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Tenchrono
Jun 2, 2011


sullat posted:

That sounds more like a hobby to me.

Thats what I was thinking, got bored on the plane and figured I'd just post.

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smackfu
Jun 7, 2004

Huh, I wonder if that law is one reason Venmo added a toggle for if a payment is a business transaction.

Small White Dragon
Nov 23, 2007

No relation.

smackfu posted:

Huh, I wonder if that law is one reason Venmo added a toggle for if a payment is a business transaction.

Well also, some credit cards do not allow person-to-person payments now, or they don't give rewards for those.

Motronic posted:

And yes, it's a pain in the rear end when I'm unloading my flyers season tickets at a loss (because I "missed the cancellation deadline" some time during the pandemic when they literally couldn't provide the product I bought and buried the notification in all of the loving spam and marketing emails they send out) but like, it's an extra couple of things to do at tax time. It's not a huge deal.

Serious question -- where/how would this be reported? I didn't think you were supposed to include nondeductible personal losses at all on your return.

Discendo Vox
Mar 21, 2013

We don't need to have that dialogue because it's obvious, trivial, and has already been had a thousand times.

Small White Dragon posted:

Well also, some credit cards do not allow person-to-person payments now, or they don't give rewards for those.

Serious question -- where/how would this be reported? I didn't think you were supposed to include nondeductible personal losses at all on your return.

Under a lot of circumstances, the transfers are just income.

Cacafuego
Jul 22, 2007

I spoke to a CPA recently. He calculated my estimated tax ($~8500) and told me I should pay it using the 1040-ES slips I had gotten when I paid my taxes last year. Having never done anything like that before, I had no idea what he was talking about, but I followed the instructions on the slip to go to the IRS website and create an account to pay the estimated tax. To do so, I had to upload my passport, drivers license and social security card by going through ID.me website. It then told me that my photos weren't acceptable and that I need to do a video phone call with them to show them the same documents on video.

The queue was too long last week, so I tried it today, waited 45 minutes only to have my webcam/mic not work. It works on every Zoom/webex/etc I do for work, but whatever. I'm now trying again on an ipad, but I've been sent to the back of the line again with another 1+ hour wait.

Is this a normal process to pay estimated taxes or setup an account with the IRS?

H110Hawk
Dec 28, 2006
hxxps://directpay.irs.gov/directpay/payment?execution=e1s1

You can pay here without an account I believe? Don't actually click that link go to irs.gov, click pay, click bank account. Top menu bar.

Cacafuego
Jul 22, 2007

H110Hawk posted:

hxxps://directpay.irs.gov/directpay/payment?execution=e1s1

You can pay here without an account I believe? Don't actually click that link go to irs.gov, click pay, click bank account. Top menu bar.

Thank you, I appreciate the info. I'm going to do that now.

Epitope
Nov 27, 2006

Grimey Drawer

Tenchrono posted:

Thats what I was thinking, got bored on the plane and figured I'd just post.

Maybe imagine if you brought in a partner for this enterprise. You both put $5,000 in as seed money, so the business has $10,000. Would you spend all that on a car? Or would you spend $2,500 on cameras/mics/lights, $2,500 on logo and graphics stuff, $2,500 on mustache wax, and still have a $2,500 uber budget to get this thing off the ground.

Small White Dragon
Nov 23, 2007

No relation.

Discendo Vox posted:

Under a lot of circumstances, the transfers are just income.

That's not really true.

If you decide to sell some old computers or tables or phones, for instance, it's easily possible that exceeds $600. But you bought those for more, and sold them at a loss. That's not income. IIRC they term that a "nondeductible personal loss" and I thought you just don't include it on your 1040 at all.

Discendo Vox
Mar 21, 2013

We don't need to have that dialogue because it's obvious, trivial, and has already been had a thousand times.
Sorry, to clarify, under a lot of circumstances, transfers conducted using these payment platforms are just income. There were plenty of ways to try to obscure transfers under reporting limits there.

The selling at a loss thing is more complicated; this IRS page has links to the relevant publications (mostly pub 544 at a glance), but yeah I think the short version is sale of personal items that you purchased at a net total loss isn't income.

Discendo Vox fucked around with this message at 20:57 on Jan 10, 2022

Small White Dragon
Nov 23, 2007

No relation.

Discendo Vox posted:

Sorry, to clarify, under a lot of circumstances, transfers conducted using these payment platforms are just income. There were plenty of ways to try to obscure transfers under reporting limits there.

Ones for business purposes, sure, not the ones between friends -- Some people close to me routinely send gifts of money to family members, friends, and even allowances to children via Venmo. Gifts are not taxable (some issues of gift tax notwithstanding, but that's on the giver.)

But not everyone is saavy to what toggle means. For instance, I had someone once PayPal me his half of the rent of a place we shared in a prior year, and marked it for "goods and services". (Reimbursements are not taxable.) I brought this to his attention and he got it fixed, but...

Also I (and some of my family) periodically sell old crap on eBay for far less than they bought it, and that should not be taxable.

Anyway, I'm all in favor of ensuring people pay what they owe, but this seems like it might cause a lot of problems, and clear guidance is very lacking.

Deviant
Sep 26, 2003

i've forgotten all of your names.


what do people use to file their taxes now? i used to use credit karma tax but now it wants me to install CashApp and that is right out

IOwnCalculus
Apr 2, 2003





Deviant posted:

what do people use to file their taxes now? i used to use credit karma tax but now it wants me to install CashApp and that is right out

Haven't settled on a replacement yet but holy poo poo CashApp taxes is godawful.

ExtrudeAlongCurve
Oct 21, 2010

Lambert is my Homeboy

Deviant posted:

what do people use to file their taxes now? i used to use credit karma tax but now it wants me to install CashApp and that is right out

FreeTaxUSA (yeah it's not a very trustworthy looking name) gets recommended here and we tried it last year and loved it. I used to use TaxAct but their pricing only gets weirder and higher every drat year.

withak
Jan 15, 2003


Fun Shoe
I've used FreeTaxUSA for the last few years and have no complaints.

KYOON GRIFFEY JR
Apr 12, 2010



Runner-up, TRP Sack Race 2021/22
yes free tax usa sounds like a scam but its legit and works well

Hadlock
Nov 9, 2004

Looks like credit karma is owned by cash app, which is owned by Lincoln Bank, but is also in cahoots with square/block somehow, looks like a clusterfuck

Residency Evil
Jul 28, 2003

4/5 godo... Schumi

Deviant posted:

what do people use to file their taxes now? i used to use credit karma tax but now it wants me to install CashApp and that is right out

Another vote for Taxhawk/Freetaxusa (same company).

Xenoborg
Mar 10, 2007

Filling out the PDF directly using the IRS's tool:

https://www.irs.gov/e-file-providers/free-file-fillable-forms

urnisme
Dec 24, 2011
Volunteer with the VITA or TCE programs and use their software to file your return, while supporting your community.

https://www.irs.gov/individuals/irs-tax-volunteers

Thesaurus
Oct 3, 2004


So my previous CPA seems to be be ghosting me, and I haven't heard from him in months despite contacting him every couple weeks. I only care because he was supposedly handling an outstanding tax dispute for my state (PR) taxes from last year (my previous posts were about this). I just wanted some kind of status update to know if it's still in progress, resolved, if I'm hosed, etc., so I'm kind of weirded out that he won't respond. At this point I'm just hoping the guy didn't fail to take any timely action and is trying to dodge me to avoid trouble.

I'll keep trying, but needless to say that I'm not enthusiastic about using him again for 2021 taxes. Is there anything special to know about hiring a new CPA's services in these circumstances, since as far as I know the 2020 issue is unresolved and may or may not still be handled by the previous CPA (who filed the return)? Do I just inform them of where things stand and give them the returns from last year?

Hadlock
Nov 9, 2004

US Income Tax Thread: My antivaxxer CPA died of covid and nobody told me till tax season

BonerGhost
Mar 9, 2007

urnisme posted:

Volunteer with the VITA or TCE programs and use their software to file your return, while supporting your community.

https://www.irs.gov/individuals/irs-tax-volunteers

This is the correct answer.

Even better your site supervisor can look it over and make sure you're not a complete idiot. Not that I would know from experience or anything.

ranbo das
Oct 16, 2013


My friend asked for help with her taxes as an independent contractor. She apparently talked to her boss who told her that quarterly taxes are optional and you can just pay everything you owe on tax day (???) and that he's been doing it for years because his CPA says it's fine.

I'm like 99.99% sure some random CPA in Florida hasn't cracked the tax code and her boss has been an idiot before (he has claimed that there is no difference between STCG and LTCG taxes) but to do my own due diligence, there's no way that that's actually true right?
I couldn't find anything that would let you get around quarterly estimated taxes

Residency Evil
Jul 28, 2003

4/5 godo... Schumi

ranbo das posted:

My friend asked for help with her taxes as an independent contractor. She apparently talked to her boss who told her that quarterly taxes are optional and you can just pay everything you owe on tax day (???) and that he's been doing it for years because his CPA says it's fine.

I'm like 99.99% sure some random CPA in Florida hasn't cracked the tax code and her boss has been an idiot before (he has claimed that there is no difference between STCG and LTCG taxes) but to do my own due diligence, there's no way that that's actually true right?
I couldn't find anything that would let you get around quarterly estimated taxes

Well, someone in this thread implied that you could:

1. Do a dry run of your 2021 taxes in February.
2. Figure out how much you owe in taxes + penalties
3. Send in the amount you owe for 2021 in February 2022.
4. File your taxes like a patriotic American in April.

Do I have that right?

H110Hawk
Dec 28, 2006

ranbo das posted:

My friend asked for help with her taxes as an independent contractor. She apparently talked to her boss who told her that quarterly taxes are optional and you can just pay everything you owe on tax day (???) and that he's been doing it for years because his CPA says it's fine.

I'm like 99.99% sure some random CPA in Florida hasn't cracked the tax code and her boss has been an idiot before (he has claimed that there is no difference between STCG and LTCG taxes) but to do my own due diligence, there's no way that that's actually true right?
I couldn't find anything that would let you get around quarterly estimated taxes

Quarterlies are due when they're due if you owe them. Can you skate by without getting audited as long as you pay on time in the end? Sometimes. But if you get reviewed and they don't find your quarterlies you can owe penalties and fines.

If your income varies wildly you can compute approximate amounts per quarter as you earn the income.

If you get into the safe harbor through regular deductions as an individual you don't owe them at all.

Don't play dumb games. You might win dumb prizes.

Methanar
Sep 26, 2013

by the sex ghost

H110Hawk posted:

Quarterlies are due when they're due if you owe them. Can you skate by without getting audited as long as you pay on time in the end? Sometimes. But if you get reviewed and they don't find your quarterlies you can owe penalties and fines.

If your income varies wildly you can compute approximate amounts per quarter as you earn the income.

If you get into the safe harbor through regular deductions as an individual you don't owe them at all.

Don't play dumb games. You might win dumb prizes.

[in canada at least] paying quarterly is optional for the first year of business; you can pay corporate taxes/sales in one lump sum at the end for the first calendar year. 2nd year on you are obligated to pay quarterly

MadDogMike
Apr 9, 2008

Cute but fanged

ranbo das posted:

My friend asked for help with her taxes as an independent contractor. She apparently talked to her boss who told her that quarterly taxes are optional and you can just pay everything you owe on tax day (???) and that he's been doing it for years because his CPA says it's fine.

I'm like 99.99% sure some random CPA in Florida hasn't cracked the tax code and her boss has been an idiot before (he has claimed that there is no difference between STCG and LTCG taxes) but to do my own due diligence, there's no way that that's actually true right?
I couldn't find anything that would let you get around quarterly estimated taxes

What happens if you don’t pay enough of your tax during the year, you get penalized/owe additional tax for underpayment. If you have paid at least 90% of the current year tax due, or you paid enough to have covered 100% of last year’s tax balance due, or if the total balance is less than $1000, you are exempt from any underpayment penalty. That penalty is generally calculated on line 38 and added to line 37’s amount you owe. Now, if her boss is meeting the criteria to be exempt or is just paying that penalty for not withholding enough with the rest of the return, that does work; they want you paying in advance but if you pay the underwithholding penalty with the rest of the balance due by April 15 the IRS doesn’t care. We encourage estimated payments because we don’t want people owing more total money than they have to, but I do have clients who just shrug and pay the extra penalty money when they file their return rather than mess with estimated payments. So long as your balance due is zeroed after April 15 the IRS does not generally worry about it, it’s a civil penalty not a criminal offense.

Only exception is if you keep owing money every year you don’t pay, then the IRS can auto-adjust wage or other withholding to prevent having ever more money owed to them, or might put liens or similar on you to ensure payment is made.

H110Hawk
Dec 28, 2006

MadDogMike posted:

What happens if you don’t pay enough of your tax during the year, you get penalized/owe additional tax for underpayment. If you have paid at least 90% of the current year tax due, or you paid enough to have covered 100% of last year’s tax balance due, or if the total balance is less than $1000, you are exempt from any underpayment penalty. That penalty is generally calculated on line 38 and added to line 37’s amount you owe. Now, if her boss is meeting the criteria to be exempt or is just paying that penalty for not withholding enough with the rest of the return, that does work; they want you paying in advance but if you pay the underwithholding penalty with the rest of the balance due by April 15 the IRS doesn’t care. We encourage estimated payments because we don’t want people owing more total money than they have to, but I do have clients who just shrug and pay the extra penalty money when they file their return rather than mess with estimated payments. So long as your balance due is zeroed after April 15 the IRS does not generally worry about it, it’s a civil penalty not a criminal offense.

Only exception is if you keep owing money every year you don’t pay, then the IRS can auto-adjust wage or other withholding to prevent having ever more money owed to them, or might put liens or similar on you to ensure payment is made.

110% of last years if you're over $75k/$150k AGI single/married. Speaking of which I need to dig out my 2020 return and multiply it by 1.1 then mail them the difference.

Residency Evil
Jul 28, 2003

4/5 godo... Schumi

H110Hawk posted:

Quarterlies are due when they're due if you owe them. Can you skate by without getting audited as long as you pay on time in the end? Sometimes. But if you get reviewed and they don't find your quarterlies you can owe penalties and fines.

If your income varies wildly you can compute approximate amounts per quarter as you earn the income.

If you get into the safe harbor through regular deductions as an individual you don't owe them at all.

Don't play dumb games. You might win dumb prizes.

H110Hawk posted:

110% of last years if you're over $75k/$150k AGI single/married. Speaking of which I need to dig out my 2020 return and multiply it by 1.1 then mail them the difference.

I guess I'm confused by these two statements. Isn't that what you're doing by mailing the difference now?

I guess you have until Monday for the final quarterly.

ranbo das
Oct 16, 2013


Well I'm glad I was right in that her boss is just committing tax fraud and hasn't gotten caught yet, because he is absolutely not exempt, he is stating that quarterly taxes are optional and technically you don't have to pay any taxes until the deadline and also there are no penalties for not paying your quarterlies. I just wanted to be sure I wasn't missing anything before I called her an idiot.

Side note and totally unrelated (of course), but looks like you have to jump through a lot of hoops to tip off the IRS on someone who is avoiding taxes, which I guess makes sense. Shame because I can't imagine his business is particularly compliant and I know he is paying people cash under the table to avoid taxes.

Epi Lepi
Oct 29, 2009

You can hear the voice
Telling you to Love
It's the voice of MK Ultra
And you're doing what it wants
Underpaying your estimated taxes results in a penalty of around 7% to 10% of the tax that you haven't paid yet when filing the return. So it's a bigger deal the bigger the balance you have at the end of the year. So if your balance due is like $5K you're adding an additional $350-$500 in penalties to your balance. For some people that percentage is not worth locking up their cash with the government when you could be using it for business cash flow or investing or whatever.

To my knowledge the IRS does not give a poo poo if you keep doing this year after year as long as you file your return timely and pay the balance timely. Extra money for them in the form of penalties.


ranbo das posted:

Well I'm glad I was right in that her boss is just committing tax fraud and hasn't gotten caught yet, because he is absolutely not exempt, he is stating that quarterly taxes are optional and technically you don't have to pay any taxes until the deadline and also there are no penalties for not paying your quarterlies. I just wanted to be sure I wasn't missing anything before I called her an idiot.

Side note and totally unrelated (of course), but looks like you have to jump through a lot of hoops to tip off the IRS on someone who is avoiding taxes, which I guess makes sense. Shame because I can't imagine his business is particularly compliant and I know he is paying people cash under the table to avoid taxes.

That's not fraud, he's not going to jail, he's just paying a little more money than he needs to every year.

ranbo das
Oct 16, 2013


Well I mean taking him at face value he's not paying a penalty for paying late, if that's true he is misstating something on his taxes, deliberately or not. The whole crux of his argument is you can just ignore the penalty line as long as you pay in full by the tax deadline and that quarterly payments are optional loans to the IRS. The whole crux of his argument is that it's optional and you don't need to pay any penalties the IRS charges.



He's not going to jail but if he's been avoiding paying penalties for a decade I'm betting that's a nice fat back payment he owes

Admiral101
Feb 20, 2006
RMU: Where using the internet is like living in 1995.

ranbo das posted:

Well I mean taking him at face value he's not paying a penalty for paying late, if that's true he is misstating something on his taxes, deliberately or not. The whole crux of his argument is you can just ignore the penalty line as long as you pay in full by the tax deadline and that quarterly payments are optional loans to the IRS. The whole crux of his argument is that it's optional and you don't need to pay any penalties the IRS charges.



He's not going to jail but if he's been avoiding paying penalties for a decade I'm betting that's a nice fat back payment he owes

You're really bending over backwards to make this look like something that it's not. He would not be the first independent contractor to just pay his taxes every April and eat the penalty. The IRS is pretty effective at assessing its quarterly interest/penalty due so it is extremely unlikely he is slipping through the cracks on that end.

Admiral101 fucked around with this message at 01:38 on Jan 14, 2022

Peyote Panda
Mar 10, 2019

Admiral101 posted:

You're really bending over backwards to make this look like something that it's not. He would not be the first independent contractor to just pay his taxes every April and eat the penalty. The IRS is pretty effective at assessing its quarterly interest/penalty due so it is extremely unlikely he is slipping through the cracks on that end.
Yeah, from what I've seen those letters get churned out automatically pretty much immediately once the return is processed if the quarterlies weren't paid properly and the penalty wasn't paid as part of the return.

Also, based on conversations I've had with tax practitioners over the years, it's entirely possible the dude's CPA explained it would just be a minor additional tax penalty but he wouldn't get in trouble as long as he paid the total balance on time and he took that to mean it's all good and just spaced the penalty part. This is especially true with the Estimated Tax Penalty as unlike most other Failure to Pay penalties it just gets baked into the overall tax balance on the return (assuming it's being prepared correctly) so as long as the total tax balance was paid in full by April 15th he wouldn't even be getting notices about it.

IOW, he probably just hands his paperwork over each tax season, pays whatever he's told he owes, stares blankly into space while his preparer gives the annual boilerplate spiel that if he was better about the quarterlies he wouldn't have the extra charge, and then scampers out of the office thinking he's got this all figured out. Goon preparers, tell me if I'm wrong on that one.

Peyote Panda fucked around with this message at 02:50 on Jan 20, 2022

Epi Lepi
Oct 29, 2009

You can hear the voice
Telling you to Love
It's the voice of MK Ultra
And you're doing what it wants
Exactly and most tax software automatically calculates the penalty so we don’t even have to spend any brainpower on it.

MadDogMike
Apr 9, 2008

Cute but fanged

Peyote Panda posted:

IOW, he probably just hands his paperwork over each tax season, pays whatever he's told he owes, stares blankly into space while his preparer gives the annual boilerplate spiel that if he was better about the quarterlies he wouldn't have the extra charge, and then scampers out of the office thinking he's got this all figured out. Good preparers, tell me if I'm wrong on that one.

Got it in one! To be fair, I consider my major service to be taking all the worry out of the prep anyway, so people not wanting to think about it that hard I can’t really diss since that’s what they’re paying me for. As long as I at least try to explain what’s going on so they understand if they want to.

Epi Lepi posted:

Exactly and most tax software automatically calculates the penalty so we don’t even have to spend any brainpower on it.

Thankfully so given my experience learning it; that drat thing is a headache even with software sometimes when I’m trying to do one of those people who didn’t evenly earn their income during the year.

Busy Bee
Jul 13, 2004
If I performed a cash gift transaction this month that I would need to file a form 709 on, do I have to wait until 2023 to file it or can I already do it now?

MadDogMike
Apr 9, 2008

Cute but fanged

Busy Bee posted:

If I performed a cash gift transaction this month that I would need to file a form 709 on, do I have to wait until 2023 to file it or can I already do it now?

Have to do it in 2023 since it’s a return for a full tax year. You can’t file early because what would happen if you did another gift later in the year?

Question of my own, especially for any of the IRS commentators in the thread. If someone keeps having their dependents falsely claimed by someone else, they can file for an IP-PIN for the dependent(s) to stop that, right? I assume being falsely claimed is the type of fraud those numbers are supposed to stop after all.

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urnisme
Dec 24, 2011

MadDogMike posted:

Have to do it in 2023 since it’s a return for a full tax year. You can’t file early because what would happen if you did another gift later in the year?

Question of my own, especially for any of the IRS commentators in the thread. If someone keeps having their dependents falsely claimed by someone else, they can file for an IP-PIN for the dependent(s) to stop that, right? I assume being falsely claimed is the type of fraud those numbers are supposed to stop after all.

Yes https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin

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