Income tax thread 3.0

[Owensdad]

It's that time of year again...

Barfers, your *hypothetical* income tax questions will be answered with general, and purely *hypothetical* guidance based on my understanding of your question and facts (I could be completely wrong on all counts).

Consult your professional tax advisor to conclude on the application of the law to your unique fact pattern.

Do not post any non public facts herein!

IRS circular 230 disclaimer: nothing in this thread constitutes tax advice within the meaning of IRS circular 230. Nothing in this thread is intended to be used nor may be used to avoid any penalty or tax imposed under the internal revenue code.

As flattering as it may be, I cannot and will not be engaged by any of you wonderful blokes to provide actual tax advice.

Now, boiler plate formalities concluded, post up!

 

[byke]

Nice of you to do this. :thumbup

I think this might be my last semi-complicated tax year for a bit.

 

[Ratters]

Ok, is taxation theft, or is the government just stealing our money?

 

[Yakoo752]

As flattering as it may be, I cannot and will not be engaged by any of you wonderful blokes to provide actual tax advice.

So I am clear... you are NOT available for hire in regards to tax pre and rep?

as I need someone this year :cry

 

[Owensdad]

Nice of you to do this. :thumbup

I think this might be my last semi-complicated tax year for a bit.

First question!

Answer: I'm sure it won't be! :laughing

 

[Owensdad]

So I am clear... you are NOT available for hire in regards to tax pre and rep?

as I need someone this year :cry

I am not.

For personal tax matters I recommend Mike Tiret, Tiret & Co. 650 225 0400 or Mike Yates, Frank + Rimerman & Co. 408 279 5566

Both are top tier.

 

[Owensdad]

Ok, is taxation theft, or is the government just stealing our money?

My personal judgement of current tax policy notwithstanding, I hate to see anybody overpay.

 

[Cycle61]

2013 was a complicated year for me, with stock options exercised, three different jobs, an interstate move, a divorce, retirement account shuffling, and several months unemployed. Still gathering paperwork at my new address, but hopefully it all sorts out. If Turbo Tax can't give me reasonable results, I'll be back with some specific questions.

 

[Marcoose]

Hypothetically, what's the rule of thumb to calculate the out of state purchases/taxes?

Thanks.

 

[Holeshot]

Thread stuck. Let me know when to unstick Sam...

 

[B-Cuz]

Is it better to have a sit down with a Tax Rep for simple preparation? I've always enjoyed the ease of TurboTax.

Thanks in advance.

 

[1962siia]

Say hypothetically I was to get a gig as a motorcycle riding instructor and that income was reported on a 1099. Would I be able to report that income on a Schedule C and then deduct a reasonable portion of my gear, mileage, training/education, parts/repairs, and the cost of the motorcycle?

Thanks.

Daniel

 

[rodr]

Say hypothetically I was to get a gig as a motorcycle riding instructor and that income was reported on a 1099. Would I be able to report that income on a Schedule C and then deduct a reasonable portion of my gear, mileage, training/education, parts/repairs, and the cost of the motorcycle?

I don't see why not. And to the extent you have a home office and/or garage space to support that line of work, there's a nice deduction for those too (see form 8829, Expenses for Business Use of Your Home). Another good deduction for the self-employed is health insurance.

 

[Holeshot]

I've got one Sam: What actions/ deduction are most likely to bring an audit?!!!

 

[yellowrasta]

A buddy of mine tried to convince me why it's better to claim 1 dependent versus 0. I was drunk, and totally forgot what he said, so I don't remember. What's your thoughts on the matter?

 

[Owensdad]

Hypothetically, what's the rule of thumb to calculate the out of state purchases/taxes?

Thanks.

I assume you mean to *estimate* the use tax you owe? Unfortunately, there really isn't a rule of thumb in this regard that I am aware of as this is meant to be an actual amount of CA use tax.

Not a great answer but I don't have a better one.

Aside: all CA resident CPAs and EAs get a flyer from the BOE every year around this time reminding them to emphasize this issue to their clients. Perhaps a natural consequence of a relatively high use tax rate that encourages evasion.

PSA: this will be reviewed in every state audit of a personal return. Count on it.

 

[Owensdad]

Is it better to have a sit down with a Tax Rep for simple preparation? I've always enjoyed the ease of TurboTax.

Thanks in advance.

Probably not for a simple personal return.

That said, you will get the most mileage out of any capable paid preparer if you stick with that preparer over many years.

When your baller potential is realized in the future, a long term tax advisor will know where you came from, your priorities, goals, and will have in the forefront of their mind facts a new advisor will have to discover.

 

[Owensdad]

Say hypothetically I was to get a gig as a motorcycle riding instructor and that income was reported on a 1099. Would I be able to report that income on a Schedule C and then deduct a reasonable portion of my gear, mileage, training/education, parts/repairs, and the cost of the motorcycle?

Thanks.

Daniel

Yes you will!

Be sure to keep in mind the rules around mixed use (personal and business) property; for example, a vehicle that you use personally and in your business. This is also known as "listed" property. All the off the shelf software I've ever used will guide you through these rules.

Use schedule C to report your income and deductions as a sole proprietor. You will probably need to make estimated payments if you are profitable and don't forget to budget for "self employment" tax (i.e., the employer portion of social security, medicare, and certain state payroll taxes).

 

[Owensdad]

I've got one Sam: What actions/ deduction are most likely to bring an audit?!!!

Hard to say but common audit targets are the self employed, folks that work in cash oriented occupations, and high earners.

 

[Owensdad]

A buddy of mine tried to convince me why it's better to claim 1 dependent versus 0. I was drunk, and totally forgot what he said, so I don't remember. What's your thoughts on the matter?

I'm assuming you mean on your withholding allowance certificate, aka W-4. This will simply result in you over withholding on this particular income stream (e.g., wages). Many people do this to avoid under withholding or to generate a larger refund when you file your return, think of it as a forced savings mechanism.

Claiming 0 dependents when you are entitled to claim 1 on your *return* will simply result in you recognizing a larger tax liability than you are required to under the law. No bueno.