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sparkmaster posted:If you have self employment income, you can roll a SEP IRA or solo 401(k). This is in addition to the IRA's that are available to everyone. An additional legal entity does not need to be set up. Keep in mind that the IRS ignores single member LLCs, and any income made by an LLC is counted as if the business was a traditional sole proprietorship (unless you elect to be treated as a corporation for tax purposes). Thanks for the info. She already maxes her Roth IRA. So from googling it seems like with a solo 401k she could put in all of her earned income as long as it is less then 18k?
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Nov 25, 2018 20:39
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Mahatma Goonsay posted:Thanks for the info. She already maxes her Roth IRA. There are two elements to the contribution limit for a solo 401(k). First is the standard 18k (19k for 2019) employee side contribution. Because self employed folks are both the employee and employer, you can also contribute 25% of your self employment income subject to SE tax. The max anyone can contribute to a solo 401(k) is $56,000/yr (unless you are an old goon). Also, that 19k max employee contribution is for all 401(k) programs. So if your wife has a job with a 401(k) she contributes to, her contributions to that plan reduce the contribution limit to the solo. The employer side profit sharing does not change, though. From personal experience, unless you have enough SE income to take advantage of the higher contribution limits, I would suggest the SEP IRA. They're a lot simpler to set up. I took me 4 months of back and forth with Schwab to get my solo set up. A pain.
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Nov 25, 2018 21:16
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sparkmaster posted:From personal experience, unless you have enough SE income to take advantage of the higher contribution limits, I would suggest the SEP IRA. They're a lot simpler to set up. I took me 4 months of back and forth with Schwab to get my solo set up. A pain.
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Nov 25, 2018 22:22
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moana posted:Agreed, a solo 401k only makes sense when you're going to be putting tens of thousands into it. Or if you want to do the backdoor Roth IRA.
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Nov 26, 2018 00:12
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Small White Dragon posted:I just saw draft versions of the 2018 forms are available. Kind of interesting. Sure is. Front of page is info about you and dependents, and signature lines. No amounts. Back of page is the gross income, deductions and taxes. Only 23 lines total. Only half a sheet too? Guess they were pushing hard for that “taxes on a postcard thing.” https://www.irs.gov/pub/irs-dft/f1040--dft.pdf
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Nov 26, 2018 02:13
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smackfu posted:Sure is. Front of page is info about you and dependents, and signature lines. No amounts. Back of page is the gross income, deductions and taxes. Only 23 lines total. Only half a sheet too? Guess they were pushing hard for that “taxes on a postcard thing*.” *Everyone now has at least 2 schedules and some people 4-8. Oh also only the 1040 is free at tax prep places, $25 per schedule.
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Nov 26, 2018 02:16
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smackfu posted:Sure is. Front of page is info about you and dependents, and signature lines. No amounts. Back of page is the gross income, deductions and taxes. Only 23 lines total. Only half a sheet too? Guess they were pushing hard for that “taxes on a postcard thing.” I think the theory was that since everyone is filing electronically, the 'taxes on a postcard*', may as well go ahead and do it since few people are gonna be affected. *with 1-5 attached schedules
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Nov 26, 2018 02:46
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Xenoborg posted:*Everyone now has at least 2 schedules and some people 4-8. Oh also only the 1040 is free at tax prep places, $25 per schedule. It's this. MAGA tax lobby.
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Nov 26, 2018 03:43
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Xenoborg posted:*Everyone now has at least 2 schedules and some people 4-8. Oh also only the 1040 is free at tax prep places, $25 per schedule. 1040 only is basically a 1040-EZ, yeah, though most of my clients are gonna have their little "postcard" return stapled to a bunch of full size pages if they paper file. Schedules 1-6 are the main ones (well, 1-5 really since 6 is just to give third party permission to talk to the IRS to a preparer/put a foreign address on the return), plus pretty much all the subforms are still there. Have no idea what the charges will be like under the new system though; most places charge by the form and the basic forms just got tweaked a bunch. No changes to 1040-NR apparently, guess "simplifying" tax forms for people who have English as a second language wasn't a priority...
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Nov 26, 2018 21:52
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I currently work as a salaried employee. I recently took a second, (10-12 hrs/wk) 1099 contract based, remote position that will bring in an additional $10-15,000 next year. My wife and I file jointly. Do I need to worry about filing taxes quarterly, or can we just file like normal and pay whatever we owe?
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Nov 29, 2018 01:07
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Cacafuego posted:I currently work as a salaried employee. I recently took a second, (10-12 hrs/wk) 1099 contract based, remote position that will bring in an additional $10-15,000 next year. My wife and I file jointly. Do I need to worry about filing taxes quarterly, or can we just file like normal and pay whatever we owe?
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Nov 29, 2018 02:19
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Hoodwinker posted:My understanding is you don't need to file quarterly if your W2 withholding will: equal at least 90% of your tax liability for the year, or 100% of your prior year tax, whichever is less. If you want to make sure you don't need to file quarterly, adjust your W4 so you withhold enough to cover the anticipated 1099 income. Excellent, that’s what I needed to know. Thank you!
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Nov 29, 2018 02:47
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Cacafuego posted:Excellent, that’s what I needed to know. Thank you! Just remember you have additional tax due in the form of SE tax on the self employment income, so make sure you're accounting for that in your withholding (there are plenty of tax calculators out there on the web you can use to make sure you've got the right amount withheld) but where the money comes from doesn't matter so long as you hit the mentioned 90% of current year tax due/100% of prior year tax due thresholds, so yes you can just withhold any extra needed from your paycheck.
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Dec 1, 2018 06:15
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I should know this by now but I'm starting to work on tax info so I can file on January and get it over with: I'm self-employed. If I didn't have expenses over $12.000 then I don't need to itemize and I can just claim the standard deduction, right? dpkg chopra fucked around with this message at 20:22 on Dec 3, 2018 |
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Dec 3, 2018 20:17
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Ur Getting Fatter posted:I should know this by now but I'm starting to work on tax info so I can file on January and get it over with:
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Dec 3, 2018 20:18
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Great, thanks. Out of curiosity, what happens if you make $22,000 in 2018 and file as MFJ? Is your AGI considered to be $0? Can you no longer make IRA contributions even if you do actually have excess income?
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Dec 3, 2018 20:22
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Ur Getting Fatter posted:Great, thanks. Your taxable income is considered $0 but your AGI is whatever you earned. Because of this you can still contribute to an IRA. Hoodwinker fucked around with this message at 21:04 on Dec 3, 2018 |
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Dec 3, 2018 20:43
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Fortunately it's not my case, I was just wondering though.
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Dec 3, 2018 20:52
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Hoodwinker posted:Yes, your AGI is considered to be $0. AGI would not be $0 as the standard deduction is a below the line deduction. Taxable income is what would be $0 in that case. Since AGI is not $0, an IRA can be used.
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Dec 3, 2018 20:53
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Ur Getting Fatter posted:Great, thanks. Your AGI would still be $22,000 but your taxable income would be $0. You would still be subject to self-employment tax. You can make IRA contributions as long as you have earned income. You would want to get advice specific to your situation, but given this set of facts it sounds like a Roth IRA would be better than a traditional IRA as there would be no benefit to reducing taxable income any further.
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Dec 3, 2018 20:54
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Ur Getting Fatter posted:I should know this by now but I'm starting to work on tax info so I can file on January and get it over with: Are these deductible business expenses, or by "expenses" do you mean things like property tax and charitable donations? Because you always want to put in business expenses that reduce your taxable 1099 income.
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Dec 3, 2018 20:55
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Ancillary Character posted:AGI would not be $0 as the standard deduction is a below the line deduction. Taxable income is what would be $0 in that case. Since AGI is not $0, an IRA can be used.
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Dec 3, 2018 21:04
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Droo posted:Are these deductible business expenses, or by "expenses" do you mean things like property tax and charitable donations? Legitimate business expenses. I used to run about 6-8k in expenses per year, which means I always itemized. I just wanted to confirm that this year I could just chill take the standard the deduction and not worry about it (other than saving my receipts).
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Dec 3, 2018 21:22
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Ur Getting Fatter posted:Legitimate business expenses. I used to run about 6-8k in expenses per year, which means I always itemized. I just wanted to confirm that this year I could just chill take the standard the deduction and not worry about it (other than saving my receipts). Uh, maybe I'm misunderstanding, but if you're self employed, business expenses go on the Schedule C with the income, NOT Schedule A. Business expenses on Schedule A were for employees (i.e. W-2 jobs) paying for things out of pocket for their jobs (like uniforms for nurses and the like), NOT for expenses related to a business you run yourself. Only exception is if it's hobby income rather than actual business income, in which case yeah you put the hobby income on the other income line and the expenses up to total hobby income go on Schedule A. If you've been itemizing on Schedule A business expenses for self employed/1099-MISC stuff, you want to get your prior year returns amended ASAP (good news is it should get you a refund). But employee business expenses got yanked from the current Schedule A, so you can't itemize them any more anyway apart from the "hobby, not real job" thing I mentioned. EDIT: Oops, just realized hobby expenses were in the 2% category too, not sure if you can itemize them now either. MadDogMike fucked around with this message at 21:47 on Dec 3, 2018 |
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Dec 3, 2018 21:42
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If they're business expenses they reduce your business income; the "To Itemize or Not to Itemize" expenses are different, personal property tax and mortgage interest on your house and out of pocket medical expenses and the like. Two different things. It's super likely you will not be itemizing this year, regardless. But you definitely DO want to take ALL of your business expenses to reduce your biz income, yo! e:fb
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Dec 3, 2018 21:45
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I just put the numbers in TurboTax usually and let it do its thing. IIRC normally TurboTax asks me my gross total income, then my total expenses, so I'm assuming it uses that to calculate my net income. Normally it would also ask me to itemize my expenses since they were over 6k, which is what I understand I don't need to do this year? So I can just tell TT my total income, my total expenses and then just take the standard deduction. Or maybe I'm loving something up (very likely!).
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Dec 3, 2018 22:53
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Ur Getting Fatter posted:I just put the numbers in TurboTax usually and let it do its thing. Business expenses are completely separate from the standard deduction and the two have nothing at all to do with each other. To make it mathy and simplified for you: Total tax for you = self employment tax + federal income tax Self employment tax = (business income - business expenses) * 15.3% Federal income tax = [(business income - business expenses) + wage income - standard deduction] * your various tax rates depending on income
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Dec 3, 2018 23:06
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Ahhhh, ok. Yeah, I knew that SE and Federal Income tax were two different taxes but I was definitely conflating the Standard Deduction with my expenses. Thanks!
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Dec 3, 2018 23:13
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I've been putting off signing up for next year's insurance on healthcare.gov bc I'm not sure whether the new tax changes appreciably change the calculation of my MAGI, and that figure determines what the affordability thresholds are under the ACA. Specifically: As I understand it, with pass-through income from Sched. C (sole proprietor) or from partnerships (I have both as income sources) 20 percent is deducted from profits before federal taxes are calculated. Is this also the case for AGI, or is the 20 percent only deducted from taxation, not AGI? Is MAGI still a thing for 2018 and beyond, and if so, are there any changes? This is particularly crucial in determining health-insurance costs, because contributions to retirement plans in prior years would lower one's income for the purpose of calculating the health-insurance subsidies and thus the direct cost of insurance. And if MAGI is still a thing, have any changes been made (eg, deduction for self-employment taxes)? I've tried looking these questions up online, but because the IRS won't release its final forms until next month, there are only drafts & notes on the drafts like this one. I tried scanning that link for answers but only got more confused with its references to numbered schedules.
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Dec 4, 2018 23:04
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My parents bought me a house in 2009 and now I want to sell it and give them their money back. The house was 20k and they also paid 25k for a renovation. We're selling it for 65k now so there will be a 20k profit. This is how I am thinking it will play out: We sell the house under my name. I pay taxes on the 20k profit. I then gift them back 30k per year, 15k per parent, until the 45k is paid off. Is this all correct and legal? I lived there for one year in 2009. I have been renting it out since then. I do not get a principal residence exemption on my property taxes since I don't live there. My parents are retired so they have a much lower income tax rate than I do. Is there any way to pay less taxes on this?
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Dec 4, 2018 23:53
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You won't be selling for $20k profit after the real estate agents and seller concessions post inspection get into your pocket. And why are you structuring your "gifts" back to your parents? Do you really think you or your estate will exceed $5.6 million dollars in gifting?
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Dec 5, 2018 02:23
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Willa Rogers posted:I've been putting off signing up for next year's insurance on healthcare.gov bc I'm not sure whether the new tax changes appreciably change the calculation of my MAGI, and that figure determines what the affordability thresholds are under the ACA. The qualified business income (QBI) 20% thing is a below the line deduction, which means it affects the final tax calculation but NOT AGI, that remains the same. Self employment taxes are also still calculated on the full income. The health insurance is still calculated based on the same MAGI to my knowledge so there should be no changes there. MrChrome posted:My parents bought me a house in 2009 and now I want to sell it and give them their money back. The house was 20k and they also paid 25k for a renovation. We're selling it for 65k now so there will be a 20k profit. This is how I am thinking it will play out: OK, your parents basically gave you a gift of the house in 2009 so they probably should have filed a gift tax return then unless the renovations were paid in a different year than the actual home purchase (20k for the house one year and then a separate 25k for renovations would individually fit under the gift tax exclusion if they weren't the same year). I don't *think* there's any issue with gifting them the money back the way you describe, but may need others to weigh in here on that one (there's no obvious tax evasion thing here I see, but might be some rule I'm forgetting/unaware of). The bigger headache for you tax wise will be because you rented the house before selling it. Since rental properties are depreciated as an expense, any previous depreciation will be subject to recapture. The most basic way I can explain it is that some of the profit (corresponding to the amount that was depreciated as a rental expense) will be taxed at ordinary income rates rather than long term capital gains. This is complicated enough it may be worth checking with a professional to make sure it's done properly; at minimum take a look at Form 4797 and related info to make sure you're doing it right. Also keep track of any closing costs since they affect the final basis.
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Dec 5, 2018 02:24
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MrChrome posted:My parents bought me a house in 2009 and now I want to sell it and give them their money back. The house was 20k and they also paid 25k for a renovation. We're selling it for 65k now so there will be a 20k profit. This is how I am thinking it will play out: Few variables in this: 1) How have you been historically been reporting the rental activity on your personal filing? You may have passive losses from prior years that will shield some or most of this gain. 2) Get what you're doing with the 15k per parent thing. From a practical perspective... none of this matters as I'm guessing your parents' estate is significantly less than the current exemption ($10 million). Wouldn't stress about this. If you are married, and very concerned about the gifting limits, you can deem to gift up to 60k and be just fine. 3) I don't think you're going to get the tax hit you're expecting. Rate on 1231 gains (which is sale of rental property) are 20% at most. You likely have some minor depreciation recapture which the other poster alluded to, however even this is max at 25%. It is not taxed like your regular wage income would be. Otherwise, given the dollar amounts we're talking, there's not a lot of practical options in deferring or eliminating the gain. Again, there's some variables that could impact my above thoughts. Admiral101 fucked around with this message at 13:15 on Dec 5, 2018 |
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Dec 5, 2018 13:11
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I'm a contractor working for a company through a recruiter, and I discovered that the recruiter has been withholding state income tax from me for the state of Georgia. This is a problem because I live and work (remotely) out of Nevada which has no state income tax. This is doubly annoying because this issue came up when I was offered the position and I had explained the situation to them and thought this was understood and resolved. I'm trying to get this resolved, but this recruiting company has been extremely incompetent and unresponsive (they bungled the onboarding process so badly that the company I'm now working for nearly withdrew my offer because it was taking so long), and I'm concerned that I'm going to run into more of the same here. So here are my questions: -If I cannot resolve this with them in a timely manner, what other recourse do I have? Can/should I file a complaint with the IRS/DOL/etc? -Will I be able to get the income tax I improperly paid back (it has been over the last two months if that helps)? -If they are withholding taxes that I did not agree to have withheld, isn't that a pretty serious issue? -Am I correct in my understanding that as a contractor who lives and works in Nevada (and only Nevada), I'm only subject to Nevada's income tax? Thanks!
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Dec 5, 2018 18:15
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Thanks for the responses, all! I'll definitely be getting professional help when the sale closes. At this point it looks like it's going to happen in 2019. To answer some questions: Different people have told me different things about the gifting. My parents estate is not worth nearly that much. People are saying that if you are below that limit you don't have to report it on your taxes. But even if you do have to report it, it would still not be subject to tax, right? Why all the fuss about reporting it, then? I've been reporting the rental income using schedule E. I do depreciation on form 4562, straight line. Some years are profitable, some are losses. It varies based on how many people are living there and how big the unexpected expenses are per year.
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Dec 5, 2018 18:20
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MrChrome posted:Different people have told me different things about the gifting. My parents estate is not worth nearly that much. People are saying that if you are below that limit you don't have to report it on your taxes. But even if you do have to report it, it would still not be subject to tax, right? Why all the fuss about reporting it, then? You have to report it. It's informational, and counts against your lifetime limit. That is all. The fuss is that people are dumb and/or think that their broke rear end is going to hit the lottery some day and have a $100M estate to distribute.
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Dec 5, 2018 19:15
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Silvergun1000 posted:-If I cannot resolve this with them in a timely manner, what other recourse do I have? Can/should I file a complaint with the IRS/DOL/etc? You should file a Georgia Non-resident tax return
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Dec 6, 2018 06:01
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Crossposting from the Accountant's thread: Hey y'all! My co-worker is considering becoming an EA; has anyone around here done that exam? How long did you study for it/what materials did you use? TIA!
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Dec 6, 2018 16:50
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Silvergun1000 posted:I'm a contractor working for a company through a recruiter, and I discovered that the recruiter has been withholding state income tax from me for the state of Georgia. This is a problem because I live and work (remotely) out of Nevada which has no state income tax. This is doubly annoying because this issue came up when I was offered the position and I had explained the situation to them and thought this was understood and resolved. I'm trying to get this resolved, but this recruiting company has been extremely incompetent and unresponsive (they bungled the onboarding process so badly that the company I'm now working for nearly withdrew my offer because it was taking so long), and I'm concerned that I'm going to run into more of the same here. A few years ago I would have agreed you would not have nexus in Georgia due to not having any kind of physical presence, but this area of state taxation has changed a ton in the past couple years. How does Georgia come into play and what do you do? edit: to elaborate, it's not really up to the company on whether they withhold on your behalf in Georgia or not. If they believe there's a withholding requirement, they are going to withhold. This is not really a discretionary thing. Admiral101 fucked around with this message at 18:13 on Dec 8, 2018 |
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Dec 8, 2018 18:07
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If you truly don't owe Georgia any state income tax, you can get all the withholding back when you file a state income tax return with Georgia. If you're absolutely sure you don't owe Georgia money, you can see if you can set your state exemptions sky high on the W4 equivalent to essentially have nothing withheld.
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Dec 8, 2018 21:51
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