25
529 Contributions are not tax advantaged, just the earnings. If you put $1000 in your 529 account, then immediately use it to pay your loan, you don't get any benefit. If you put $1000 in an index fund and wait a year, you could end up with (say) $1050, and that extra $50 is non-taxed.
Your job's $200 yearly contribution is the real reason to do this. (Also,...
7
The answer is that the assets are not "his" anymore if they are they are not taxable to the grantor.
If the trust is revocable, meaning that the grantor can get the assets back, then all income the trust(s) receive is reportable and taxable to the beneficiary.
The scenario you describe, where the trust pays taxes on its own income, only applies to ...
7
Companies like TurboTax can import data like W-2 if its available to them, but I believe entering the 1099-MISC is a manual operation.
Generally you should be paying estimated tax throughout the year to avoid penalty.
From IRS - Topic No. 306 Penalty for Underpayment of Estimated Tax:
Generally, most taxpayers will avoid this penalty if they either owe ...
6
Since money is fungible1, the joint account would make it easier to demonstrate that she pays more than half of the household expenses
That's because there's a 2:1 ratio going in, so there's a 2:1 ratio going out, even though which dollars "belong" to who was lost when they got combined.
1 able to replace or be replaced by another identical item; mutually ...
5
To your question as asked, but not your example and probably not your intent, there is (since a few years ago) one exception. If you directly own stock of a foreign (non-US) issuer (i.e. NOT an ADR held in a US account, or a mutual fund, which are the easy ways to invest 'abroad') -- or you own anything (not just stock) in a foreign bank or financial ...
5
Ideally the customer(s) wouldn't have submitted a 1099-MISC since it was paid via PayPal, and ideally when they make a mistake like this they would correct it. Unfortunately, the IRS doesn't know the situation, they just know that you didn't report all of the 1099 income on your tax return which they have copies of.
If you can't get the customer(s) to send ...
4
Doing work is "a business" even if you do it under your own name.
The default category if you haven't done any paperwork to form a company is "individual/sole proprietor".
Both terms fit doing work under your own name, depending on whether you look as the contractor as yourself (an individual) or as a small business entity whose sole proprietor is you.
4
No, the IRS expects you to report the gains/losses in the year they occurred. Your brokerage will report this to the IRS in the proper year, so you'd have issues from the jump if you tried to claim the gains for the prior year.
Note that the $39,375 threshold for the 0% long-term capital gain rate is based on taxable income (AGI - deductions), so you can ...
4
Do I need to wait for my W-2 or do companies like Turbotax etc. auto
import that stuff?
The tax software can import directly some W-2 data. It depends on what company you work for, and what payroll company they use. But even if the software can ingest the W-2 without you having to enter the numbers, it can't do that until the employer/payroll company ...
3
Intentionally overwithholding tax in order to get a big refund is essentially loaning your money to the government for free. Since you have debts and other obligations, you're not in a great position to use the IRS as a free savings account. I would definitely adjust your withholdings so that you can use your money more effectively.
how many allowances ...
3
If you move, you are correct that you would be "worse off" (financially) than you are now, but the things you are comparing are actually independent from each other. Consider these hypotheticals:
You currently live in your parents house and pay no rent. If you choose to rent an apartment on your own, you would be "worse off".
You currently live in a paid ...
2
If I do not sell it, it seems that I do not have to be worried about capital gains/losses.
Correct. You do not inform the IRS (via Form 1040 Schedule D) of capital gains and losses until you realize them (which is a fancy way of saying that you sold the underlying securities).
would there be any mention at all on my tax forms about my Facebook stocks?
...
2
No, you don’t report stock purchases or stock you hold on your tax return.
Also, if the stock is held at a broker, as is typical, you don’t report it as a payer of dividends, either; the dividends are paid to you by the broker.
So, the IRS generally doesn’t know about any specific stock you own until you sell it. (They do know if you own dividend-paying ...
2
I assume that when sold, these were OTM covered calls and now you have a large gain on the stock? Just checking because if you sold deep ITM calls at the outset, there wouldn't be a large taxable gain unless the stock had already appreciated a lot.
As for the IRS, gains and losses are reported in the year that they occur. You cannot back date a transaction ...
1
Yes, both you and your spouse have to file Form 8843, since you are both "exempt individuals" (exempt from the Substantial Presence Test) as students, unless you have already been an exempt individual for some part of 5 previous calendar years.
You can and should file for past years now.
1
You are generally not an "exempt individual" (exempt from the Substantial Presence Test) as a student if you have been an exempt individual for any part of 5 previous calendar years. For 2019, you have been an exempt individual for some part of 5 previous calendar years (2014, 2015, 2016, 2017, and 2018) -- yes, although you were only on F1 for part of 2014, ...
1
TurboTax does not support 1040NR but instead links with SprinTax which does. Here's the FAQ which was updated on January 13, 2020:
Does TurboTax handle Form 1040NR for nonresident aliens?
TurboTax doesn't support Form 1040NR: U.S. Nonresident Alien Income
Tax Return, but we have a partnership with Sprintax offering a
nonresident tax filing ...
1
Typically you'd file Form 8606 with your tax return to determine how much of your distribution is taxable. Specifically, Part III deals with distributions from Roth IRA's. However, the instructions indicate:
Don’t include on line 19 any of the following. .....
Distributions that are incident to divorce. The transfer of part or
all of your Roth IRA ...
1
If you are not running a business and you are doing it as a one-off you would be considered to be having a hobby. It would be similar to you doing some spring cleaning and deciding to sell some stuff on eBay or having a garage sale. You are correct that you do not have to include any money you make selling this stuff in your tax return and you don't have to ...
1
The 2019 version of the IRS Publication 970 was just recently released, and it clarifies that you have to take the distribution from a Qualified Tuition Program (e.g. a 529 account) in the same year as the qualified education expense.
What is the tax benefit of a QTP?
No tax is due on a distribution from a QTP unless the amount
distributed is greater ...
1
Assuming the two shifts you worked were done since the beginning of April then you need to select B. You wouldn't have paid tax on that previous job if it would have fallen within your tax free allowance, however the income is still classed as taxable income and would be added to all other income for the tax year to work out your total tax liability (which ...
1
I would say that, yes, it is tax-inefficient to rent and receive rent. Living in your own home is equivalent to renting to yourself (i.e. paying an amount of rent and receiving the same amount of rent), except you don't get taxed on the rental income as you would if you actually rented out to someone.
This is the concept of "imputed income" -- you save ...
1
Something else to consider, because you are in Canada, based on the tax implications of selling a 'principal residence' [ie: the home you actually live in]:
Any gain on selling a principal residence is completely tax free.
For every tax year, only one property can be your 'principal residence'. In some cases, you may have the ability to choose which is ...
1
Yes, but your use of the phrase "so that the the 200k does not have to be distributed" makes it seem like you're thinking distributions are mandatory, which isn't the case. Distributions are optional; nothing forces you to distribute the profits; you could leave the money in the company bank account if you wish or even "invest" in mutual funds or real estate....
1
To calculate the marginal benefit in retirement of a structure that includes FICA tax versus one that avoids it, first compute a marginal benefit from a given income amount that would be impacted by the business structure. Running alongside the following calculation instructions is an example based on $1 of marginal income and other various stated ...
1
Yes, if it will enable the deduction and not incur any IRA penalty (per your tax adviser), you should take the distribution. If you leave the $50k in the IRA, the beneficiaries will eventually pay tax at ordinary income rates on the $50k and all earnings from it. If you invest the $50k outside the IRA, taxes will be owed only on the earnings, likely at ...
1
Leaning toward NO for the amount received via 1099-MISC for Tribal Distributions and listed on 1040 Schedule 1 line 21 as:
INDIAN GAMING PROCEEDS
INDIAN TRIBAL DISTRIB
NATIVE AMERICAN DISTRIB
The section on
Compensation in Pub 590-A Contributions to Individual Retirement Arrangements (IRAs) lists out what is and is not considered compensation:
What Isn’...
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