US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.

Jose Cuervo: Aug 25, 2004

Two questions:

1) Does everyone who receives a 1099-MISC have to pay self-employment tax?

I have a scholarship that I get a stipend through (my only source of income, other than interest from a savings account); they withold no taxes and send me a 1099-MISC at the end of the year. Through the year I made 4 estimated tax payments based on the assumption that I was only paying income tax. However, I am now unsure as to whether or not I am considered to be self employed and need to pay self employment tax.

2) Does the income I get on the 1099-MISC count as earned income?

# ¿ Mar 12, 2011 21:54

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# ¿ Apr 29, 2024 06:42

Jose Cuervo: Aug 25, 2004

furushotakeru posted:

If the income is reported in box 7 (non employee compensation) the IRS will presume that you are self employed. If it is listed elsewhere (most commonly box 3 - other income), then you may not be subject to SE tax.

Yes your net income from the 1099 is earned income if you are self employed.

All the stipend is reported in box 3 (Other income), which is why I am unsure. The payer is the American Society for Engineering Education, but the scholarship is a government scholarship. I would not consider myself employed by either the ASEE or the agency administering the scholarship. Am I self employed because this is my only source of income and as a student I don't 'work' anywhere or for anyone?

Edit: From reading the handbook closely, I found the following information:

quote:

At year end, ASEE will provide you and the Internal Revenue Service
(IRS) with the informational Form 1099-MISC recording the amount paid to you during the tax
year. ASEE does not withhold taxes from your stipend payments. Under current laws and
regulations, you are responsible for submitting quarterly estimates of income taxes to the IRS
and paying the amounts due. You may have a similar liability with respect to state and/or local
taxes depending upon the state and/or locality where you reside.

and

quote:

During Phase 1 of the Program, Recruitment Participants are NOT employees of the Program and will NOT
receive a Form W2. The Program DOES NOT withhold taxes from monthly cash award payments, book
allowance, or internship support payments. However, cash award payments, book allowances, and
internship support payments ARE subject to income tax and ASEE WILL report all such payments to the
IRS.
Participants are personally responsible for withholding and paying taxes on cash award, book allowance,
and internship support payments. In some cases, Participants must submit quarterly estimates of
income taxes to the IRS and pay the amounts due. Participants may have a similar liability with respect
to state and/or local taxes.

So it seems to say I am responsible for income tax (nothing about self employment tax), but that I am definitely not considered an employee of the administering agency (Program). Any thoughts please?

Jose Cuervo fucked around with this message at 01:20 on Mar 13, 2011

# ¿ Mar 13, 2011 01:06

Jose Cuervo: Aug 25, 2004

I traded stocks for the first time in 2011, and I ended up with a loss of $2900. I understand that if I had made a loss of say $5000, then I could claim $3000 of the loss for 2011, and defer the remaining $2000 until 2012. However, is it possible for me to defer the loss of $2900 until I do my 2012 taxes? I did not have a job in 2011 but I do have one this year. Thus I think that it would be more beneficial for me to use the loss on my 2012 taxes, as it might mean that the $2900 does not get taxed in a higher tax bracket.

# ¿ Mar 22, 2012 22:13

Jose Cuervo: Aug 25, 2004

I received a 1099-MISC from my graduate school, with the only non-zero amount being placed in Box 7 - Nonemployee Compensation. The cheque I received (that corresponds to the amount in Box 7) was listed as an 'Honorarium Payment' on the memo, and was given to me for guest lecturing twice during the summer (I graduated in May 2011, and I guest lectured in June 2011). Am I correct in thinking that I should report this amount on Line 21 - Other Income on Form 1040? If so, what do I put down as the type? From reading Pub 525 Miscellaneous Income, this payment does not appear to fall under anything listed.

# ¿ Mar 29, 2012 00:16

Jose Cuervo: Aug 25, 2004

scribe jones posted:

"Honorarium Payment"

Should probably be paying self-employment tax on the line 21 amount too, depending on facts and circumstances.

Do I need to fill out a Schedule C? Or can I just report the entire amount from the 1099-MISC Box 7 on Line 2 of Schedule SE (as a profit)?

# ¿ Mar 29, 2012 02:04

Jose Cuervo: Aug 25, 2004

Does anyone have any experience with filing their federal taxes through the Free File Fillable Forms? My return was rejected by them with the following reason given:

code:

Form 1040, Line 21 'TotalOtherIncomeAmt' must be equal to the sum of Line 21, 'NetOperatingLossDeductionAmt' 
and all occurrences of ( 'OtherIncomeAmt' in (OtherIncomeTypeStatement) attached to Line 21).

I asked a question earlier in the thread regarding an Honorarium payment. The payment is the only amount I put down on Line 21 - Other Income, and I attached the Schedule SE corresponding to SE tax paid on that amount to my return. So I am at a loss as to what this error is telling me to do. Any thoughts?

# ¿ Mar 30, 2012 18:01

Jose Cuervo: Aug 25, 2004

Question about Maryland State taxes. I am a part-year resident for 2011 (I lived in NC from January through September 2011, and in MD from October through December 2011). I am having a hard time understanding the 'Additions to Income' and 'Subtractions from Income' portion of Form 502 (which I have to fill out as a part-year resident).

Suppose my income was as follows: $40000 of Form 1040 line 7 income, $500 in interest, -$3000 in capital losses, and $1000 in other income for an AGI of $38500. And suppose that $30000 of the W2 income, $300 of the interest, $2000 capital gains, and the $1000 other income were incurred was while I was in NC (-$5000 in capital losses were incurred during December 2011 while in MD). Finally, lines 23-35 on my 1040 are blank, except for line 27 because I filed a Schedule SE for the other income.

The instructions for line 5 of Form 502 state:

code:

OTHER ADDITIONS TO INCOME. a. Part-year residents: losses or adjustments 
to federal income that were realized or paid when you were a nonresident 
of Maryland.

Do the 'losses or adjustments' refer to:
a. Any amounts on lines 23-35 of Form 1040 (in my case this means only the amount on line 27)?
b. The $300 of the interest, $2000 capital gains, and the $1000 other income that were incurred was while I was in NC?
c. Something else?

The instructions for line 12 of Form 502 state:

code:

Complete the subtractions from income area using Instruction 13. You may 
include only subtractions from income that apply to income subject to 
Maryland tax. Include on line 12 any income received during the part of 
the year when you were not a resident of Maryland.

So for line 12 of Form 502 I put down the $30000 of the W2 income, $300 of the interest, $2000 capital gains, and the $1000 other income that was incurred was while I was in NC, correct?

# ¿ Apr 2, 2012 14:47

Jose Cuervo: Aug 25, 2004

As far as I am aware you should have started paying them last year. See the following link and click on "When To Pay Estimated Tax".

# ¿ Apr 6, 2012 18:07

Jose Cuervo: Aug 25, 2004

Last year I was a government employee and made contributions to my TSP (government 401k plan). The amount contributed is reported on my W-2 in box 12 with code D (where code D is used for elective deferral contributions). Do I use this figure on line 32 of form 1040 (IRA deduction)?

If not, should or could I use this figure elsewhere on my 1040?

EDIT: If it matters 'Retirement Plan' in box 13 of my W-2 is checked.

Forget this question, the instructions for line 32 state that:

You cannot deduct elective deferrals
to a 401(k) plan, 403(b) plan, section
457 plan, SIMPLE plan, or the federal
Thrift Savings Plan. These amounts
are not included as income in box 1 of
your Form W-2. But you may be able to
take the retirement savings contributions
credit. See the instructions for line 50.

Jose Cuervo fucked around with this message at 17:37 on Feb 23, 2014

# ¿ Feb 23, 2014 17:13

Jose Cuervo: Aug 25, 2004

Jose Cuervo posted:

Last year I was a government employee and made contributions to my TSP (government 401k plan). The amount contributed is reported on my W-2 in box 12 with code D (where code D is used for elective deferral contributions). Do I use this figure on line 32 of form 1040 (IRA deduction)?

If not, should or could I use this figure elsewhere on my 1040?

EDIT: If it matters 'Retirement Plan' in box 13 of my W-2 is checked.

Forget this question, the instructions for line 32 state that:

You cannot deduct elective deferrals
to a 401(k) plan, 403(b) plan, section
457 plan, SIMPLE plan, or the federal
Thrift Savings Plan. These amounts
are not included as income in box 1 of
your Form W-2. But you may be able to
take the retirement savings contributions
credit. See the instructions for line 50.

Follow up question to this. Is line 32 for people who have an IRA account outside of their work? I.e., if I chose to open a traditional IRA account that was separate from my work retirement account, would I then use line 32 to report the amounts put into that separate IRA account during the year?

# ¿ Feb 24, 2014 21:16

Jose Cuervo: Aug 25, 2004

From this page, the annual exclusion for gifts is $14,000 for 2014. Suppose that my parents want to give me a gift of $16,000 without exceeding the individual yearly limit. If my mother wrote me a check for $8,000 and my father wrote me a check for $8,000 (so the total gift is $16,000), but the checks were written from a joint account, would they be able to claim that they had each individually given me a gift that was less than the yearly individual limit?

# ¿ Apr 7, 2014 21:25

Jose Cuervo: Aug 25, 2004

Admiral101 posted:

The gift limit is 14k per person. Marries couples can transfer property between each other without gift tax implications. Therefore, your parents can gift you up to 28k in cash with no gift tax consequences (even if the cash came from your father's checking account, you can treat it as though your father gifted a portion of that cash to your mother, who in turn gifted it to you).

Thanks for the answer. I hadn't thought about it from the perspective of married couples being able to transfer between themselves. And if they each give me $14,000 or less this year (2014) they do not have to report this anywhere (i.e., fill out a gift tax return), correct? I only ask this now because JohnnyPalace mentioned a tax return where they had mentioned it even though it was under the $14,000 limit.

# ¿ Apr 8, 2014 13:49

Jose Cuervo: Aug 25, 2004

I am in a situation where my late father-in-law owned a number of rental properties (he died in 2019). We are finally getting around to doing the 2018 taxes (long story), and the CPA has asked me to determine the fair market value of the properties as of the date of death of my father-in-law so that he can �step up� the basis for reporting/depreciating on the tax return.

He suggested that I should get some sort of professional assessment.

What is the best way to go about doing this keeping in mind that:
1. I live in Virginia and the properties are located in South Carolina,
2. There are multiple properties,
3. There is a management company who is in charge of renting out the properties now.

Would the management company be the correct 'professional' to do the assessment, or would I need to see a realtor?

# ¿ Sep 27, 2021 17:33

Jose Cuervo: Aug 25, 2004

H110Hawk posted:

I would ask an appraiser. It's definitely not a realtor, unless you know one personally who you could ask for their appraiser suggestion. If your dad ever worked with a real estate lawyer this is the person to ask. You could ask the management company if they have anyone they have worked with, but otherwise really anyone is going to be close enough. If your county does tax assessments annually you could also just point to those if they seem close enough to what you're aiming for, and if they're over/way over then I would say they're 100% accurate. (Note you will then want to contest the current years as absurdly wrong.)

You just need a sheet of paper for each one that you can staple to the return from a professional.

I'm not a tax person. Or a lawyer.

I do not know what I am aiming for in this situation. I am just the unlucky person who gets to deal with this.

I do think there are annual tax assessments - I have the property tax assessments which have a box titled "Appraised Taxable Value". Is this the number I would be looking for?

I am also going to check to see if there was a real estate lawyer involved. You are saying that the real estate lawyer my FIL worked with should be the best person to tell me who to use as an appraiser?

If I cannot find the real estate lawyer I will look for some appraisers in the area. Would it make sense to have a single person do all of the (8) appraisals since they are all in one city?

# ¿ Sep 27, 2021 18:18

Jose Cuervo: Aug 25, 2004

Going to go with the appraiser route as that seems like the most straightforward way to get the valuations (even if it will cost money). Thanks for the advice.

# ¿ Sep 30, 2021 02:37

Jose Cuervo: Aug 25, 2004

H110Hawk posted:

Remember that this is paid by the estate, not you. Even if you wind up being the one writing the check you should submit it for reimbursement. Are you working with an estate attorney? Because if not, start.

Yeah I know it is being paid by the estate. Things are complicated because my MIL is still alive but not able to make any decisions. However the trust in which the rental properties now reside was set up with an attorney (in the two months my FIL had before he died), so I am going to try and get in contact with them. This is all the more complicated because my BIL was named as the executor of the estate and the trustee of the trust and was supposed to be taking care of the taxes, but did not, which is why I am now having the CPA do 2018 taxes in October of 2021.

# ¿ Sep 30, 2021 15:53

Jose Cuervo: Aug 25, 2004

I just found a 2006 refund check for a few hundred dollars from the IRS to my wife while going through her parents files. Is there any way of getting that refund after all this time?

# ¿ Nov 8, 2021 00:59

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# ¿ Apr 29, 2024 06:42

Jose Cuervo: Aug 25, 2004

Epi Lepi posted:

Nope, refunds after 3 years are gone, too bad so sad.

Ok, thanks.

# ¿ Nov 8, 2021 14:25

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > US Income Tax Thread: Bank error in your favor! GO DIRECTLY TO JAIL.