It’s that time of year, Taxes.

atferrari

Joined Jan 6, 2004
4,330
When I worked as a consultant, I got in the habit of providing my information to the accountant quarterly so I could make my estimated payments. The rule on how much you had to pay and when were arcane and difficult to follow. Since I have retired I have maintained that practice except for a different reason. When I take a mandatory withdrawals from my retirement account I can specify almost any amount to be withheld for taxes in the year I take that withdrawal. When you pay your taxes via "withholding" there are no penalties or interest that are assessed if you underpay what what you owe. If I engage in stock trading in December and have excessive capital gains. I just pay what I owe by April 15th with no muss and no fuss. This is in start contrast to the situation where unexpected payments from customers would come in in December. To avoid this problem in the past, because there was no withholding option, I would stop sending Invoices about Nov 15th to push the income into the following year.
Wow! In spite the little I know of our system I can realize the big differences between yours and ours.
 

dl324

Joined Mar 30, 2015
12,871
Out of curiosity: in USA, asking an accountant to prepare your declaration, is it expensive?
With the advent of tax preparation software, it doesn't make sense to pay an accountant to do it. For $50. I can do my return, my Son's, and my Mother In Laws.
 

SamR

Joined Mar 19, 2019
3,411
For years, ever since the advent of Turbo Tax, we did our own taxes. Biggest hurdle was compiling all the medical, taxable donations, work expenses, etc. deductions. Now, being retired and with a lot of the deductions eliminated plus having to deal with all our various investment accounts, we threw in the towel and take it to our CPA. He was recommended by our investment banker and does a great job inexpensively and quickly.
 

Papabravo

Joined Feb 24, 2006
16,173
With the advent of tax preparation software, it doesn't make sense to pay an accountant to do it. For $50. I can do my return, my Son's, and my Mother In Laws.
Tax software does help with the data entry and the calculation. It does not and cannot keep you out of legal trouble if you make any kind of mistake.

I don't think I ever would have known about the exemption from interest and penalties if you pay your taxes via withholding.
 

dl324

Joined Mar 30, 2015
12,871
Tax software does help with the data entry and the calculation. It does not and cannot keep you out of legal trouble if you make any kind of mistake.
Before I started using TurboTax, I did my own returns the old fashioned way and combed through tax documents to find things that affected me. If you made a mistake, you'd pay penalties and interest. TurboTax removes much of the burden, but you still need to have some idea of what you need to do.

My income and the tax laws may have stabilized enough for me to consider taking advantage of having an income low enough to be able to avoid taxes on some long term capital gains.

That penalty exemption you mentioned has conditions. If you don't withhold enough, you can still be subject to penalties and interest. The IRS still has a strong preference for you to pay as you go. They like interest free loans just as much as the next guy...
 

Papabravo

Joined Feb 24, 2006
16,173
...
That penalty exemption you mentioned has conditions. If you don't withhold enough, you can still be subject to penalties and interest. The IRS still has a strong preference for you to pay as you go. They like interest free loans just as much as the next guy...
That does not appear to be the case for me for 2020. I ended up owing $1342 for 2020. I meant to make an estimated payment last October for $1260, but apparently, I did not hit the final execute button and the transaction never happened. I paid about $615 through April 1 of 2020 when they announced no more required minimum distributions from IRAs would be required. They did not ask for interest and penalties when I filed my 2020 return last week. We're good, and we're square. No interest -- no penalties for 8 months of no tax payments. I did ring the register in January. Maybe those numbers just don't meet their aggravation threshold.
 

Thread Starter

killivolt

Joined Jan 10, 2010
800
I didn’t get the deposit in my Bank for the second Stimulus until Jan, 8th, shouldn’t that be applied to 2021 tax in 2022? If so, I’m not responsible for an additional
$1,030+ on this years taxes, I guess I’m a little confused in their question did you receive? It didn’t say did you receive the second stimulus in 2020, just did you.
A very open ended question.

kv
 
Last edited:

Papabravo

Joined Feb 24, 2006
16,173
I didn’t get the deposit in my Bank for the second Stimulus until Jan, 8th, shouldn’t that be applied to 2021 tax in 2022? If so, I’m not responsible for an additional
$1,030+ on this years taxes, I guess I’m a little confused in their question did you receive? It didn’t say did you receive the second stimulus in 2020, just did you.
A very open ended question.

kv
IMHO neither of the 2020 stimulus payments is taxable. My second one arrived on Jan 4th. Why do you think it is.
 

SamR

Joined Mar 19, 2019
3,411
As to the stimulus checks, if you didn't receive a tax document for them then it must not be taxable income.
 

Thread Starter

killivolt

Joined Jan 10, 2010
800
IMHO neither of the 2020 stimulus payments is taxable. My second one arrived on Jan 4th. Why do you think it is.
It's the Tax Software not an actual human in the mix, if I add the stimulus of $1200 on Jan 8th I think the software see's it as an overpayment or not, still unsure. If it was taxable it would only be a portion of the payment, but it's not, that is not the question, the question itself isn't actually spelled out to you, when proposed to you, did you receive it in 2020 or 2021(but it doesn't ask directly) only did you receive which is my beef. If to include it for 2021 and you don't include it as a payment for 2020 it is not clear to what year? Many people see the question and won"t dispute it, an honest person will declare it, if so their going to be liable for an overpayment IMHO, but if I'm wrong then their will be a penalty for not accurately declaring it in 2020, which still doesn't make any sense to me. Many people will just be giving it back if they are using a software to do their Taxes, which I am. Until I get a real person saying ya, you need to report this on 2020 taxes because they began giving it out on Dec, 31 2020, my answer would be so what, I didn't receive it until Jan 8th 2021 and I will dispute it, then speak to my lawyer. Because of a convoluted question you proposed to me.

Debt and Income for 2020 and then there is Debt and Income for 2021 next year, choose one and don't be shifty about it. I want it brass tax, not some shell game, I'll go to a street artist for that, average people won't know what to claim, IMHO they can keep it, but that doesn't stop them from putting in my bank account, because I qualified for it. No one will question why they hurried to get it approved and sent out on Dec 31, 2020 because I feel they know most will have to give it back qualified or not.

I'm not an accountant or a Lawyer but something seems fishy to me. Taxable not Taxable is not the question.

kv
 

SamR

Joined Mar 19, 2019
3,411
I used computer tax software since they first came out. At first, I thought they were greater than sliced white bread. Then they became progressively more difficult. It took longer and longer to complete a tax return using them for anything but the simplest of tax returns. Partly due to our income stream becoming more complex over the years and partly due to the complexity of the software. We finally threw our hands up and started using a very good and reasonably priced CPA.
 

Thread Starter

killivolt

Joined Jan 10, 2010
800
I used computer tax software since they first came out. At first, I thought they were greater than sliced white bread. Then they became progressively more difficult. It took longer and longer to complete a tax return using them for anything but the simplest of tax returns. Partly due to our income stream becoming more complex over the years and partly due to the complexity of the software. We finally threw our hands up and started using a very good and reasonably priced CPA.
For me it's just my pension which is straight for ward, interest on my house, and the rest are W2's, I was surprise to learn that insurance will not be a liability this year but who knows what he Gov has plans for next year, re-applying Obama Care in full force because they can... And if the GOP did this roll out on Dec 31st it would be only to take it back, I think that is despicable, as well as the other side who proclaimi their silence for political points to debate in the future. But, this isn't intended for that on this forum, I'm just here to point out an obvious exclusion to a stupidly written question leaving an open ended declaration to when do we declare a stimulus or not, this year or next? errrrrrrg :mad:

kv
 

wayneh

Joined Sep 9, 2010
17,152
We finally threw our hands up and started using a very good and reasonably priced CPA.
That's a perfectly reasonable thing to do. I know several people that have gigs preparing tax returns this time of year. They all just use software, and enter the numbers just as you would for DIY. They do have access to more software, though, with capabilities that aren't in the consumer-level packages.
 

wayneh

Joined Sep 9, 2010
17,152
It's the Tax Software not an actual human in the mix, if I add the stimulus of $1200 on Jan 8th I think the software see's it as an overpayment or not, still unsure.
I'm probably missing your point. Neither "stimulus" payment is taxable income. I'm using TurboTax and don't see any questions about entering the payment. Just cash your check and enjoy. Where's the confusion? The software can help you verify that you got all the payments you were entitled to.

Unemployment payments are another matter.
 

dl324

Joined Mar 30, 2015
12,871
I didn’t get the deposit in my Bank for the second Stimulus until Jan, 8th, shouldn’t that be applied to 2021 tax in 2022? If so, I’m not responsible for an additional
$1,030+ on this years taxes, I guess I’m a little confused in their question did you receive? It didn’t say did you receive the second stimulus in 2020, just did you.
A very open ended question.
The two stimulus payments aren't taxable. If you didn't already receive the full amount you were entitled to, they'll credit it when you complete the Recovery Rebate Credit Worksheet. If they paid too much, you don't have to pay it back.
 

Thread Starter

killivolt

Joined Jan 10, 2010
800
The two stimulus payments aren't taxable. If you didn't already receive the full amount you were entitled to, they'll credit it when you complete the Recover Rebate Credit Worksheet. If they paid too much, you don't have to pay it back.
I'm probably missing your point. Neither "stimulus" payment is taxable income. I'm using TurboTax and don't see any questions about entering the payment. Just cash your check and enjoy. Where's the confusion? The software can help you verify that you got all the payments you were entitled to.

Unemployment payments are another matter.
I‘m using TurboTax once you get past other credits they have a box did you received stimulus payment, the first which was in the amount of $2400 which we qualified for, ok said and done, no increase from the current liability to the Feds, this was because my pension was never Taxed which @wayneh helped me understand box “7“, but then after that is another box which reads did you receive the second stimulus? check a box yes or no, if you did then put the amount which adds to my current liability of $1015 underpayment for my pension, now they add to that another $1030 for this year if I say yes and put that amount, if I don’t answer yes and leave zero, no additional charge of $1030 to my existing federal debt of $1015, get where I’m coming from now?

If I’m seeing it correctly not entering yes, means I didn’t receive it in 2020 and it will be on the next tax year, but if as I have tried to gain understanding, either on the net or elsewhere there is no clarity, either your responsible for that amount this year because the roll out was on Dec 31st 2020 regardless if you personally seen it in which for some was Jan or later for others Feb, May, June what ever but in 2021? There in lay the question? I’m going to a Tax Accountant anyway and if he says you owe that money this year, I will then put in for payments over a year to pay the IRS for both my pension underpayment, plus that second stimulus payment, If I’m responsible this year then they can get theirs in due time, spread out over a year and screw the abrupt payment on April 15th, but yes it will be filed for on the 15th without that penalty, to those who miss understand that as well.

Thank you, for those who have tried to better understand my question, and have added many tips and tricks.
Either I’m not being clear or your not finishing what I write and read it through it with a Tax code on your mind, rather than seeing it as a possible glitch in software that could have been better written, for instance did you receive the second stimulus in 2020? if so, right the amount, if not and was in 2021, then put zero and declare it next year. How difficult is that for god sake.

kv

Edit: I’m not currently using the paid software and could be the difference in what you read and what I read @wayneh
 
Last edited:

wayneh

Joined Sep 9, 2010
17,152
I‘m using TurboTax once you get past other credits ....

I’m not currently using the paid software and could be the difference in what you read and what I read
Ah, I didn't think of looking in Credits. I do see stuff there if you're self-employed but nothing obvious about the stimulus checks.
 

Thread Starter

killivolt

Joined Jan 10, 2010
800
Ah, I didn't think of looking in Credits. I do see stuff there if you're self-employed but nothing obvious about the stimulus checks.
The one I’m seeing is after (“Other Tax Situations”) the first under “Federal Review”.

kv

Edit: It’s after “Other Tax Situations” first thing under Federal Review. I missed this because it’s grey not black print check it out (Enter your total second-round payment (issued Dec '20 - Feb '21) so, if you can’t read it, you can see my issues based on the timeline, I have to declare it and yes it will add to this years Tax Debt. If I include the $1200. This is what is do April 15th
FEDERAL TAX DUE
(in progress)
$2,247
If I put zero in the box then it drops and I get it as a credit of $1200 and would be $1047, don’t need a CPA, just file and call the IRS to make scheduled payments if possible.
 
Last edited:
Top