances are you'll be MFJ and your combined income falls under the IRA rules for that. You can always look into a backdoor Roth approach.
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Jul 10, 2017 14:04
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OK, cool - finacee will be in school and I think there was some implication around aid, but I'll have to look at that more carefully.
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Jul 10, 2017 16:09
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KYOON GRIFFEY JR posted:OK, cool - finacee will be in school and I think there was some implication around aid, but I'll have to look at that more carefully. If her financial aid will be impacted due to higher income from MFJ that may be one reason to file MFS (medical expenses is another one) if the costs outweigh what you lose in tax advantages. If you don't have kids and already itemize (so the standard deduction doesn't count) it's possible. However some financial aid packages may not care about filing status and look at combined income regardless. Definately look in to it.
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Jul 10, 2017 16:17
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My work gives me $3,000 if I buy a green car. They really give $5,000 but withhold $2,000 for taxes. Would that withholding be partially FICA? Would the rest of it apply to my income tax? I ask because there's no way I'm hitting a 40% tax burden so I'm wanting to calculate if I could add another allowance for the rest of the year. Would a year end bonus that you don't get paid until the next year count for the payment year's taxes or the bonus year's? I'm thinking the first.
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Jul 11, 2017 16:51
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Based on date of payment.
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Jul 11, 2017 17:03
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22 Eargesplitten posted:My work gives me $3,000 if I buy a green car. They really give $5,000 but withhold $2,000 for taxes. Would that withholding be partially FICA? Would the rest of it apply to my income tax? I ask because there's no way I'm hitting a 40% tax burden so I'm wanting to calculate if I could add another allowance for the rest of the year. Federal income tax withholding on bonuses for amounts that size is required to be 25%. Add FICA and state taxes and 40% isn't unreasonable. However, some payrolls aren't done right, so you should try to get a pay stub or compare YTD figures on your next pay stub to verify the withholding.
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Jul 12, 2017 13:34
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I just got an IRS bill for 2015 saying I owe roughly $1,800. I had done some freelance work back then, and apparently did not pay enough taxes. I'll be calling them tomorrow and talking to an accountant as well, but is it better to pay the full amount straight off, or file an amended return to see if I can lower that amount through deductions? The money isn't the issue, but I don't want to overpay. They're basically hitting me with $1,800 in taxes off an income of $6,400. This only increased my total taxable income from $27,00 to $33,400, and the tax rate seems very high...
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Jul 14, 2017 05:01
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Seven Hundred Bee posted:I just got an IRS bill for 2015 saying I owe roughly $1,800. I had done some freelance work back then, and apparently did not pay enough taxes. I'll be calling them tomorrow and talking to an accountant as well, but is it better to pay the full amount straight off, or file an amended return to see if I can lower that amount through deductions? The money isn't the issue, but I don't want to overpay. That sounds about right for $6,400 of income on top of your other income. Right off the bat, you owe'd 15.3% for self-employment taxes, which is really just both halves of Social Security and Medicare taxes (it's actually around 14% since you can deduct the employer half from your AGI). Since your other income fills up all the lower brackets and leaves you in the 15% marginal tax bracket, you owe 15% worth of income taxes on that $6,400. ~29% of $6,400 is in the $1800 ballpark. If you have legitimate expenses to deduct from that $6400, then you will owe less, but if it's pretty much pure profit, the sooner you pay, the less penalties you'll owe. EDIT: You can probably expect a letter soon from your state's tax department if you live somewhere with state income tax as either they go to the IRS for regular updates on changes to income or the IRS updates them. Ancillary Character fucked around with this message at 05:34 on Jul 14, 2017 |
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Jul 14, 2017 05:27
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If you are doing 1099 work and are the sole employee of your company (sole practitioner counts, you don't need to actually form an LLC/etc.) you can put some of that money in a tax deferred account like a SEP-IRA or (if you don't also have a company sponsored plan somewhere else) Solo-401k. The latter has higher contribution limits at lower income levels. The former is easier. You're past the establishment date needed for both (end of calendar year/tax year for Solo-401k, tax filing deadline/tax year for SEP-IRA) but look into it for the future.
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Jul 14, 2017 14:13
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Ixian posted:If you are doing 1099 work and are the sole employee of your company (sole practitioner counts, you don't need to actually form an LLC/etc.) you can put some of that money in a tax deferred account like a SEP-IRA or (if you don't also have a company sponsored plan somewhere else) Solo-401k. The latter has higher contribution limits at lower income levels. The former is easier. I'm not doing the work anymore. Do you think it's worthwhile to pay first, then file the amended, and get paid back? I do have some travel deductions from the income amount. They sent me a CP2000 so it's not a bill. I could also send the payment plus the amended tax return, or just pay the value dictated by the amended tax return?
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Jul 14, 2017 15:17
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Seven Hundred Bee posted:I'm not doing the work anymore. Have your accountant file an amended return with all dedutable expenses included and pay the amount as dictated by the return
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Jul 14, 2017 15:25
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Zeta Taskforce posted:Have your accountant file an amended return with all dedutable expenses included and pay the amount as dictated by the return The amount I owe is low enough that I don't know if going to an account is worthwhile  Which is probably dumb.
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Jul 14, 2017 16:01
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Seven Hundred Bee posted:The amount I owe is low enough that I don't know if going to an account is worthwhile Its up to you. You see the ratios yourself. Every $1.00 you are able to reduce your income by reduces your taxes a bit more than $0.25. If you had $300 in travel expenses then its probably not worth it, buy the time you pay him/her and take the time to make the appointments, etc. There is probably some threshold where it goes beyond the hassle factor. My point is that you either pay the amount in full on the CP2000 OR you file an amended return and send the amount as directed by the return.
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Jul 14, 2017 16:26
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Seven Hundred Bee posted:The amount I owe is low enough that I don't know if going to an account is worthwhile Depends mainly if you have anything you think might count as personal expenses from that work. That gets complicated enough I really would bite the bullet and talk to a professional at least as a basic consultation, I see SO many people screw this kind of thing up trying it without any personal knowledge of self employment tax issues. Don't be so sure it's "too low" to bother with, it's remarkably easy if you do have expenses to knock the tax bill down far more than the cost of getting a tax preparer to amend it, especially at $1,800 due. It depends a lot on the preparer, but in my experience at least we don't charge you for an amendment that costs more than it saves you, I'd just hand you the letter back and say pay that amount and only charge you whatever the base consultation fee is. But at $1,800 plus whatever your state tacks on it is worth being sure here in my opinion. However, if you really want to, just sending a check in to the IRS and state (when their letter shows up) will handle it without later issue.
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Jul 16, 2017 20:36
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Zeta Taskforce posted:Have your accountant file an amended return with all dedutable expenses included and pay the amount as dictated by the return Not with a CP2000, that messes the IRS up completely - amended returns are not processed in the same department as the CP2000 notices and you will confuse the crap out of them. There's an option on one of the later pages of the notice you can check that says "Yeah, IRS, I agree with some of what you're proposing but not all of it." Then I would simply list out the expenses you have proof for in a spreadsheet and ask the IRS to consider those expenses and re-compute your taxes in a letter you send to the address listed on the CP2000. The IRS will add your 1099 income you missed, but then it would also consider your expenses. Don't forget if you paid after-tax dollars for health insurance you might qualify for the self-employed health insurance deduction (SEHI). Also see a higher post regarding state taxes. If you live in a state with income taxes, they *will* get a copy of this notice eventually and assume it's 100% correct. You need to get moving on this to get the IRS to correct their position and send you an updated statement, then you can send the updated statement to your state of residence and hopefully get them to back off a bit as well.
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Jul 17, 2017 16:54
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If you get a CP 2000, don't file an amended return before calling the number on the letter; they can adjust the proposal without necessarily needing an amended return.
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Jul 31, 2017 01:00
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My wife and I became first-time homeowners at the very end of last year. I was excited that we'd be able to start exploiting the mortgage interest tax deduction next year, but when I looked up the standard deduction for a married couple filing jointly, it's going to be more than what we paid in interest this year. I expect we'll probably pay $9000 in interest, and I can't think of a ton of other things we could itemize and claim as deductions (aside from PBS/NPR contributions, some Goodwill donations, etc). As first time homeowners, would it make more sense for us to pay a professional to try to find as many deductions as possible, as well as itemize properly? Or would it make more sense to just take the standard deduction as we've been doing? I typically do our taxes with Turbotax since we have really simple returns. I'm not asking for specific advice, just some guidance on how to maximize our return in the coming year. Thanks!
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Aug 8, 2017 16:22
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The Midniter posted:My wife and I became first-time homeowners at the very end of last year. I was excited that we'd be able to start exploiting the mortgage interest tax deduction next year, but when I looked up the standard deduction for a married couple filing jointly, it's going to be more than what we paid in interest this year. I expect we'll probably pay $9000 in interest, and I can't think of a ton of other things we could itemize and claim as deductions (aside from PBS/NPR contributions, some Goodwill donations, etc). You pretty much only get state income (or sales) tax, property tax, mortgage interest and charitable donations. Those four things together will probably push you over the $12,600 standard deduction, but not by much. I wouldn't hire a professional just to sort that out, in my opinion. It's pretty hard to mess up once you know what you should be adding together. What state do you live in?
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Aug 8, 2017 16:27
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Droo posted:You pretty much only get state income (or sales) tax, property tax, mortgage interest and charitable donations. Those four things together will probably push you over the $12,600 standard deduction, but not by much. The only thing he might hire someone to do this first year is to dig through the settlement statement to see if property taxes/points are buried in there and were missed.
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Aug 8, 2017 16:36
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Droo posted:property tax Especially this, which )depending on your location) could rival your mortgage interest. Also any auto excise taxes.
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Aug 8, 2017 17:08
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I have a payroll situation with a new job. My employer is located in a state that does not levy an income tax. I live and work in a state that does have an income tax. My employer is not withholding and remitting state income tax on my behalf. Do I need to remit taxes on my own recognizance or can I just pay up on tax day? The amount in question is about $25,000 a year so obviously I would prefer to hold onto it and do something cute like pay it on a credit card all at once.
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Aug 9, 2017 02:33
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BEHOLD: MY CAPE posted:I have a payroll situation with a new job. My employer is located in a state that does not levy an income tax. I live and work in a state that does have an income tax. My employer is not withholding and remitting state income tax on my behalf. Do I need to remit taxes on my own recognizance or can I just pay up on tax day? The amount in question is about $25,000 a year so obviously I would prefer to hold onto it and do something cute like pay it on a credit card all at once. It's almost a certainty that whatever state you live in would assess underpayment penalties if you wanted until April of next year to pay it off in one shot. You should probably pay quarterly to avoid those penalties.
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Aug 9, 2017 06:21
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Ancillary Character posted:It's almost a certainty that whatever state you live in would assess underpayment penalties if you wanted until April of next year to pay it off in one shot. You should probably pay quarterly to avoid those penalties. This is not an uncommon problem for employers in this situation, OP is going to need to do a rough tax projection on their own and start sending in taxes. It sucks, but the state is going to get their money anyways so you might as well get on it. Third quarter vouchers due 9/15/17 for most states.
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Aug 9, 2017 18:15
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Ancillary Character posted:It's almost a certainty that whatever state you live in would assess underpayment penalties if you wanted until April of next year to pay it off in one shot. You should probably pay quarterly to avoid those penalties. It does, it turns out. However for this tax year and next I get a very significant out due to the way the safe harbor is calculated (almost exactly like the federal safe harbor).
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Aug 10, 2017 00:39
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BEHOLD: MY CAPE posted:It does, it turns out. However for this tax year and next I get a very significant out due to the way the safe harbor is calculated (almost exactly like the federal safe harbor). To satisfy my nosy curosity can I ask what you do for a living that lets you work for an out-of-state employer and generates $25k in state tax? Interest is piqued. Software?
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Aug 10, 2017 01:46
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Michael Scott posted:To satisfy my nosy curosity can I ask what you do for a living that lets you work for an out-of-state employer and generates $25k in state tax? Seriously, gently caress off with asking every high earner what they do for a living. It's incredibly irritating and juvenile.
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Aug 11, 2017 16:41
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KYOON GRIFFEY JR posted:Seriously, gently caress off with asking every high earner what they do for a living. It's incredibly irritating and juvenile. Hi what's your AGI from the last three years and also your favorite color and also your mother's maiden name and your SSN, just curious 
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Aug 11, 2017 19:04
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KYOON GRIFFEY JR posted:Seriously, gently caress off with asking every high earner what they do for a living. It's incredibly irritating and juvenile. Already got my answer but sorry you were triggered! I think discussing earnings and careers should be less taboo than it is. You don't think it's worth learning about what someone does that places them in the above-99th percentile, and that's fine, but don't be a jerk about it. Michael Scott fucked around with this message at 19:35 on Aug 11, 2017 |
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Aug 11, 2017 19:32
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Michael Scott posted:Already got my answer but sorry you were triggered! I think discussing earnings and careers should be less taboo than it is. You don't think it's worth learning about what someone does that places them in the above-99th percentile, and that's fine, but don't be a jerk about it. this is the loving income tax questions thread dude. every single thread that has a high earner post in it you ask what they do. This isn't the high earners "how did you get where you are today" thread, and neither are the other threads you do this in (electric car thread in AI for starters) if you want to learn how to make a lot of money in your field why don't you post a thread asking for advice?
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Aug 11, 2017 22:51
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You have a lot of posts, KYOON GRIFFEY JR, if you don't mind, can you tell me what to do to make all those posts?
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Aug 11, 2017 23:50
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I'm enrolling in a graduate school for a few classes to get a license I've been working towards, and I'm curious what the best option will be as far as taxes go at the end of the year. I typically file with Turbotax, am single, not a dependent, have no dependents, and stand to make somewhere around 45k this year. I already have about a thousand in deductions this year, and the graduate school courses will cost me around 3k. I can take out stafford loans (probably unsubsidized) to add to the 29k I already owe in student loans. I also have enough in savings that I could just pay for the classes, or I could draw the money out of some stocks that I own in order to not wipe out my immediate savings (this would be about 10% of the stock I have). What course of action will be best to maximize credits and deductions in this situation?
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Aug 13, 2017 18:59
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My spouse will be getting out of the Navy at the end of next month. She has a TSP with both Roth and traditional funds. We both have a Roth w/ Troweprice, one under each of our name, and a joint account with Wealthfront (robo trader, ETFs, has been a great investment so far). I want to move the money from the TSP Roth to the larger, non-navy Roth. Some google research and reading the TSP brochure tells me that as long as it is an institution to institution transfer, and both accounts are Roths, there should be no taxes paid and everything will be nice. Now for the difficult part... I want to move the rest of the TSP, the traditional bit, to Wealthfront to simplify managing our investments and to earn a higher rate of return. The TSP will automatically withhold 20% of the total for fed taxes. The question is: How do I move the non-Roth money around without paying a poopload of taxes? Is this complicated enough that I should just pay someone to do the taxes this year? I've been filing them myself for about ten years now and haven't had an issue, but also haven't had as complicated a financial situation.
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Aug 15, 2017 23:05
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AmishSpecialForces posted:My spouse will be getting out of the Navy at the end of next month. She has a TSP with both Roth and traditional funds. We both have a Roth w/ Troweprice, one under each of our name, and a joint account with Wealthfront (robo trader, ETFs, has been a great investment so far). I don't have answers to your main questions, but are you sure you want to move out of TSP? It has very low rates (I think it's 0.038% ER for all funds). Or does something change when you leave the service? Just make sure you consider the ER differences when making this move. Sorry if this is more an issue for the long term investment thread. Maybe pass it by the people in that thread if you haven't already?
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Aug 15, 2017 23:19
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*Derp. Reply is not quote.quote:I don't have answers to your main questions, but are you sure you want to move out of TSP? It has very low rates (I think it's 0.038% ER for all funds). Or does something change when you leave the service? Just make sure you consider the ER differences when making this move. You can only add money to the TSP after active duty if it comes from an IRA or an employer plan. We have neither of those, so we wouldn't be able to contribute to it. The size of the tax hit will influence whether or not we leave the funds in it, but for right now I'm set on getting it out and making higher returns. You make a good point about the ER, and it is super low, but Wealthfront charges little for a higher rate of return then in the TSP. I know more (I think) about the investing side of things than I do the tax issues.
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Aug 16, 2017 00:32
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AmishSpecialForces posted:You make a good point about the ER, and it is super low, but Wealthfront charges little for a higher rate of return then in the TSP. there is absolutely no guarantee that this continues to be true at any point beyond today or over any sort of time horizon that includes points in time beyond today
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Aug 16, 2017 18:19
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