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Appro of nothing, but my client just showed me their vanguard retirement account page as confirmation they put the amount we agreed upon for SEP IRA Contributions for 2021. Here is the thing, though. The page tells you the max contribution amount for thise account. If you run your own business and you are trying to use like SEP then your maximum contribution can be limited by your business profit or your W-2 from your S-Corp. Consult your tax professional before making a contribution. It's kind of irresponsible of vanguard to just tell people the absolute max amount for those accounts.
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May 24, 2022 18:25
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Covok posted:Appro of nothing, but my client just showed me their vanguard retirement account page as confirmation they put the amount we agreed upon for SEP IRA Contributions for 2021. I'm pretty sure every single one of my clients overfunded in Year 1 because of this. They open the account and just fund without having the discussion with us.
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May 24, 2022 19:18
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Ungratek posted:I'm pretty sure every single one of my clients overfunded in Year 1 because of this. They open the account and just fund without having the discussion with us. It amazes me that it not only says she can contribute 58k but it looks at her 20k and shows her the remaining amount she can contribute. Like, no, that's not how that works!
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May 24, 2022 19:48
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Covok posted:There was talk that died on tax appreciated gains. However, it wouldn't even have affected this account. The Build Back Better bill did actually have a cap on contributions and required early distributions if you exceeded the cap. My guess is they were probably below whatever thresholds but there was absolutely a lot of stuff in that bill that affected retirement accounts for high earners. I mean, a number of upper-middle income class folks I know (who paid attention) were a bit peeved hearing they would not longer to be able to do Roth contributions even though they were below the $400k line and therefore supposedly spared from tax increases.
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May 25, 2022 01:33
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I had a bunch of people panic sell QSBS because they were going I cap the exclusion at 50% but that didn’t come to fruition. Of course it worked out because selling in October was like the perfect time for realization.
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May 25, 2022 01:40
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Small White Dragon posted:The Build Back Better bill did actually have a cap on contributions and required early distributions if you exceeded the cap. I mean, they would be spared a tax increase since ROTH contributions don't change your taxable income.
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May 25, 2022 01:52
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Epi Lepi posted:I mean, they would be spared a tax increase since ROTH contributions don't change your taxable income. Not really. In that calendar year, sure, but they would pay more tax rates in the long run.
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May 25, 2022 02:14
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Hey, somebody asked and I figured this crew would know — how long after filing an electronic return does it usually show in ones irs.gov account?
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May 26, 2022 15:52
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My spouse and I want to file an amended return to change our filing status from MFS to MFJ because it turns out we get a bigger refund that way. Nothing else has changed besides the filing status (affecting the amount of tax owed, and therefore the overpayment amount.) What, if anything, do I need to include with the 1040-X when mailing it in?
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May 28, 2022 00:10
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I just got my California refund. It was only $4795 but I was supposed to get back $8287. Where is the remaining $3492? What can I do to get the rest back?
School of How fucked around with this message at 00:59 on May 29, 2022 |
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May 28, 2022 20:05
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I have what's probably a complicated question / request for help. I just received a letter from the IRS, saying I owe them over $7000 because I misrepresented my taxes in 2020. This has to do with my 401k withdrawal that I did under the Cares Act. What's odd is that when I look at the statements from my 401k company, they withdrew taxes. (Maybe not enough?) When I look at my W-2 the money isn't claimed there (which we were told didn't have to be). I've very lost and confused on what to do. I don't think I owe this money, but maybe my 401k company hosed up, or my Payroll department at my company hosed up. Or I hosed up. This 7k won't absolutely ruin my life, but I just climbed out of a hole (thanks in part to said withdrawal) and I really don't want to add complications to it. Can someone recommend who to talk to? Or what to do?
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May 28, 2022 21:04
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Comfortador posted:I have what's probably a complicated question / request for help. Did you report the withdrawal on your return? You should have received a 1099-R for 2020 reporting both the amount your withdrew and the amount of taxes that were withheld. This 1099-R, however, is not a substitute for reporting the withdrawal as income on your 1040.
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May 28, 2022 22:13
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Admiral101 posted:Did you report the withdrawal on your return? You should have received a 1099-R for 2020 reporting both the amount your withdrew and the amount of taxes that were withheld. This 1099-R, however, is not a substitute for reporting the withdrawal as income on your 1040. So to make sure I'm understanding you, I should have added that money I withdrew to my gross income? I could have sworn I read that it doesn't apply against it, but man I am dumb when it comes to this poo poo. So I guess the answer is no, I didn't. Which means this is valid. The amount I owe seems grossly outweighed by how much I withdrew but like I said, I don't know poo poo about gently caress.  I just got my forms, thought my forms represented what I had to file, and filed it.
Comfortador fucked around with this message at 22:45 on May 28, 2022 |
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May 28, 2022 22:40
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Comfortador posted:So to make sure I'm understanding you, I should have added that money I withdrew to my gross income? I could have sworn I read that it doesn't apply against it, but man I am dumb when it comes to this poo poo. So I guess the answer is no, I didn't. Which means this is valid. The amount I owe seems grossly outweighed by how much I withdrew but like I said, I don't know poo poo about gently caress. Correct, sorry. The CARES Act only allowed for waiver of the 10% penalty for covid reasons. However, this income should be getting spread over three years (2020, 2021 and 2022). Shouldnt entirely be hitting your 2020 return. Before you assume the notice is correct, would check three things: 1) Is the IRS assessing the 10% early withdrawal penalty too? 2) Is the IRS taxing the full amount or just 1/3? 3) Is the IRS correctly including the tax withholding on the adjustment? Only thing Im not sure about is whether the 1099-R reporting would include 100% of the distribution or only 33% of the distribution. Any other practitioners in the thread have insight? edit: I see. You would have needed to file 8915-E in 2020 reporting only one third as taxable. I think you may need to amend your 2020 return to resolve this. Admiral101 fucked around with this message at 22:57 on May 28, 2022 |
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May 28, 2022 22:51
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Admiral101 posted:Correct, sorry. The CARES Act only allowed for waiver of the 10% penalty for covid reasons. However, this income should be getting spread over three years (2020, 2021 and 2022). Shouldnt entirely be hitting your 2020 return. Thank man, I don't think I did any of that and now I feel dumb. They tax my money, I don't pay the 10%, and I just get my money. I should've figured there was more to it than that. 1) I don't think so 2) The full amount since I've never spread it out, I didn't know I had to. So I think they're right. 3) That I'm not sure about. Should I just call a local tax/accountant person for assistance to make sure I do the right thing? I paid the taxes withdrawing it, and I just thought that was the end of the story.
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May 28, 2022 23:33
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Comfortador posted:Thank man, I don't think I did any of that and now I feel dumb. They tax my money, I don't pay the 10%, and I just get my money. I should've figured there was more to it than that. You don't have to spread it out over three years, it's optional. If you do spread it out, all of your withholding gets used in year one so you should be ready to pay a bill for 2021 and 2022 taxes. This isn't the most complicated thing but it's clear this isn't your forte so your best bet is to find a preparer to help you straighten 2020 out and determine if it's better to recognize the income all at once or spread it over three years. You're behind the eight ball as it is, better to take the time to make sure you're doing the best thing financially than rush. Ask your parents/friends/coworkers who does their taxes and go from there. School of How posted:I just got my California refund. It was only $4795 but I was supposed to get back $8287. Where is the remaining $3492? What can I do to get the rest back? You should get a letter from CA saying why they reduced your refund. If you owe them for back taxes or child support or something they may have took part of the money to satisfy a debt. They may have picked up income that you didn't include on your tax return. If you don't get a letter or don't want to wait call the CA tax department this week and see if you can get an explanation.
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May 29, 2022 01:36
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Epi Lepi posted:You should get a letter from CA saying why they reduced your refund. If you owe them for back taxes or child support or something they may have took part of the money to satisfy a debt. They may have picked up income that you didn't include on your tax return. If you don't get a letter or don't want to wait call the CA tax department this week and see if you can get an explanation. That is super weird. The opposite happened with my federal taxes. I wasn't supposed to get a refund at all, yet I got a $260 check from the federal government. The letter the federal government sent me "explaining" why I got a refund was super vague and didn't really explain anything. Whats also weird is that I don't even live in CA. I live in NM, but the company I work remotely for is based out of CA, so all withholding is to the state of CA. Last year when I filed for CA taxes, I got all 8K back with no problems.
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May 29, 2022 03:34
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Comfortador posted:Thank man, I don't think I did any of that and now I feel dumb. They tax my money, I don't pay the 10%, and I just get my money. I should've figured there was more to it than that. I recommend: 1) When does the IRS notice request/require a response? If soon, you will want to call the IRS (number will be on the letter) and request a hold on your account while you look into the matter. 2) Collect your 2020 W2, 1099-R, the IRS notice, and whatever other 2020 tax documents you have. Take these to a H&R Block or equivalent and explain that you took a COVID distribution from your 401k but did not report the income on your 2020 return and did not file a 8915-E. 3) Depending on the language in the notice, the practitioner will likely recommend amending your 2020 return (form 1040-X). You will owe money, but probably a lot less than what the notice is requesting. 4) If you already filed your 2021 return, you will have to amend this filing as well. 5) May have to do something similar for your state return too depending on where you live. If you PM me we can verify some of these items if you want?
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May 29, 2022 13:19
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Hello tax thread, I'm "self-employed" (I think... I work remotely for a European company) and I've been going insane for the past few weeks trying to figure out whether I need to make estimated quarterly payments to the IRS / how big they should be. I was unemployed for the entirety of 2021 and did not file a tax return (because I had no income). At the start of February, I started a paid 6-month internship at said European company and was paid $1500/month for February + March. In April, said company offered me a full-time position at the conclusion of my internship and gave me a raise for the remainder of the internship to $2400/month. In May (i.e. last week) they gave me another raise for the duration of my internship to $2850 a month. Starting in July, I'll start at the "full time" rate of $4050/month. As far as I can tell, my income for the year should be: Jan: $0 Feb: $1500 Mar: $1500 April: $2400 May: $2850 June: $2850 July: $4050 Aug: $4050 Sep: $4050 Oct: $4050 Nov: $4050 Dec: $4050 Total: $35400 I got married at the end of April. I don't know whether we will file separately or individually. Getting married was probably a (financial) mistake, because I'm caught in the ACA family glitch and have to pay $450/month for a marketplace plan (my wife's employer offers spousal health insurance for $800/month over what it costs to insure just her). I did not make any estimated tax payments yet this year because I mistakenly assumed I could just deal with it when taxes were due. When I try to calculate my estimated tax payments for the year, I'm getting quarterly payments around $2000. I...can't afford that right now. I've been saving roughly 1/3 of my income for taxes, but with healthcare costs + rent, I literally do not have enough money left over to pay $4000 (2k for the April deadline i missed, then 2k more in June for the next one) to the IRS, let alone penalties. I can save enough by the end of the year to pay off my total tax burden because 1/3 of my income for the second half of the year is a lot more than it is now. I'm not sure what to do. I was getting quotes in the $4-600 range for an accountant to handle this, but the only way I can afford that right now is by dipping into my tax fund. I'm terrified about penalties and worried that I might have to quit my job to avoid being crushed by them. (I won't be able to find a new job easily; this was part of a career transition and I was lucky to get the position I got). That seems insane... I don't want to quit my job... Additionally, I have no clue how to calculate my total tax burden for the year. I'm not sure if my health insurance is deductible - the wording is very confusing and I think it might not be because I technically could get (grossly unaffordable) insurance through my wife's employer. Can anyone provide some guidance?
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May 31, 2022 00:22
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For one thing, if you made no money last year and nobody claimed you as a dependent, you should file a tax return because you will get free money. I'll let the actual tax people answer the rest.
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May 31, 2022 00:31
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Gnumonic posted:I'm "self-employed" Step one: KillHour posted:For one thing, if you made no money last year and nobody claimed you as a dependent, you should file a tax return because you will get free money. Step two: How much does your spouse make? Are you a W-2 employee? You need to ask your employer. Did you submit a W-4 when you started? Yes? Great. What is you spouses gross income? Add it to your total income. Subtract $25,900. Look up in the tax tables how much tax you owe total under married filing jointly. ( This is 2021's, use it to estimate as 2022's aren't out yet. https://www.irs.gov/pub/irs-pdf/i1040tt.pdf ) Now, look at your wifes paystub. See where it says her federal tax withheld? Multiply that by how many paychecks she gets a year (typically 12, 24, or 26). Subtract it from your Tax above. That's about how much you will owe. Want to do this even simpler? Are you W-2? I'm going to assume you and your wife make combined exactly $83,550, and she makes more than you. This means your top marginal rate is 12%, and the most you could possibly owe the federal government on that $35,400 is $4,248. Are you actually 1099? Add another 15.3% to that number: $4,248 + 5412 = $9664. That's $805/month. Does your state have income tax? They probably want their taste too. Are they withholding $0 from your paychecks?
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May 31, 2022 04:39
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Gnumonic posted:I'm terrified about penalties and worried that I might have to quit my job to avoid being crushed by them. (I won't be able to find a new job easily; this was part of a career transition and I was lucky to get the position I got). That seems insane... I don't want to quit my job... Dont worry, this is not something to quit your job over. Also, you're almost certainly overestimating how behind you are. You made 3000 in q1. You're not supposed to pay 2000 just because you expect to make more later.
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May 31, 2022 04:56
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OK I will file a tax return for 2021. Did not realize I got free money. H110Hawk posted:Step two: How much does your spouse make? H110Hawk posted:Are you a W-2 employee? You need to ask your employer. H110Hawk posted:Did you submit a W-4 when you started? Nope. H110Hawk posted:Yes? Great. What is you spouses gross income? Add it to your total income. Subtract $25,900. Look up in the tax tables how much tax you owe total under married filing jointly. ( This is 2021's, use it to estimate as 2022's aren't out yet. https://www.irs.gov/pub/irs-pdf/i1040tt.pdf ) Now, look at your wifes paystub. See where it says her federal tax withheld? Multiply that by how many paychecks she gets a year (typically 12, 24, or 26). Subtract it from your Tax above. That's about how much you will owe. H110Hawk posted:Want to do this even simpler? Are you W-2? I'm going to assume you and your wife make combined exactly $83,550, and she makes more than you. This means your top marginal rate is 12%, and the most you could possibly owe the federal government on that $35,400 is $4,248. Are you actually 1099? Add another 15.3% to that number: $4,248 + 5412 = $9664. That's $805/month. H110Hawk posted:Does your state have income tax? They probably want their taste too. H110Hawk posted:Are they withholding $0 from your paychecks? For additional context: The other Americans who work here form S-Corps (I think that's the right type?). They're all in more senior positions + make more though, so I'm not sure that I can do that this year because I don't know that it would survive an audit. I'm a software engineer... and while I'm totally OK with making less than I would at an American company, I'd really be pushing the "reasonable salary" limit with an S-Corp for this year at least. (Also atm I'm pretty much broke and can't afford the cost to set that up correctly.) Edit: This seems to indicate that I don't need to pay estimated quarterly taxes this year? IRS posted:You don’t have to pay estimated tax for the current year if you meet all three of the following conditions. I do meet those conditions I think, but I dunno if I'm missing something that nullifies that exception. Gnumonic fucked around with this message at 07:00 on May 31, 2022 |
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May 31, 2022 06:56
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Also, someone correct me if I'm wrong, but I think if you've never been required to do quarterly withholding before, you get a one year mulligan where you won't get penalized for not doing it (although in that case, you'd still have to pay it as a big lump sum at the end of the year). Edit: it sounds like you're being treated as an independent contractor which actually sucks for you because in addition to not getting any benefits, you have to pay the portion of employment taxes that a company normally pays on your behalf. Given the amount you're paid, I'm very suspicious. Are you sure the place you're working for isn't loving you over? There are extremely specific requirements to consider you an independent contractor because it's something lovely companies try to do a lot. KillHour fucked around with this message at 07:03 on May 31, 2022 |
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May 31, 2022 06:59
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Read this link. It will help you understand how you should be characterized. https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee I would be extremely surprised if you qualify as an independent contractor based on what you have told us so far and I think the place you work is loving you over and breaking the law. I am not a lawyer. You should probably talk to an employment lawyer. KillHour fucked around with this message at 07:13 on May 31, 2022 |
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May 31, 2022 07:06
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KillHour posted:Edit: it sounds like you're being treated as an independent contractor which actually sucks for you because in addition to not getting any benefits, you have to pay the portion of employment taxes that a company normally pays on your behalf. The company I work for didn't have any US employees until a few months ago and has no official presence in the US. I'm certain that they're not intentionally loving me over at least. I get 3 days of paid vacation a month that never expires, I can work whenever I want, I have unlimited paid sick leave, I never have to work more than 40 hours a week, I have a large degree of autonomy to do things the way I want to, etc. It would honestly be an ideal job if it weren't for the bullshit tax situation. I'd rather have all those nice things than another $20k/year at a place that sucked to work at. For additional context, this pays vastly more (for way less work) than the adjunct philosophy professor jobs I would otherwise be working, and at least I get a stipend to cover health insurance from this place. I honestly really like working here. If I could somehow get my tax burden down to a sane level I'd probably never look for another job. After 10 years killing myself in grad school I'm big on quality-of-life stuff. Also I probably can't get another job until I have a year or two of experience anyway. (If this means anything to you: I'm a Haskell programmer that specializes in type level programming, it's a small market and the skills don't really translate that well to more mainstream stuff.) Edit: I mean, they're a small Europe-based fully-remote company with no official presence in the US. Maybe they are breaking the law... but I can understand if they don't have the resources to sort out the laws in each of the 30+ countries where people work. And again, I don't really have any other options, so I don't really care if they're breaking US law. Gnumonic fucked around with this message at 07:35 on May 31, 2022 |
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May 31, 2022 07:31
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Gnumonic posted:I think my answers to the previous questions mean this isn't the correct calculation procedure? Correct me if I'm wrong. $9664 is correct enough. All you do is add together your two incomes, subtract the standard deduction, and look it up in the tax tables. Then take your income and multiply it by 15.3% and add that to the number from the tax tables. That's your total tax burden for the year married filing jointly. Her withholding times paychecks is subtracted from that. That is the amount your family will owe come April 15, 2023. You absolutely are not going to be penalized for not paying your quarterlies this year. Just get on track. Also you and your wife need to sit down and talk about money. You guys need to know how your family budget looks. Neither of you make enough to have completely separate finances. There needs to be some kind of communal pot. Go check out the BFC Newbies thread. I would get in the habit of paying your taxes the day you get paid. Multiply your paycheck by (12+15.3) = 28.3% and pay the federal taxes immediately. Also this job pays more than others for less work? Are you sure with that 15.3%? Do you need to make your s-Corp for deductions?
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May 31, 2022 15:02
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Raere posted:My spouse and I want to file an amended return to change our filing status from MFS to MFJ because it turns out we get a bigger refund that way. Nothing else has changed besides the filing status (affecting the amount of tax owed, and therefore the overpayment amount.) What, if anything, do I need to include with the 1040-X when mailing it in? If you electronically filed the original return, electronically file the amendment as well. If the option exists, it is absolutely worth doing. If my memory serves me, the last time I had a MFS>MFJ amendment I enclosed the other spouse's W-2s/1099s with withholding and I might have attached a copy of the other spouse's original return with something like "original - do not process" written in bold and highlighted. Whatever I sent, the IRS processed fine. But that was in the days before electronic filing for amended returns was available, and before the IRS' ability to process paper was decimated in the pandemic.
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May 31, 2022 15:03
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H110Hawk posted:$9664 is correct enough. All you do is add together your two incomes, subtract the standard deduction, and look it up in the tax tables. Then take your income and multiply it by 15.3% and add that to the number from the tax tables. That's your total tax burden for the year married filing jointly. Her withholding times paychecks is subtracted from that. That is the amount your family will owe come April 15, 2023. Thanks, that's very helpful. H110Hawk posted:Also you and your wife need to sit down and talk about money. You guys need to know how your family budget looks. Neither of you make enough to have completely separate finances. There needs to be some kind of communal pot. Go check out the BFC Newbies thread. I kind of do make enough money to cover living expenses/etc on my own. We moved across the country to a very low cost of living area earlier this month, but moving expenses ate all of our savings. We split the rent / bills and have a joint savings account. H110Hawk posted:I would get in the habit of paying your taxes the day you get paid. Multiply your paycheck by (12+15.3) = 28.3% and pay the federal taxes immediately. I can do this? I guess I'll need to look up how to do it. I've been saving 30% of my paycheck to cover taxes so I have the money sitting in an account anyway. H110Hawk posted:Also this job pays more than others for less work? Are you sure with that 15.3%? Do you need to make your s-Corp for deductions? Well, it does relative to other jobs I could realistically get right now. At least with my post-internship salary (I already signed a contract for that). I did the adjunct professor thing before Covid, made $27k-ish a year working 60-80 hour weeks with no benefits. If I looked really hard I could maybe find a better software engineering position in a few months, but almost every company I could work at is based in Europe with a similar arrangement. I'd rather just stay here until I have enough experience to apply for mid-level positions. I spoke to the other Americans at my company and they do...something (I'm not super clear on the details)... with an S-Corp that lets them avoid paying the employer contribution for SS/Medicare taxes on part of their income and pay capital gains tax instead of income tax on the other part. I definitely need to talk to an accountant about this. I'm not sure if they're doing something shady or if it's a legitimate tax mitigation strategy (tbh I doubt they know themselves, their responses seemed like "my accountant said to do this and I did it" answers.) If I can form an S-corp, based on my understanding of the rates they pay, my tax burden would be a lot more reasonable. I think I can do that next year when I have a higher annual salary. As I understand things, the IRS will come after you if you pay yourself a comically low salary from your S-corp relative to the work you do, so I believe I need a higher annual income to avoid drawing their ire. Edit: I'm definitely an independent contractor fwiw. I spoke to my company's one-person HR department and I guess this arrangement is a lot less burdensome tax-wise in European countries. They're looking into setting up an official US presence so the US workers can be employees. As far as I can tell they weren't really aware of the complex tax situation for US workers. Gnumonic fucked around with this message at 19:47 on May 31, 2022 |
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May 31, 2022 19:41
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Gnumonic posted:Thanks, that's very helpful. I am glad it helped. I'm not a tax professional, I just really hate intuit. And congress. Harumph. You don't. And that's no excuse regardless. You and your wife need to sit down and work out a budget. Whatever works best for your family. You and her are in this together now, and you need to know where you both stand. There are lots of ways to accomplish this. It's important to understand where the money all goes. You're subtly stressed about finances, even after correcting the taxes. This isn't about controlling one person or anything, you guys have a pot of money on which to draw. If you pay all the rent out of your account that's fine, but what about saving to retire? Does she do all of it because you budget $5000/yr in retirement savings and she has a decent enough 401k? Emergency fund? Hookers? BLOW?! You should know the answer to these questions easily. Because you wrote it all down somewhere. Absolutely. You can pay the IRS online basically daily. Go to their website and find the section to make a payment. When you pay, choose "1040-ES" for tax year 2022. Note when you pay your quarterly taxes for 4q2022 in January 2023 it's STILL 2022 on the site. In regards to your employment situation I wasn't trying to disparage it, just making sure you had thought about it. If your coworkers are doing something they should be able to plainly explain it. Ask for the name of their accountant and have a phone call with them asking about how to set it up like so and so, what it costs, and how it works. "I can't afford to hire you right now but I want to save up and be ready when I can." relay it here and we can sniff test it. Ask them their salary.
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May 31, 2022 20:01
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H110Hawk posted:In regards to your employment situation I wasn't trying to disparage it, just making sure you had thought about it. If your coworkers are doing something they should be able to plainly explain it. Ask for the name of their accountant and have a phone call with them asking about how to set it up like so and so, what it costs, and how it works. "I can't afford to hire you right now but I want to save up and be ready when I can." relay it here and we can sniff test it. Ask them their salary. I thought accountants were like lawyers in that they were licensed on a state-by-state basis in the US? Afaik none of the other US employees live in my state.
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May 31, 2022 20:21
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Gnumonic posted:I thought accountants were like lawyers in that they were licensed on a state-by-state basis in the US? Afaik none of the other US employees live in my state. We are licensed/registered in the state we practice in but we can prepare returns for other states. People love to move, and also love to stick with the accountant they've had for their entire life so we tend to have clients all over. Hence me being an NYS CPA with tons of clients in Florida and the Carolinas and a few other scattered states. Your co-workers are being somewhat sketchy. You are supposed to have a "reasonable salary" as an S Corporation shareholder, meaning actually issue yourself a W-2 and pay all the taxes that entails but it sounds like they are probably ignoring that aspect and just passing the income through to their personal returns. They're not paying capital gains rates on it, but they're also not paying self employment taxes. Regardless of whether you open an S-Corporation or not you are entitled to write off your reasonable and necessary expenses to do your job from the income you receive. If you have to purchase a program or take a class in order to do your work then you are entitled to deduct the cost of that from your income on your tax return.
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May 31, 2022 20:57
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Gnumonic posted:I thought accountants were like lawyers in that they were licensed on a state-by-state basis in the US? Afaik none of the other US employees live in my state. I believe there is a lot of reciprocal licensing for cpa's. More so than lawyers. Either way call and ask. A 10 minute phone call to see if they're a good fit is probably free. I would expect it to be free, but I'm not a cpa.
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May 31, 2022 20:59
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Epi Lepi posted:Your co-workers are being somewhat sketchy. You are supposed to have a "reasonable salary" as an S Corporation shareholder, meaning actually issue yourself a W-2 and pay all the taxes that entails but it sounds like they are probably ignoring that aspect and just passing the income through to their personal returns. They're not paying capital gains rates on it, but they're also not paying self employment taxes. I talked more to one guy at work (this might not be representative) and he pays himself enough of a salary to cover living expenses/etc (roughly half of what he really makes) and then pays out the rest of his earnings at the end of the year as a "distribution" (whatever that is). It seems like the legality of this depends on whether the salary counts as reasonable? I can't figure out if those "distributions" are taxed or not.
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May 31, 2022 21:23
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H110Hawk posted:I believe there is a lot of reciprocal licensing for cpa's. More so than lawyers. Either way call and ask. A 10 minute phone call to see if they're a good fit is probably free. I would expect it to be free, but I'm not a cpa. The key is you're not required to be a CPA in most(any?) states to prepare tax returns. You register with the IRS for a Preparer Tax ID Number (PTIN) and then your states determine the rest of the rules. NYS requires anyone who prepares more than 10 returns for compensation to register and get a New York Tax Preparer Registration ID Number (NYTPRIN) and pay a $100 fee. If you are licensed as a CPA you do not have to pay the fee. Gnumonic posted:I talked more to one guy at work (this might not be representative) and he pays himself enough of a salary to cover living expenses/etc (roughly half of what he really makes) and then pays out the rest of his earnings at the end of the year as a "distribution" (whatever that is). It seems like the legality of this depends on whether the salary counts as reasonable? I can't figure out if those "distributions" are taxed or not. He's doing it the right way then. I'm assuming he pays himself a paycheck, keeps the rest of the money in his business bank account, pays out business expenses from there, whatever is leftover he pays income tax on as part of his personal return at the end of the year. He does not pay employment taxes on that amount, just income taxes. The profit that he's paying income tax on is now his to take or keep in the business account, whichever his heart desires. Hopefully that makes sense and if it doesn't, well that's why people pay me to do their taxes.
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May 31, 2022 21:39
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I have a technical question, not sure if anyone can help answer. If I own an owner occupied duplex and choose not to rent the second unit, then when I eventually sell the property I do not need to pay capital gains on 50% of the profit as long as it has been unrented for 3 of the last 5 years, correct? (And I assume I lose all my tax deductions against the rental income because its no longer a rental property and I no longer have rental income)
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May 31, 2022 22:41
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Upgrade posted:I have a technical question, not sure if anyone can help answer. No, the situation is a bit different. Okay, captial gains triggers no matter what because you got an assest selling for more than it was purchased for. Well, I assume, at least, that you are making a profit. Also, if an owner dies, the value steps up to date of death value. A few other factors exist. Let's just say your basis is purchase price for simplcity. Talk to your accountant for more details. Okay, the part you rented? That gets depreciated. That's a whole can of worms but basically you deduct the assest value slowly every year based on schedules and not depreciating the land it is on. The other part you didn't rent, no depreciation. When you sell, depreciation allowed or allowable is added back to determine your captial gains. Also, owner occupied? So you live in half that house? If you live there 2 of the last five years and own it, you can get $250,000 off the captial gains per owner for the part not rented. A married couple counts as two owners. But you don't get this on the part you did rent. You also can stop renting and move into the rented part two years before to get the 250k deduction on that part but if its two legally different residences then this won't work. But if you're like renting a basement you can do this. But you still got to add back depreciation. From my knowledge and I might need to research this but I think since you rented half the home and lived in the other half, 1031s are off the table for the property unless it's a full rental. I got to do a worker's comp premium assestment. That should cover the basics and hopefully someone else will fill it in.
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Jun 1, 2022 15:53
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I just got a letter from California explaining why my tax refund was $3492 short. They say it's because I didn't include a "Form FTB 3853", and so they charged me a penalty for that. This form has something to do with health insurance. I looked through the PDF I printed out and mailed to them (prepared by TurboTax), and there is indeed a form 3853 in there. At the bottom of that form it says my penalty is $0. It is very unlikely that that one page just didn't print. What can I do here? Do I just mail in another copy of that form to get the my $3492 back? Let me reiterate that I don't even loving live in California. I haven't set foot in CA since 2017.
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Jun 1, 2022 19:24
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School of How posted:I just got a letter from California explaining why my tax refund was $3492 short. They say it's because I didn't include a "Form FTB 3853", and so they charged me a penalty for that. This form has something to do with health insurance. I looked through the PDF I printed out and mailed to them (prepared by TurboTax), and there is indeed a form 3853 in there. At the bottom of that form it says my penalty is $0. It is very unlikely that that one page just didn't print. What can I do here? Do I just mail in another copy of that form to get the my $3492 back? Let me reiterate that I don't even loving live in California. I haven't set foot in CA since 2017. Respond to the letter with the form and a copy of your proof of health insurance, requesting the penalty be removed based on your evidence. Make sure to write an explanation.
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Jun 1, 2022 19:34
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Covok posted:Respond to the letter with the form and a copy of your proof of health insurance, requesting the penalty be removed based on your evidence. Make sure to write an explanation. I don't have health insurance. But I don't live in California either. How do I owe money to a state I don't even live in? The reason why my form says my penalty is $0 is because Turbo Tax asks me if I can "afford" health insurance, and I always answer "No". That has always exempted me from all health insurance penalties before. School of How fucked around with this message at 20:13 on Jun 1, 2022 |
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Jun 1, 2022 20:11
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