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Heyo, apologies if this has been asked before. Basically trying to figure out if its worth going to an accountant over. I'm a W2 worker that picked up a consulting gig late last year. Made 3800 bucks and the guy who hired me filed a 1099 contractor form for me. He told me to file a schedule c to cover some of the costs associated with the gig (like buying a new laptop to work from home). So instead of my easy peasy W2 form I used taxact to also fill out a schedule C, trying to deduct the cost of my computer on the form as a business expense. Then it asks if i should file an expected quarterly tax return. I'm going to keep on doing the side gig, and I guess I write down how much I expect to make this year? So in essence I'm going to be paying more on my taxes because I filed the schedule C? Which sucks? Am I doing anything wrong? Will I get in trouble for guessing wrong about how much I expect to make? Thanks, this is confusing, and kinda scary.
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Mar 25, 2019 15:08
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Yes, you can pay a penalty if you don't make large enough quarterly payments. You may find it easier to look up when the penalties kick in, and pay exactly that much. I think the threshold I used when doing consulting was to cover 100% of my tax owed in the previous year. (Or was that 110%?) So you take the Tax line from your 1040, subtract the expected amount of withholding from your W2 job, and divide that by 4. That's your quarterly payment amount. But if you're only making a few thousand on top of your day job, you may not even need to make any quarterly payments, your extra amount owed at the end of the year could be less than the penalty threshold.
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Mar 25, 2019 15:30
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Shageletic posted:Heyo, apologies if this has been asked before. Basically trying to figure out if its worth going to an accountant over. Here's 2019's publication on the matter Check out Section 2: Estimated Tax. 2018 Pub 505 if you need it. When you work a W-2 job, your employer is responsible for withholding income tax and employment tax (Social Security and Medicare) on that income. They have software to calculate this based on withholding tables. When you do 1099 work, you're your employer, so there's no one to withhold those taxes and pay the IRS on your behalf, and you're responsible for calculating and paying quarterly estimated taxes. Bear in mind, withholding from a W-2 job is also estimated taxes, which is why you file taxes every year to calculate how much you really owe, and you can still face an under-withholding penalty if you put in too high a number of exemptions, so quarterly taxes aren't different in concept from withholding. If you owe tax because of your 1099 income, it isn't because you're paying a higher rate on that income, it's because you didn't pay tax on that income throughout the year. Remember that whether you owe or get a refund when you file has no relation to how much tax you have to pay overall, it simply tells you whether you paid too much or too little tax throughout the year. The publication I linked details the dollar amounts where you're required to pay quarterly and has worksheets so you can figure out how much, because the IRS withholding calculator can only figure taxes for W-2 income due to the employment tax portion. It mentions also that you can increase your withholding at your W-2 job to cover your 1099 income, which might be a good option for you if you don't suddenly start making more 1099 income. Yes, if you are wildly wrong about your expected income you can face an underpayment penalty, which is why quarterly estimated tax payments exist. If you follow the IRS guidance you will be fine, but you have to follow it. https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses A lot of people tend to think anything they buy or use for the business can be deducted 100%, when that just isn't the case, and because of this find out at the end of the year they've spent more money than they've earned. If you're going to do self-employed work, don't rely on business expense deductions to profit unless you know for certain they're valid expenses, and take your operating costs into account when deciding what to charge.
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Mar 25, 2019 16:15
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Thanks a bunch. I was only hoping to deduct a few hundred compared to thousands of earnings. I'll get right to reading the links you guys kindly provided. Thanks again.
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Mar 25, 2019 16:50
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The quarterly estimated payments aren't super crucial; the penalty is pretty tiny. You can also just make one big estimated payment before the end of the year to cover your 1099 income, which will save you from the penalty AND let you have that money at your disposal (or mb in an interest bearing account?) throughout the year.
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Mar 25, 2019 18:30
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Just to make sure I'm not doing a dumb mistake: If I don't have a 401k from my employer, and I am filing single, I can contribute 5500$ to my IRA for 2018 and deduct the full amount? And just out of curiosity, if I did have a retirement plan at work and my gross income was more than 73 000$, I could still contribute 5500$... but not deduct it? What's the point of doing so, just being able to defer tax on any gains inside the IRA until withdrawal?
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Mar 26, 2019 03:26
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Jan posted:Just to make sure I'm not doing a dumb mistake: If I don't have a 401k from my employer, and I am filing single, I can contribute 5500$ to my IRA for 2018 and deduct the full amount? Contributing non-deductibly to a traditional IRA and then converting to a Roth IRA is called a "Backdoor" Roth IRA. It's used to still get money into a Roth IRA if your income exceeds the Roth limit.
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Mar 26, 2019 05:37
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DaveSauce posted:HSA question: Hate to bump this, but does anyone at least have any advice on filing amended returns?
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Mar 26, 2019 16:04
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DaveSauce posted:Hate to bump this, but does anyone at least have any advice on filing amended returns? I think you can contribute at least 11/12 * the contribution limit. I don't remember exactly how a partial month coverage is handled off the top of my head. I filed an amended return once, I basically printed out my filed 1040, made the changes in Turbotax and printed out the new 1040, and then filled out form 1040x or whatever it is by hand using the two returns. Then you mail in that form with a copy of whatever form changed, so in this case you would also include a new version of the form that lists the HSA contributions (which I also can't remember offhand). It wasn't too hard.
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Mar 26, 2019 16:15
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Jan posted:Just to make sure I'm not doing a dumb mistake: If I don't have a 401k from my employer, and I am filing single, I can contribute 5500$ to my IRA for 2018 and deduct the full amount? Jobert posted:Contributing non-deductibly to a traditional IRA and then converting to a Roth IRA is called a "Backdoor" Roth IRA. It's used to still get money into a Roth IRA if your income exceeds the Roth limit. The Roth IRA income limits are higher than the Traditional IRA income limits. Since Jan only asked about income over $73k, it's possible they could contribute directly to a Roth without worrying about backdoor stuff. Jan: a Roth IRA is not deductible in the year you contribute, but is tax free when withdrawn (usually, unless early, in excess of basis, etc).
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Mar 26, 2019 18:50
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Well, my second question was just curiosity to try and understand (coming from the Canadian tax system). I only mentioned that income because it was the max listed on the IRS website past which there is no deduction possible. My first question is the one that pertains to me since my employer doesn't provide any 401k at all. Roth IRA is the equivalent of Canada's TFSA, as I understand--no tax deduction but the gains and withdrawals are not taxable income. I would actually prefer to use a Roth over a Traditional IRA, but because they both share the same maximum contribution and Roth IRAs are more complicated/troublesome to bring back to Canada, I figured I'd put that contribution towards the Traditional IRA.
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Mar 26, 2019 19:07
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I keep hearing about this backdoor Roth IRA. It's always sounded sketchy. Suspicion confirmed, it is sketchy. Stepwise doctrine might bite you rich a holes https://www.kitces.com/blog/dodging-the-income-limits-on-roth-contributions-strategy-or-abuse/
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Mar 26, 2019 21:55
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Epitope posted:I keep hearing about this backdoor Roth IRA. It's always sounded sketchy. Suspicion confirmed, it is sketchy. Stepwise doctrine might bite you rich a holes quote:Although an individual with AGI exceeding certain limits is not permitted to make a contribution directly to a Roth IRA, the individual can make a contribution to a traditional IRA and convert the traditional IRA to a Roth IRA. Hoodwinker fucked around with this message at 22:12 on Mar 26, 2019 |
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Mar 26, 2019 21:56
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Epitope posted:I keep hearing about this backdoor Roth IRA. It's always sounded sketchy. Suspicion confirmed, it is sketchy. Stepwise doctrine might bite you rich a holes lol, as if rich assholes are affected by a whopping 5000 in tax relief. The IRA maximum contribution is so low it completely fails to fulfill its goal ("Retirement"). I'm flabbergasted that this is the only avenue available unless your employer chooses to provide a 401k, but I guess this is America.
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Mar 26, 2019 22:58
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Epitope posted:I keep hearing about this backdoor Roth IRA. It's always sounded sketchy. Suspicion confirmed, it is sketchy. Stepwise doctrine might bite you rich a holes Well, if they come for you for it, you at least know that you're but one among tens of millions of people that will be up for charges. Also, you're only talking about taxes and penalties on the returns from the mischaracterization, which due to the tiny limit on contributions, isn't going to be that much. It might console you that no one has ever been charged for this for a couple of decades now?
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Mar 27, 2019 00:01
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Jan posted:lol, as if rich assholes are affected by a whopping 5000 in tax relief. Sure, but multiply by number of households and years, and it's a chunk of taxes not drawn on people that can afford it. Of course the rich being able to dodge taxes is rampant, and has been forever. I guess I've allowed myself to hope they'll get busted on this one, silly of me I know.
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Mar 27, 2019 00:17
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Epitope posted:Sure, but multiply by number of households and years, and it's a chunk of taxes not drawn on people that can afford it. Of course the rich being able to dodge taxes is rampant, and has been forever. I guess I've allowed myself to hope they'll get busted on this one, silly of me I know.
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Mar 27, 2019 00:20
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Hoodwinker posted:Don't avoid the rich assholes. Become the rich rear end in a top hat. Embrace it. Let the tax advantage flow through you. Oh I'm for sure a rich rear end in a top hat. Doesn't mean I can't dislike rich assholes
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Mar 27, 2019 00:22
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I think I hate rich assholes even more now that I am one? Wait is that just the self-loathing
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Mar 27, 2019 03:57
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Epitope posted:Oh I'm for sure a rich rear end in a top hat. Doesn't mean I can't dislike rich assholes So long as capitalism thrives, there'll always be someone richer than you to hate.  I'm just leveraging what little tax benefits I can while living in this area where tech companies pay me far too much to write bad code. On that note, if I'm understanding this backdoor Roth IRA correctly, I can convert a traditional IRA to Roth if I ever need to, the main caveat being that this conversion will be counted as taxable income for the contributions (but not the gains)?
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Mar 27, 2019 04:09
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Jan posted:So long as capitalism thrives, there'll always be someone richer than you to hate.
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Mar 27, 2019 04:26
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Jan posted:So long as capitalism thrives, there'll always be someone richer than you to hate. The gains are also taxable income during a conversion. Most people that do a backdoor Roth do the conversion immediately so that there are no gains or the pennies worth of gains get rounded away to the nearest dollar when doing taxes.
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Mar 27, 2019 13:22
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These questions are about the tax return for my mom, who passed away last year. She did not have a will and no representative has been appointed. 1) I filled out the return on one of the e-file services and advanced to where it made the return a PDF (I can't e-file because I don't know her last year AGI or PIN so I have to mail it) and now I can't go back and edit it. Do I have to mail this PDF version, or can I just use another service to draft a new return if I need to change it? 2) For the signature space on the 1040, should I sign that? Do I need to write anything by my name? 3) For the refund, can I have that deposited straight to my bank account? The e-file service I was using said I needed to provide info for a bank account in my mom's name if I wanted to do that. If I get a check mailed to me, will it be in my name or my mom's? I am filing a Form 1310 as well so my info is included. Badger of Basra fucked around with this message at 01:28 on Mar 28, 2019 |
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Mar 28, 2019 01:05
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Took over my folks’ taxes this year and ran into what I think is a super weird edge case scenario. They qualify for the $7500 EV tax credit, which brings their federal tax liability down to about $250. Problem is: I just found out that their former CPA had them prepay $2200 to the feds back in January. If I’m understanding this correctly, they more or less threw away ~$2000 due to the prepayment bringing their tax liability low enough that they can’t utilize the full $7500 EV credit? Or will they somehow get back the prepayment after they file? 
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Mar 28, 2019 01:35
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Leathal posted:Took over my folks’ taxes this year and ran into what I think is a super weird edge case scenario. As long as their tax liability is >$7,500, they can fully utilize the credit. It is not a refundable credit so if their liability is $5,000, the adjusted liability will be $0 vs -$2,500 like if it was a refundable credit. EITC, education and child credits are some examples of refundable. The amount of tax due with the filing has nothing to do with the tax liability.
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Mar 28, 2019 02:28
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Jan posted:What's the point of doing so, just being able to defer tax on any gains inside the IRA until withdrawal?
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Mar 28, 2019 12:51
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SiGmA_X posted:** Not a tax professional, consult your CPA ** You, sir, win the internets for today. This is correct. We just had an elderly client who bought a new car for the credit - but her tax for the year was zero. Oops. She's pissed at the dealership who promised her it would help.
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Mar 28, 2019 16:34
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Badger of Basra posted:These questions are about the tax return for my mom, who passed away last year. She did not have a will and no representative has been appointed. Sorry about your mom. 1) You can use another service if need be. Until you actually send/e-file the return, it's not submitted. 2) Yes, you sign. Your title depends on what you've been legally assigned in probate (if any), but usually it's personal representative for estates without wills. 3) No, you need to complete form 1310 (and a comparable state form, if applicable - in Oregon we have form 243). Note this form is frustrating, not in its complexity, but in how often the IRS fucks it up. If you send in paperwork, send in COPIES. The IRS will inevitably lose whatever you mail them, send requests to you three times to re-send the paperwork, and then send you the wrong amount. In the last few years, roughly 50% of the time the IRS messes this up, and it can take 9-18 MONTHS to get the refund back, and it's usually not the full amount. This will be a frustrating hassle, mentally just erase this money and plan on it being lost, and whatever you get from the IRS will be a gift in the future.
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Mar 28, 2019 16:40
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So I lost my job in January of last year, didn't go with the continued health insurance because I didn't know when I was going to get another job and have income again. I found another job around the middle of the year but didn't get coverage until the beginning of this year through them. So I was without coverage for 11 months last year. Like your average idiot, I haven't thought about taxes until now. Can I still apply for an exemption based on not being able to afford it? Did I miss that boat? It's not really clear to me if I can or can't, based on looking at the relevant sites. If I can, I assume I will not get an answer by the 15th, so that means I guess I would need to send in form 8965 and hope it's granted to me? I'm also not sure if I can even qualify. I think so, but I don't know what the prices for Marketplace Bronze plans were at the time and if I could have qualified for a lower price for one. I'm all confused over here. Thanks for any help.
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Mar 31, 2019 21:16
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https://www.irs.gov/help/ita/am-i-e...rdable-care-act You claim the exemption when you file. "Shared responsibility payment" is the tax penalty you'd pay if you don't have coverage and don't qualify for an extension.
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Mar 31, 2019 23:15
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This is what I'm mostly not sure about, which comes from the application form for exemptions :quote:You can’t use this application to get this exemption for time in the past. If you need this exemption for months in the past, you can apply for it when you file your tax return instead.
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Apr 1, 2019 01:41
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Detective Thompson posted:What form do I need to submit with the 1040 then in order to get the exemption? I assume I can't just say it wouldn't have been affordable and file just the 1040 and the IRS is going to be cool with it. If you qualify for an exemption for all the months you didn't have insurance, this year you just check the box on the first "page" of the 1040 and don't submit any form. If you have an exemption for some, but not all the months you didn't have insurance, use form 8965 to claim the exemption for the months that you qualify. The 8965 instructions have worksheets to determine if coverage was unaffordable, but if you would've qualified for Advanced Premium Tax Credit to help pay for insurance, you have to factor that in when you're calculating affordability. There's also a laundry list of "hardships" that you should review and see if any apply.
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Apr 1, 2019 13:58
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I'm a self-employed US citizen living and working outside the US. I've been asked to do some work for a US citizen who's currently in the country I live in. Do I need to provide him with a W9? I don't usually do work for other US citizens so it's never come up. Edit: this seems to suggest yes https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-about-international-individual-tax-matters dpkg chopra fucked around with this message at 16:36 on Apr 1, 2019 |
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Apr 1, 2019 16:33
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I'm considering making a fully tax-deductible donation of 10k. I usually make 500-1000 in tax-deductible donations annually. Is there anything tax-wise that I should look into or plan for? Would an unusual spike like this typically trigger an audit?
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Apr 2, 2019 16:41
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Keep rly rly good records of the donation and itll be fine. Or if you hate your accountant, make 100 donations of $100 and keep all the records.
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Apr 3, 2019 03:26
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Ur Getting Fatter posted:I'm a self-employed US citizen living and working outside the US. Yeah, he may need to file 1099-MISC or similar forms, so the W-9 is probably required by my read of the instructions. black.lion posted:Keep rly rly good records of the donation and itll be fine. Or if you hate your accountant, make 100 donations of $100 and keep all the records. Dude, do NOT put ideas like that out there please; just had to do a "add up a bunch of itty bitty receipts for a schedule C" return again tonight as is  . And yeah, I wouldn't freak about it so long as you have the documentation to prove it.
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Apr 3, 2019 03:38
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Lol I had to add up at least a hundred little bullshit Goodwill donations because they were claiming what they thought was like $3k worth of donations and had used some Intuit product to estimate and list FMV, but it only gave totals for their purchase price. They didn't have enough deductions to itemize anyway 
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Apr 3, 2019 15:11
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MadDogMike posted:Dude, do NOT put ideas like that out there please; just had to do a "add up a bunch of itty bitty receipts for a schedule C" return again tonight as is My record (the worst record) this season is 141 receipts for a Sch C. I'm legit dreaming about how drunk I'm gonna be on April 15.
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Apr 4, 2019 00:01
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Hello thread I put $1750 into HSA via my paychecks last year, and my employer contributed $250. In turbotax, these are all labeled as 'employer contributions', presumably because they all came out of my paycheck. Am I missing out on significant tax savings because of this? Or was the $1750 already accounted for as a reduction in my net income from my employer?
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Apr 4, 2019 00:30
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Sounds like that 1750 went in thurr pre-tax so no deduction to be had, sorry m8
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Apr 4, 2019 00:49
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