Ask MetaFilter questions tagged with Money and tax

Paying Payroll taxes on Employer Expenses?

Anonymous — Tue, 28 Apr 2009 22:00:41 -0800

I have a good friend who's getting screwed by his (soon to be former employer) re: expenses and payroll taxes. What's the best way to resolve this situation? This is all pre-accountant/pre-lawyer information gathering.

Long story short, my friend is an office manager for a consulting firm that does a lot of entertaining. He pays for catering out of pocket, and then is reimbursed for it at each pay period.

So far no problem, but where it gets dicey is these reimbursed expenses are being reported on his paycheck as income, which has totally fucked him at tax time. We plan on going to an accountant, possibly a lawyer, but before we do I want to know what I'm talking about.

What are the various things we need to be wary of here. The consulting firm has a lot of shady business practices, and I don't think they'd react well (either feet dragging or outright hostility) to an employee asking them to correct this. They have more time and money for lawyers than we do. My gut says he should be able to go with an itemized deduction of the business expenses, but the employer collects all receipts. He has copies, but I know the IRS is big on originals.

Any advice no ways to smartly deal with this cluster fuck? Oh, and a preemptive "are you helping" to the "you should be happy to have a job in this economy" people. Just because times are tough is no reason we should let employers slap us around.

Where do I file my taxes?

yesno — Fri, 20 Mar 2009 15:02:07 -0800

What state (or DC) do I have to pay tax in? I am a Colorado resident. This summer, I lived in Virginia and worked and was paid in Washington, DC, for about 3 months. From the perspective of my job, my address remained throughout those three months Colorado, not my temporary VA housing.

This is confusing because D-40B contemplates living in DC temporarily, but not working in DC only on a temporary basis without living there. (http://otr.cfo.dc.gov/otr/frames.asp?doc=/otr/lib/otr/2008_d-40b.pdf)

I'd be interested if anyone specifically knew DC law on this point, as opposed to just the general principle of where you pay tax.

Self-employment tax help for out-of-state web work

Anonymous — Tue, 24 Feb 2009 16:16:41 -0800

Self-employment tax help for out-of-state web work In late 2007, I moved from Ohio to San Francisco, leaving my full-time web-related job. In early 2008, the company I left started tossing freelance work my way. Lots of freelance work. So much that I never even needed to find local clients.

Questions:
1) Will I have to file an Ohio income tax form because the company paying me is located there? What about the city where the company is? (Yes, when I lived in Ohio we had city-level tax forms to file. I mentioned this to a SF resident once and it surprised them)

2) I'm assuming that I have to file a California income tax form since I live here, but are there any laws that say, for example, if the higher income tax state only gets the difference between the two rates? Or anything else pertinent?

Notes:
a. I have not been keeping up with estimated quarterly payments. Yeah, I know that's not really smart. I'd never intended to be a full-time freelancer. If I wasn't in the sweet situation of getting a steady stream of work from a company I was at for a decade, I don't think I'd have the temperament for it.

b. If it matters, we're talking about $73K of 1099 income.

Lesser of two tax burdens?

al_fresco — Sat, 13 Dec 2008 15:40:17 -0800

My partner and I need to pay off some debt, and unfortunately we need to dip into our retirement funds. Our tax accountant is on vacation and we can't find the answer to our question. We have two sources–either sell some stock or cash out a couple of short-term IRA CDs. Which is the lesser of two evils? The service charge on either transaction would be about the same (~$50). We understand that the painful part would come in the form of the taxes on the amount we receive. Is there a difference in how the two types of transactions would be taxed? If we took a theoretical amount of $10k from either transaction, which would be taxed at a higher rate? What is the tax rate on either of these. I'm in California, and we'd need to do this before the end of 2008. If it matters, the money would go directly to pay off credit cards, car, student loans.

And it always makes sense to pay off debt before saving for retirement, right? (Higher interest rate on debt than retirement fund, blah blah). Oh, and we're living paycheck to paycheck.

Thanks in advance!

30-year investment portfolio which has to start before the end of the year and wants to be left alone afterwards?

Anonymous — Fri, 05 Dec 2008 08:59:37 -0800

If you had a very strong incentive to invest money before the end of the year with a 30-year outlook, and a further strong incentive to not adjust your investment strategy over that timeframe unless absolutely necessary, what kind of portfolio would you assemble? I live in Germany, which has an effective 0% capital gains tax on long-term capital gains from financial instruments. The government has finally decided to end this peculiar state of affairs and will start to tax long-term capital gains at 25% or more starting in 2009. Investments made before 1/1/2009 and held for more than a year will continue to be (un)taxed under the old system. But, naturally, if you redistribute the portfolio at any point, what was redistributed will come under the new law, so there is a strong incentive to leave it alone if at all possible. I don't see this as a suicide pact, and would make changes that were necessary without sweating the tax too much, but I am trying to design a portfolio to put a little money in now that has decent odds of not requiring rejiggering and having acceptable performance over the long timeframe which is available.

Personality and background: I consider good money management to be an obligation but not a pleasure of life or inherently interesting, so I believe in keeping things as simple as possible, within reason. Past experience has taught me that if the workings of a financial vehicle aren't clear to me after one good and comprehensive explanation, I'd do best to avoid it. I have invested for the (shorter) long-term before and I've had good outcomes, and I've been lucky enough to have received my lessons about active short-term trading and speculation at reasonably low prices. My general financial health is healthy and the investment seed is extra money. I'm able to purchase many (but not all) US and other international securities/ETFs/funds/bonds without too much of a markup, so let's just assume for simplicity's sake that I can purchase any of them. This will be retirement money, but not the only source of retirement money.

I've read the Scott Adams article, lots of Warren Buffett, and several good books on index fund investing, and now this is my AskMe gut-check/brainstorm request before proceeding: what would your 30-year fire-and-forget portfolio look like? I would love to hear your ideas and advice if you wouldn't mind sharing. Thank you!

US income tax history and theory for dummies?

p3t3 — Fri, 17 Oct 2008 18:14:41 -0800

With all the bickering over taxes in the election campaign, I'm trying to get a broader picture of US income tax history, theories behind past policies, and analysis of how they worked (in idiot friendly language). I found this income tax rate history chart, and was surprised to see that 50 years ago, the wealthiest brackets were paying 70-90% taxes on income.

Then I found this tax history fact sheet, which is sort of what I'm looking for, but either with a little better explanation, or in simpler language. For instance, I'd like more explanation on passages like this:
Over the 22 year period from 1964 to 1986 the top individual tax rate was reduced from 91 to 28 percent. However, because upper-income taxpayers increasingly chose to receive their income in taxable form, and because of the broadening of the tax base, the progressivity of the tax system actually rose during this period.

All links, explanations, articles, anecdotes appreciated!

What is the best financial/tax situation for a family with a kid on the way?

Anonymous — Wed, 02 Jul 2008 06:27:17 -0800

What is the best financial/tax situation for us? Kid on way, financial aid eligibility concerns. Me: grad student for 2 more years, on a teaching assistantship (this covers tuition, fees, health insurance, and gives me a $1600/mo. stipend) and with some student loans on top (less than $10k/year). I also work in the summers, but make less than $5k. I also receive research grants sometimes ($5k-$15k). In 2008, I will only have been in the country for 2 months and will have an income of less than $5k. In 2009 and 2010 I will be be back on the normal track with $1600/mo. and some loans with perhaps 2-3 months of a travel grant of ~$6k.

Him: working person making a good salary (floating around 6 figures)

New factor: baby on the way at end of year (will be on Dad's insurance and Dad's company covers childcare)

The way that we see it, here are our financial options:

(1) Stay unmarried, he claims baby on his taxes.

(2) Stay unmarried, I claim the baby on my taxes. (But would this screw up my student loan/financial aid eligibility by making me look richer?)

(3) Marry and claim kid together. (Again, would this screw up my student loan/financial aid eligibility?)

Taxes not done. Help.

Space Kitty — Tue, 15 Apr 2008 09:10:26 -0800

It's Tax Day already?! Help. California resident. Haven't filed either my state or federal taxes. I tried to file an extension last night, but if I had the figures they were asking for, my taxes would already be done. (In addition, tax is a language my brain utterly refuses to understand.)

I'm not asking anyone here to be my accountant, but I can't be the only procrastinator on AskMe. Advice? Anyone?

Foreign Money Tax Filter

paperlanterns — Sun, 13 Apr 2008 17:06:25 -0800

Foreign Money Tax Filter: This is likely a silly question, but please humor me. Money sat in an interest-friendly account overseas for 20 years, was finally all withdrawn this year.... An older relative deposted a sum of money in an British bank many, many years ago. The money sat there and grew. 20 years later -- this year -- the relative had the money (principal + interest, and closed the account) sent over to the US and it was converted into dollars ($xx,xxx).

How do they claim this on their taxes? The sum total of it as interest income and just state that it's from a foreign bank? The money was earning interest overseas through out the years, but relative never claimed it on prior tax forms-- will this be a big problem for the IRS? Relative wants to just claim everything ($xx,xxx) on this year's tax form and pay all the tax on this interest income now.

Does this make sense? Apologies if there is an obvious answer. And I know you are not my tax accountant/lawyer!

How to report tax info I don't have?

daisyace — Thu, 10 Apr 2008 13:48:20 -0800

What date acquired and cost basis should I put for two items reported on a 1099-B, when there are several unknowns? I have this on a 1099-B:
10/26/07.......Avaya cash merger at $17.50 per.......quant:16.......box 2: $280.00
4/5/07..........LSI corp cash in lieu............................................box 2: $7.94

These companies came from Lucent, which my grandmother gave me years ago, before she died, and I don't know what to put for date acquired and for cost basis.

For date acquired:
- 1947 is when my grandmother's husband bought att, which both of the above eventually came from.
- 1958 is when my grandmother's husband died. I don't know whether he gave Grandma att before he died, or whether she inherited it.
- Roughly late 90's is when Grandma gave me Lucent, which had come from att.
- 12/1/06 is the date that Avaya spun off Lucent.
- 10/26/07 and 4/5/07 are the dates of the reported events on the 1099-B.

For cost basis, I know that the basis of a gift is the giver's basis. But I
don't know:
- what Grandma or her husband's basis was, and which of those is relevant.
- what percent of the investment that had that basis they gave to me.
- what percent of what they gave me became the two companies in question.

If it matters, my mom thinks that when I was given Lucent, it was worth
about $25 per share, and $9500 all together. Now, all the parts taken together are worth much, much less.

I know that, to be safest, I could treat the entire $287.94 as capital gains even though they may actually be losses. This would cost me $75 in Federal tax, I'm not sure how much in state tax, plus the value of whatever loss I could have written off against other gains. I could try to find a tax advisor to help, but I suspect that would cost more than I'd save (plus, at this time of year, it would be a challenge to find one). I've tried the IRS help line and the investment firm where these are now held, but I reached dead ends because of the information I'm missing.

My ex is trying to screw me out of claiming my daughter on my taxes. What are my options?

raddevon — Thu, 07 Feb 2008 06:41:57 -0800

LegalFilter: My ex-wife is trying to screw me out of claiming my daughter on my taxes. What are my options? I realize this isn't strictly a legal forum and that I should see a lawyer (I will.), but I want to get some feedback here anyway.

The terms of my divorce say that I or my ex-wife can claim my daughter in alternating years. When it is my year, my wife can at her option allow me to claim her or claim her herself and pay me the difference. The divorce was final this past summer. My ex claimed her last year (before we were divorced) on her taxes and received the entire benefit. She is starting to suggest she believes she should get the tax benefit this year as well. This is a particularly rough tax year for me. Do I have any recourse? The options as I see them are to file preemptively claiming my daughter (which I'm guessing has some pretty serious legal implications if she decides to pursue it) or wait until she has taken the money and sue her to get it back. I'm not even sure I could win. Intuitively, I should claim her this year since she did last year, but the divorce was not final and nothing is specified in the decree about who gets this year. Any thoughts or advice? I'm in Tennessee if that makes a difference to anyone.

Tax planning advice for the self employed.

Nothing — Mon, 26 Mar 2007 13:57:55 -0800

Tax planning advice for the self employed. The web is full of articles, the bookstores are full of guides. But there is so much "get rich quick" and "pay zero taxes" crap out there that I am not sure where to go for good, solid tax planning advice. Is it better to operate as an LLC? An s-corp? What expenses are deductible? What is a good system of recordkeeping? What records should be kept? If I have two related business pursuits, should I keep track of them separately or together? And so on. I know I need to see an accountant, but I'd like to be as educated as possible. Right now I am paying a rather high percentage of a rather small income in taxes. I'm not anti-tax, but I am very pro-eating.

So, what books do you recommend? What websites have accurate, useful articles? What has helped you better understand managing finances as a self employed person?

USA freelancing from abroad?

LongDrive — Tue, 13 Mar 2007 19:38:06 -0800

Are there any US citizens here who have lived abroad but did freelance or contract work for clients in the States who can share their experiences? I am a US citizen living in Australia as a Permanent Resident since 2001. I have just gotten some freelance work from the States and need to figure out who I need to talk to on which shores to figure out the details. My obvious main concern is how I can invoice and get paid. All my US bank accounts were closed for inactivity around 2002-3. Factors that may make a difference:

-I still have immediate family in the states.
-The businesses that I will be invoicing will be fairly large companies, so in the hopes of getting future work, the process would have to be as straightforward as possible. IE, no money wiring, paypal transfers, etc.

My secondary concern is how this affects my taxes. A previous post turned up a great link on the Australian Tax Office site with regards to foreign income, but alot of it is really greek to me. I am estimating the total income would be no more than 10-15k per annum, and I have no other source of income in the states (investments, etc) Should I be speaking to an American or Australian accountant?

Help me hive mind! Thankyou!

Tax accountant in Toronto?

Robot Johnny — Wed, 03 Jan 2007 08:35:22 -0800

Freelance artist seeks accountant in Toronto. I've recently quit my job in favour of becoming a fulltime illustrator. What's the best way of finding an accountant familiar with small home businesses that can be my tax guru?

The mystery of the tax credit

Lyn Never — Fri, 20 Oct 2006 08:53:53 -0800

How do tax credits work? My husband and I both bought Priuses early this year (well before the 60,000 mark), and we get tax credits of $3,150 for each car. Which is awesome, but... My car was a planned purchase, and it was timed to get this year's tax credit to offset an expected financial transaction that was supposed to come with some hefty taxes. Except, it actually doesn't - I've paid taxes for years on that stuff already, and there's no hit at the end. So there's nothing there to offset with the credit after all.

Also, we rent our house and so do not traditionally itemize our taxes, and generally come in just about even on our taxes every year. I had meant for both of us to calculate the dollar amount by which we should reduce our withholding on our paychecks to come even with the credits, and then we went though some pay changes, so I waited, and by the time the dust settled I forgot to do it and now we've got two months, which isn't a whole lot of taxes to not pay.

My research about tax credits has taught me a lot about UK and Canadian taxes, and not so much about the US. I am assuming that the government is not going to pay us all this money if we don't have something to apply the credit to, but I really can't tell that for sure.

We didn't buy the cars to make money, but if I can make some use out of the tax credits, that would certainly be the smarter thing to do. Can anyone tell me something non-speculative (unlike all the news articles about the hybrid tax credits) about how tax credits are supposed to work, or find me resources worded for the layperson that might help me get my ducks in a row before I start looking for a tax preparer? I don't even know if anyone knows - at the beginning of the year, there was a definite "oh, somebody'll figure it out by April '07, I'm sure" vibe surrounding the whole thing.

I will assume on all answers that YANACPA.

A Taxing Question

popcassady — Sat, 23 Sep 2006 08:45:21 -0800

UK: I've thought of a way to earn a little pocket money. Will the taxman be bothered? I have full-time job. I also have a great idea.

I would like to make a little money in my spare time. I would be doing business directly with my customers.

Now, if this enterprise ends up earning me a few bob, at what point would I have to tell the taxman? Do I have to tell the taxman? Would I have to register as self-employed?

Vancouver accountants?

stavrosthewonderchicken — Thu, 14 Sep 2006 17:51:06 -0800

Possibly a longshot : can anyone recommend an accountant in Vancouver? I'm looking for one that can advise me on tax issues and possibly do some document preparation for me, particularly with regard to my lengthy and continuing expatriate status.

Also, a follow-on question: I've never actually sat down with an accountant who wasn't just a professional friend helping me out. My expectation is that I might be able to sit down with one to lay out my requirements and get a price estimate for the actual engagement, without charge. Is this the case, or will the initial consultation cost, and if so, what might I looking at, ballpark, for say the initial 20 minutes of his or her time?

How to deal with the IRS?

Anonymous — Mon, 04 Sep 2006 07:31:03 -0800

Help me with my scary tax problem. I haven't filed income taxes since 1994. The IRS has caught up with me and is now sending me lots of letters and registered mail (which I ignore). I have had a steady job for all of those years and taxes have been taken out of my pay. How far back can they go? To 1994? To 1999? I am terrified and I want to handle this, though. What do I do?

Money for Nothing

billtron — Sun, 30 Apr 2006 13:30:25 -0800

If this "GOP energy package" is passed by congress, and I get a "hundred dollar gas tax holiday rebate check", where should I spend my new $100? If the rebate goes to individuals making less than $125,000 or couples making less than $150,000, then I could estimate that at least 95% of taxpayers in the US would be elligible. Which means approximately fifteen billion dollars that tax-payers will spend as they see fit.

Since I am fortunate enough not to have to spend that money on baby formula, hospital bills, attorney fees or body armor, I would like to donate the money to a worthy cause.

Any ideas about which federally-underfunded or unrecognized programs would get the most mileage (har har) out of the money?

Tax implications of various investments

xmutex — Sat, 18 Mar 2006 17:57:57 -0800

I have a chunk of change that I am trying to make earn more than the small interest in my savings account. Can anyone speak to the tax implications of someting like an ING Direct savings account - which is offering a promotional yield of 4.0% - vs. something like a money market fund, which lately seems to yield in the range of 3.8 - 4.3? Help me make my money work for me!

Taxation Around the Nation

jasondigitized — Fri, 21 Oct 2005 07:39:39 -0800

Does a company like 37Signals / Basecamp have to charge its users for sales tax? Looking at Basecamp, they charge different monthly rates for associated tiers of service. I would imagine they have customers from all over the States, as well as different countries. Are they required to apply sales tax to these monthly rates based on the customers geographic location. Or, because they are an e-commerce entity, and aren't really selling anything tangible, do they simply charge the flat rate and ignore sales tax?

More pointedly, I am wondering how complex tax collection / reporting is for a U.S. based e-commerce business of this sort.

Selling my house and keeping the cash - possible?

cubedweller — Sun, 11 Sep 2005 13:22:24 -0800

Selling a house and keeping the cash - my wife and I are in the midst of selling our house. When all is said and done (fees, taxes, etc all paid) we're going to get $250k. The expected thing to do is move to another house and use that money as a down payment. But we're playing around with the idea of taking the money and travelling for six months - can we? More Inside... Are they simply going to hand us a check for $250k and that's it? Or is it transferred straight into the next real estate transaction to avoid tax implications? If we do just take the cash, will get screwed on taxes? We're in California if that helps at all.