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100 HOGS AGREE posted:I'm single, don't own a house/property, no dependents, pay a boatload of student loan interest every year and I definitely don't itemize on my taxes. I also think I'll end up contributing like 800 bucks to a 401k by the end of the year and work pays for part of my medical coverage. Does that matter? I always get huge tax returns so I think I'm doing this wrong? My gross wages for this year are gonna be like.... 27-28k I think. Your year-end tax liability is based on your $28k minus $10k for the standard deduction and personal exemption, so no more than $18k AGI. Subtract $800 for the 401k, some exempt medical plan fees, and up to $2500 in student loan payments. That's around $15k AGI, or $1805 of tax liability, but you've paid in 12*275 or $3300, giving you a refund of $1495. Those are my calculations; let's see what the IRS Calculator says: "[Y]our anticipated income tax for 2013 is $1,882. If you do not change your current withholding arrangement, you will have $3,025 withheld for 2013 resulting in an overpayment of $1,143." This is based on a single, non-dependent, with no further adjustments. If you have a "boatload of student loan interest" deducted from your AGI yearly, you'll probably end up doing well with two exemptions, but one won't hurt much. Also, putting $800 annual dollars in a 401k, starting at age 18, gives you $142k dollars at age 66, which is hardly enough to pay heating bills, so you should really think about front loading that 401k as much as possible. That money is tax exempt (today, but it doesn't save you gobs on taxes since you're already in the 15% bracket). So, how close is my estimate of income to your actual monthly earnings? If it's 50% off, for example, some important piece of info is missing. What does the tax calculator actually say?
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Oct 12, 2013 06:12
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That sounds about right, I had a little trouble figuring out my yearly income but once you take overtime into account I think your numbers are pretty close. I make a little under 1600 a month take home on 14.09 hourly wages. I'd like to front load the 401k more but isn't it better financially to work on paying down my student loans right now? I've got like 40k in loans, the highest interest rate I have on those is like 9.5%. Pretty sure I'm hitting the $2500 cutoff for deducting student loan interest. And I'm not 18, I'll be 28 in December.  The real thing I need is more income, honestly. I've only been making 14.09 an hour since April when I got hired in from being a contractor (I work at an IT helpdesk). And this is the most I've ever been paid at any job I've ever had. It's what I get for doing a liberal arts degree.
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Oct 12, 2013 14:25
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The general advice is to load the 401(k) only to the amount needed to get all of the matching your employer provides (if any): then, load up a Roth IRA to the max annual contribution ($5500 this year for an individual); then load the 401(k) up to the annual max ($17.5K I think? If I remember right?); and then if you still have more money to save, you're into stuff like non-tax-advantaged investments. Using an HSA is also an option somewhere in that mix. However the student loan interest rate does complicate things. If your student loans cost you more in interest than you'd make from your retirement investing, it seems like you should probably pay them down preferentially. Although it can be more complicated than that, since you have an annual maximum that you can take advantage of for tax-advantaged retirement savings, so if you "miss" several years in order to pay down your loan faster, you can't make that up (and you miss having money in for the longest haul for your retirement, too). On the third hand, student loans in the US are non-dischargeable in a bankruptcy, making them especially onerous and for many folks, that alone is enough to prioritize them ahead of any other savings/investing beyond your emergency cash reserve. All of this advice and more is available for discussion in the long term investment and retirement savings thread.
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Oct 12, 2013 18:18
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Konstantin posted:This sets off several sets of alarm bells, and you should stay as far away as possible. Number one, no reputable brokerage service would recommend this course of action. They shouldn't even be talking to you about your In-law's assets unless they have his written consent for you to handle his finances. They certainly shouldn't be recommending that he legally transfer those assets to you. Having $15,000 transferred into your bank account and then wired out of the country will raise some major red flags, the IRS will know about it and may be asking some very pointed questions. Something very shady is going on here, if you're a part of it you are in way, way over your head and need to GTFO, and if you're not a part of it then you need to stay that way and not get involved with your in-laws finances at all. Nothing shady is going on, FYI I didn't give any account info just gave a hypothetical to an online broker. They don't offer international wire services which is one of the problems. I'm going to let my bank know what's going on ahead if time so they don't get spooked. Medikit fucked around with this message at 19:55 on Oct 12, 2013 |
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Oct 12, 2013 19:46
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Please forgive me if something similar has already been asked in this thread. I'm about to receive a sizable sum from a relative living in a foreign country in the form of a wire transfer (and yes, he is a foreign citizen). Let's say it's greater than $10,000. Do I need to pay taxes on the gift or declare it to the IRS?
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Oct 16, 2013 05:22
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dzarc posted:Please forgive me if something similar has already been asked in this thread. With what you described here, no. Unless the gift was more than $100k, you shouldn't have any special filing requirements.
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Oct 16, 2013 05:46
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Admiral101 posted:With what you described here, no. Unless the gift was more than $100k, you shouldn't have any special filing requirements. Just out of curiosity, what happens if it's over $100k? Or say two $50k over the span of less than one year?
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Oct 16, 2013 05:58
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dzarc posted:Just out of curiosity, what happens if it's over $100k? Or say two $50k over the span of less than one year? You can read about this in detail here: http://www.irs.gov/Businesses/Gifts-from-Foreign-Person But essentially it will require you to file Form 3520.
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Oct 16, 2013 20:26
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I see. Thanks for your help! Seems like it might be worthwhile to break it up into smaller amounts over a number of years to avoid the hassle.
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Oct 16, 2013 21:00
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dzarc posted:I see. Thanks for your help! Seems like it might be worthwhile to break it up into smaller amounts over a number of years to avoid the hassle. Really? Every transaction that's over 10k gets flagged to the IRS automatically by your bank, seems like it would be in your best interest to just follow the rules of Form 3520 than try to make the payments look like money laundering. There are no taxes owed on the foreign gift it seems.
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Oct 16, 2013 21:21
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Since IRS will know about it one way or the other and there are no taxes involved, I rather not fill out the form. If they want to investigate, go ahead. I don't see how filling out the form will make it seem less like money laundering. We're not talking about millions here.
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Oct 16, 2013 21:29
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dzarc posted:Since IRS will know about it one way or the other and there are no taxes involved, I rather not fill out the form. If they want to investigate, go ahead. I don't see how filling out the form will make it seem less like money laundering. We're not talking about millions here. Breaking up a large payment into smaller payments purposefully to avoid reporting requirements looks like money laundering, both your bank and the IRS might get curious depending on the number of transactions, the time in between each one, and the amounts. Filling out a simple form and them getting it all in one chunk seems easy enough to me, but whatever floats your boat...
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Oct 16, 2013 21:34
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mishaq posted:Breaking up a large payment into smaller payments purposefully to avoid reporting requirements looks like money laundering, both your bank and the IRS might get curious depending on the number of transactions, the time in between each one, and the amounts. I see your point. Not to prolong the debate but it seems like if I was a money launderer, I would fill out the form and hide in plain sight  And I'm pretty sure there are plenty of people in the US that purposefully break up cash gifts into multi-year payments to avoid the gift tax threshold and reporting requirements.
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Oct 16, 2013 21:41
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dzarc posted:Since IRS will know about it one way or the other and there are no taxes involved, I rather not fill out the form. If they want to investigate, go ahead. I don't see how filling out the form will make it seem less like money laundering. We're not talking about millions here. Structuring payments to stay under filing requirements or avoid scrutiny itself is illegal.
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Oct 16, 2013 21:43
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Guy Axlerod posted:Structuring payments to stay under filing requirements or avoid scrutiny itself is illegal. Okay this would force me to fill out the form. Is there somewhere I can read up on this?
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Oct 16, 2013 21:45
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dzarc posted:Okay this would force me to fill out the form. Is there somewhere I can read up on this? http://en.wikipedia.org/wiki/Structuring
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Oct 16, 2013 23:15
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Let me get this straight. If I give someone $14,000 a year every year for as long as we both live to avoid gift taxes and filing requirement. This can be considered structuring and illegal? Edit: Reading on the structuring a bit more. This rule seems to apply only to the $10,000 threshold.
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Oct 16, 2013 23:19
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dzarc posted:Let me get this straight. If I give someone $14,000 a year every year for as long as we both live to avoid gift taxes and filing requirement. This can be considered structuring and illegal? Why are you fixated on this if, as you stated, the money is coming from a non-US citizen relative from abroad? The gift is not subject to any tax, just fill out the form and you're following all the rules like a good boy/girl. If you want any other advice about evading taxes you're in the wrong place.
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Oct 16, 2013 23:30
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If you don't file the form, it's possible that the money can be deemed income in the year you began the structured transactions. You would then either have to pay taxes as if it were income, or pay the negligence penalty. Stop being a baby.
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Oct 17, 2013 00:28
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That said, annual gifts of $14k (or whatever the annual gift tax exclusion is each year) are a common estate planning technique used to preserve the lifetime unified exemption.
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Oct 17, 2013 00:44
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I concede.  Thanks for all the advice.
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Oct 17, 2013 03:11
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Will an online service like turbotax let me file current and back taxes? I didn't file successfully for 2010 and 2011 and am trying to figure out how to get everything taken care of in one swoop.
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Oct 17, 2013 14:24
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cr0y posted:Will an online service like turbotax let me file current and back taxes? I didn't file successfully for 2010 and 2011 and am trying to figure out how to get everything taken care of in one swoop. Last time I checked, no.
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Oct 18, 2013 02:19
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My wife and I incurred some minor legal expenses. From looking around online appears personal expenses are not tax deductible, however this was related to a job. I don't particularly want to go into details unless it is necessary, but is this something that we can itemize in our deductions?
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Oct 18, 2013 22:02
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GanjamonII posted:My wife and I incurred some minor legal expenses. From looking around online appears personal expenses are not tax deductible, however this was related to a job. If this is something along the lines of wrongful termination or harassment on the job or whatever, then it's not deductible.
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Oct 18, 2013 22:45
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My side business recently started to generate a sizable amount of monthly income. I make $72k at my normal job (+$6600 bonus this year). For the first part of the year, my side business was making around $1k a month and now is making around $10k a month. So I should end the year with around $40-$60k in extra income. I'm in California and already max out my 401k and my Roth. Couple of questions: 1. I was making quarterly tax payments of $1k per quarter based on the initial part of the year. Should I up my last quarter's payment to take into consideration the income growth? How much should I put in? 2. What can I do to shelter this income? I pay a friend now to help with the marketing side of my business. Should I up her salary/pay ahead for her services? Should I stock up on business assets (membership fees, etc) this year to be able to deduct the cost of everything? 3. I am not sure whether this income will continue next year or not. Is it worth doing anything else to prepare in case it does continue? I'm considering the following: Opening up an HSA Starting a corporation ??? Any help would be much appreciated!
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Oct 18, 2013 23:13
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cr0y posted:Will an online service like turbotax let me file current and back taxes? I didn't file successfully for 2010 and 2011 and am trying to figure out how to get everything taken care of in one swoop. I just had to go through this same process (though only for 2011). The online TurboTax services and e-filing appeared to be shut off for earlier years. Though you can still get DVD software copies for earlier years from some outlets, I think you'd still be filing paper returns from it. (I felt my particular multi-state situation warranted an accountant's time to unfuck, no offense to this thread. It was worth the money to me to put all my tax worries down.)
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Oct 19, 2013 00:11
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cr0y posted:Will an online service like turbotax let me file current and back taxes? I didn't file successfully for 2010 and 2011 and am trying to figure out how to get everything taken care of in one swoop. If you make under a certain amount, you can go to a VITA site and they'll prepare your back-taxes for free: http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers
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Oct 19, 2013 14:34
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furushotakeru posted:There is no tax related benefit that I could think of resulting from you incorporating. Instead, you would have another tax return to file and the corporation would owe CA a minimum of $800 per year even if you had little or no profit. So a follow-up on this question. I spoke to someone in my field who had personal experience in the matter. He said that it was a way to avoid the AMT. He also said that, because he has an agent that takes 10% of his income off the top from any job he accepts, incorporating lets him avoid paying taxes on that 10%. If someone on this forum had the time and inclination, could you explain how paying an LLC all of your wages and then drawing a salary would accomplish this? Or is he mistaken?
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Oct 22, 2013 01:37
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Are you a self-employed contractor? If so, you should be able to take these deductions on Schedule C before tax anyway. Are you an employee of another corporation? If so, incorporating and paying yourself could save big bucks -- but aware you'd be on the hook for the other half of FICA. Either way, sounds like bad tax planning.
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Oct 22, 2013 02:44
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e: nvm
Total Confusion fucked around with this message at 21:37 on Nov 13, 2013 |
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Oct 24, 2013 08:03
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Cocoa Ninja posted:So a follow-up on this question. I spoke to someone in my field who had personal experience in the matter. He said that it was a way to avoid the AMT. He also said that, because he has an agent that takes 10% of his income off the top from any job he accepts, incorporating lets him avoid paying taxes on that 10%. It's possible that it might work that way in his circumstances. The nuances involved are more than I would go into for free on an internet forum. It might work for you in a similar way, or it might not. It might be worth incorporating, or it might not.
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Oct 24, 2013 18:00
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Oops, at the start of this year I misread the conditions for an exception to the underpayment penalty and am facing a fee for 2013 and want to see if there is anything I can do about it while its still 2013. The basics (super round numbers) I lost my job in January and converted my 401k since it would be a low income year and I could do the conversion in the 10 and 15% marginal brackets. Because of a mistake reading I thought I didn't need to pay tax on the conversion until I did my 2013 taxes. I have 3k taxable W2 income and 23k taxable 401k to Roth income all in January 2013. I have about 400 withheld from the paycheck, but did not make an estimated payment for the conversion. All other income and deductions add up to about 1k more AGI. I will owe about 1.7k on my return for 2013. Running through form 2210 Short Method it looks like I will pay a penalty of about $45 if I did nothing but wait until February and filed my taxes like normal. It doesn't seem like I can use the Regular method or Scheduled 1A since I neither made the estimated payment in the correct quarter nor made equal estimated payments in all quarters. I just want to check if there is anything I can do now to avoid the penalty like sending them a late estimated payment. edit: I should reiterate that I had always planned on my tax bill for 2013 to be about 1.7k and have that money ready already, this is just about the underpayment fee. Xenoborg fucked around with this message at 00:17 on Oct 25, 2013 |
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Oct 25, 2013 00:15
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furushotakeru posted:It's possible that it might work that way in his circumstances. The nuances involved are more than I would go into for free on an internet forum. It might work for you in a similar way, or it might not. It might be worth incorporating, or it might not. Thanks! When I'm making hella' paper I'll call you up and get a real consult.
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Oct 25, 2013 02:32
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moana posted:My side business recently started to generate a sizable amount of monthly income. I make $72k at my normal job (+$6600 bonus this year). For the first part of the year, my side business was making around $1k a month and now is making around $10k a month. So I should end the year with around $40-$60k in extra income. I'm in California and already max out my 401k and my Roth. I was in a similar situation years ago. It gets a little tricky when things overlap so I want to preface I'm not an expert on this. Just passing on what I did with the help of my CPA. The first thing I would look at is a SEP-IRA. Really easy to setup and allows you to put a bigger chunk of tax-deferred money away. For self-employed individuals, calculating how much you can contribute is a little tricky. This calculator might help, just look at the SEP part of the graph. http://www.calcxml.com/do/qua12 The nice thing about a SEP-IRA is you don't have to give up your Roth IRA contributions. For reducing income, paying up front for fees and services is one way of doing it. We used to pay down our Amex card before the end of the year to count it on that tax year. If you aren't doing so already, make sure you are utilizing all the proper business deductions if they are available (home office, cell phone service, etc). There is also a Section 197 Deduction that allows you to deduct certain items all at once instead of depreciating them over the course of years. So if you're on the fence about buying computers, printers, office furniture, or software, do so before the end of the year. As for estimated taxes, since your income is under $150k, you need to pay 100% of what your tax liability was last year to fall under Safe Harbor provision.
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Oct 25, 2013 09:53
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I'm sure something like this has been asked before but I did a quick search and didn't see an answer on the first few pages. I started a new job in late May and went from $80,500 to $92,000/year. I also had unused vacation time cashed out that to $1,268 after tax and $27,000 in a 401(k) that got rolled over into an Traditional IRA in September. I haven't been making contributions to it since I opened it (family financial planner's advice since I don't have a ton of savings on hand). The only W-4 allowances I have are for being single and not being a dependent. I also claim more than the standard deduction because New York and New York City taxes wind up being higher (Last year it was close to $7,000). Oh, and I'm not a homeowner. Am I still likely to get a tax refund for this year? I don't care about the amount so much as I am afraid of having to owe money. Shark Sandwich fucked around with this message at 19:29 on Oct 27, 2013 |
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Oct 27, 2013 19:27
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Niwrad posted:As for estimated taxes, since your income is under $150k, you need to pay 100% of what your tax liability was last year to fall under Safe Harbor provision.
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Oct 27, 2013 19:34
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Slaughterhouse-Ive posted:I'm sure something like this has been asked before but I did a quick search and didn't see an answer on the first few pages. Nobody on the planet will be able to answer this question. W-4 allowances are helpful, but what actually gets withheld very often varies from payroll department to payroll department (if it's done in house).
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Oct 28, 2013 00:36
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Fair enough. I didn't know if there was some hard and fast rule of thumb and Google didn't enlighten me. I guess that makes sense if it's a nebulous question. Thanks though!
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Oct 28, 2013 01:09
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Slaughterhouse-Ive posted:Fair enough. I didn't know if there was some hard and fast rule of thumb and Google didn't enlighten me. I guess that makes sense if it's a nebulous question. Thanks though! Can you tell us what % of federal income tax is being withheld from each paycheck?
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Oct 28, 2013 05:30
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