|
smackfu posted:I’ve never had that happen. I've also never had this happen.
|
#
?
Apr 19, 2023 06:25
|
|
|
|
| # ? May 10, 2024 12:33 |
|
|
Gabriel Grub posted:Having the previous six tax years filed officially puts you in good standing with the IRS, so if a revenue agent really did ask for filings back that far their finger was hovering over the "Smite" button for some reason, and you might want to be more circumspect about taking such a client. In my experience with multi-year filers at least, the issue can also just be if you owe for filed years and have big gaps in your filings, they want ALL your prior missing returns before they'll talk payment plans. Also, hate to say it, but for every idiot I've had who randomly decided they didn't want to do their taxes for several years, I tend to have 3-4 other people doing it because thanks to traumatic medical issues/life disasters they weren't capable of doing things like file returns for several years no matter how it screwed their finances. They're always so drat grateful for my help even when I have such crappy news for them usually and have to charge a ridiculous total $$$ amount  . As far as smiting goes, I get paid before filing for a reason so kind of hard to get screwed that way, and in any event thanks to how life at H&R Block works I'll get stuck with the problem cases anyway even if I did try to dodge them. I've made the terrible mistake of being noticeably good enough at my job so that poo poo gets pushed over to me for fixing regardless, so might as well embrace the inevitable.Peyote Panda posted:There might be other tools people recommend in addition to this, but you can download the 1040ES from IRS.GOV (just enter that form number in the search box in the top right corner of that website). It has a series of worksheets that you can use to figure out how much tax you'll owe, how much withholding you have, and the amount of estimated tax (ES) payments you should make each quarter of the year to even things out. It also includes instructions and quarterly payment vouchers for those ES payments that you can fill out if you want to mail your payments in, though you can also submit ES payments online. You can also use the new W-4, it has some worksheets you could maybe check if you just want to hopefully adjust withholding. Also the IRS has an actual tax withholding estimator app here you can try so long as you have your paystubs. Generates W-4s as part of it, though with the drat withholding table adjustments I'm not sure how accurate either of these are now.
|
|
#
?
Apr 19, 2023 07:02
|
|
|
Would it be worth it to have a tax professional interview my filing and see if there's some savings they can eke out? My financial situation is very straightforward, so this might just be wishful thinking.
|
|
#
?
Apr 19, 2023 17:58
|
|
|
null_pointer posted:Would it be worth it to have a tax professional interview my filing and see if there's some savings they can eke out? My financial situation is very straightforward, so this might just be wishful thinking. I mean, it's impossible to say without knowing your situation and who you plan to use. It's right after season so most people probably are on vacation. Normally, I'd be off 1-2 days after busy season. Had to use my own vacation day for one of them but they were always closed the day after. That's pretty standard. Like, what do you mean by straightforward? And even if its straightforward usually, you could have done something weird. One of my best clients forced his son to see me. He brought his incomplete return to compare to mine. It was super simple and I looked like I was about to just tell his dad it was a free consultation (he was a great guy so I would do that for him) but then I asked if he took money out of his retirement accounts to buy the house he just got. I technically saved him money by avoiding an audit in 1-3 years when I pulled the 1099R and got the early withdrawl penalty abated for first time homepurchase (which they wouldn't tell him about if he hot audited.) So, anyway, really its impossible to say from afar. Tax people are charging more and more nowadays. Last year I was in the industry (2022) we were already being told that our software company wanted to double our bill for inflation and we realized we'd have to raise fees again. I bet that wasn't an isolated incident.
|
|
#
?
Apr 19, 2023 20:28
|
|
|
MadDogMike posted:and in any event thanks to how life at H&R Block works I'll get stuck with the problem cases anyway even if I did try to dodge them. I've made the terrible mistake of being noticeably good enough at my job so that poo poo gets pushed over to me for fixing regardless, so might as well embrace the inevitable. Hey, fellow "Gets everything slightly complicated shunted onto them at HR Block" buddy. I went out on my own this year, I had enough of billing $500+ on returns and getting paid less than 20% of it. Don't have much to add other than being the person who fixes all the returns in the office sucks.
|
|
#
?
Apr 19, 2023 22:05
|
|
|
Covok posted:Tax people are charging more and more nowadays. Last year I was in the industry (2022) we were already being told that our software company wanted to double our bill for inflation and we realized we'd have to raise fees again. I bet that wasn't an isolated incident. No kidding. I had my taxes done at H&R Block the previous couple years, just out of lack of time, and I was shocked at how much it cost. 2020 was like $450 for just a 1040, some ESPP/RSU sales, house purchase, backdoor Roth IRA, and kid credits. 2021 was $550 for basically the same stuff, but added a K-1 that had a literal 1 box with a number in it. "It's $100 more because you have an extra form this year." "It has 1 number in it that needed entered verbatim. It's not like it was a complicated calculation." "Sorry, that's what we charge for that form." Plus, the previous 2 years, they screwed up my backdoor Roth IRA contributions reporting, despite me telling them up front "hey this 'distribution' on my 1099-R isn't actually a distribution; it's a backdoor Roth so I shouldn't get taxed on this whole $6200." Needless to say, I paid $20 for the H&R Block software this year and did them myself, and got the backdoor Roth entry right the first time.
|
|
#
?
Apr 19, 2023 23:22
|
|
|
Henrik Zetterberg posted:No kidding. You paid 450 for a 1040? gently caress, I used to undercharge big time.
|
|
#
?
Apr 19, 2023 23:32
|
|
|
So I need An Professional for my 2022 taxes. I've filed for an extension. When is a good time to start contacting pros for help? A week from now? 2?
|
|
#
?
Apr 20, 2023 00:35
|
|
|
Covok posted:You paid 450 for a 1040? Big same.
|
|
#
?
Apr 20, 2023 03:41
|
|
|
So it's apparently one of those days.
|
|
#
?
Apr 20, 2023 22:51
|
|
|
H110Hawk posted:So it's apparently one of those days. Those are for clients and not you personally, I hope.
|
|
#
?
Apr 20, 2023 23:03
|
|
|
MadDogMike posted:Those are for clients and not you personally, I hope. I don't work in tax prep.
|
|
#
?
Apr 20, 2023 23:05
|
|
|
RIP
|
|
#
?
Apr 21, 2023 01:40
|
|
|
You did such a good job on your taxes they wanted to give you a reward. It's a thank you letter with a gift certificate to the cheesecake factory.
|
|
#
?
Apr 21, 2023 01:53
|
|
|
Hi tax thread, cross post from the Long Term Investment thread regarding my partners mutual fund she would like to diversify into index funds and how best to do this.Popete posted:This is a question on behalf of my partner. Her parents setup a mutual fund account for her, it's worth ~350k right now and we are looking at ways to better invest this money (e.g. reinvest it in index funds). She has a meeting setup to talk with someone whose helped there family setup this mutual fund but obviously they are likely to be biased to tell her to keep the money in the mutual fund. A few helpful goon posts later. Popete posted:Much appreciated, we will have to do some more research but yes we are looking to diversify it into lower EP index funds like VTI and a few others.
|
|
#
?
Apr 21, 2023 02:04
|
|
|
In her brokerage's website there should be a page that lists her Unrealized Gain. That is the amount that will be taxed. When you reinvest it elsewhere, reserve money equal to that (now realized) gain times the tax rate from below. Assuming that its been invested in that fund for longer than a year she will owe Long Term Capital Gains on it. This is 15% for a very wide bracket, but if she has low or very high yearly income otherwise some might be in one of the other brackets. See here for the table: https://www.nerdwallet.com/article/taxes/capital-gains-tax-rates. If she is in that middle 15% bracket and the gain wont push past it, then from a tax perspective it doesn't matter when to sell. If she is in the 0% it would save a bit on taxes to only sell up to the edge of that bracket each year, but you would still be loosing out from being in a high cost fund.
|
|
#
?
Apr 21, 2023 02:32
|
|
|
Thank you that is very helpful, looking at the table everything should fall into the 15% bracket so should be good to sell it all in one go. One other question though, last year we did her taxes and included the 1099 form from her mutual fund account and it added a significant bill to her taxes (I'm talking like $7k she had to pay). Is this likely because of transactions happening in the mutual fund? She previously had someone doing her taxes for her and she never paid in before so this was a bit of a shock. I'm just trying to figure out if we royally screwed something up or perhaps she's already paid some of the capital gains taxes up to this point.
|
|
#
?
Apr 21, 2023 03:37
|
|
|
I'm curious if the lower fees in the index funds will really offset the hit of immediately losing 15% of the investments to tax, over the long term.
|
|
#
?
Apr 21, 2023 03:40
|
|
|
Gabriel Grub posted:I'm curious if the lower fees in the index funds will really offset the hit of immediately losing 15% of the investments to tax, over the long term. This is another thing I was considering. She should only be paying taxes on the realized gains over the initial investment amount (I'm not sure what the initial amount was) which means her new principal investment in index funds would be larger and she would thus pay less in taxes when selling in the future so as far as paying taxes go it's a wash. If I'm understanding what you're saying it's also possible to lose gains in the long term because she will have had less money invested now in 2023 if she sells and reinvests due to the tax bill cutting into that principle. This isn't a fund she has plans of touching anytime in the near future so I think it's probably still worth reinvesting especially because the mutual fund it's in has a fairly high expensive ratio relative to index funds.
|
|
#
?
Apr 21, 2023 03:44
|
|
|
Yeah, it's one of those things that's not going to have a clear answer without running the numbers.
|
|
#
?
Apr 21, 2023 03:50
|
|
|
Yeah its worth reiterating that part of their sales/retention tactics is that 1% annual fee doesn't sound like a lot until you compare it to a maybe 5% average annual growth and realize you are loosing a full 20% of your gains.
|
|
#
?
Apr 21, 2023 04:01
|
|
|
Popete posted:Thank you that is very helpful, looking at the table everything should fall into the 15% bracket so should be good to sell it all in one go. Yes, this is likely due to transactions happening within the mutual fund. The fund buys and sells investments, and the people with money in the fund owe taxes on those gains. The taxes you pay on those gains increase your basis in the fund, which is why the unrealized gains number is smaller than (current value - initial investment). $7k doesn't seem wildly out of line for a large investment with a very good year, impossible to say without the actual numbers though.
|
|
#
?
Apr 21, 2023 05:19
|
|
|
Winged Orpheus posted:Yes, this is likely due to transactions happening within the mutual fund. The fund buys and sells investments, and the people with money in the fund owe taxes on those gains. The taxes you pay on those gains increase your basis in the fund, which is why the unrealized gains number is smaller than (current value - initial investment). $7k doesn't seem wildly out of line for a large investment with a very good year, impossible to say without the actual numbers though. I don't remember ever paying taxes on my index fund gains which makes sense as they are unrealized. Seems like you would be paying a lot more in taxes from a mutual fund that is constantly buying/selling than just holding onto index funds and paying one tax bill when you sell. Am I missing something?
|
|
#
?
Apr 21, 2023 05:31
|
|
|
Dividends, interest, capital gain distributions within the fund, etc. Dividends is usually the biggest one.
|
|
#
?
Apr 21, 2023 05:41
|
|
|
Gabriel Grub posted:I'm curious if the lower fees in the index funds will really offset the hit of immediately losing 15% of the investments to tax, over the long term. Well, it's not 15% of the investment, it's 15% of the investment's current unrealized gains. You're right that there's a hypothetical region of the parameter space in which it makes sense to stay put (depending on how much of the position is currently unrealized gains, how long the position will be held, and what the market does while it's held) but the expense ratio difference is getting exponentiated, and exponential growth always dominates in the long run. (And that's without even factoring in the additional ongoing tax drag generated by an actively-managed fund.) Popete posted:I don't remember ever paying taxes on my index fund gains which makes sense as they are unrealized. Seems like you would be paying a lot more in taxes from a mutual fund that is constantly buying/selling than just holding onto index funds and paying one tax bill when you sell. Am I missing something? But you paid taxes on your index fund distributions. You might have just mentally bucketed them as dividends. Actively-managed funds generate more of these than passive index funds.
|
|
#
?
Apr 21, 2023 05:58
|
|
|
Gabriel Grub posted:Dividends, interest, capital gain distributions within the fund, etc. raminasi posted:Well, it's not 15% of the investment, it's 15% of the investment's current unrealized gains. You're right that there's a hypothetical region of the parameter space in which it makes sense to stay put (depending on how much of the position is currently unrealized gains, how long the position will be held, and what the market does while it's held) but the expense ratio difference is getting exponentiated, and exponential growth always dominates in the long run. (And that's without even factoring in the additional ongoing tax drag generated by an actively-managed fund.) Ah right the dividends that makes sense. My index fund holdings are pretty small so I probably just never noticed much of an affect on my tax return comparatively. We need to sit down and do some math but I think it still makes sense to move everything over to index funds. The mutual fund expense ratio alone is costing her a few thousand dollars a year compared to ~$100 for equivalent or better performing index funds, once you factor in the increased taxes being paid on the mutual fund it really seems like the right thing to do.
|
|
#
?
Apr 21, 2023 06:08
|
|
|
Popete posted:Ah right the dividends that makes sense. My index fund holdings are pretty small so I probably just never noticed much of an affect on my tax return comparatively. Just as a point of nomenclature here, index funds are a type of mutual fund. You’re considering moving from an “active” mutual fund to a “passive” “index” mutual fund. Because it’s not held in a tax-advantaged account, you might also consider an ETF; the long-term investment thread can give you more information about that.
|
|
#
?
Apr 21, 2023 06:18
|
|
|
H110Hawk posted:So it's apparently one of those days. Rip. Hopefully it’s a training audit, I’ve seen a couple of those the last 2 years where the exam focus is something brain dead and easy to prove. And if you’re married half of those letters may be duplicates.
|
|
#
?
Apr 21, 2023 16:45
|
|
|
Epi Lepi posted:Rip. And if you’re married half of those letters may be duplicates. Bingo. One pair was telling me they were reducing my refund carry forward for 2023, the other was telling me that they were charging me $100 in penalties for failure to pay my quarterlies promptly.
|
|
#
?
Apr 21, 2023 17:14
|
|
|
Popete posted:One other question though, last year we did her taxes and included the 1099 form from her mutual fund account and it added a significant bill to her taxes (I'm talking like $7k she had to pay). Is this likely because of transactions happening in the mutual fund? This part kind of confuses me though. That’s a very large tax bill due to a 1099 for a mutual fund account that seems like it had no active trading. Would love to know the details there.
|
|
#
?
Apr 21, 2023 20:42
|
|
|
smackfu posted:This part kind of confuses me though. That’s a very large tax bill due to a 1099 for a mutual fund account that seems like it had no active trading. https://www.investopedia.com/terms/c/capitalgainsdistribution.asp Your mutual fund may buy or sell stock for various reasons. When it sells the stock, there is a capital loss or gain. They owe you that money in a pro-rata form. Same thing when stocks in your mutual fund post a dividend. If you automatically reinvest this money it probably seems like a bill out of nowhere, but you should be taking that payment to you and sending off the appropriate tax payment to the government, then reinvesting/spend/whatever the rest. I suggest you turn off automatic re-investment in taxable accounts for this reason. In tax advantaged accounts it doesn't matter, you don't owe taxes then (or ever in Roth accounts.) Unless you own a Vanguard mutual fund: https://www.investopedia.com/how-vanguard-patented-a-system-to-avoid-taxes-in-mutual-funds-4686985 So if you make $100k a year AGI, and your mutual fund posts a $10,000 "long term capital gain" you should immediately take 15% of that ($1,500) and send it off to the federal government as an estimated tax payment. If it says Short Term Capital Gain then 22% (MFJ). Same thing with state taxes, lookup what you owe, send it off.
|
|
#
?
Apr 21, 2023 20:55
|
|
|
I'm curious too, like even if it's 22% 7k would mean more then 30k worth of gains in a year, ya? So like 10% the value of the account. If they've done that much shuffling, maybe exiting won't have as much of a tax hit?
|
|
#
?
Apr 21, 2023 21:03
|
|
|
friends don't let friends buy mutual funds in taxable accounts even vanguard mutual funds have eaten dirt on this before (e.g. the TDF debacle)
|
|
#
?
Apr 21, 2023 21:04
|
|
|
pmchem posted:friends don't let friends buy mutual funds in taxable accounts wait so me holding fxaix in my unregistered is bad? I just started doing that
|
|
#
?
Apr 21, 2023 21:07
|
|
|
Sorry I was off it was actually more like ~4k paid in taxes last year, so not quite so extreme. This year she didn't even get a 1099 from them because it lost money.
|
|
#
?
Apr 21, 2023 21:09
|
|
|
Methanar posted:wait so me holding fxaix in my unregistered is bad? oh it's not bad per se, I mean it's a huge index fund that presumably you're holding in a fidelity account and it has minimal tax worries. I just have a preference for using ETFs, they are super convenient and fewer types of potential tax worries.
|
|
#
?
Apr 21, 2023 21:10
|
|
|
Epitope posted:I'm curious too, like even if it's 22% 7k would mean more then 30k worth of gains in a year, ya? So like 10% the value of the account. If they've done that much shuffling, maybe exiting won't have as much of a tax hit? Actively managed mutual funds turn over stock a ton. I missed the account balance but it's all within reach. pmchem posted:friends don't let friends buy mutual funds in taxable accounts Where should I hold them then? Or what should I be buying in my taxable account?
|
|
#
?
Apr 21, 2023 21:10
|
|
|
H110Hawk posted:Actively managed mutual funds turn over stock a ton. I missed the account balance but it's all within reach. well, more of a subject for the long term thread and clearly there's no one size fits all "correct" answer for this, but if you want to use ETFs instead of mutual funds, some suggestions are at the boglehead site here: https://www.bogleheads.org/wiki/Three-fund_portfolio#Other_than_Vanguard,_Boglehead-style (see section subtitled "Three-fund portfolios using exchange-traded funds")
|
|
#
?
Apr 21, 2023 21:14
|
|
|
Got it sorted 👋 Viginti Septem fucked around with this message at 04:41 on Apr 23, 2023 |
|
#
?
Apr 21, 2023 22:35
|
|
|
|
| # ? May 10, 2024 12:33 |
|
|
Hi all, I have a question. This is for filing in 2024. 1) My wife and I are getting a divorce and plan to sell our house and split whatever profits we get from that. There are no children and no other property. If the divorce is final by the end of this year, when we file next year, do we both file as Single, and then show whatever profit we spilt from selling the house as capital gains or something similar? 2) if the divorce is not final by Dec 31st but instead ends up being final in January, let’s say. In this example, we would still be filing as married, correct?
|
|
#
?
Apr 21, 2023 23:11
|
|
