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Oh hey, we have a thread for taxes. I’m gonna have to file for an extension this year. My CPA and I have been twiddling our thumbs waiting on my job’s finance department for literal weeks for clarifications on my W-2, and it’s only three weeks out from the deadline that we’re learning that the W-2 needs to be corrected and it’ll take weeks for ADP to fix it. This is so loving frustrating. Remind me again what I need to do by May 17th? I know that you still need to pay your tax bill by then, does that require the amount paid to be accurate? If I’m currently working with a CPA, should I use FTU anyway to pay some amount of money, and that would be enough to stay in the IRS’s good graces? Pollyanna fucked around with this message at 16:02 on Apr 21, 2021 |
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Apr 21, 2021 15:56
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ADP sucks mega balls so condolences. If you think you’ll owe pay as close as you can get or even over that with your extension to avoid failure to pay penalties. Remember the penalty is some percent of the tax owed so if you end up only owing a couple bucks the penalty will be minuscule. You can google the percentage I can’t remember them off hand.
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Apr 21, 2021 16:11
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Alright, in that case, depending on what my CPA says about the situation I’m going to use FreeTaxUSA for now with all the stock options-relevant info, pay what I can, hope to god it’s accurate enough to prevent the IRS from getting mad, and then push the actual returns/filing til later under guidance from my CPA. Still gonna get an extension though cause ugh. gently caress you, Intuit.
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Apr 21, 2021 17:01
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Also the CPA wants my routing and account number for the payment is that normal or am I getting scammed.
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Apr 21, 2021 17:35
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Pollyanna posted:Alright, in that case, depending on what my CPA says about the situation I’m going to use FreeTaxUSA for now with all the stock options-relevant info, pay what I can, hope to god it’s accurate enough to prevent the IRS from getting mad, and then push the actual returns/filing til later under guidance from my CPA. Still gonna get an extension though cause ugh. This is the dumbest course of action. Let your CPA handle this - you're paying them to do it and it will cost you MORE if you go around their back and do dumb things. Tell them to file an extension based on their estimation, pay what the extension says you owe, and move on with your life. Pollyanna posted:Also the CPA wants my routing and account number for the payment is that normal or am I getting scammed. For the IRS to pay you? Of course.
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Apr 21, 2021 17:36
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H110Hawk posted:This is the dumbest course of action. Let your CPA handle this - you're paying them to do it and it will cost you MORE if you go around their back and do dumb things. Tell them to file an extension based on their estimation, pay what the extension says you owe, and move on with your life. Good thing you’re here! My CPA said the same. They will handle it, I’ll send them the data they need, then extension + refund depending. quote:For the IRS to pay you? Of course. I getcha, I just get nervous whenever routing numbers come up.
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Apr 21, 2021 17:49
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Pollyanna posted:I getcha, I just get nervous whenever routing numbers come up. Have Ally Bank? Or Capital One 360? I have a dedicated account there for "so you insist on using my account and routing number." It's got $100 and no overdraft protection. But for the IRS forms themselves I just put my normal bank account, you give everyone this information any time you write a check. It's insane, but there are a lot of federal laws that cover you - unlike Zelle.
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Apr 21, 2021 17:57
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Yep, I’ll be fine there!
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Apr 21, 2021 18:04
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The CPA basically suggested paying the $23k fed + $5k state tax payments and filing an extension, then using the corrected W-2 income to file the return later on and relying on the refund to get the money back. So I’ll do as they say. Smarts, but at least I’ll be getting that money back while my work gets its loving poo poo together. Update: Said CPA seems to have gotten confused by the stock option sales: quote:When I compare the paystub to Etrade, there’s $40K of stock option income that was under reported on your W-2. I can’t tell if any income tax was withheld on the $40K, so to be safe, I’m assuming no taxes were withheld. which is where I got confused too. I did ask if he incorporated the adjusted cost basis in his calculations, but he didn’t say one way or another. On the one hand, I know I should leave this well enough alone, but on the other, I sure hope I’m not working with a CPA that knows as much as or less than I do. Pollyanna fucked around with this message at 23:19 on Apr 21, 2021 |
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Apr 21, 2021 19:53
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Pollyanna posted:Also the CPA wants my routing and account number for the payment is that normal or am I getting scammed. Yeah, direct debit is a common thing for payment, and this year probably safer than mailing the payment in really. Also, to be blunt, your CPA knows enough personal information just by working with you an account number is practically minor in the scheme of things really if you have scammer worries. Pollyanna posted:The CPA basically suggested paying the $23k fed + $5k state tax payments and filing an extension, then using the corrected W-2 income to file the return later on and relying on the refund to get the money back. So I'll do as they say. Smarts, but at least I'll be getting that money back while my work gets its loving poo poo together. If I read this right, the CPA's concern is if your work withheld tax on the exercise of the options (basically the difference between the option value and the stock's value on the date of exercise, which is included on the W-2 as income), which given they obviously screwed something up on said W-2 isn't a bad thing for them to be concerned about. The adjusted cost basis thing applies to the actual sale, not the exercise stuff (it basically takes the W-2 exercise stuff into account so you don't get double-taxed on the bit that should be on the W-2). So, from my admittedly outside perspective here, it's not a screwup by the CPA but prudent paranoia in case your job really messed things up, which would not be a first with employers and stock options in my experience definitely. Can't say the CPA ISN'T wrong of course, but at least over-withholding is less painful than under-withholding as mistakes go.
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Apr 24, 2021 07:47
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Fair point. I’m definitely worrying too much, I think. I just hate it when taxes get complicated 
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Apr 24, 2021 14:38
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A few years ago when it was the first year basically every option was on the table (espp qd, espp dd, ISO's, nso's, rsu's) I got two w-2c's, some people got 3. poo poo happens. Next two years I got 0 w-2c's.
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Apr 24, 2021 15:25
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Agronox posted:Taxpayer (me) drew salary from a New York employer for the entirety of 2020 but does not live there, and in fact hadn't set foot in the state all year. Hmm, I work for a NY company but work virtually from Connecticut (even pre-pandemic) and I don’t have anything to do with NY state taxes. The only time I had to deal with them at all was when they incorrectly withheld NY taxes when I first started and I had to file to get them back. What’s different about this situation? Or am I supposed to be filing a NY tax return for some reason? Edit: I guess the OP normally working in NY is the difference. smackfu fucked around with this message at 21:25 on Apr 24, 2021 |
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Apr 24, 2021 21:21
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smackfu posted:Hmm, I work for a NY company but work virtually from Connecticut (even pre-pandemic) and I don’t have anything to do with NY state taxes. The only time I had to deal with them at all was when they incorrectly withheld NY taxes when I first started and I had to file to get them back. NY uses the "convenience" rule and not the "physical presence" rule when determining what income is subject to NY taxation. The jist of it seems to be that if your employer lets you work from home out of convenience and not necessity, then your income is still consider NY-sourced and subject to NY state taxes. There's a bunch of rules and tests for what kind of home office would qualify as a necessary out-of-state work location that you can look up. I think a situation where you're like sent to New Hampshire to provide long-term on-site tech support to some logging company and your employer reimburses you for your home office gets you out of NY state taxes. But if you work from home just because your work can just be done from anywhere and your employer doesn't really care where you are, then NY will want a slice of the pie. So it's possible that you could have been required to file a NY tax return this entire time. Perhaps they'll come knocking one day demanding back taxes, and maybe then you can see if you want to be the test case to challenge the constitutionality of it.
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Apr 25, 2021 01:37
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smackfu posted:Hmm, I work for a NY company but work virtually from Connecticut (even pre-pandemic) and I don’t have anything to do with NY state taxes. The only time I had to deal with them at all was when they incorrectly withheld NY taxes when I first started and I had to file to get them back. If his employer does not have a presence in CT, it's difficult for them to have one there without subjecting themselves to a lot of other requirements (CT filing, legal compliance, income tax, .etc). Congress probably ought to step in and step up a framework for this scenario but they've yet seemed interesting in do so.
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Apr 25, 2021 04:17
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I'll start by saying I have no experience with US taxes but am trying to help out a friend who also doesn't have any prior experience. My friend bought some USO last year and just got a Schedule K-1/1065 Form showing some miniscule amount under interest income & ordinary dividends. Something like  which didn't end up in her brokerage account. I suppose these are gains which weren't actually dispersed by the fund but are liable for taxation by the fund owners?Some googling on my part found a few sites that advises non-resident aliens getting this form to file a 1040NR (non-resident) return to the IRS. But I also saw some sites that said you needn't file a return if total income is less than a certain amount - something like $12,000. Not sure if this means US-derived income only or total worldwide but I find it hard to believe that the US would have jurisdiction to tax all your other income for owning a few shares of an Exchange Traded Commodity fund. I don't think she's even stepped foot in the US before and lives in a tax jurisdiction where filings are literally 100x simpler than the US' and also doesn't tax capital gains or dividends. So reading about US tax filings is crushingly complex for her and she's panicking now about what she needs to do after receiving this form. Anyone have any advice on this situation? edit: I just realised that my random Monty Python joke I picked for my text 17 years ago has relevance to what I'm posting for the first time ever. Banana Canada fucked around with this message at 19:23 on Apr 25, 2021 |
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Apr 25, 2021 19:19
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The US absolutely claims the right to tax all US source income. Your friend should have provided the fund with a W-8BEN when she subscribed. Interest and dividends are subject to 30% withholding unless reduced by a tax treaty (or certain kinds of interest, like portfolio interest and bank interest, which are exempt), which she would have claimed on the W-8BEN. Gains, unless the are effectively connected with the conduct of a US trade or business or are derived from real property, are generally foreign source and not taxed. Check the K-1 footnotes, if there is any effectively connected income allocated to your friend, she should file a Form 1040NR (nonresident return). State filings may also be required. If she doesn't want to deal with US taxes, I recommend she get out of the investment and avoid partnership investments that generate US income.
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Apr 25, 2021 19:51
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Thanks. I'm seeing her later this week and will have a look at the form. I'll check and see if there is any withholdings shown in the form but she lives in a jurisdiction that has no tax treaty with the US so my understanding is that it's the full 30% withheld, with or without W8-BEN on her record, and if it is anything like my experience with dividends, it should already be done by the fund. From what she told me, it sounds like it is showing $10 under interest income and $2 under ordinary dividends. Is there any allowances from the IRS to not require a filing for such miniscule amounts?
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Apr 25, 2021 20:32
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What do I do if I’ve already fully-funded my Roth for 2021 then my income ends up over the contribution limit? Separate question: if I cash out long-term stocks for a house downpayment, do the capital gains count as “income” toward the Roth limit?
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Apr 26, 2021 03:50
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eddiewalker posted:What do I do if I’ve already fully-funded my Roth for 2021 then my income ends up over the contribution limit? 1. You will have to tell your investment guy/website to recharacterize the 2021 contribution as a Trad IRA contribution instead of a Roth. Then after that clears, transfer it back and it will go into your 2021 taxes as a Trad IRA contribution and a backdoor Roth. 2. Income is income, capital gains will count towards the limit.
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Apr 26, 2021 04:00
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withak posted:1. You will have to tell your investment guy/website to recharacterize the 2021 contribution as a Trad IRA contribution instead of a Roth. Then after that clears, transfer it back and it will go into your 2021 taxes as a Trad IRA contribution and a backdoor Roth. Is this something I can wait until tax time next year to take care of?
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Apr 26, 2021 04:07
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eddiewalker posted:Is this something I can wait until tax time next year to take care of? Presumably, because you won’t know your income until then. Or maybe it needs to be in the calendar year IDK.
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Apr 26, 2021 04:11
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Since you can contribute till you pay your taxes, it makes sense to me. Thanks.
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Apr 26, 2021 04:17
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Ancillary Character posted:So it's possible that you could have been required to file a NY tax return this entire time. Perhaps they'll come knocking one day demanding back taxes, and maybe then you can see if you want to be the test case to challenge the constitutionality of it. Definitely not going to pull on this thread any more!
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Apr 26, 2021 13:31
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These may sound like dumb questions, but I'm an idiot when it comes to taxes. I'm trying to look for a good CPA and wondering what to expect for next year's taxes. Previously, we've always done our own, but there are some considerations for next year that I don't know how to file/what to ask a CPA about regarding deductions. I did the taxes this year and took the standard deduction. We just bought a second house to rent to family for below market rent. We put 20% down and the mortgage is ~$900/mo, but they (in-laws) are paying us $500/mo. I've always partially worked from home, but since COVID, my wife now works 100% from home. We expect to have about $50,000 this year on a 1099-NEC and I'm at about $8,000 in short term cap gains for the year. I'd like to ask a CPA if we should be paying quarterly now, or with WFH and the second property if that will be necessary. And then to retain their services in the future. Is it appropriate to start looking for a CPA for next year to ask them all the stuff above and whether I even filed appropriately this year? I know I don't owe anything extra, but it's possible I overpaid the IRS for 2020.
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Apr 26, 2021 15:49
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Cacafuego posted:These may sound like dumb questions, but I'm an idiot when it comes to taxes. I'm trying to look for a good CPA and wondering what to expect for next year's taxes. Previously, we've always done our own, but there are some considerations for next year that I don't know how to file/what to ask a CPA about regarding deductions. I did the taxes this year and took the standard deduction. I would ask them about the particulars of if they understand how to handle the complicated part of your taxes (non-arms-length below market rental income.) If you like their answers, give them your 2020 return and ask them to review it after may 15th. June is perhaps the perfect time to engage them, then you have them ready to go for 2021 and they can sort your quarterly payments and such, and set you up for the future. If you have Facebook, look for a local group, and ask in there. It's how I got my list of names, which I called and just asked. The first one said without hesitation "oh they hosed up adjusting your espp income based on your w-2 so it was double taxed? Yeah that's a pain but easy." That sold me. I paid $975 this year.  Yours won't be this expensive in all likelihood unless you want them to do some bookkeeping on your behalf. The more organized you are the less it costs.
H110Hawk fucked around with this message at 17:24 on Apr 26, 2021 |
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Apr 26, 2021 17:20
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H110Hawk posted:I would ask them about the particulars of if they understand how to handle the complicated part of your taxes (non-arms-length below market rental income.) If you like their answers, give them your 2020 return and ask them to review it after may 15th. June is perhaps the perfect time to engage them, then you have them ready to go for 2021 and they can sort your quarterly payments and such, and set you up for the future. Exactly what I was looking for, thank you!
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Apr 26, 2021 19:17
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Banana Canada posted:Thanks. I'm seeing her later this week and will have a look at the form. I'll check and see if there is any withholdings shown in the form but she lives in a jurisdiction that has no tax treaty with the US so my understanding is that it's the full 30% withheld, with or without W8-BEN on her record, and if it is anything like my experience with dividends, it should already be done by the fund. Sounds like FDAP rather than ECI, which should just be 30% withholding and filing should not be required. If it is ECI, then there is not really a threshold. I mean realisticly no one is going to give a poo poo at these amounts, but since you asked, I'm just telling you what you should do. The W-8BEN also lets the fund know you're foreign and allows for the zero rate on portfolio interest and is used for FATCA documentation, so you should generally always provide.
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Apr 26, 2021 23:22
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Hey all, hopefully a simple question. Friend of mine, not a US citizen, lives abroad, is receiving payments from a US company in a US bank account. HR has told her that they need to withhold something like 30% of the deposited amounts but weren't clear on why. My guess is that this is Backup Withholding since she's a non-resident alien. Is there a) anything she can do to avoid the withholding, b) anything she should be doing to ensure the IRS actually releases the amounts withheld?
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Apr 27, 2021 00:03
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Ur Getting Fatter posted:Hey all, hopefully a simple question. she needs to prepare Form W-8BEN (or more realistically hire someone to prepare it for her)
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Apr 27, 2021 01:10
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Agreed. Backup is like 24%, so maybe they're just confused. In any case, they should not be withholding. Location of bank account and company is not really relevant, the income should be sourced to where the services are performed. No idea if the company needs to withhold for local taxes and social security or if she might constitute a permanent establishment for her employer. Usually I recommend a contractor relationship in these situations. The W-8BEN is pretty simple, but let us know if she has questions. She can claim a refund for amounts withheld by filing a US tax return (1040-NR).
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Apr 27, 2021 03:58
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Thanks for the input! I asked a bit more, and she's apparently serving as director for a local subsidiary of the US parent company. https://www.irs.gov/individuals/international-taxpayers/nra-withholding Would this be the relevant reading?
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Apr 27, 2021 18:09
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Ah, then she is an employee, but of the local sub. Why is US withholding coming up at all? I suppose she must be getting paid by the parent directly, but in any case withholding should not apply (at least US, local payroll withholding might be required, depending on the country). W-8BEN should be the right form. Edit: Yes, for the link, but none of that should apply to foreign source personal services income.
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Apr 27, 2021 23:07
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It appears we now have a game for this thread: https://www.nintendo.com/games/detail/turnip-boy-commits-tax-evasion-switch/
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Apr 28, 2021 00:42
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PatMarshall posted:Ah, then she is an employee, but of the local sub. Why is US withholding coming up at all? I suppose she must be getting paid by the parent directly, but in any case withholding should not apply (at least US, local payroll withholding might be required, depending on the country). W-8BEN should be the right form. I'm starting to think that HR is treating her as if she's performing services for the company within the US or something like that. I'll tell her to press them for an explanation and point her to an accountant if the W8BEN doesn't fix things. Thanks!
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Apr 28, 2021 21:09
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So trying to efile TurboTax and it says my 2019 agi doesn’t match and rejects it but it is the same amount as on my irs transcript? What am I messing up?
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Apr 29, 2021 01:28
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Elephanthead posted:So trying to efile TurboTax and it says my 2019 agi doesn’t match and rejects it but it is the same amount as on my irs transcript? What am I messing up? 1) Was your AGI adjusted subsequent to your original return filing, such as filing an amended return? If so, the adjusted AGI might not show on the return transcript but should be visible on an account or record of account transcript. 2) Was your 2019 return fully processed after the end of 2020? The database for the AGIs is compiled for the efiling system at the end of the prior year (so for example, efiling systems in 2021 are only using the AGI information as it was available in IRS records at the end of 2020), so if there was a delay in processing 2019 and it wasn't finished until 2021 the 2019 AGI wouldn't be in the efile system. In that case, you'd use a $0 for the AGI instead. I'd check for either of those things to see if they might apply before trying to submit again. After a certain number of failed attempts due to an AGI mismatch the efile system may block any further submissions, forcing you to file by print and that's a morass you want to avoid if at all possible right now.
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Apr 29, 2021 01:49
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The zero did it. I had to paper file last year and that must have borked it.
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May 2, 2021 19:14
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I worked remotely in 2020. I was physically in Massachusetts for the whole year but my employer initially considered me working out of their New York office and withheld new york tax, and then switched to considering me working out of their Massachusetts office and withheld Massachusetts tax. Two questions: 1) I'm not sure whether I might technically meet the criteria to not pay NY taxes working remotely, since they're somewhat confusing, but I'd rather not worry about this and just go along with how the tax was withheld and file a non-resident return with NY for the part of the year when my employer was withholding NY tax; should this be okay? 2) I didn't really think about this until now, but rather than sending me W2s with the income divided between new york and Massachusetts, my employer sent me two W2s which each show all of my income as New York and Massachusetts income respectively. (In other words, rather than being like one W2 showing 20k NY state income and one showing 80k MA income it's like one showing 100K NY income and one showing 100K MA income). I'm using Turbotax, and it seems like based on the way it works this means I can only enter one of the W2s at a time, because if I enter both than it will double my income for the state tax returns, but if I enter the Massachusetts W2 in the W2 screen in Turbotax (and therefore not the New York W2), it won't let me efile my New York taxes because this is only allowed if the withholdings come from the W2. Should I just accept this and mail in my New York tax form? Or is it potentially problematic that my employer sent separate W2s showing my full income both NY and MA income (will this cause NY to think all my income was NY income)? I guess I could try doing it the other way (entering the NY W2 in the W2 screen and then adding the MA witholdings separately) and see if this lets me efile both states but this whole situation is making me slightly nervous. Also, I didn't think about this, but there's no way this is a screwup on the part of my employer that's going to cause the IRS to think I made double the amount of income, right? mystes fucked around with this message at 18:48 on May 3, 2021 |
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May 3, 2021 17:24
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mystes posted:I worked remotely in 2020. I was physically in Massachusetts for the whole year but my employer initially considered me working out of their New York office and withheld new york tax, and then switched to considering me working out of their Massachusetts office and withheld Massachusetts tax. Matching what the employer did will generally not get you into trouble honestly, those are the numbers the IRS and states are going by after all. quote:2) I didn't really think about this until now, but rather than sending me W2s with the income divided between new york and Massachusetts, my employer sent me two W2s which each show all of my income as New York and Massachusetts income respectively. (In other words, rather than being like one W2 showing 20k NY state income and one showing 80k MA income it's like one showing 100K NY income and one showing 100K MA income). The reporting of all the income as taxable in MA is correct, you lived there the whole year so it's taxable there as a resident. New York has the obnoxious rule of reporting the total income in the W-2 even if it's not all taxable there, which is why they have the full amount as income there. Now, important note: you DO NOT have 2 W-2s, you have a single W-2 issued on multiple forms because you had more than one state. I'm not familiar with Turbotax's entry design since I use a different software package as a professional, but generally you enter it as one W-2, but where the state info is you can add each state's information separately. Don't do two separate entries, that will definitely screw up your US federal tax by counting the income twice. For New York you may have to manually adjust the income amount to the correct one because of that aforementioned "New York demands the full number there" issue; my system lets me edit the actual New York taxable income on the return but keep the W-2 entries, but Turbotax might not to avoid non-professionals screwing things up. So I suggest putting the W-2 in as one entry, then see if it lets you do multiple states on the same page and correct the New York income number to the right amount of income for New York (keep the state withholding the same obviously). Anybody with more familiarity with Turbotax want to chime in to confirm if this works?
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May 3, 2021 19:36
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