Who can I go to for tax advice for this unusual and embarrassing problem?
December 4, 2009 10:35 AM Subscribe
Who can I go to for tax advice for this unusual, personal and embarrassing problem?
OK... I've been mostly unemployed for the past few years, working sporadically for self-support (I'm OK for now).
My parents don't know this, and believe I've been holding down a 20-30 hour a week job, and I absolutely prefer it to stay that way for now.
My problem: The family shares income from various stock and bond holdings (S Corp), and the parents would like me to run some numbers through TurboTax and last year's taxes to help figure out my "effective capital gains rate" for the coming year . OK. I can't do that; any capital gains rate estimate would reveal (I would think) my unemployed status and very, very low income. What I need is some kind of typical numbers for the kind of job they believe I have that I could feed into turbo tax to create a viable effective capital gains rate estimate.
I'm not financially savvy, unlike my parents who have worked all their lives in the financial world. Would somebody at, say HR Block be able - or even willing - to help with this problem, and what would I be expected to be charged for it? Basically, I'm just trying to hold onto my private status as unemployed for the moment; I'm not trying to defraud anyone or do anything illegal, and when I file my taxes in the spring, I will (as always) use only my true numbers.
What to do?
OK... I've been mostly unemployed for the past few years, working sporadically for self-support (I'm OK for now).
My parents don't know this, and believe I've been holding down a 20-30 hour a week job, and I absolutely prefer it to stay that way for now.
My problem: The family shares income from various stock and bond holdings (S Corp), and the parents would like me to run some numbers through TurboTax and last year's taxes to help figure out my "effective capital gains rate" for the coming year . OK. I can't do that; any capital gains rate estimate would reveal (I would think) my unemployed status and very, very low income. What I need is some kind of typical numbers for the kind of job they believe I have that I could feed into turbo tax to create a viable effective capital gains rate estimate.
I'm not financially savvy, unlike my parents who have worked all their lives in the financial world. Would somebody at, say HR Block be able - or even willing - to help with this problem, and what would I be expected to be charged for it? Basically, I'm just trying to hold onto my private status as unemployed for the moment; I'm not trying to defraud anyone or do anything illegal, and when I file my taxes in the spring, I will (as always) use only my true numbers.
What to do?
To complete my thought, your best option may well be to suck it up and come clean about your employment status. That's the only way I can see you getting clear of this without dropping a few hundred bucks on the problem.
posted by valkyryn at 10:47 AM on December 4, 2009
posted by valkyryn at 10:47 AM on December 4, 2009
I don't really understand--I don't get why your effective capital gains rate is any of your parents' business. Why do they need to know? If the reason they need to know is not important, don't tell them. If it is important, you probably shouldn't be lying to them about it.
But I guess anyone at HR Block could give you something plausible (although it's a pretty weird request). Heck, anyone with a basic understanding of math and the US tax code could understand it--you didn't post enough info in your question to figure it out, but it shouldn't be hard to do.
posted by phoenixy at 10:49 AM on December 4, 2009
But I guess anyone at HR Block could give you something plausible (although it's a pretty weird request). Heck, anyone with a basic understanding of math and the US tax code could understand it--you didn't post enough info in your question to figure it out, but it shouldn't be hard to do.
posted by phoenixy at 10:49 AM on December 4, 2009
This is simplistic but has the basic percentages:
2009 tax brackets and long-term CG and qualifying dividends
posted by Gusaroo at 10:52 AM on December 4, 2009
2009 tax brackets and long-term CG and qualifying dividends
posted by Gusaroo at 10:52 AM on December 4, 2009
It kind of sounds like your parents are on to you, because it's kind of an odd thing for them to be asking. Giving them fake numbers won't do anybody any good, and I'm not sure why you think telling them you had a tough year in a bad economy is better than lying to them. But you can just tell them that you have your own copy of TurboTax, and you'll run your own numbers, thanks for the offer.
posted by sageleaf at 10:52 AM on December 4, 2009 [2 favorites]
posted by sageleaf at 10:52 AM on December 4, 2009 [2 favorites]
I don't get it either -- what you pay in taxes, capital gains or otherwise, is none of their damn business. Unless you're still a minor, and I can't see that being the case if you've been doing this for several years.
But whatever you do, do not go to H&R Block. They're less than useless; they hire people at tax time, give them 20 hours "training" and set them loose on your financial well being.
posted by cgg at 10:56 AM on December 4, 2009
But whatever you do, do not go to H&R Block. They're less than useless; they hire people at tax time, give them 20 hours "training" and set them loose on your financial well being.
posted by cgg at 10:56 AM on December 4, 2009
three-minute edit window says: Is worse than lying
posted by sageleaf at 10:57 AM on December 4, 2009
posted by sageleaf at 10:57 AM on December 4, 2009
I'm not seeing why you can't fire up TurboTax or some other tax program, put in a fake salary of the amount you would like them to think you are making, then plug in whatever numbers they want to see about and give them the result. TurboTax walks you through that stuff easily enough.
posted by mikepop at 11:03 AM on December 4, 2009
posted by mikepop at 11:03 AM on December 4, 2009
What I need is some kind of typical numbers for the kind of job they believe I have that I could feed into turbo tax to create a viable effective capital gains rate estimate.
If this is all you actually need, look in the help wanted ads and see what they are offering as starting salaries for whatever imaginary job you have. Or, search for "typical salary" jobtitle.
posted by mikepop at 11:05 AM on December 4, 2009
If this is all you actually need, look in the help wanted ads and see what they are offering as starting salaries for whatever imaginary job you have. Or, search for "typical salary" jobtitle.
posted by mikepop at 11:05 AM on December 4, 2009
Thinking after submitting I realize you might be looking for something like sample W-2 forms so you have the various amounts withheld. I googled that and congratulations, you are now making $66,000/year (pdf). If you need to make more/less you can probably find more samples.
posted by mikepop at 11:11 AM on December 4, 2009
posted by mikepop at 11:11 AM on December 4, 2009
I don't get why your parents are asking for your cap gains rate...are they trying to get all the cap gains taxed at your rate and not theirs? That's fishy if it's not 100% your stock as documented by your brokerage. But you know more about the ownership of the assets, so maybe what they're doing is perfectly legal, I don't know. Misinforming them could turn what they think is a legal reporting of cap gains into something that will get their return flagged for discrepancies, and then the cat is really out of the bag regarding your unemployment.
Lying about your cap gains rate is fraud either way, even if in this case you're being fraudulent in a way that potentially benefits the IRS through higher taxes collected.
posted by slow graffiti at 11:20 AM on December 4, 2009
Lying about your cap gains rate is fraud either way, even if in this case you're being fraudulent in a way that potentially benefits the IRS through higher taxes collected.
posted by slow graffiti at 11:20 AM on December 4, 2009
what you pay in taxes, capital gains or otherwise, is none of their damn business.
Since they "share income", my guess is that they are trying to find the family member who would pay the least taxes on the income, maybe in order to transfer the assets. Short-term capital gains are taxed as regular income, so whoever makes the least income would pay the least taxes on it.
Ironically, this means that lying about it would completely defeat the point, since you are certainly the person who is paying the least tax on the gains.
posted by smackfu at 11:20 AM on December 4, 2009
Since they "share income", my guess is that they are trying to find the family member who would pay the least taxes on the income, maybe in order to transfer the assets. Short-term capital gains are taxed as regular income, so whoever makes the least income would pay the least taxes on it.
Ironically, this means that lying about it would completely defeat the point, since you are certainly the person who is paying the least tax on the gains.
posted by smackfu at 11:20 AM on December 4, 2009
I'm not an accountant, but . . . reading through your details I'm inferring that you are part of "The family" that "shares income from various stock and bond holdings" in an SCorp. If that's the case then it's possible your parents are evaluating how to basically disburse some funds and their thinking may very well be that if you have a lower CG rate then it would be favorable to have said gains be disbursed to/through you because they would be taxed at a lower rate. You should ask them about this and try and understand what they're trying to accomplish. It MAY BE that your low-income status is what they're hoping for . . .
The larger issue is, of course, that lying to your family about details of a financial matter you're entangled with (it seems) can't end well.
posted by donovan at 11:28 AM on December 4, 2009
The larger issue is, of course, that lying to your family about details of a financial matter you're entangled with (it seems) can't end well.
posted by donovan at 11:28 AM on December 4, 2009
Misinforming them could turn what they think is a legal reporting of cap gains into something that will get their return flagged for discrepancies, and then the cat is really out of the bag regarding your unemployment.
Lying about your cap gains rate is fraud either way, even if in this case you're being fraudulent in a way that potentially benefits the IRS through higher taxes collected.
THIS. OP, you need to rethink your strategy here. Do you know what your parents intend to do with the information you give them? I ask because you say you aren't financially savvy. Is it possible they will be incorporating this information into their tax returns for 2009 or 2010? Because then you could really be committing, or at least enabling, tax fraud if they mis-state (over) your tax paid and thereby mis-state (under) the effective cap gains rate, and make decisions on withholding and/or quarterly payments based on that.
Honestly for much the same reason it seems that despite your protestations to the contrary, you are defrauding (or at least scamming, regardless of whether you meet the technical legal definition of "fraud") the family business/trust. If you understate your effective gains rate you will in fact be receiving a disproportionately large draw from the business without anyone else's knowledge. Maybe you don't realize it but this request seems to cross the line from "how do I tell a white lie to save face with my parents" territory into something more like "how do I take money from mom's sock drawer without getting caught." But really, the important part is the IRS stuff.
posted by rkent at 11:38 AM on December 4, 2009
Lying about your cap gains rate is fraud either way, even if in this case you're being fraudulent in a way that potentially benefits the IRS through higher taxes collected.
THIS. OP, you need to rethink your strategy here. Do you know what your parents intend to do with the information you give them? I ask because you say you aren't financially savvy. Is it possible they will be incorporating this information into their tax returns for 2009 or 2010? Because then you could really be committing, or at least enabling, tax fraud if they mis-state (over) your tax paid and thereby mis-state (under) the effective cap gains rate, and make decisions on withholding and/or quarterly payments based on that.
Honestly for much the same reason it seems that despite your protestations to the contrary, you are defrauding (or at least scamming, regardless of whether you meet the technical legal definition of "fraud") the family business/trust. If you understate your effective gains rate you will in fact be receiving a disproportionately large draw from the business without anyone else's knowledge. Maybe you don't realize it but this request seems to cross the line from "how do I tell a white lie to save face with my parents" territory into something more like "how do I take money from mom's sock drawer without getting caught." But really, the important part is the IRS stuff.
posted by rkent at 11:38 AM on December 4, 2009
If you tell the truth now, you may get into some trouble with your family but it will likely pass sooner than it will pass if you lie to them and it messes up their taxes.
That said, I can't tell for sure what they're asking or what info you would have to fake. I fear an accountant, even HR Block, would have to ask a lot of questions and might charge you a few hundred dollars to tell you that they can't help you because it might somehow involve misleading or lying to tax authorities.
If you have Turbo Tax I think it will tell you step by step what information it needs - you could always run the numbers at your actual income versus what would be a typical income for the job you say you have, and if you're lucky they might be close enough to not matter?
Consider that if your parents are very financially savvy they might not need any information and might be giving you a chance to come clean on this.
posted by KAS at 11:51 AM on December 4, 2009
That said, I can't tell for sure what they're asking or what info you would have to fake. I fear an accountant, even HR Block, would have to ask a lot of questions and might charge you a few hundred dollars to tell you that they can't help you because it might somehow involve misleading or lying to tax authorities.
If you have Turbo Tax I think it will tell you step by step what information it needs - you could always run the numbers at your actual income versus what would be a typical income for the job you say you have, and if you're lucky they might be close enough to not matter?
Consider that if your parents are very financially savvy they might not need any information and might be giving you a chance to come clean on this.
posted by KAS at 11:51 AM on December 4, 2009
Like the others, I'm not totally sure what you're asking. However, the lowest brackets for U.S. income tax are broad enough that, if your imaginary hourly rate for your imaginary 20-30 hour a week job is low enough, your effective capital gains rate might be the same as it in truth is. In other words, eyeballing the chart Gusaroo linked to, your rate would be the same if your income is anywhere in the $8,350-$33,950 range.
posted by Jasper Fnorde at 1:26 PM on December 4, 2009
posted by Jasper Fnorde at 1:26 PM on December 4, 2009
Yes, your parents are totally on to you, and/or just nosy about how much you make. Truly, when you're tied to family in business this way, it's best just to be honest. Covering up years of semi-unemployment is digging a hole...
posted by maelanchai at 7:24 PM on December 4, 2009
posted by maelanchai at 7:24 PM on December 4, 2009
This thread is closed to new comments.
You need to talk to an accountant. But know that if your parents are going to do financial planning based on the numbers you give them, not giving them accurate numbers is going to cause a lot of problems.
Unfortunately for you, accountants aren't cheap. Think $100-200/hr depending on a variety of factors. This doesn't sound like a terribly complicated deal--you don't have any money, after all--so you can probably get away with this for a few hours tops. Generally the only people that use/need them are those with enough money that doing it wrong will cost more than paying someone to do it right. You aren't in that situation. You'd be trying to pay an accountant to disguise the fact that you can't afford one.
I wouldn't go to HR Block or any similar company. They're complete rip-offs. They don't tend to provide any service you couldn't do yourself.
posted by valkyryn at 10:46 AM on December 4, 2009