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BEHOLD: MY CAPE posted:Personal federal income tax question: I make about half of my income as W2 wages and half as a 1099 independent professional. I had a big income increase and I figure I will owe about $10k in taxes when I file. I increased my withholdings a bit so I will withhold more than my 1040 total tax owed for last year, and therefore I should qualify for safe harbor from underpayment penalty. My question is, will I still qualify for safe harbor if I request an automatic extension to file? This seems like a much too obvious loophole but it would be really nice to put off forking over a big tax bill for an extra six months. An extension only extends your filling deadline; you still need to pay what you owe by April 18. You're supposed to estimate what you will owe and pay it with your extension. They'll charge interest from April 18 until you pay the balance of what you owe.
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Nov 1, 2016 01:59
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Leon Trotsky 2012 posted:Does anyone know if mandatory pre-tax pension contributions count towards the Retirement Saver's Tax Credit? I know SARSEPs do, but the rules mention "if the employee chooses" and I don't know if that would include mandatory pension payments. Mandatory contributions do not count. If you make optional contributions on top of that, the optional contributions count.
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Dec 2, 2016 02:46
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Moneyball posted:Question about foreign property- my girlfriend is a foreign citizen living in the US who received some property due to eminent domain. Some apartment in her parents' city worth around $50k USD. She probably has to report all worldwide income regardless of whether you two are married. Residents (citizen or non-citizen) have to report worldwide income. Unless she has some kind of tax treaty exemption that allows her to file as a nonresident alien while living and working in the US, she's either including the income on her single or MFS return or you both are including it on your MFJ return. Once you are married, if she still has the treaty exemption, she COULD still file her nonresident return, and you'd also file a MFS return, or she could elect to be treated as a resident and you could file MFJ. She acquired the property through eminent domain? Does that mean she owned some other property that was taken through eminent domain and this property was given to her as compensation? Generally, selling property results in capital gain - your gain is the amount realized minus your basis in the property. How she acquires the property will likely determine her basis. If she received it as compensation for eminent domain seizing of some other property, her basis in this new property might be whatever her basis in the old property was or it might be the fair market value of the old property when it was seized, depending on how the transaction was structured. If she gives it to her parents, she wouldn't report it as income, but she may need to file a gift tax return to report the gifts. Whether you marry in 2017 or not, she should get tax advice from a professional who has all of the details about how she got the property and how she transferred it away.
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Dec 18, 2016 17:09
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Going to be fun filling out all the paperwork these next couple of years.
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sex swing from IKEA posted:Deduction question: When you get married doesn't determine filling MFS vs MFJ. The best thing is to run the return both ways and see what gives the best result. Tax items that make a difference would be where the tax brackets change, and credits you would qualify for as MFJ that aren't allowed for MFS, and ACA subsidies, off the top of my head. There are probably others depending on your specific situations. Some people also choose to file MFS if they are on income-based student loan repayment plans and eliminating the spouse's income makes a big difference in the payment amount (and the amount saved on loan payments is greater than the extra tax paid because they filled MFS).
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Dec 18, 2016 17:21
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SurgicalOntologist posted:Married, filing jointly, last year we had $43k AGI and overpaid through withholdings by $2.5k. That stuff hasn't changed much. You won't get an underpayment penalty if the amount you owe with your return is less than $1,000, or as long as your withholdings + estimated payments are at least the lesser of 1) your taxes owed last year or 2) 90% of the tax you owe this year. Your state probably has similar rules with a different absolute $ amount. At this point, changing your withholdings at work will not make enough difference on the amount withheld for 2016, but if you expect to have the same thing happen in future years, changing your withholding could prevent you from needing to make estimated payments.
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Dec 18, 2016 17:30
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SurgicalOntologist posted:Thanks. Doesn't the timing matter though? Or can one just pay enough estimated taxes in Q4 every year to avoid the penalty? It can. You're generally expected to make equal payment of estimated tax, and underpayment penalties can be assessed for each payment individually. When you have uneven income, you can use an alternate method to calculate your estimated payments to avoid underpayment penalties. See Pub 505.
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Dec 19, 2016 03:59
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The Slack Lagoon posted:MFS and MFJ is a year to year thing and you don't get life 'locked in' to doing one or the other year to year? Probably a dumb question. Yes, every year you are married you choose between filling jointly or separately. What you did the prior year has no affect on your choice the next.
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Dec 26, 2016 03:19
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Michael Scott posted:Hello tax thread, If you have AGI less than $64000, you can use myfreetaxes.com-a United Way project powered by H&R Block software. It will do what you need for free. Is the mileage related to your W-2 job or your self-employment? If it's for self-employment you would list it as an expense on your schedule C and it would reduce your net self-employment income. Then you could also take the standard deduction. If it's for your W-2 job, it is an unreimbursed employee expense and has to go through schedule A, and you only take it if you're itemizing, not taking the standard deduction.
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Jan 21, 2017 17:47
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DaveSauce posted:Kind of an odd question, but we bought a house in 2016 and we'll be itemizing our deductions. Deduct what your escrow account paid in 2016 and the amount of property tax allocated to you in the closing documents. Both amounts are probably for taxes that came due in 2016-at least here half of the year's taxes are due in the spring and half in the fall.
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Jan 29, 2017 15:42
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The Gardenator posted:My question is regarding filing (Form 8965) an exemption to Obamacare with exemption A (Unaffordable Coverage) as the annual cost would be more than the 8.13% of their Modified AGI. I am completing this for a married couple who is in my extended family and there is a language barrier. I am "the tax person" in my family and I want to save them some money versus going to a professional. Were they offered employer-sponsored coverage? If so, you have to use that amount instead of their marketplace number. If you're figuring affordability based on the marketplace, you don't just use the total bronze premium, you have to complete the Marketplace Affordability Worksheet in the 8965 instructions to figure out their required contribution amount-what they would have been required to pay if they'd gotten insurance through the marketplace. A 2-person household making $25k would definitely have gotten subsidies to make their insurance cheaper.
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Feb 11, 2017 14:38
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TATPants posted:Thanks for the quick reply! Also be careful to make sure you qualify to take mileage from your apartment to your first place of work. If your home is not your Principal Place Of Business, then you are commuting when you leave your home and when you return and this mileage is not deductible. You can always take mileage between job locations.
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Feb 11, 2017 14:43
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TATPants posted:Excellent information. That is actually incredibly helpful, because 90% of my client meetings are at their homes, so that would make my apartment not my principal place of business, right? Not necessarily. Principal place of business has more to do with doing the "running the business" type work there than the total time spent there. See Pub 587 about business use of the home to see if you can count your apartment as your principal place of business.
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Feb 12, 2017 05:05
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22 Eargesplitten posted:I have no idea how they did it. I would guess they didn't do it at all, since they didn't ask about my income. She's not a dependent, we provide for ourselves. If your in-laws signed your wife up for her marketplace insurance, they might have told the marketplace she was part of their tax household. Since she isn't, you and the in-laws will both need to enter the 1095-A information and allocate the premium credits received. You want to coordinate this with them because the IRS will let you allocate any way you can agree on as long as the percent allocated to yours and the percent allocated to theirs add up to 100%. (It can be allocated 100% to one and 0% to the other). You'll have to do some playing with the numbers to see how it turns out best. The allocation is what the VITA folks won't do. Did you get married during 2016? If so, you might qualify for the alternate calculation for year of marriage for your wife's advanced premium credit reconciliation.
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Feb 19, 2017 16:31
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GobiasIndustries posted:Thank you for this. She definitely wasn't, she also went on a rant at one point about how the law was 'evil' but it's good to know that I might be able to get a bit of relief. She's probably misunderstanding the IRS response to the executive order telling agencies to use discretion to "reduce the burden" of the affordable care act. The IRS is accepting returns for processing that do not report a penalty or any heath insurance. This does not change the fact that the penalty is owed, and will probably result in letters from the IRS asking for proof of health insurance or the additional tax owed because of the penalty.
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Feb 24, 2017 14:45
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22 Eargesplitten posted:Apparently TurboTax Free doesn't handle 1099-MISC forms for something other than work. I've got a lawsuit settlement 1099-MISC, are there any free online places that will handle that? Preferably also handling state taxes. If not, I'll probably just see if I can still get a Mint discount on one of the paid versions. MyFreeTaxes from the United Way should handle that free if you have less than $64,000 AGI on your return. It also does states free.
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Feb 27, 2017 15:39
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momtartin posted:Jesus TurboTax/HrBlock are ripoffs when it comes to being self employed. If you have AGI less than $64,000, the United Way's MyFreeTaxes will file a return with a schedule C for free. If not, you could figure your return by hand and enter the numbers using the free file fillable forms.
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Apr 9, 2017 16:22
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ohgodwhat posted:Is it necessary to have the 8606 once you've converted it to a Roth? It sounds like it's only for traditional ones that didn't get converted. It's necessary to calculate any tax and penalty on an early Roth distribution.
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Jun 28, 2017 13:59
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Zero VGS posted:If I make 80k a year and my dad makes nothing, and I am about to start renting out a property, can I have him collect the rent for himself in his name, and gift some back to me? For purposes of getting him some money and still getting some for myself at a lower tax bracket? No. The rental income goes to the property owner. And having your income arrive in your dad's name and then have him gift it to you is fraud. You could hire your dad to manage the property for you and pay him for that service, assuming that doesn't require some kind of license where you live. The management fees would be expenses on your schedule E.
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Feb 13, 2018 14:06
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Elizabeth Mills posted:I filed my taxes in February, they said I owed $905, I paid $905. Easy-peasy. Yes. How is it a punishment for you to return money that wasn't yours to begin with?
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Mar 15, 2018 03:48
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Ur Getting Fatter posted:I'm getting some conflicting info and was hoping someone here might clear it up. 1. No; however, if she does not file for 3 consecutive years her ITIN will expire and she will have to renew it by filling out the application and submitting her identification documents to the IRS again. 2. Maybe. Since you are a citizen, you both can elect to treat her as a resident and file a joint return. A resident joint return would report all of both of your worldwide income. You might be able to use the foreign tax credit or the foreign earned income exclusion to reduce the tax you part the US on her non-US income. This election would continue until it is revoked, and then you cannot make that election again. So you usually make a choice which way to treat her and stick with it. If you do not elect to treat her as a resident, then you would file separately, and her return would only report her US-related income. Which route is better will depend on your specific income situations, and you probably should talk to a professional to figure out which is better for you. 3. This question only comes up if you do not elect to treat her as a resident and file a joint return, so you would be filing a married filling separately resident return and she would possibly be filing a married filling separately nonresident return. Generally deposit interest is not taxable for nonresidents, but I do not know if you can allocate interest from a joint account between a resident return and nonresident return.
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Jul 19, 2018 19:04
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Ur Getting Fatter posted:Does "renewal" keep the same ITIN number or would she be assigned a new one? The point of getting the ITIN is making sure she has access to my accounts and I imagine the bank isn't going to look favorably on her tax id number changing every three years. The ITIN stays the same.
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Jul 20, 2018 19:12
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Harveygod posted:Follow-up question: It's looking like we're going to end up with an AGI slightly too high to qualify for the credit (probably going to land on around $66000). We haven't maxed out our IRA contributions yet (only contributed $2000 to each of our Roths), so my plan is to contribute just enough to my Traditional IRA to bring the AGI to $63000. Yes, just make sure you tell your IRA custodian that the contributions are for 2018 when you make them.
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Oct 11, 2018 13:31
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Small White Dragon posted:Should I be expecting any forms if I made HSA contributions, but not deductions in 2018? (I know there's a form sent if you took money out.) Yes, but the HSA trustee isn't required to send it until May because you can still contribute for 2018 until April 15. You don't need to have it to file. Any contributions you made through payroll deductions (and any amounts that your employer provided) should be reported with code W in box 12 of your W-2.
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Jan 21, 2019 00:48
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BonerGhost posted:Can any of you tax pros give any insight as to how you staff during the season? I'm a first year VITA/TCE volunteer and our site coordinator hasn't released the schedule yet, so apart from late in the season I don't know relative busy times. Do you anticipate any of it changing because of the shutdown? I've run a community-based free tax program for the past 5 years. For VITA/TCE, sites are extremely busy starting at the end of January as soon as enough taxpayers get their documents. The strong majority of taxpayers accessing a free tax site expect to receive a refund and will file as soon as possible to get it quickly. When we operated as first-come-first-served, we would be swamped as soon as we opened and through mid-March, then we have a lull and sites would sometimes close early. Traffic would pick up again in April, but we never saw January/February level traffic even right before the deadline. I don't expect you to be any less busy because of the shutdown, but I would not be surprised if it took a little longer to process everyone's returns and issue refunds.
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Jan 22, 2019 13:59
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Droo posted:I'm not sure about exactly what order the refundable/non refundable credits go in so not sure if you would get money back or not, Jumping back up to this, the nonrefundable credits are applied before refundable credits. You see it walking through the 1040: nonrefundable credits are applied to reduce your income tax, then any special or penalty taxes (like SE tax, the IRA early distribution penalty, etc) are added, then refundable credits are added to your withholding and estimated payments to apply against your total tax liability and constitute your refund. So you might not get all the benefit of the nonrefundable credits if you don't have enough income tax liability, but they are applied in the order you would want them to be.
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Jan 22, 2019 14:07
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Ronald McReagan posted:This of course assumes everything goes to plan. I know I can always zero out withholding now, but that would leave the possibility of things not going according to plan and us ending up owing interest/penalties to the IRS (on the other hand, without the second child tax credit, we'd still only owe the government about $1,000. Is this even enough to trigger penalties/interest if it's paid late?). If things do go to plan, can I get whatever I've had withheld on my taxes during the year up to that point "refunded" through payroll in advance of filing the following year's tax return? The answer affects how we'll save for hospital bills over the course of the year. There are three ways to avoid the underpayment penalty: 1. Withhold/pay estimated taxes of at least as much as your prior-year tax liability 2. Withhold/pay estimated taxes of at least 90% of your current-year tax liability (this was lowered to 85% for 2018) 3. Owe less than $1000 on your return So owing "about $1000" might be ok and might not be ok depending on which side of $1000 you end up landing on. I am not aware of any mechanism for you to get your withholdings back before filling a return. Your employer is required to send that money to the government on a regular basis, so you can't just ask for it back from payroll. You can change your withholding at any time during the year, so you could wait until you know that you are pregnant and then adjust so no more is withheld. Note also that a child has to be born before the end of the year to provide tax benefits, so time is of the essence to get that process started.
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Jan 22, 2019 14:31
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axeil posted:My girlfriend and I are getting married this year ( Try also mocking up a return as if you were already married filling jointly to get an idea of how marriage will affect your situations. Also be aware that the "married" withholding rates assume your spouse doesn't work, so you both should probably continue to withhold at single rates unless one of your incomes is way, way nicer than the other.
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Jan 24, 2019 06:04
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) and I was curious if there were any tax-related implications we should be aware of and start preparing for now. She owns a condo (with a modest mortgage) and we're doing our taxes together by hand this year so we both have full and accurate info on everything.
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tumblr hype man posted:gently caress TurboTax, the IRS FreeFile program is available to people making less than $66k/year. You can probably find something that will do everything you need for free through the free file list. The HSA stuff might not be free everywhere. It is free to do the HSA form through https://www.myfreetaxes.com, which is sponsored by the United Way. You will also be able to file one state return for free.
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Jan 31, 2019 04:29
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actionjackson posted:I'm being asked for the 1099-G using the eSmart free file, but my state only provides me part of the info needed... huh You have to include your state refund in income IF you got a tax benefit by deducting state income tax withheld (as an itemized deduction) last year. This is not new, but if you never itemized you wouldn't have seen it.
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Feb 1, 2019 05:40
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Ur Getting Fatter posted:Thanks a ton everyone for the expat advice, it really is super helpful: Owning an interest-bearing bank account is, by itself, a justification to get an ITIN. You get a letter from the bank saying that you need an ITIN so they can report your interest to the IRS and you include that with the W-7 instead of a tax return.
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Mar 16, 2019 14:21
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Detective Thompson posted:What form do I need to submit with the 1040 then in order to get the exemption? I assume I can't just say it wouldn't have been affordable and file just the 1040 and the IRS is going to be cool with it. If you qualify for an exemption for all the months you didn't have insurance, this year you just check the box on the first "page" of the 1040 and don't submit any form. If you have an exemption for some, but not all the months you didn't have insurance, use form 8965 to claim the exemption for the months that you qualify. The 8965 instructions have worksheets to determine if coverage was unaffordable, but if you would've qualified for Advanced Premium Tax Credit to help pay for insurance, you have to factor that in when you're calculating affordability. There's also a laundry list of "hardships" that you should review and see if any apply.
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Apr 1, 2019 13:58
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MadDogMike posted:Per this at least it appears Medicaid MAGI does indeed not count things put towards retirement contributions. I would probably double check with New York's HHS to be sure though, there might be some sort of state issue I'm not aware of. Be sure to check if Medicaid has asset limits on your state. Even if you income qualify, assets you hold might make you ineligible.
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Jun 7, 2019 13:57
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tangy yet delightful posted:How would being a resident of Oregon for part of the year work with respect to Oregon income tax? For residency definitions, check Oregon Publication OR-17. As a part-year resident, Oregon wants to tax you on all the income you got while a resident and the Oregon-sourced income you got while a non-resident (if any). W-2 income should be split by state in boxes 15 and 16. This division will be done by the employer and likely reflects the location where you earned the wages. You might need to divide your wages differently if you worked in a state other than your state of residence.
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Aug 4, 2019 14:28
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sullat posted:Ah yes, that decision. You have to write off the income as non-taxable, but you can't use it to claim the EITC either. This might not be true anymore. In May, a taxpayer won in tax court on the argument that the Notice 2014-7 income is "earned income" that is includible in gross income, even though they excluded it from income as instructed in the Notice. The argument went that Section 32 uses "includible" instead of "included" in gross income, so the IRS deciding in Notice 2014-7 that taxpayers should exclude this income from AGI did not change the character of the income, it just provided an exclusion from taxation. I haven't seen any new guidance from the IRS about this issue yet. So it looks like the current state is that we adjust the income back out on Schedule 1 and include it as earned income for calculating the EITC.
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Nov 4, 2019 14:19
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Splinter posted:I received a 1099-R for withdrawing $500 from a Vanguard Roth IRA in 2019. From my understanding, despite being under 59.5, this should be a penalty/tax free withdrawal since it could be said I was withdrawing from previous contributions, rather than earnings. However, if I add this 1099-R to TaxAct, it adds $50 to my tax liability as if I'm being hit with the 10% penalty. Am I misunderstanding the criteria for avoiding the 10% penalty, or is there some issue with how I'm entering this into my taxes? Should I just not add the 1099-R distribution to my taxes if I'm confident this could be offset by prior contributions? You need to complete Part III of Form 8606 to record your contribution basis and use it to offset this distribution. The software might reference Form 8606 or Form 5329 (the form that calculates the additional penalty) on the entry screen for the 1099-R. You should NOT just leave the 1099-R off your return. That would guarantee an IRS letter in the fall.
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Mar 2, 2020 04:16
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tangy yet delightful posted:I'm showing $0.00 real estate taxes paid on my 1098. Last year we sold a home and bought a new home in November. I'm not sure if that's somehow changed how the real estate taxes are reported (or in this case - not reported) on the 1098 but I'm trying to determine if I need to get that number and/or have the mortgage companies re-send corrected forms because I feel like I'm missing a deduction or credit here. Assuming you still had a mortgage on the home you sold, you're looking for two 1098s, one for the loan on the old house and one for the loan on the new house. Old loan's 1098 should show any taxes that were paid out of the old escrow. Check that closing disclosure to see if any already-paid taxes were allocated to your buyers in the sale. If you closed in November, it's likely that your escrow account for the new loan didn't pay any taxes in 2019. Check that closing disclosure to see if any already-paid taxes were allocated to you in the sale.
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Mar 16, 2020 05:18
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tangy yet delightful posted:I'll dig that paperwork up hopefully tomorrow. I assume if the taxes are allocated to the buyers then they get to claim any tax break from them? Yes
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Mar 16, 2020 05:55
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heavy liquid posted:Thanks. Well her concern is that she's splitting the money with her brother, and wants to make sure they aren't going to tax her after she gives him his share. I don't think they're on the best of terms, so she doesn't want to have to ask him for some of the money back if they tax her later on. She should probably talk to a probate attorney local to where the decedent lived to confirm whether any state or local inheritance tax was owed. If such a tax exists for that area, the threshold might be much lower than the federal estate tax exemption.
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Jul 2, 2020 19:18
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Peyote Panda posted:If the delay between the receipt of the return and the release of the refund is long enough, you may have gotten some credit interest on the refund. The IRS calculates interest from April 15 until they pay the refund, as long as you file within 3 years of the original due date - just like they charge you interest from April 15 until you pay when you owe (except this year, the deadline for you to pay got pushed back to July 15. The IRS is still paying interest on refund back to April 15). They were paying 5% annual interest until June 30 and 3% since.
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Aug 15, 2020 01:17
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Josh Lyman posted:Somehow I don’t think I’m going to get interest on my Virginia state tax return which I mailed 2 full months ago and still doesn’t turn up when I check the status on their website. You might have to argue about when you filed it, but it looks like you'd eventually get some interest: https://law.lis.virginia.gov/admincode/title23/agency10/chapter20/section200/
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Aug 15, 2020 17:02
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