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As I remember, I did it in (2) 5.5k contributions because Vanguard kept nagging me - one for the prior tax year (2017) and one for the current. But I withdrew them at the same time, and didn't take out the earnings. Yes, that was stupid overall and I should have been paying attention. I'm probably going to get jacked by them over this but I'll find a local tax attorney and see if it is worth sorting through it, or cheaper just to pay what they claim I now owe and write it off as a lesson learned. I'm going to guess the latter.
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Aug 24, 2019 18:36
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I filed for an extension because of some irritating peculiarities regarding my tax situation, and I'd like to wrap this up. In short: I'm a Canadian national, moved to California during the year 2018 so I'll be dual status for 2018. My income situation in the US is trivial, with just a W-2 and a Traditional IRA contribution. Where it gets tricky is I have a Canadian RRSP. Under the tax treaty, these are considered tax exempt in the US as well. Except... for the state of California.  I've tried asking my Canadian broker to produce the necessary 1099-DIV form so I can file with the state, to no avail. So I manually summed up the dividends from my RRSP during the period I was in the US, converted that amount into USD and was considering just adding it to my declaration as is, despite the lack of forms to support it. But that would mean producing a different declaration for federal and state taxes, unless I just put it on my federal tax return as well and eat the extra tax. The amount in my RRSP, the dividends and the resulting tax bill are trivial--enough holdings to require FBAR reporting (already done) but not even enough to require filing Form 8938. I honestly would rather just pay that amount than whatever accountant fees I would need to handle my declaration. So how likely is it that having an extra ~$200 in dividends without a 1099 would bother the IRS? (I mean, more money for them, right!?) Should I stop sperging and just send it in?
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Aug 25, 2019 01:30
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Jan posted:I filed for an extension because of some irritating peculiarities regarding my tax situation, and I'd like to wrap this up. I have never ever heard or experienced the IRS complaining about a taxpayer reporting more income than they have in theim matching database. Just file it. Edit: or a state Lord of Garbagemen fucked around with this message at 02:41 on Aug 25, 2019 |
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Aug 25, 2019 01:50
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Lord of Garbagemen posted:I have never ever heard or experienced the IRS complaining about a taxpayer reporting more income than they have in theim matching database. Just file it. Well, if that extra unreported schedule C incone just happens to maximize your EITC they might have some questions... but yeah, this is totally different and won't cause a problem.
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Aug 25, 2019 03:31
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Ixian posted:As I remember, I did it in (2) 5.5k contributions because Vanguard kept nagging me - one for the prior tax year (2017) and one for the current. But I withdrew them at the same time, and didn't take out the earnings. Yes, that was stupid overall and I should have been paying attention. Ah, yeah the “2017” contribution is definitely early withdrawal since it wasn’t pulled out by April 2018, and like I said previously I think pulling out the other can’t count as a return of contribution. If you did leave the deduction for IRA contributions off your 2017 and 2018 returns originally, you might get some benefit at least amending the returns to add the resulting $5500 deductions for each year to reduce the tax blow some; if they aren’t allow “takebacks” you might as well get the tax benefit of having made the contribution. Or else as Ancillary Character points out if you did make non deductible contribution to an IRA, the pro rata rule applies for working out the taxable vs. non taxable portions of the distribution (part I of Form 8606 goes into figuring that). I’m just not certain off the top of my head whether a contribution that could have been written off in adjustments but wasn’t counts as a non deductible contribution or not. I’m going to do some more research and get back to you (this is an issue I’d very much like to know how to correctly handle if it shows up for me  ).Lord of Garbagemen posted:I have never ever heard or experienced the IRS complaining about a taxpayer reporting more income than they have in theim matching database. Just file it. Yeah, about the only form I’ve ever seen any debate on not having from tax agencies are things that show tax withholding (W-2 and the like) . If you just include additional income they have no problem assuming you’re telling the truth, at least at low levels like this (I imagine a huge amount of mysterious “dividends” might trigger review to catch mistakes or maybe money laundering, but not something that isn’t in the thousands or something equally crazy).
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Aug 25, 2019 20:18
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I have a Dependent Care FSA question: My wife hasn't worked in a few years, so I knew we weren't able to use Dependant Care FSA to pay for preschool. However, now my wife does earn some income (from home). She averages about $500 per month and preschool for our kid is $300/month. Are we able to pay the preschool using a DC FSA? Are we just limited to how much my wife earns in each month? When I look at the IRS sites, the information/scenarios seem mostly focused on the Dependent Care credit and not specifically Flex-Spending Accounts.
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Aug 26, 2019 18:13
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Harveygod posted:I have a Dependent Care FSA question: Basically on Form 2441 part III, the limit is the smaller of your two yearly incomes or $5000, whichever of the three is the lowest. If your wife had a full year of income she’d be at $6000, which is more than enough to cover the max $5000 you can take for dependent care from an FSA. If she has less than $5000 in a year you’re limited to whatever she did earn. See the Form 2441 instructions for details. Also, for Ixian, passed my question along to more knowledgeable folks and there’s no issue claiming your contributions as non deductible if you didn’t claim them as a deduction on your 1040 to begin with. So you can either amend to add deductions to the return or take them as non deductible contributions on Form 8606 and adjust the taxable amount of the distribution, whichever works better (think the 8606 approach is given the big contributions/earnings disparity, but not positive without checking the return myself obviously). Either way, you can reduce the amount due at least  .
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Aug 31, 2019 14:35
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My wife and I are US citizens living abroad (Spain). My wife is freelancing for a US-based company. They sent her a W9, but it doesn't have an option for country in the address field, so she asked if it was appropriate. Then they sent a W-8BEN. But it says at the top, DO NOT fill this out if you are a US citizen. She asked for clarification and they are insisting on the W-8BEN, although it's not clear they understood the problem:quote:If you don’t currently reside in the US please use the address of the place you are currently staying at. When you return to living in the US we can get you to fill out a W9. I tried to google it but seems the answers are mixed. Some say that the W-8BEN may be appropriate anyway (although the IRS website pretty clearly says it's not) and others say you can just write in a foreign address on the W9. What she would do? Any adverse consequence if she just avoids rocking the boat and does the W-8BEN? If it matters, our income is well within the range where we don't expect any US taxes due to the foreign tax credit.
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Sep 3, 2019 09:52
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I know it’s not what you asked but just in case, your wife should still be paying self employment taxes even if she qualifies for the FEIE.
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Sep 3, 2019 12:53
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poo poo, thanks for the reminder. Wow, being a freelance expat sucks then... Edit: now I'm confused because when I asked my accountant about this he said quote:as long as you pay into the Spanish social security system, you do not have to pay the 15.3%. Is that wrong? SurgicalOntologist fucked around with this message at 13:16 on Sep 3, 2019 |
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Sep 3, 2019 13:11
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It's standard in tax treaties to provide an exemption for self-employment tax if you are enrolled in the social security equivalent of your host country. You need to be able to prove it by getting a certificate of coverage which explicitly states the tax treaty provision being claimed, and the process for this varies from country to country. The problem with a W-8 BEN is it can cause tax withholding in some circumstances that you should not be subject to as a citizen. Gabriel Grub fucked around with this message at 13:50 on Sep 3, 2019 |
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Sep 3, 2019 13:46
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SurgicalOntologist posted:poo poo, thanks for the reminder. Wow, being a freelance expat sucks then... OK, this gets a little complicated, see here for some more details. Basically Spain has what is called a totalization agreement with the United States, which is a treaty to ensure you aren't subject to both Social Security tax and tax for the country's local equivalent. How that agreement works (i.e. whether US people pay only to the US, or only to the host country) varies, and I'm not sure what Spain's version is (looks like self employment goes to the US only from my first glance unless you're there for more than five years? Little unclear here to me). There's some more places to check/contact for specific info here and here you can try. But yeah, ordinarily if you have self employed income outside the US you still pay SE tax on it even though you exclude the actual income from income tax. As for the W-9 vs. W-8BEN, you should NOT be doing the W-8BEN, that's for foreign individuals subject to backup withholding and as a US citizen she is not generally subject to that if her TIN is on file with a W-9. I would agree with the people saying to just write in the foreign address on the W-9. The address on the W-9 is supposed to be for the business's benefit anyway, since it specifies where they mail your copy of the 1099-MISC in this case. Hell, page 2 of the W-9 instructions allow the business to basically have their own version of W-9 if it has substantially the same information, pretty sure the idea is just they have the info on file if the IRS reviews it since it's not actually submitted to the IRS. If you're feeling paranoid you can file a Form 8822 Change of Address form with the IRS afterwards to make sure they have the right one on file, that form definitely allows a foreign address.
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Sep 3, 2019 13:59
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I found this blog on how to get the Spanish certificate of coverage and excuse yourself from self-employment tax. It seems to be a bit more difficult than most other countries. http://blog.manugarri.com/the-sorry-state-of-transparency-in-spain-where-is-my-certificate/
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Sep 3, 2019 14:12
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Thanks for the info there, wow. In any case, she's insisting on the W9 and we'll deal with the rest as tax time approaches.
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Sep 3, 2019 17:17
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Since we're on the subject, is there any way to reduce SE payments if I'm paying into social security in another country but there's no totalization agreement? I'm guessing no, but can't hurt to ask.
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Sep 3, 2019 20:57
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SurgicalOntologist posted:Thanks for the info there, wow. In any case, she's insisting on the W9 and we'll deal with the rest as tax time approaches. Good. Based on their response to you, they do not actually understand who needs a W-8BEN versus a W-9, and it may take you some time to get them to understand it. But absolutely do not sign something under penalty of perjury when it says something objectively false (about your citizenship).
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Sep 3, 2019 22:01
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Ur Getting Fatter posted:Since we're on the subject, is there any way to reduce SE payments if I'm paying into social security in another country but there's no totalization agreement? Nope, need the treaty, although there are a LOT of totalization agreements out there at least. You do generally get paid from both Social Security/the foreign equivalent in those cases though, although the foreign version gets taxed as pension income in the US rather than SS. tagesschau posted:Good. Based on their response to you, they do not actually understand who needs a W-8BEN versus a W-9, and it may take you some time to get them to understand it. But absolutely do not sign something under penalty of perjury when it says something objectively false (about your citizenship). Not to mention it basically forces withholding when there should be none. If they have any question, the W-8BEN instructions specifically say it's not for use with US citizens, even those located overseas (Spanish version of said instructions here if you need to show the employer something easier for them to understand).
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Sep 4, 2019 03:38
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Earlier this year I was at an awful job for three days (tons of red flags while I was interviewing, but I had been unemployed for the first time since graduating college and I was desperate). They sent the check (~$475 before deductions) a few months later. If they don't send a W-9 (since it's under $600), is there another way to report this? I have the check stub showing what was paid/withheld. I don't think it should affect the bottom line either way, but I have zero desire to contact them and get screamed at again but I want to make sure I'm filing accurately.
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Sep 8, 2019 04:28
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Nvm
Magic City Monday fucked around with this message at 14:18 on Sep 23, 2019 |
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Sep 8, 2019 10:14
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My grandpa wants to help me buy a place but wasn’t sure if he would owe gift tax on it since the help would exceed the annual limit. I spoke to a real estate attorney and he said so long as the help didn’t exceed the lifetime amount ($11 million?) neither of us would owe any taxes on it but my grandpa would have to include a form reporting the gift in his tax return. Does this sound right to y’all? I’m happy with the answer from the attorney but figured I would ask anyway.
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Sep 9, 2019 20:24
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you asked a real professional for advice and now you want to validate that against a bunch of goons?
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Sep 9, 2019 20:34
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I wanted to ask an actual accountant rather than a real estate attorney but I don’t have one of those.
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Sep 9, 2019 20:46
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It's IRS form 709 and the lifetime exemption is $5.6M. $11.2M is thrown around if he's married.
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Sep 9, 2019 21:27
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KS posted:It's IRS form 709 and the lifetime exemption is $5.6M. $11.2M is thrown around if he's married. *grabs you by the shoulders and shakes you madly* "Nigga have u heard about the Tax Cuts and Jobs Act!
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Sep 10, 2019 01:08
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My wife went self-employed halfway through this year, and the first quarterly tax payment is due in 5 days. We're meeting with an accountant later this week, but my understanding is each quarterly payment is supposed to be 1/4 of your total tax liability for the year, NOT what you've collected so far. Is that right? It sucks because she'll have a bunch of invoices that will get paid probably later this month and the coming months, but I think right now we still have to pay taxes like the money has already come in (assuming we expect it to come in before 2020).
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Sep 10, 2019 19:57
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MomJeans420 posted:My wife went self-employed halfway through this year, and the first quarterly tax payment is due in 5 days. We're meeting with an accountant later this week, but my understanding is each quarterly payment is supposed to be 1/4 of your total tax liability for the year, NOT what you've collected so far. Is that right? It sucks because she'll have a bunch of invoices that will get paid probably later this month and the coming months, but I think right now we still have to pay taxes like the money has already come in (assuming we expect it to come in before 2020). It’s not “1/4 of total liability” per se, you are expected to withhold on the tax due on what you’ve earned by then, not necessarily a certain percentage of your total tax liability. The US system is “pay as you earn”, so you aren’t punished for paying less tax on a quarter where you made less income. To pull an example not at random, tax preparers generally earn their most money between January and April, so they can do a bigger payment for that quarter and less for the others. See the Form 2210 instructions for details, you use that form to do the appropriate calculations to avoid under withholding penalties.
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Sep 11, 2019 17:09
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sale on Banksy art posted:*grabs you by the shoulders and shakes you madly* "Nigga have u heard about the Tax Cuts and Jobs Act! Isn’t that one of those things that’s supposed to revert to a lower value after 2025? Have they even said how that’s getting handled if you give a gift in that time frame but lack the courtesy to die before 2025?
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Sep 11, 2019 17:16
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They did, actually: Prop. Regs. Sec. 20.2010-1(c). No clawback. I've actually been pretty pleased with Treasury's regulations to the TCJA, it's a pity the Act is such a clusterfuck.
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Sep 11, 2019 23:49
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Sunset provisions never mean anything. It's just part of a game to get the budget office projections to hit a certain number. In reality, there will be a new tax law before then that either extends or eliminates the cap.
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Sep 12, 2019 01:55
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But just in case, you should encourage your wealthier clients to die in 2025.
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Sep 12, 2019 05:31
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MadDogMike posted:It’s not “1/4 of total liability” per se, you are expected to withhold on the tax due on what you’ve earned by then, not necessarily a certain percentage of your total tax liability. The US system is “pay as you earn”, so you aren’t punished for paying less tax on a quarter where you made less income. To pull an example not at random, tax preparers generally earn their most money between January and April, so they can do a bigger payment for that quarter and less for the others. See the Form 2210 instructions for details, you use that form to do the appropriate calculations to avoid under withholding penalties. Thanks for this, it was very helpful. My wife talked to the accountant today, who estimated a tax liability for this period of 2.75x what my wife will withdraw from the capital account for June to August. I'm most definitely not a tax expert, but I'm going to go with the accountant made a mistake here. It's a little complicated because she became part of a partnership, but unless you're liable for what you've billed to clients instead of what's actually been received by the partnership, I can't possibly imagine that's right. (I can see if the partnership received $1,000,000 in that time frame but you only withdrew $100k from the account, somehow being liable for the whole thing, but that's not what happened here. Also no idea if that's how it works.)
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Sep 12, 2019 05:35
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MomJeans420 posted:Thanks for this, it was very helpful. My wife talked to the accountant today, who estimated a tax liability for this period of 2.75x what my wife will withdraw from the capital account for June to August. I'm most definitely not a tax expert, but I'm going to go with the accountant made a mistake here. It's a little complicated because she became part of a partnership, but unless you're liable for what you've billed to clients instead of what's actually been received by the partnership, I can't possibly imagine that's right. Going to try to keep it simple. 1) The amount your wife gets in cash from the partnership ("withdraws from the capital account") generally has nothing to do with the amount of tax your wife will have to pay on her portion of the partnership's income. 2) The amount of income the partnership is computing may or may not be based on cash received. It's possible that the partnership calculates its income based on amounts invoices to clients vs cash actually received (depending on a bunch of factors, this method of accounting may be required for tax purposes). Admiral101 fucked around with this message at 12:18 on Sep 12, 2019 |
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Sep 12, 2019 12:13
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That makes sense, one of the other partners said they're cash basis accounting and the number was way too high, but I'm going to meet with the accountant today to see what's going on. Always fun to have someone tell you your quarterly tax bill is higher than our combined entire tax liability for last year, it was a bit of a shock. I had to pull money out of vanguard just in case, since it takes a couple of days to have everything go through.
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Sep 12, 2019 17:39
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Tax friends, my wife and I are relocating abroad to Japan (from the US) for a couple of years for my job and are starting to research what we should be expecting tax-wise. My company is paying for professional help, so I'm not looking for any sort of in-depth or detailed help as they'll be doing that, but I was hoping you guys might have good recommendations for what types of questions I should be asking my employer/tax preparer before we go? I know US & Japan have a tax treaty that makes it not-so-bad, but I've never done anything more complicated than preparing relatively simple tax returns on Turbo Tax, so my exposure to the more complicated tax codes are minimal.
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Sep 12, 2019 20:20
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torb main posted:Tax friends, my wife and I are relocating abroad to Japan (from the US) for a couple of years for my job and are starting to research what we should be expecting tax-wise. My company is paying for professional help, so I'm not looking for any sort of in-depth or detailed help as they'll be doing that, but I was hoping you guys might have good recommendations for what types of questions I should be asking my employer/tax preparer before we go? Assuming you're on an expat package and will continue being paid from the US, you will still have regular payroll taxes taken out and will be exempt from the Japanese equivalent. Your salary will be excluded from US taxable income up to $105,900, and you can use foreign tax credits beyond that. On the Japanese side, only income you make in Japan will be taxable. But if you are paid from the US, you will not be able to take advantage of the usual withholding and year-end tax adjustment system used in Japan. Instead, you will need to file an individual tax return, which I assume is part of the tax help your employer is paying for.
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Sep 13, 2019 01:01
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This might be more of an immigration law question but I figure it doesn’t hurt to ask. I’m a US citizen living abroad. My wife is not from the US and currently only has a tourist visa. We’ve been considering moving to the US and she’s looking at jobs. Many sites ask if she’s elegible to work in the US. My guess is the answer is no. I know we can apply for a work permit once in the US, but we are not planning to move unless one of us has a decent job lined up first. As far as I can tell, any company that wants to hire her will have to treat her as a regular non-resident and sponsor her visa before she moves. The ironic part is that she’s infinitely more hireable than me.
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Sep 13, 2019 15:59
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Taxation is loosely related to immigration. Find a lawyer.
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Sep 13, 2019 17:35
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sale on Banksy art posted:Assuming you're on an expat package and will continue being paid from the US, you will still have regular payroll taxes taken out and will be exempt from the Japanese equivalent. Your salary will be excluded from US taxable income up to $105,900, and you can use foreign tax credits beyond that. On the Japanese side, only income you make in Japan will be taxable. But if you are paid from the US, you will not be able to take advantage of the usual withholding and year-end tax adjustment system used in Japan. Instead, you will need to file an individual tax return, which I assume is part of the tax help your employer is paying for. Thanks for the insight. Sounds like it (hopefully) shouldn't be too much of a pain in the rear end then!
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Sep 13, 2019 21:27
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I forgot to make necessary estimated tax payments, but am looking to at least make an effort before the end of the year. I am looking to use the safe harbor rule and pay 100% of my tax liability from last year. What I can't figure out is whether the tax liability is the gross tax liability (including withholding from w-2), or my net tax liability (what I actually paid the IRS)? I am setting up a meeting with a tax professional, but wanted to see if I could figure this out first.
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Sep 13, 2019 23:43
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I'm starting a new job on Monday and will be filling out a new W4 as part of it. Without going back and calculating the federal tax withheld on every paycheck I've received so far this year, how do I best estimate the amount of money I should withhold from my paychecks from this new employer for the remainder of the year? The withholdings worksheet attached to the W4 doesn't take into account federal tax already withheld, so if I just used that I would withhold way too much for the rest of the year. I will of course be filing a new W4 at the start of 2020.
C-Euro fucked around with this message at 00:02 on Sep 14, 2019 |
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Sep 14, 2019 00:00
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