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You are correct that if your income is low enough that you don't have to pay taxes, then a Roth will let you avoid taxation at both ends, because Roth withdrawals are tax-free.
You are also correct that you can contribute only earned income to the Roth. More specifically, you cannot contribute more to the Roth than your taxable compensation in that tax year....
28
In the US we deduct certain things from income to calculate how much of our income is taxable. Rather than have everyone list out all applicable deductions people can choose to use a standard deduction. The amount of the standard deduction varies by year based on filing status and whether or not the filer is a dependent.
Regardless of your filing/dependent ...
21
The IRS has done a good job of creating a FAQ for each change in the tax law regarding these payments, they have even updated them as the situation has changed:
From the IRS: Questions and Answers about the Third Economic Impact Payments — Topic H: Reconciling on Your 2021 Tax Return
I received a Third Economic Impact Payment. Do I need to pay back all or ...
8
No. There are two parts to the stimulus payment: the advance refund (the "check") and the tax credit (in the case of the third stimulus payment, it's a tax credit for the 2021 tax year). For the advance refund, you received the correct amount; and for the tax credit, the lowest it can be is 0 (it cannot be negative).
Let's look at the text of the ...
5
Employers are supposed to report employer contributions to the HSA (and any employee contributions made through payroll deduction) on the Form W-2 in Box 12 with a code of “W”. That amount should not be included in Box 1 on the W-2, meaning that you don’t pay any tax on that amount. The contribution is automatically deducted from your income tax that way ...
answered Apr 2 at 5:54
Ben Miller - Remember Monica
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5
I think that 2008 was the last year before electronic filing took place. My 8949 form was 832 pages (over a ream and a half of paper!) and it took me all day to print it.
Now, brokerage firms report 1099 and 8949 forms to the IRS and I just report the 8949 totals. I've never had a complaint from the IRS since 2008.
4
I don't believe any situation can exist between individuals where an amount would be rightfully considered a taxable gift from the giver and taxable income to the recipient. People may argue about whether or not an item is a gift, but I've never seen any portion of tax code that indicates something can be both a gift and not a gift at the same time.
In US ...
4
You probably won’t be getting any tax forms from them, but it doesn’t matter. Your business needs to declare all of its revenue, whether you get a 1099 or not.
Add in whatever they paid you in 2020 to the other freelance revenue you had when you do your taxes.
answered Apr 6 at 22:58
Ben Miller - Remember Monica
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4
One way to get them there is to import them electronically - many brokers and most tax software support this.
I got 2300 transactions from one broker imported (and submitted to the IRS) without a problem; but I can‘t tell you how TurboTax spread it technically on many pages, I never looked.
Alternatively, you can total them for each category, and enter one ...
3
Yes, you can pay estimated taxes in equal amounts and avoid a penalty, provided you still meet one of the safe harbors. If you look at Form 2210 - Underpayment of Estimated Tax by Individuals, Estates, and Trusts, you figure the minimum amount you need to pay for the year to meet one of the safe harbors (line 9), then divide by 4 (line 18). Only if you pay ...
3
There is a procedure for returning a stimulus payment. However, it is unclear exactly when it is required to return it and when it is not required.
It seems logical to me (although tax regulations do not always follow logic) that if the stimulus payment was paid because of your own error, you would probably be well-advised to return it (Example 1, Example 2)....
answered Mar 17 at 4:15
Ben Miller - Remember Monica
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3
The US has progressive tax brackets, meaning that the tax rates increase as you go up in tax brackets. For example, for 2020 for married filing jointly, the first $19,750 of taxable income is taxed at 10%; the next $60,500 of taxable income is taxed at 12%; and the next $90,800 of taxable income is taxed at 22%, etc. (And there's also effectively a "0% ...
3
I'm assuming you file jointly. The income of the second spouse is taxed at the "incremental" tax rate. In your case this income is taxed (more or less) in the 22% bracket, so the incremental tax on your spouses income would be $6600 dollars, which is more than the withholding.
You can do it the other way around and see the same effect: if you start ...
2
If you realize a loss and within 30 days before or after that loss you acquire replacement shares, you incur a wash sale violation. That means that loss must be deferred and the cost basis of the replacement shares must be adjusted.
If you close such positions before the end of the current year, you get claim your loss.
If you carry wash sale violation ...
2
In this case your mother is considered a "nominee" of the actual owner of the property (you).
IRS covers this scenario in instructions for Form 8949:
You received a Form 1099-B or 1099-S (or substitute statement) as a nominee for the actual owner of the property
Your mother would add the following to her 8949:
Enter code N in column (f)
Report ...
2
It depends on which safe harbor you are going for. If you are trying for the safe harbor of paying 100% (or 110% for high earners) of last year's tax liability, then yes, you can just pay 1/4 of that amount each quarter and be sure that you won't have a penalty.
If you are trying for the safe harbor of paying 90% of this year's tax liability, there are 2 ...
2
Asset monetisation is the process of unlocking the value of investment made in public assets which have not yielded appropriate or potential returns so far. The Minister informed that an Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors. According to https://journalsofindia.com/national-asset-...
2
If you can assume:
you know that watching your real IRA grow isn't a better teacher than watching a simulated portfolio, and
you're starting a high-paying job post-graduation
Then no, I wouldn't recommend putting your high-value dollars into an IRA now. Save it instead of risking you'll need the money, then invest it all once you build up an emergency fund....
1
When you submitted your tax forms in the spring of 2020 for the 2019 tax year, you were advised to create a pdf file of the federal and state tax forms. This pdf will have the Adjusted Gross income.
If you imported last years tax file into this years tax software one of the numbers the software would have pulled into this years data file is the AGI for last ...
1
The deadline to file and pay 2020 income taxes, both federal and New Jersey, is May 17, 2021. Since it sounds as if you plan to pay by then, you will be on time.
1
Your friend's CPA must be wrong, but that doesn't mean that your CPA is right: Having signed a TIC agreement, you cannot be compelled to create a JV just to enable you to file taxes. The IRS has a "come as you are" approach. The IRS does not go around forcing people to change their business arrangements. Seriously, they have enough to do without ...
1
I'll answer some of your easier questions first. :)
There will be no penalty for you, because there is no tax due. The penalties are all based on how late you were in paying your tax bill, and because you are due a refund, there is no penalty. If you were to simply refuse to file your tax return in which you were due a refund, your only penalty would be ...
answered Mar 24 at 4:02
Ben Miller - Remember Monica
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1
No.
You are not paying taxes now and presumably for the next few years. A brokerage account would give you the same benefits of Roth IRA except you have access to the money if you need it.
You know when you might be have to start paying taxes. The year before you graduate so you could realize all the gains you have or if you left them along they would be in ...
1
According to this Journal of Accountancy article:
If the employer discovers the error after the calendar year of the wage payment closes, the employer also provides the employee and the Social Security Administration a corrected Form W-2 (Form W-2c) reflecting additional FICA earnings, if applicable, for the prior year and FICA tax withholding as if the ...
1
You don't mail in most 1099s. They are a reference for you to know what your bank/brokerage has reported to the IRS.
As @dave_thompson_085 pointed out, that for paper filings certain documents with withheld tax needs to be submitted. The IRS requests that a copy of 1099-R be submitted.
If you have a online account, you should be able to download them. ...
1
Were you supposed to receive them? Or were they lost/misplaced?
If the amounts are too low they don't have to issue a 1099. But if they were lost you may be able to get a replacement.
Are they available on the website? Many 1099s, 1098's, and W-2's I see only exist as a PDF file. The pdf can of course be printed.
1
If I set up my own non-profit (501c3) entity, is it possible for me to donate any or all of my sources of income to offset my tax burden for this year, and if so what percent of each of my sources of income am I allowed to contribute to it annually to offset my tax burden?
You and your LLC are different entities from the 501(c)(3) entity that you propose to ...
1
Not exactly. In 2021 you would claim $500 of interest income, not a $1,000 deduction in 2020 and $1,500 income in 2021. The accrued interest you pay is not really an "expense" since you get it back at the next coupon payment (or when you sell the bond, whichever comes first).
This is included in the instructions for Schedule B:
Accrued interest.
...
1
Each person's stimulus payment and amount are determined independently according to that taxpayer's tax situation and the rules in the law. Different people's stimulus amounts are not connected. From what I can tell, the stimulus amounts received by both of you are correct according to your tax situations and the law, and therefore nothing needs to be, or ...
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