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MadDogMike posted:Depends on if you have taxable income from traditional IRAs/401k or not, retirement alone doesn't always equal 0% capital tax rates. It also still adjusts your AGI so taxable social security might be a thing. But yeah, if the rest of your income is low enough you don't get taxed on long term capital gains, and retired people are more likely to hit that. If I have $10 million dollars of long term capital gains in my individual stock account, is it possible for me to realize all those gains without paying taxes by not working for a year so I have no AGI, and then sell the stocks, and then get a job again?
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Jun 14, 2021 09:12
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human garbage bag posted:If I have $10 million dollars of long term capital gains in my individual stock account, is it possible for me to realize all those gains without paying taxes by not working for a year so I have no AGI, and then sell the stocks, and then get a job again? No. The 0% tax rate on long term capital gains is only for the first $40,000. After that you pay 15% and then it maxes out at 20% ($441,000+ worth of income from long term capital gains).
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Jun 14, 2021 11:38
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Magic City Monday posted:No. I thought the tax rate on long term capital gains was determined by your income bracket?
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Jun 14, 2021 14:32
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The gains count as income.
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Jun 14, 2021 14:46
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Epi Lepi posted:If you should have been on Medicaid you may have to pay back some amount of your credit but not the whole thing, last I checked it was capped at $600 but that may change based on family size or just change for 2021. MadDogMike posted:Uh, not in my personal experience? I was going entirely off Epi's post.
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Jun 14, 2021 15:37
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human garbage bag posted:I thought the tax rate on long term capital gains was determined by your income bracket? You can look up the IRS Qualified Dividends and Capitals Gains Worksheet, but the short answer is they are counted as the last part of your total taxable income. The portion of them that falls in the 12% or lower tax bracket (below 40,525 for single), gets taxed at 0% instead. The rest above that (that would normally be in the 22-35% brackets) is taxed at 15%. Any that falls in the 37% bracket gets taxed at 20%.
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Jun 14, 2021 16:19
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MadDogMike posted:As I understand it, if you're in the Medicaid income range they won't offer Marketplace insurance on the healthcare.gov website, but they certainly don't penalize you for it if you have Marketplace insurance but fall below the poverty line on your return. quote:I do agree with Peyote Panda the whole thing is an over-complicated mess that punishes people (doesn't help when there's things like the SLCSP being listed as $0 instead of the correct amount on the 1095-A, so screw you if you don't know how to find the rather hidden tool on healthcare.gov to get the right numbers),
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Jun 14, 2021 16:30
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MadDogMike posted:
Hmm, not sure if I've been doing something wrong and my tax program is generating a tax that shouldn't exist. I've seen a few people who've estimated high to get the better insurance and then when I prepare the return they end up having to pay back the credit with a cap of $600 since they ended up being low income. I remember looking it up when I first encountered it and it seemed right at the time but that was a few years ago.
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Jun 14, 2021 18:51
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My GF and I both recently started 1-2 night a week part time jobs. We have higher paying full time jobs. On W-4 for multiple jobs it says: (Your withholding will be most accurate if you complete Steps 3–4(b) on the Form W-4 for the highest paying job.) Why is more accurate if we re-do the higher paying job we already submitted a W-4? She would prefer to just have more money taken out from her smaller paycheck if it is not a big difference. I know it would all be same by time we do taxes at end of year.
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Jun 14, 2021 23:06
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Fritzler posted:My GF and I both recently started 1-2 night a week part time jobs. We have higher paying full time jobs. On W-4 for multiple jobs it says: It doesn't really matter. If 100% of your side job income is going to be in say, the 22% bracket then you could just calculate it to be roughly fixed there.
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Jun 14, 2021 23:30
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Epi Lepi posted:Hmm, not sure if I've been doing something wrong and my tax program is generating a tax that shouldn't exist. I've seen a few people who've estimated high to get the better insurance and then when I prepare the return they end up having to pay back the credit with a cap of $600 since they ended up being low income. I remember looking it up when I first encountered it and it seemed right at the time but that was a few years ago. Page 8 of the 8962 instructions calls it out as you're eligible for the PTC under the following conditions: IRS Instructions for Form 8962 posted:Estimated household income at least 100% of the federal poverty line Can't find any drat elaboration of "provided incorrect information" in Pub 974, though I presume that's something like "claiming PTC when you know drat well your taxable income is going to be ridiculously low for the year". I can't help but think this is later additions to the rules because I don't remember any of this crap when I was frantically trying to find the answers back around 2015/16 when the issue actually applied to me after getting Marketplace for the first time. In any event, utterly stupid design as mentioned by several here; having to psychically predict your drat income for a year in advance is BS anyway for a lot of folks especially self-employed types.
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Jun 15, 2021 01:11
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H110Hawk posted:It doesn't really matter. If 100% of your side job income is going to be in say, the 22% bracket then you could just calculate it to be roughly fixed there. Thank you!
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Jun 15, 2021 02:56
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Had an interesting conversation and couldn't find an answer either way. Can you request/do voluntary withholding from a 1099?
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Jun 15, 2021 07:13
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Since bonuses are taxed at a flat rate of 22%, why don't companies just pay high earning employees only in bonuses, so they pay less taxes?
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Jun 16, 2021 18:34
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human garbage bag posted:Since bonuses are taxed at a flat rate of 22%, why don't companies just pay high earning employees only in bonuses, so they pay less taxes? They are withheld at a fixed rate. They are taxed as ordinary income.
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Jun 16, 2021 18:55
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human garbage bag posted:Since bonuses are taxed at a flat rate of 22%, why don't companies just pay high earning employees only in bonuses, so they pay less taxes? i can't tell if this is a joke post going over my head, but supplemental wages have a separate withholding rate, not a separate tax rate
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Jun 16, 2021 18:57
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Small White Dragon posted:Had an interesting conversation and couldn't find an answer either way.
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Jun 16, 2021 19:44
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GhostofJohnMuir posted:i can't tell if this is a joke post going over my head, but supplemental wages have a separate withholding rate, not a separate tax rate No it wasn't a joke, I was just ignorant.
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Jun 16, 2021 20:33
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Small White Dragon posted:Had an interesting conversation and couldn't find an answer either way. You could refuse to provide a SSN/EIN and force the payer to do backup withholding.
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Jun 16, 2021 20:46
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Guy Axlerod posted:You could refuse to provide a SSN/EIN and force the payer to do backup withholding. Any business with even basic vendor onboarding controls would require this prior to a work agreement. If you don't get the work, there won't be anything to pay. Plus, it's putting a lot of confidence in the issuer to withhold/report properly. Why would a 1099-NEC recipient want the payor to withhold anything voluntarily? If they did, it would almost certainly be at a rate much higher than what would ultimately be paid to the IRS.
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Jun 16, 2021 20:55
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Guy Axlerod posted:You could refuse to provide a SSN/EIN and force the payer to do backup withholding. Looks like that's the only way to get withholding judging by the Form 1099-NEC instructions, it specifically calls out the box 4 entry as "enter backup withholding". And as Magicaljesus says, most companies are not going to proceed unless you give them a drat TIN. I swear though I always see a bunch of freaked out people wondering why the company they did contract work with gave them a W-9 and wants their SSN, "why should I give them my private info?". I respect having some sense of personal security, but in general major corporations don't cheerfully try to indulge in blatant identity theft (even if some of their payroll departments apparently skimp on security enough to facilitate that  ).
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Jun 16, 2021 22:30
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I've had a couple smaller contracts who paid by handwritten check. I don't know how far they would have gone without a EIN. I just included it with my first invoice.
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Jun 17, 2021 00:11
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MadDogMike posted:Looks like that's the only way to get withholding judging by the Form 1099-NEC instructions, it specifically calls out the box 4 entry as "enter backup withholding". And as Magicaljesus says, most companies are not going to proceed unless you give them a drat TIN. I swear though I always see a bunch of freaked out people wondering why the company they did contract work with gave them a W-9 and wants their SSN, "why should I give them my private info?". I respect having some sense of personal security, but in general major corporations don't cheerfully try to indulge in blatant identity theft (even if some of their payroll departments apparently skimp on security enough to facilitate that Businesses large and small need to know who they're paying. Smaller businesses are often more relaxed about it, out of ignorance, personal comfort with the contractor, or a combination of both. For example, if a company paid a non-US person who didn't provide or doesn't have a tax ID, among other conditions, the company itself is liable for the 30% withholding in addition to very steep fines that add up quickly. Requiring supporting documents up front (W-9, W-8) is a no brainer for any business, but especially so for larger (more bureaucratic? less personal?) businesses. The privacy aspect is largely overblown but is certainly a non-zero risk, though there are things you as a contractor could do to mitigate the risk if you choose. I'm still missing why the question was raised in the first place. Why would a 1099 recipient WANT the payer to withhold, and potentially jump through hoops to recover your withholding from the IRS?
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Jun 17, 2021 00:47
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Magicaljesus posted:I'm still missing why the question was raised in the first place. Why would a 1099 recipient WANT the payer to withhold, and potentially jump through hoops to recover your withholding from the IRS? Some creative folk (who do work for multiple clients) were having a discussion about how much of a pain taxes were to handle, and apparently really excited by the idea that they were just get some of their clients to withhold at X%. I mean, I don't think twice about doing quarterly filing etc if I need to, but I also realize I may not be in the norm.
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Jun 17, 2021 05:32
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Small White Dragon posted:Some creative folk (who do work for multiple clients) were having a discussion about how much of a pain taxes were to handle, and apparently really excited by the idea that they were just get some of their clients to withhold at X%. This is how taxes work for contractors in Japan, and it is, in fact, a huge pain in the rear end for the clients.
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Jun 17, 2021 05:46
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Small White Dragon posted:Some creative folk (who do work for multiple clients) were having a discussion about how much of a pain taxes were to handle, and apparently really excited by the idea that they were just get some of their clients to withhold at X%. Unfortunately, in this case the clients are probably paying them as 1099 contractors instead of employees at least in part to avoid the hassle of things like withholding (like Banksy said) Peyote Panda fucked around with this message at 05:51 on Jun 17, 2021 |
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Jun 17, 2021 05:48
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Peyote Panda posted:Unfortunately, in this case the clients are probably paying them as 1099 contractors instead of employees at least in part to avoid the hassle of things like withholding (like Banksy said) In most of the cases I'm aware of, these people set their own hours and work from home, and they really value that flexibility. Many of them in different states than their clients. Which actually brings up an even bigger issue, in that it's a big mess to try to hire a remote employee in a state you don't operate in. It'd be swell if the federal government fixed this problem, since it's squarely in their purview, but...
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Jun 17, 2021 06:19
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Small White Dragon posted:Some creative folk (who do work for multiple clients) were having a discussion about how much of a pain taxes were to handle, and apparently really excited by the idea that they were just get some of their clients to withhold at X%. It is a pain in the rear end for a lot of folks, many of my self employed clients rejoice that I hand them four nicely prepared 1040-ES forms with addressed envelopes and a nice checklist to write the check number and payment date on (I think some of them would never go DIY precisely because I give them that service by default). H&R Block even tried to sell a new support service this year to help people with making the payments (calling them to remind them, appointments to work out how much needs to be sent this quarter, etc.) though I'm not sure how well it did. Peyote Panda posted:Taxes are definitely something that can freak people out and it doesn't surprise me that some people would be willing to eat a temporary loss with additional withholding to avoid the hassle. I talk to plenty of people of the Economic Impact Payment hotline who spent hours on hold to talk to someone and are extremely desperate to get money but the prospect of having to fill out a few lines on a 1040 to give the IRS enough info to get their stimulus payments is too much for them to handle so they freak out or shut down and then hang up. Considering I have a quite a few W-2 only clients who use me despite even the minimum fee not being cheap, people will pay a lot to avoid having to worry about anything tax form related (though some of them are because I'm on the PA/DE border and navigating that multistate can of worms if you're working out of state in either is a pain in the rear end even if the federal part is easy). quote:Unfortunately, in this case the clients are probably paying them as 1099 contractors instead of employees at least in part to avoid the hassle of things like withholding (like Banksy said) Yeah, hate to say it but that's probably at least 50% of my 1099 clients if not more, it's for corporate convenience in withholding (and knowing HOW to do W-2 in the smaller employers) than really being "contractors" by the IRS definition of things. Of course, in practical terms, anybody filing that form to get the IRS to make their company not duck the W-2 system, I have to frankly tell them "yeah, they're gonna come up with an excuse to fire you if you do that"  . Hell, getting employers that remember to file the 1099-NEC is a miracle some days, though at least if the client reports the income and has bank records for backup it's not THEIR problem if that's not filed at least (never seen the IRS question someone saying they have more income than reported).
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Jun 19, 2021 21:50
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Stocks hard. Okay, I think I got it. Paid $23,000 up front to appease the IRS, taxes withheld by work were originally reported as ~$163,000 with ~$20,900 withheld, but with the W-2C the wages were adjusted up to ~$201,000, no changes to federal income tax withheld (why, I don’t know). Therefore, I actually needed to pay ~$20,366 to the IRS so I’m getting a refund back on why I paid. I am still very, very confused as to whether or not I’m double-paying taxes on my options or not. EDIT: Aite I give up, who knows where all my money is. I'll just chalk it up to capitalism extracting its blood tax. Pollyanna fucked around with this message at 19:53 on Jun 21, 2021 |
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Jun 21, 2021 18:40
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For some content, I guess: the tax return copy I got included some Massachusetts estimated tax things, called "Massachusetts estimated income tax payments". I was told that these are completely optional and do not actually have to be filed. Is this true?
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Jun 21, 2021 21:36
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These are questions for the accountant who prepared your return
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Jun 22, 2021 02:57
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I’m doing my due diligence here and getting second opinions. What if the accountant is wrong?
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Jun 22, 2021 03:25
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Pollyanna posted:For some content, I guess: the tax return copy I got included some Massachusetts estimated tax things, called "Massachusetts estimated income tax payments". I was told that these are completely optional and do not actually have to be filed. Is this true? There's a lot of "it depends" in this, but the short answer is: the worst outcome to not paying your estimated taxes is an interest charge that is too trivial to talk about. If your income in 2021 is largely going to be driven by vanilla wage income (that has appropriate tax withholdings on it) then youre fine not paying them. As far as the other issues go: if you are dubious on whether the W-2 you received from your employer is reporting correct income/withholding, that is a problem for your employer's payroll department not your CPA. The CPA is likely going to trust the source document unless there is something obviously incorrect about it, which does not seem to be the case here.
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Jun 22, 2021 12:00
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Alright, it sounds like I’m fine with not taking the estimated income tax step, as suggested by my CPA. Thank you for corroborating them.
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Jun 22, 2021 14:02
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Two questions for the thread: 1. Is there any way to check on if the unemployment tax refund credit is processing? I filed super early but have seen nothing on that front. 2. Should I amend my tax return seeing as 3/4 of my income last year was from unemployment income? I hesitated on it because the IRS kind of emphasized not doing that just for the refund, but it might also allow me to claim other credits? At least, that's what a freetaxusa email I randomly got hinted at but who knows.
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Jun 23, 2021 21:10
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Double Deux posted:Two questions for the thread: 1. I am not yet aware of one, except possibly requesting transcripts online. 2. No, you should wait for the IRS to screw up the refund and then file an amended return.
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Jun 23, 2021 23:05
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Double Deux posted:Two questions for the thread: 2. The IRS is only adjusting for the reduced tax from the UI deduction. If you have other deductions or credits that would get you a better tax benefit due to the AGI reduction, then you'll want to file an amended return (for example if you couldn't claim the Earned Income Credit before but would now be eligible).
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Jun 24, 2021 00:30
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Peyote Panda posted:1. The transcript suggestion is a good one. Specifically you would want the account transcript as it shows adjustments subsequent to the original return. You can get that online through the Get Your Tax Record section on IRS.GOV. Thanks for the advice, that's pretty much exactly what would happen as pre-unemployment credit my income was 26k so this would put it under the max threshold for that from my brief review of the earned income credit. Looking at my transcript there don't seem to be any adjustments besides the ones for the tax refund last year and early this one. Based on that I guess my best move is filing an amended return now. Should sort out potential issues with the UI deduction and net me more than the standard deduction.
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Jun 24, 2021 02:06
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Just wanted to chime in that we were waiting for our refund to process for months and it finally happened this week, with the caveat that it was reduced by $1200 likely due to one of the stimulus check complications. The info from there where’s my refund page said it could be one of a few things, and that we’d be getting a letter to explain it. Hopefully that letter will be more specific, and have a number to call.
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Jun 25, 2021 18:15
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meanolmrcloud posted:Just wanted to chime in that we were waiting for our refund to process for months and it finally happened this week, with the caveat that it was reduced by $1200 likely due to one of the stimulus check complications. Mine is scheduled to get deposited on Monday after months and they increased it 1200 so thanks I guess.
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Jun 27, 2021 02:54
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