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SiGmA_X posted:What funds are you exchanging? TLH is both possible and common. Yeah, only time it’s an issue is if it’s the same or “substantially similar”, which I double checked and according to here at least different funds from the same provider are not in fact under that definition so you’re fine there. As for identical/similar funds, it’s only an issue if you have a purchase within 30 days of a sale, that’s plenty of time in the year to sell for a loss.
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Oct 21, 2019 17:37
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MadDogMike posted:Haven't messed much with this for my clients so take this with a grain of salt, but for this - BlackMK4 posted: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. Thanks!
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Oct 21, 2019 19:00
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When "should" we get an accountant? It looks like we're going to be itemizing this year and will have our usual backdoor roths, mortgage, a solo 401k, as well as some investments that were sold when my wife's parents passed away. Thankfully we're only filing in 1 state this year as opposed to 3, and majority of our income for now is on W2s. Sitting down on a crappy spring Sunday to fill out some forms in Turbotax isn't something I dread (and I kind of enjoy it), but I'm beginning to worry that I could be missing
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Oct 22, 2019 12:26
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Residency Evil posted:When "should" we get an accountant? It looks like we're going to be itemizing this year and will have our usual backdoor roths, mortgage, a solo 401k, as well as some investments that were sold when my wife's parents passed away. Thankfully we're only filing in 1 state this year as opposed to 3, and majority of our income for now is on W2s. Sitting down on a crappy spring Sunday to fill out some forms in Turbotax isn't something I dread (and I kind of enjoy it), but I'm beginning to worry that I could be missing
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Oct 22, 2019 14:34
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Residency Evil posted:When "should" we get an accountant? It looks like we're going to be itemizing this year and will have our usual backdoor roths, mortgage, a solo 401k, as well as some investments that were sold when my wife's parents passed away. Thankfully we're only filing in 1 state this year as opposed to 3, and majority of our income for now is on W2s. Sitting down on a crappy spring Sunday to fill out some forms in Turbotax isn't something I dread (and I kind of enjoy it), but I'm beginning to worry that I could be missing At the risk of undercutting my profession, honestly if you’re comfortable with what you’re doing you don’t NEED to go to a preparer. If I had to pick a “professional help is needed” line I’d probably pick business/rental property being the threshold since I see those as the biggest sources of errors/ignorance in new clients, but I know a bunch of people who handle it just fine so who knows. I suppose I owe my bosses a little nod after undercutting our value like that, so I should mention we do have a free service at H&R Block called Second Look where we basically review prior returns/tax documents and see if we agree with your results. We generally only charge if you want to do an amendment because of any mistakes we find. You can go to one of our offices or you can check other preparers in the area since I imagine other groups might offer similar reviews. So if you aren’t sure you’re doing it right, you can get double checked. Hoodwinker posted:From my own personal standpoint, the need for an accountant comes up not when I have sufficient complexity in my tax situation, but when I lack the time and interest to become educated and capable of handling that complexity myself. Yeah, apart from the real complicated stuff the main advantage is not having to worry about knowing what needs to be done. Kind of like plumbing, including the potential poo poo if you overestimate your personal skill at doing it on your own  .
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Oct 22, 2019 15:14
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Thanks. Out of curiosity, for those people using TurboTax/taxes on their own, what percentage of them have serious errors, and what’s the scale of those errors percentage wise?
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Oct 22, 2019 15:20
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Residency Evil posted:Thanks. Out of curiosity, for those people using TurboTax/taxes on their own, what percentage of them have serious errors, and what’s the scale of those errors percentage wise? Get a cpa to do it and never look back. It's been great. Don't go to h&r block (to undercut the above poster's business.) it's basically double-triple the cost of doing it with TurboTax once you have paid all their dumb upsells to actually file your taxes. Plus you aren't encouraging intuit.
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Oct 22, 2019 16:23
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Lol Intuit has professional software used by tons of CPAs. There’s a good chance Intuit got your money anyway.
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Oct 22, 2019 17:02
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sale on Banksy art posted:Lol Intuit has professional software used by tons of CPAs. There’s a good chance Intuit got your money anyway. I know.  My last guy I actually asked him what he used to check.
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Oct 22, 2019 17:27
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Residency Evil posted:Thanks. Out of curiosity, for those people using TurboTax/taxes on their own, what percentage of them have serious errors, and what’s the scale of those errors percentage wise? Most of the ones I’ve seen have either been leaving something off they didn’t know had tax consequences or omitting some sort of credit/expense. Couldn’t really tell you percentages since obviously I mostly see the people who screwed it up. How severe kind of varies a bunch, though at least a lot of them result in just lower refunds rather than suddenly owing a bunch of $$. Most common I recall is people outright leaving depreciation off expenses, probably since most people give you a deer in the headlights look if you even mentioned the word depreciation so they have no way of noticing they screwed it up. H110Hawk posted:Get a cpa to do it and never look back. It's been great. Don't go to h&r block (to undercut the above poster's business.) it's basically double-triple the cost of doing it with TurboTax once you have paid all their dumb upsells to actually file your taxes. Plus you aren't encouraging intuit. Honestly last I checked most returns done by a preparer tend to charge pretty close to the same, which is always a bunch more than just do-it-yourself software. Like the aforementioned plumbing example, you’re paying extra to have a guy who does more of the work in a year than you do generally do in your lifetime perform it, so it’s a question of the money vs. experience/time for you like all professional work. All I can say to the people who devalue what we do is they generally have NO idea how much a screwup costs in time and frequently money until the scary IRS or state letter shows up. God knows I’ve had tons of people swear they’re not doing it again themselves after I had to fix it.
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Oct 22, 2019 23:24
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MadDogMike posted:Honestly last I checked most returns done by a preparer tend to charge pretty close to the same, which is always a bunch more than just do-it-yourself software. Like the aforementioned plumbing example, you’re paying extra to have a guy who does more of the work in a year than you do generally do in your lifetime perform it, so it’s a question of the money vs. experience/time for you like all professional work. All I can say to the people who devalue what we do is they generally have NO idea how much a screwup costs in time and frequently money until the scary IRS or state letter shows up. God knows I’ve had tons of people swear they’re not doing it again themselves after I had to fix it. Yeah, I decided once I got well past 1040A land to just go all in having someone else do it. Anyone who is squarely 1040-EZ (I realize they recently changed a bunch of stuff here) should DIY it because why not, but if your life is complicated, forget it. Especially for mr evil up there and his doctor income. Just mail it all off to a CPA and be done with it.
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Oct 22, 2019 23:52
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H110Hawk posted:Yeah, I decided once I got well past 1040A land to just go all in having someone else do it. Anyone who is squarely 1040-EZ (I realize they recently changed a bunch of stuff here) should DIY it because why not, but if your life is complicated, forget it. Especially for mr evil up there and his doctor income. Just mail it all off to a CPA and be done with it. 1040 EZ and 1040 A are no more
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Oct 23, 2019 03:50
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Any tips on how to find a “good“ accountant? I’ve heard of people saying their accountants had no idea how to deal with a back door Roth. And what to expect to pay?
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Oct 23, 2019 12:17
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Residency Evil posted:Any tips on how to find a “good“ accountant? I’ve heard of people saying their accountants had no idea how to deal with a back door Roth. And what to expect to pay? As a CPA, it's tough. I know many CPAs in my market that are still spitting out trash work regularly. First and foremost the person should be knowledgeable about 80% of the the common questions that come up. If they are always saying they need to look it up then you should be worried. Big firms don't always mean better work. Most CPAs don't do this but the first focus should be getting a taxpayer in compliance then the focus should shift to a more holistic approach and overall financial wealth (sometimes less tax isn't the best option). Be wary of a CPA who isn't comfortable being upfront about their fees, it means they are not proud of their work or are not comfortable with the work they are doing. Lord of Garbagemen fucked around with this message at 00:58 on Oct 24, 2019 |
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Oct 24, 2019 00:55
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Honestly, speaking as somebody whose general work this time of year often boils down to "fix other preparer's problems", it's kind of hard to predict who's a good preparer if you're coming off the street. I've seen incredible big firm preparers and CPAs, and I've seen terrible ones, and even the multi-decade highly trained pros have the occasional issue I've needed to fix (not a LOT of them of course, but that seldom comforts the one poor unlucky person it is). All I can suggest is the usual approaches to finding any professional help in an area you're unfamiliar with - check with people you trust, particularly if they've had similar problems, for advice on who they see; ask what questions you need to feel comfortable with them; don't hesitate to ask multiple possibilities, and make sure you're up front with what your situation is so whoever you go to can avoid sticking the work on somebody unfamiliar with it. And definitely if you find somebody you like, stick with them so you can avoid going through the routine again, or at minimum ask them who they'd recommend.
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Oct 24, 2019 03:09
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Probably more complicated question than this thread is for, but since its early in the process, I thought I'd start here. My father bought an apartment in Brazil in the 90s, when the US$ was worth 0.8 reais. When my father passed away in 08 (he was a Brazilian citizen living in Brazil), my sister started living in an apartment that, in terms of ownership was both mine and hers. I never charged her rent or anything like that, so my understanding is that I did not need to declare anything here in the US as a US citizen (became one in 2017). Now my sister wants to buy me out, as she got married and all that jazz. Because of currency devaluation (the US$ is now worth 4 reais), there was no capital gains in this transaction. I know that I cannot claim losses from this sort of transaction. But do I still need to declare it, even if it was a loss? If so, what form?
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Oct 26, 2019 19:03
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joepinetree posted:Probably more complicated question than this thread is for, but since its early in the process, I thought I'd start here. You do need to report it on Form 8949 and Schedule D, though as you noted there won't be any taxable income from it probably and you can't claim the loss since it's to a related party. Make sure you use the proper US/Brazilian dollar conversion at the time of the inheritance to work out the basis and cost it sold at (sound like you have that, but you can check the links here if you need to), but otherwise it works just like a US property. Since it's to a relative, per the IRS instructions for Schedule D you enter it on the Form 8949 part II with F marked at the top, on the line with the property sale you put code L in box f and the amount of the loss you can't deduct in box g. Important to do this mainly so the IRS can't possibly come back and think you sold at a profit to your sister, though to be fair I doubt they would probably hear about it from a property in Brazil since there's no 1099-S sale of home form ever issued there (man, the number of people I see coming in with heart attacks because some idiot issued a 1099-S without telling them and the IRS promptly bills them for the tax on an additional couple hundred thousand in "income" that was never reported because it was the sale of a primary residence and you don't include that without a profit or a 1099-S).
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Oct 27, 2019 18:49
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MadDogMike posted:You do need to report it on Form 8949 and Schedule D, though as you noted there won't be any taxable income from it probably and you can't claim the loss since it's to a related party. Make sure you use the proper US/Brazilian dollar conversion at the time of the inheritance to work out the basis and cost it sold at (sound like you have that, but you can check the links here if you need to), but otherwise it works just like a US property. Since it's to a relative, per the IRS instructions for Schedule D you enter it on the Form 8949 part II with F marked at the top, on the line with the property sale you put code L in box f and the amount of the loss you can't deduct in box g. Important to do this mainly so the IRS can't possibly come back and think you sold at a profit to your sister, though to be fair I doubt they would probably hear about it from a property in Brazil since there's no 1099-S sale of home form ever issued there (man, the number of people I see coming in with heart attacks because some idiot issued a 1099-S without telling them and the IRS promptly bills them for the tax on an additional couple hundred thousand in "income" that was never reported because it was the sale of a primary residence and you don't include that without a profit or a 1099-S). I believe you cannot receive a step up on DOD on non US property. Also, he has likely tripped Fincen requirements (unless the money was shuffled around carefully and never deposited into a foreign bank account).
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Oct 30, 2019 00:00
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Lord of Garbagemen posted:I believe you cannot receive a step up on DOD on non US property. Also, he has likely tripped Fincen requirements (unless the money was shuffled around carefully and never deposited into a foreign bank account). The situation only gets complicated if he partially owned the property before inheriting the rest when his dad died. Otherwise you get the step up like any inherited property.
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Oct 30, 2019 00:59
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sale on Banksy art posted:The situation only gets complicated if he partially owned the property before inheriting the rest when his dad died. Otherwise you get the step up like any inherited property. Why would he get step up (or down)? The decedent is a nra, the property is not subject to possible US estate filing requirements. Because it is not subject to US estate, it does not meet section 1014 for step up or step down.
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Oct 30, 2019 14:24
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Lord of Garbagemen posted:Why would he get step up (or down)? The decedent is a nra, the property is not subject to possible US estate filing requirements. Because it is not subject to US estate, it does not meet section 1014 for step up or step down. Double checked, IRS apparently ruled for foreign real property like this you still get the step up (Revenue Ruling 84-139, 1984-2 C.B. 168 for the specific one), so he still uses the FMV of the property on the date of death for basis. You're right about the FBAR though; Joepinetree, if the money went to an account you controlled overseas and the total was over $10,000 USD you need to file something around the same time as next year's tax return called FinCen Form 114 or more commonly the FBAR. There's no tax on it per se but if you have any non-US bank accounts over that value at any point during the year the Treasury Department wants the information about the account in question to confirm you aren't doing anything funny to hide money outside the USA. It's pretty much "type your info, type the bank info", you can do that here if need be. Note you only do this if it was an account outside the US; if they paid you directly to a US account or by a check you cashed here or something this wouldn't apply. If the amount is over $50,000 USD, you also include a Form 8938 with the actual tax return, though at the exchange rate we're talking about here it wouldn't surprise me if that's not an issue.
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Oct 30, 2019 21:05
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MadDogMike posted:Double checked, IRS apparently ruled for foreign real property like this you still get the step up (Revenue Ruling 84-139, 1984-2 C.B. 168 for the specific one), so he still uses the FMV of the property on the date of death for basis. You're right about the FBAR though; Joepinetree, if the money went to an account you controlled overseas and the total was over $10,000 USD you need to file something around the same time as next year's tax return called FinCen Form 114 or more commonly the FBAR. There's no tax on it per se but if you have any non-US bank accounts over that value at any point during the year the Treasury Department wants the information about the account in question to confirm you aren't doing anything funny to hide money outside the USA. It's pretty much "type your info, type the bank info", you can do that here if need be. Note you only do this if it was an account outside the US; if they paid you directly to a US account or by a check you cashed here or something this wouldn't apply. If the amount is over $50,000 USD, you also include a Form 8938 with the actual tax return, though at the exchange rate we're talking about here it wouldn't surprise me if that's not an issue. I guess its a good thing I haven't had that situation come up before. I was wrong and would have given bad advice.
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Oct 30, 2019 21:53
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Lord of Garbagemen posted:I guess its a good thing I haven't had that situation come up before. I was wrong and would have given bad advice. This is why when I meet a potential client I tell them if you don't choose to work with me, please at least choose another expat specialist. Do not under any circumstances use dad's tax preparer back home.
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Oct 31, 2019 01:07
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How should I budget for taxes as a writer (USA)? I'm employed full-time at a regular job, but I also earn royalties on the side. Currently my plan is to pay 30% estimated tax (state and federal) online the second I get my quarterly royalty payments, and then enjoy the rest as fun money, but perhaps that is wrong and bad. I definitely plan to ask a tax professional before January, but I want to make sure I'm taking the correct first steps now.
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Oct 31, 2019 16:46
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Blue Scream posted:How should I budget for taxes as a writer (USA)? I'm employed full-time at a regular job, but I also earn royalties on the side. Currently my plan is to pay 30% estimated tax (state and federal) online the second I get my quarterly royalty payments, and then enjoy the rest as fun money, but perhaps that is wrong and bad. I definitely plan to ask a tax professional before January, but I want to make sure I'm taking the correct first steps now. 30% of gross is definitely a good rule of thumb. Royalties can be tricky for writers, musicians, artists. Usually the royalties are subject to SE , there are a few weird circumstances where the royalties are not. Is this your first book?
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Oct 31, 2019 18:12
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Lord of Garbagemen posted:30% of gross is definitely a good rule of thumb. Royalties can be tricky for writers, musicians, artists. Usually the royalties are subject to SE , there are a few weird circumstances where the royalties are not. Is this your first book? No--and I low-balled the last one and got boned come April  So I'm definitely being more conservative this time around. I'm hoping that if I throw 30% at taxes the second I get the check, I'll be much safer. The online system makes that pretty easy.
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Oct 31, 2019 19:56
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Blue Scream posted:No--and I low-balled the last one and got boned come April If your effective ordinary tax rate is over roughly 18ish% you will want to increase that number.
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Oct 31, 2019 21:39
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Lord of Garbagemen posted:If your effective ordinary tax rate is over roughly 18ish% you will want to increase that number. Probably even better to consider marginal tax rate instead of effective since the royalty income can be thought of as stacked on top of the income from the full time job. If self employment taxes apply to the royalty income, 40-45% might be a safer target.
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Oct 31, 2019 22:04
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Blue Scream posted:How should I budget for taxes as a writer (USA)? I'm employed full-time at a regular job, but I also earn royalties on the side. Currently my plan is to pay 30% estimated tax (state and federal) online the second I get my quarterly royalty payments, and then enjoy the rest as fun money, but perhaps that is wrong and bad. I definitely plan to ask a tax professional before January, but I want to make sure I'm taking the correct first steps now.
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Nov 1, 2019 06:24
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moana posted:Have you already started a SEP or solo 401k? May be worth doing to save money on taxes if you are making enough with the royalties. I doubt I'll make enough--it's not a super popular genre. I'm mainly just hoping for a bit of extra cash that will help me and my gf save for some upcoming goals.
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Nov 1, 2019 18:16
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Lord of Garbagemen posted:I guess its a good thing I haven't had that situation come up before. I was wrong and would have given bad advice. Eh, everybody has something they don't know about in tax law, there's a reason this area supports lawyers who specialize in it. I've had plenty of clients bring up something I wasn't aware of until I investigated it myself; personal favorite was someone I knew in personal life brought up Medicaid waiver programs (program where you get paid to take of family members at home; they get a W-2 then have to write off the income with a special entry on line 21). Had never even heard of it, based on a semi-obscure IRS decision, but sure enough they were right. Then we had several other clients come in later who didn't know it and they and my officemates were AMAZED at my genius in knowing about something so obscure. Even got to write a letter explaining it to a state auditor who didn't understand the negative entry on line 21 of the federal return accompanying the state one  . Expertise only comes with being clueless the first time!Blue Scream posted:How should I budget for taxes as a writer (USA)? I'm employed full-time at a regular job, but I also earn royalties on the side. Currently my plan is to pay 30% estimated tax (state and federal) online the second I get my quarterly royalty payments, and then enjoy the rest as fun money, but perhaps that is wrong and bad. I definitely plan to ask a tax professional before January, but I want to make sure I'm taking the correct first steps now. There are tax calculators out there for self-employment you can try too, just search "self employment tax calculator" and there are about a million free ones out there you can use for a quick sanity check of your numbers.
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Nov 2, 2019 18:58
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Ah yes, that decision. You have to write off the income as non-taxable, but you can't use it to claim the EITC either.
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Nov 4, 2019 13:26
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sullat posted:Ah yes, that decision. You have to write off the income as non-taxable, but you can't use it to claim the EITC either. This might not be true anymore. In May, a taxpayer won in tax court on the argument that the Notice 2014-7 income is "earned income" that is includible in gross income, even though they excluded it from income as instructed in the Notice. The argument went that Section 32 uses "includible" instead of "included" in gross income, so the IRS deciding in Notice 2014-7 that taxpayers should exclude this income from AGI did not change the character of the income, it just provided an exclusion from taxation. I haven't seen any new guidance from the IRS about this issue yet. So it looks like the current state is that we adjust the income back out on Schedule 1 and include it as earned income for calculating the EITC.
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Nov 4, 2019 14:19
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Well, that is interesting. I look forward to guidance about this being communicated to processing centers and the tax practitioner community in a timely and accurate manner.
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Nov 4, 2019 14:36
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sullat posted:Well, that is interesting. I look forward to guidance about this being communicated to processing centers and the tax practitioner community in a timely and accurate manner. Is tax preparation so much fun? Hell, I still remember sitting through my required Internet work class on expiring tax law provisions right as Congress was debating extending them; nothing like wondering if everything you learned would be worthless a day or so later.
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Nov 5, 2019 01:54
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I am confused about foreclosure and it's tax reporting. I have a client who had a rental property foreclosed on him. He currently has not been forgiven for the mortgage debt but I think it is likely that will happen eventually. How do you report the situation where the foreclosure happens one year and the forgiveness of debt happens later? Normally the foreclosure is treated as a sale with the fair market value or the amount of debt discharged as the sale price. Do I report this year the foreclosure using FMV and then if he gets a 1099-C next year do I use the FMV as the cost basis for a sale with the discharged debt as the sale price? It seems entirely hosed if I have to report the forgiveness with no basis since the asset was already disposed of.
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Nov 13, 2019 18:02
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I have a small condo I rent out. I get along well with my tenant and he ended up referring me some work. We agreed on a referral fee equal to a month's rent. Any suggestions on how to best document this? I was thinking that he should just invoice me his referral fee and make a note in the invoice that payment would be "compensated with rent due for the month of December for property x". Or should I just wire him the money and have him pay rent as usual?
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Nov 22, 2019 16:16
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Ur Getting Fatter posted:I have a small condo I rent out. I get along well with my tenant and he ended up referring me some work.
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Nov 22, 2019 16:20
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Ur Getting Fatter posted:I have a small condo I rent out. I get along well with my tenant and he ended up referring me some work. My recommendation would be to pay him directly (and issue a 1099 if above the $600 threshhold) and have him pay you directly. This makes a simple paper trail, and you can take the payment you make to him as a commission expense. Also better to have the rental income than self-employment income if that's the nature of your business IMO.
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Nov 22, 2019 16:26
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saltylopez posted:My recommendation would be to pay him directly (and issue a 1099 if above the $600 threshhold) and have him pay you directly. This makes a simple paper trail, and you can take the payment you make to him as a commission expense. Thanks! No, my primary business has nothing to do with rental. I just happen to rent out this one condo I have and out of sheer coincidence my tenant has some work he could refer to me.
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Nov 22, 2019 16:34
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