US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

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Hoodwinker: Nov 7, 2005

C-Euro posted:

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.

You don't have to "go back" to calculate anything. Just take the amount you've withheld so far, calculate out based on your salary how much your tax burden will be for the rest of the year, and calculate what your per-paycheck withholding will be. You can change your W4 any number of times, so use the first one to figure out if it'll be enough and modify from there.

# ? Sep 14, 2019 00:26

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# ? May 13, 2024 16:01

C-Euro: Mar 20, 2010; Soiled Meat

Hoodwinker posted:

You don't have to "go back" to calculate anything. Just take the amount you've withheld so far, calculate out based on your salary how much your tax burden will be for the rest of the year, and calculate what your per-paycheck withholding will be. You can change your W4 any number of times, so use the first one to figure out if it'll be enough and modify from there.

So the amount that I'll owe is just going to whatever I calculate on the W4 Two-Earners worksheet, minus whatever my YTD federal tax withheld is on my final paycheck from my old employer?

# ? Sep 14, 2019 01:22

Gazpacho: Jun 18, 2004; by Fluffdaddy; Slippery Tilde

I was looking for a tax court ruling and this isn't the one I was looking for, but it starts off interestingly enough:

Paschal v. Commissioner (1994) posted:

The issues for decision are:
1. Whether increases in petitioner's net worth were due, as petitioner contends, to the following nontaxable sources of income: (1) Seventy-five thousand dollars in loans from his sister, (2) $50,000 buried in his back yard, (3) $35,000 from the sale of two Corvettes, and (d) $20,000 from the sale of a bulldozer. We hold that they were not.

2. Whether respondent's determination that petitioner had unreported income of $121,158 for 1980, $128,764 for 1981, and $17,857 for 1982, by use of the net worth plus expenditures method, was correct. We hold that respondent's determination was correct, except as respondent concedes below.

# ? Sep 14, 2019 02:38

dpkg chopra: Jun 9, 2007; Fast Food Fight; Grimey Drawer

Did he use the bulldozer to bury the 50.000?

Also, a literal sunk cost fallacy.

# ? Sep 14, 2019 02:53

sullat: Jan 9, 2012

dox posted:

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.

Gross, what you actually owed. So if last year you owed $10000 and had $5000 in withholding, you have to make sure that the $10000 is paid thru withholding or ES tax pymts to make the the safe harbor rule.

# ? Sep 14, 2019 03:02

Gazpacho: Jun 18, 2004; by Fluffdaddy; Slippery Tilde

In February of this year, as a result of information I learned from this thread (and verified from IRS publications), I realized that I had made substantial over-contributions to an IRA over a period of years. I worked with a tax preparer to prepare corrected forms and mailed them along with an explanation (which the preparer also reviewed) and a payment of tax owed, plus my own estimate of interest.

Today I got refunds for most of the years that I paid. For all but one year the IRS sent back the entire amount, plus ~4.2% interest. I copied the checks and deposited them, though I'm keeping the funds earmarked. How do I find out what the heck happened?

Gazpacho fucked around with this message at 04:42 on Sep 14, 2019

# ? Sep 14, 2019 04:31

sullat: Jan 9, 2012

Gazpacho posted:

In February of this year, as a result of information I learned from this thread (and verified from IRS publications), I realized that I had made substantial over-contributions to an IRA over a period of years. I worked with a tax preparer to prepare corrected forms and mailed them along with an explanation (which the preparer also reviewed) and a payment of tax owed, plus my own estimate of interest.

Today I got refunds for most of the years that I paid. For all but one year the IRS sent back the entire amount, plus ~4.2% interest. I copied the checks and deposited them, though I'm keeping the funds earmarked. How do I find out what the heck happened?

1800-829-1040

# ? Sep 14, 2019 05:53

Hoodwinker: Nov 7, 2005

C-Euro posted:

So the amount that I'll owe is just going to whatever I calculate on the W4 Two-Earners worksheet, minus whatever my YTD federal tax withheld is on my final paycheck from my old employer?

Yes, exactly this. Your tax liability is not a moving or wild target. If you know how much you're going to make in a given year, you know what your tax liability is going to be down to the penny.

# ? Sep 14, 2019 06:01

C-Euro: Mar 20, 2010; Soiled Meat

Hoodwinker posted:

Yes, exactly this. Your tax liability is not a moving or wild target. If you know how much you're going to make in a given year, you know what your tax liability is going to be down to the penny.

Yeah, but does my tax liability move at all if my salary changes mid-year? I'll be in a different income bracket for this W4 calculation, at least going off of what the worksheet advertises.

# ? Sep 14, 2019 06:19

moana: Jun 18, 2005; one of the more intellectual satire communities on the web

sullat posted:

1800-829-1040

The reports from previous years off the IRS website could also give you a clue, if you don't want to wade into the hell of the IRS phone line.

# ? Sep 14, 2019 13:50

Hoodwinker: Nov 7, 2005

C-Euro posted:

Yeah, but does my tax liability move at all if my salary changes mid-year? I'll be in a different income bracket for this W4 calculation, at least going off of what the worksheet advertises.

Your tax bracket is based on your marginal income. Only the new income is affected if you reach a new bracket. Your tax liability increases, but it only increases in proportion to the higher earnings you have. If your old withholdings would have you withhold $10k, and if your new withholdings withheld as if you were earning your new salary the entire year, you would withhold, say, $20k, your actual tax liability is going to be somewhere between those two numbers. There's no way you'll end up underwithholding unless you claim 99 allowances, even though you may be hitting a higher bracket. The main reason to calculate this stuff out to withhold the correct amount is just to get as small of a refund as possible.

My brain isn't firing on all cylinders at the moment but I'll try to write out an example using real world numbers to demonstrate what I'm saying.

Hoodwinker fucked around with this message at 18:12 on Sep 14, 2019

# ? Sep 14, 2019 18:03

MadDogMike: Apr 9, 2008; Cute but fanged

moana posted:

The reports from previous years off the IRS website could also give you a clue, if you don't want to wade into the hell of the IRS phone line.

It's not hellish! You just need to call around 7am Eastern time late in the week for a reasonable wait period, or at least be tolerant of waiting over an hour listening to the mind-numbing music that haunts my nightmares and hoping at the end of the wait they won't randomly disconnect you instead of picking up, or dropping you in the middle of speaking with the person, or tell you they won't answer any more calls that day, or you need to call this other number which they of course can't transfer you to, or... :suicide:

# ? Sep 15, 2019 02:52

sullat: Jan 9, 2012

I mean, the IRS transcript will show you what happened, but not necessarily why or how to fix it. So when you call the number the trained IRS CSR will be able to figure it out.

# ? Sep 15, 2019 03:39

Hoodwinker: Nov 7, 2005

Hoodwinker posted:

My brain isn't firing on all cylinders at the moment but I'll try to write out an example using real world numbers to demonstrate what I'm saying.

Let's say you make $75,000 a year and you're single. This puts you in the 22% bracket. Let's remove deductions (except for the standard deduction at $12,200) and savings from the equation to simplify. You gross $75,000 a year and therefore your federal income tax on that is $9,674.50. You get paid every two weeks, so you have 26 pay periods in the year. You claim no allowances on your W4 and you request no additional withholding. This means your per-paycheck withholding will be roughly $443.24 for FIT. This will put you on track to withhold $11,524.12, with a refund of $1,849.62.

code:

Salary:    75,000.00
FIT:       9,674.50
Per PC WH: 443.24
Final WH:  11,524.12
Refund:    1,849.62

Next, let's imagine you make $100,000 a year instead. You're now in the 24% marginal tax bracket. Everything else is the same. Here's what the numbers look like:

code:

Salary:    100,000.00
FIT:       15,246.50
Per PC WH: 664.00
Final WH:  17,263.92
Refund:    2,017.42

Let's see what happens when your income changes exactly halfway through the year from $75k to $100k. Halfway through the year you'll have withheld $5,762.06 because you were withholding based on $75k. Then you set up a new W4 at the $100k salary, which assumes you've been making this amount throughout the whole year so it withholds $664. The final outcome is you're still way overwithheld for your FIT liability for the year.

code:

Salary:         87,500.00
FIT:            12,424.50
First half WH:  443.24
Midyear WH:     5,762.06
Second half WH: 664.00
Final WH:       14,394.06
Refund:         1,969.56

So even though you didn't gently caress around with the W4 at all in either case, you weren't in any danger of underwithholding. In both cases you end up overwithholding.

Incidentally, this exercise helped me catch a bug in my withholding calculator that's been bugging me for ages.

# ? Sep 16, 2019 15:36

OAquinas: Jan 27, 2008; Biden has sat immobile on the Iron Throne of America. He is the Master of Malarkey by the will of the gods, and master of a million votes by the might of his inexhaustible calamari.

Finance goons, I am in need of assistance!

Getting a solar system installed so I can keep FPL from shafting me in rate increases over the next decade. I'd like to get the full value out of my PACE tax credit, which is 30% of the system's value issued over a maximum of 5 years (in this case, roughly ~15K). If I don't pay enough in taxes in 5 years, I don't get the full amount.

Presently, I make about 88K as the sole income source of the household, with two kids. Wife is SAHM and has effectively no income. Yes, somehow I stumbled into a 60s nuclear family setup in TYOOL 2019; I'm as confused about it as you are. Last year's paid taxes after standard deduction + 2 child deduction was ~$2000.

My main question is: is it possible/legal to not take the standard deduction, then just not itemize anything to maximize my taxable income (and thus, the tax credit payout)? Would it possibly be better to file singly and not jointly?

If I file jointly and take the standard deduction, I'm looking at maybe getting $2K/year from the credit, which will leave about 5-6K on the table. Not looking to tax fraud, of course; just trying to get as much as I can back. Kids are expensive.

Thanks!

# ? Sep 20, 2019 19:32

Ancillary Character: Jul 25, 2007; Going about life as if I were a third-tier ancillary character

OAquinas posted:

Finance goons, I am in need of assistance!

Getting a solar system installed so I can keep FPL from shafting me in rate increases over the next decade. I'd like to get the full value out of my PACE tax credit, which is 30% of the system's value issued over a maximum of 5 years (in this case, roughly ~15K). If I don't pay enough in taxes in 5 years, I don't get the full amount.

Presently, I make about 88K as the sole income source of the household, with two kids. Wife is SAHM and has effectively no income. Yes, somehow I stumbled into a 60s nuclear family setup in TYOOL 2019; I'm as confused about it as you are. Last year's paid taxes after standard deduction + 2 child deduction was ~$2000.

My main question is: is it possible/legal to not take the standard deduction, then just not itemize anything to maximize my taxable income (and thus, the tax credit payout)? Would it possibly be better to file singly and not jointly?

If I file jointly and take the standard deduction, I'm looking at maybe getting $2K/year from the credit, which will leave about 5-6K on the table. Not looking to tax fraud, of course; just trying to get as much as I can back. Kids are expensive.

Thanks!

Was the $2,000 the amount you paid when you filed your return or was that your income tax owed inclusive of your withholdings throughout the year? $2,000 is extremely low for a household income of $88,000. If it was just the amount you paid with your return, then you need to look line 15 for "Total Tax" to see what the actual total income tax you owed for the year.

Unless you divorce your wife, you cannot file as Single.

# ? Sep 20, 2019 21:08

OAquinas: Jan 27, 2008; Biden has sat immobile on the Iron Throne of America. He is the Master of Malarkey by the will of the gods, and master of a million votes by the might of his inexhaustible calamari.

Ancillary Character posted:

Was the $2,000 the amount you paid when you filed your return or was that your income tax owed inclusive of your withholdings throughout the year? $2,000 is extremely low for a household income of $88,000. If it was just the amount you paid with your return, then you need to look line 15 for "Total Tax" to see what the actual total income tax you owed for the year.

Unless you divorce your wife, you cannot file as Single.

It was 77K taxable income (Guess there was 10,000 in pretax exemptions), minus the 24K standard deduction making it 53K taxable, which left it at a total of 6K tax paid, minus 4K for the two child credits leaving 2K tax paid.

Sorry, I meant "married filing separately"

To further clarify: I'm mainly curious if filing "stupidly" and all but eliminating deductions is possible/legal to maximize federal tax owed, so I can get it back via the tax credit.

OAquinas fucked around with this message at 21:31 on Sep 20, 2019

# ? Sep 20, 2019 21:26

KillHour: Oct 28, 2007

I'm not a tax person but why would it matter that you're getting more back just to pay it again in taxes?

Also, holy crap 2k in taxes is super low for your income.

# ? Sep 20, 2019 21:42

saltylopez: Mar 30, 2010

OAquinas posted:

It was 77K taxable income (Guess there was 10,000 in pretax exemptions), minus the 24K standard deduction making it 53K taxable, which left it at a total of 6K tax paid, minus 4K for the two child credits leaving 2K tax paid.

Sorry, I meant "married filing separately"

To further clarify: I'm mainly curious if filing "stupidly" and all but eliminating deductions is possible/legal to maximize federal tax owed, so I can get it back via the tax credit.

If you have to pay the same amount of tax either way, why does it matter?

Whether you can file a return like that or not, there's a couple reasons that it would be a bad idea:

1. The credit has a carryforward, so any unused portion can be carried forward to future years.
2. $1,400 of each child tax credit is refundable, so $2,800 of your residential energy credit will replace the child tax credit in the non-refundable credits section.

# ? Sep 20, 2019 23:17

OAquinas: Jan 27, 2008; Biden has sat immobile on the Iron Throne of America. He is the Master of Malarkey by the will of the gods, and master of a million votes by the might of his inexhaustible calamari.

saltylopez posted:

If you have to pay the same amount of tax either way, why does it matter?

Whether you can file a return like that or not, there's a couple reasons that it would be a bad idea:

1. The credit has a carryforward, so any unused portion can be carried forward to future years.
2. $1,400 of each child tax credit is refundable, so $2,800 of your residential energy credit will replace the child tax credit in the non-refundable credits section.

The carryforward is limited to 5 years. Any left after that is lost.

My thoughts were that since tax credit = money you get refunded back from what you pay in taxes, by maximizing my tax payment I'd enable a larger check to be cut.
So if my plan for no standard deduction and no itemized deduction is legally kosher, then instead of 77-24=53K taxable (for a 6K tax bill before credits), I'd have 77K flat for an 8.7K tax bill (that would be completely refunded due to the credits). That would enable me to actually get the PACE credit out before the time limit expires.

I just don't know if there's some law/rule against that.

# ? Sep 20, 2019 23:48

Ancillary Character: Jul 25, 2007; Going about life as if I were a third-tier ancillary character

OAquinas posted:

The carryforward is limited to 5 years. Any left after that is lost.

My thoughts were that since tax credit = money you get refunded back from what you pay in taxes, by maximizing my tax payment I'd enable a larger check to be cut.
So if my plan for no standard deduction and no itemized deduction is legally kosher, then instead of 77-24=53K taxable (for a 6K tax bill before credits), I'd have 77K flat for an 8.7K tax bill (that would be completely refunded due to the credits). That would enable me to actually get the PACE credit out before the time limit expires.

I just don't know if there's some law/rule against that.

Is that $10k in pretax exemptions Traditional 401k contributions? You can switch those over to Roth contributions instead to up your tax bill.

# ? Sep 21, 2019 01:02

KillHour: Oct 28, 2007

OAquinas posted:

The carryforward is limited to 5 years. Any left after that is lost.

My thoughts were that since tax credit = money you get refunded back from what you pay in taxes, by maximizing my tax payment I'd enable a larger check to be cut.
So if my plan for no standard deduction and no itemized deduction is legally kosher, then instead of 77-24=53K taxable (for a 6K tax bill before credits), I'd have 77K flat for an 8.7K tax bill (that would be completely refunded due to the credits). That would enable me to actually get the PACE credit out before the time limit expires.

I just don't know if there's some law/rule against that.

Why would you want a larger refund at the end of the year instead of paying less taxes upfront?

Even if you wanted this for some insane reason, you could just have them withhold more.

Ancillary Character posted:

Is that $10k in pretax exemptions Traditional 401k contributions? You can switch those over to Roth contributions instead to up your tax bill.

OK, this might actually make sense. You'd effectively be "spending" your credit to avoid tax altogether on the money in the IRA.

KillHour fucked around with this message at 05:55 on Sep 21, 2019

# ? Sep 21, 2019 05:51

OAquinas: Jan 27, 2008; Biden has sat immobile on the Iron Throne of America. He is the Master of Malarkey by the will of the gods, and master of a million votes by the might of his inexhaustible calamari.

OK, I think I'm missing something then; here's what I understand to be the case:

Withheld money: Money paid to the govt in advance, to cover taxes
Tax Bill: Actual Taxes owed to the govt
Tax Refund: The amount of withheld money, minus the tax bill
Tax Credit: An amount to not exceed Tax Paid, that gets returned to the person regardless of withheld money

So if these definitions are roughly true, by maximizing my Tax Bill (via no deductions), I maximize the total amount of Tax Credit money I can get per filing period (assuming I had sufficient Tax Credits to cover the total). This would be returned to me on top of any Withheld money due back normally.

If this is incorrect, then I'm badly misjudging the situation and need to correct my outlook posthaste. :shepspends:

OAquinas fucked around with this message at 08:33 on Sep 21, 2019

# ? Sep 21, 2019 08:30

Konstantin: Jun 20, 2005; And the Lord said, "Look, they are one people, and they have all one language; and this is only the beginning of what they will do; nothing that they propose to do will now be impossible for them.

You are misunderstanding tax credits. To use your terminology, tax credits reduce your tax bill and have nothing to do with withheld money. Certain tax credits can be refunded even if your tax bill is zero, but this usually doesn't come up unless you are near or at poverty.

# ? Sep 21, 2019 10:23

OAquinas: Jan 27, 2008; Biden has sat immobile on the Iron Throne of America. He is the Master of Malarkey by the will of the gods, and master of a million votes by the might of his inexhaustible calamari.

Konstantin posted:

You are misunderstanding tax credits. To use your terminology, tax credits reduce your tax bill and have nothing to do with withheld money. Certain tax credits can be refunded even if your tax bill is zero, but this usually doesn't come up unless you are near or at poverty.

Oh. drat. Welp.

Thanks for the clarification! :lovewcc:

# ? Sep 21, 2019 15:16

sullat: Jan 9, 2012

Konstantin posted:

You are misunderstanding tax credits. To use your terminology, tax credits reduce your tax bill and have nothing to do with withheld money. Certain tax credits can be refunded even if your tax bill is zero, but this usually doesn't come up unless you are near or at poverty.

That's not entirely true, there are two fully refundable credits that are very very popular with the middle & upper middle class; the credit for taxes withheld and the credit for excess social security taxes withheld.

# ? Sep 21, 2019 16:41

Harveygod: Jan 4, 2014; YEEAAH HEH HEH HEEEHH

YOU KNOW WHAT I'M SAYIN

THIS TRASH WAR AIN'T GONNA SOLVE ITSELF YA KNOW

Konstantin posted:

Certain tax credits can be refunded even if your tax bill is zero, but this usually doesn't come up unless you are near or at poverty.

I'll also chime in real quick to say that (with the child tax credit and standard deduction being increased so much) you don't necessarily have to be near-poverty anymore to be in this scenario. My wife and I were able to get to below zero-tax for 2018 while earning like $75,000 (2 kids + retirement savers tax credit).

# ? Sep 22, 2019 02:00

C-Euro: Mar 20, 2010; Soiled Meat

Hoodwinker posted:

Let's say you make $75,000 a year and you're single. This puts you in the 22% bracket. Let's remove deductions (except for the standard deduction at $12,200) and savings from the equation to simplify. You gross $75,000 a year and therefore your federal income tax on that is $9,674.50. You get paid every two weeks, so you have 26 pay periods in the year. You claim no allowances on your W4 and you request no additional withholding. This means your per-paycheck withholding will be roughly $443.24 for FIT. This will put you on track to withhold $11,524.12, with a refund of $1,849.62.
code:
Salary:    75,000.00
FIT:       9,674.50
Per PC WH: 443.24
Final WH:  11,524.12
Refund:    1,849.62
Next, let's imagine you make $100,000 a year instead. You're now in the 24% marginal tax bracket. Everything else is the same. Here's what the numbers look like:
code:
Salary:    100,000.00
FIT:       15,246.50
Per PC WH: 664.00
Final WH:  17,263.92
Refund:    2,017.42
Let's see what happens when your income changes exactly halfway through the year from $75k to $100k. Halfway through the year you'll have withheld $5,762.06 because you were withholding based on $75k. Then you set up a new W4 at the $100k salary, which assumes you've been making this amount throughout the whole year so it withholds $664. The final outcome is you're still way overwithheld for your FIT liability for the year.
code:
Salary:         87,500.00
FIT:            12,424.50
First half WH:  443.24
Midyear WH:     5,762.06
Second half WH: 664.00
Final WH:       14,394.06
Refund:         1,969.56
So even though you didn't gently caress around with the W4 at all in either case, you weren't in any danger of underwithholding. In both cases you end up overwithholding.

Incidentally, this exercise helped me catch a bug in my withholding calculator that's been bugging me for ages.

Thanks for this. So assuming my wife and I remain in the "MFJ, two incomes" group and I don't itemize any deductions...I just shouldn't file a new W-4 until January 1 next year? Or can I fill out the Two-Incomes worksheet like normal, adjust the value on line 8 based on the amount of time remaining in the year (since my new salary is being taxed for only part of the year and at a new rate), and then file a new W-4 January 1 when I don't have to worry about wages from a different position?

# ? Sep 22, 2019 23:31

Hoodwinker: Nov 7, 2005

C-Euro posted:

Thanks for this. So assuming my wife and I remain in the "MFJ, two incomes" group and I don't itemize any deductions...I just shouldn't file a new W-4 until January 1 next year? Or can I fill out the Two-Incomes worksheet like normal, adjust the value on line 8 based on the amount of time remaining in the year (since my new salary is being taxed for only part of the year and at a new rate), and then file a new W-4 January 1 when I don't have to worry about wages from a different position?

Honestly, I'd ride right past all of this and do the following:
- Calculate out what your tax liability is going to be (as a household). Since you're looking at two salaries, it's not rocket science to do this. Add your gross numbers together, adjust for your deductions (including the standard), and plug that number into any old online tax calculator. Alternatively, you can build a spreadsheet pretty simply that'll do this for you.
- Figure out what you've both withheld so far and add them together.
- Look at the amount you've withheld most recently on your paychecks (like, just the amount withheld from that check).
- Do the math based on the remaining pay periods to see how much you're going to have withheld by the end of the year. Add it to what you've withheld so far.
- Is this more than your tax liability? You're good. If not, either add some additional withholding or just reduce your allowances.

I literally never use the worksheets because they never seem to give me a good sense of what's happening and why.

# ? Sep 22, 2019 23:48

BlackMK4: Aug 23, 2006; wat.; Megamarm

I received a mystery check for about $46 today from the IRS that just said tax refund. I most definitely cut a five figure deposit to them earlier this year as I owed on top of what was already deducted. Should I expect to get hosed for some reason?

# ? Sep 25, 2019 00:59

sullat: Jan 9, 2012

BlackMK4 posted:

I received a mystery check for about $46 today from the IRS that just said tax refund. I most definitely cut a five figure deposit to them earlier this year as I owed on top of what was already deducted. Should I expect to get hosed for some reason?

Could be a number of things, I suppose. Should give them a call @ 1-800-829-1040 to see which it is! Either you overpaid and this is a refund + interest, or maybe they abated the ES tax penalty for you because of the tax law changes. Or someone could have accidentally put your SSN on their $46 payment and the IRS is going to want that money back. Might even be something I'm not thinking of, let us know after you call them tomorrow between 7 am and 7 pm local time.

# ? Sep 25, 2019 04:53

BlackMK4: Aug 23, 2006; wat.; Megamarm

It appears that I just did overpay by the amount I received as a refund, plus about a dollar of interest.

Not sure how this happened, HR block shows the amount owed then they also show the higher amount paid in the IRS direct debit section. Ah well.

# ? Sep 25, 2019 17:46

MadDogMike: Apr 9, 2008; Cute but fanged

BlackMK4 posted:

It appears that I just did overpay by the amount I received as a refund, plus about a dollar of interest.

Not sure how this happened, HR block shows the amount owed then they also show the higher amount paid in the IRS direct debit section. Ah well.

Did you have an under withholding penalty on the original return? Last minute the IRS dropped the amount you had to have paid in withholding/estimated payments to 80% of the total for the year rather than 90%, and I seem to recall having to manually correcting it on the returns I was preparing because otherwise the software would calculate it for people below the 90% range. Seem to recall an announcement they were going to start refunding people in that situation recently too. In any event, at least you know it's OK to keep the money!

# ? Sep 30, 2019 01:10

H110Hawk: Dec 28, 2006

Hi Tax Nerds, the investing thread suggested I try asking this here. Pretend I asked this 13 days ago.

Tax loss harvesting question, mainly to make sure I'm doing it correctly.

1. Verify basis is per tax lot (it is), verify that I am set to not reinvest dividends/cap gains (I'm not.)
2. Sell the red FSPSX, buy FSKAX with it.
3. Don't re-buy the FSPSX one until it's been 30 days.
4. Profit?

The one question I have is I see the rule for wash sales is 30 days before or after, does that matter if I'm selling the lots I bought <30 days ago as well?

# ? Oct 16, 2019 22:09

Epitope: Nov 27, 2006; Grimey Drawer

Hey tax nerds. I'm trying to comprehend what the guy above me is talking about. It sounds like the scheme from office space, only a real life thing that people do. Am I on track?

# ? Oct 17, 2019 03:29

H110Hawk: Dec 28, 2006

Epitope posted:

Hey tax nerds. I'm trying to comprehend what the guy above me is talking about. It sounds like the scheme from office space, only a real life thing that people do. Am I on track?

Yes. Google "tax loss harvesting".

# ? Oct 17, 2019 03:51

MadDogMike: Apr 9, 2008; Cute but fanged

Haven't messed much with this for my clients so take this with a grain of salt, but for this -

H110Hawk posted:

The one question I have is I see the rule for wash sales is 30 days before or after, does that matter if I'm selling the lots I bought <30 days ago as well?

The wash sale rule is if you buy the same or a substantially identical security after a sale that generates a loss within 30 days, you can't claim the loss. Basic logic is kind of similar to like kind exchanges, if you sell one thing and get the same thing within a short time, it's more a replacement than a true loss. If you are just selling the same thing you bought within a short time that isn't a wash per se, the wash part triggers when you're buying a "replacement". Buying more of the stock 30 days before the sale also counts because to continue the metaphor, you just had a "replacement" on hand for what you sold already. So selling even your "older" purchases of the same stock could get wash sale treatment if you did it within 30 days of buying more of said stock. One question from what I'm reading is whether these two stocks constitute "substantially identical securities", can't really speak to that though the fact one appears to be international and the other isn't might mitigate that being a concern. Again, haven't really done tax harvesting stuff (most of my "complicated security trading" experiences are with backdoor Roths and various stock option things), so not sure how much to trust my input here. If you want more info on wash sales in general believe the Schedule D instructions and Pub 550 go into it a bit more.

# ? Oct 17, 2019 17:49

BlackMK4: Aug 23, 2006; wat.; Megamarm

H110Hawk posted:

Hi Tax Nerds, the investing thread suggested I try asking this here. Pretend I asked this 13 days ago.

Tax loss harvesting question, mainly to make sure I'm doing it correctly.

1. Verify basis is per tax lot (it is), verify that I am set to not reinvest dividends/cap gains (I'm not.)
2. Sell the red FSPSX, buy FSKAX with it.
3. Don't re-buy the FSPSX one until it's been 30 days.
4. Profit?

The one question I have is I see the rule for wash sales is 30 days before or after, does that matter if I'm selling the lots I bought <30 days ago as well?

Fidelity handles the accounting end of this for you, go look in the YTD tax activity tab. It'll also be handled in the tax form they send you.

IF I REMEMBER RIGHT, they also warn you if you're about to trigger a wash sale when you get to the trade confirmation dialog. It'll also put a blue W in the main view and next to the specific lots that are wash sales.

# ? Oct 17, 2019 18:00

Residency Evil: Jul 28, 2003; 4/5 godo... Schumi

MadDogMike posted:

Haven't messed much with this for my clients so take this with a grain of salt, but for this -

The wash sale rule is if you buy the same or a substantially identical security after a sale that generates a loss within 30 days, you can't claim the loss. Basic logic is kind of similar to like kind exchanges, if you sell one thing and get the same thing within a short time, it's more a replacement than a true loss. If you are just selling the same thing you bought within a short time that isn't a wash per se, the wash part triggers when you're buying a "replacement". Buying more of the stock 30 days before the sale also counts because to continue the metaphor, you just had a "replacement" on hand for what you sold already. So selling even your "older" purchases of the same stock could get wash sale treatment if you did it within 30 days of buying more of said stock. One question from what I'm reading is whether these two stocks constitute "substantially identical securities", can't really speak to that though the fact one appears to be international and the other isn't might mitigate that being a concern. Again, haven't really done tax harvesting stuff (most of my "complicated security trading" experiences are with backdoor Roths and various stock option things), so not sure how much to trust my input here. If you want more info on wash sales in general believe the Schedule D instructions and Pub 550 go into it a bit more.

See, this is what I don't understand, regarding the "look back." I'm not a day trader, I'm investing for the long term. I put money in to a taxable account every month. You're saying TLH is impossible, and that prior times I've tried TLH it's been invalidated?

# ? Oct 17, 2019 18:04

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# ? May 13, 2024 16:01

SiGmA_X: May 3, 2004; SiGmA_X

Residency Evil posted:

See, this is what I don't understand, regarding the "look back." I'm not a day trader, I'm investing for the long term. I put money in to a taxable account every month. You're saying TLH is impossible, and that prior times I've tried TLH it's been invalidated?

What funds are you exchanging? TLH is both possible and common.

# ? Oct 19, 2019 20:22

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

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