Income tax thread 3.0

canyonrat

canyonrat

Veteran Knee Dragger
FXCLM5 said:
gj mark doubling your income, wish I could do that in my lifetime :thumbup
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And renting your house after 1 in 19 homes were destroyed does up the rental rate considerably! We have family friends that just bid on buying a house...I think it was this one:

https://www.openlistings.com/p/1159-cornell-dr-santa-rosa-ca-95405

Asking $570, they bid $670, another offer accepted $725! Holy mother of dung piles. Of the 22 houses at 1500sqft+ for rent, 66% are renting at over $3200 per month!

Everyone I know as a friend that lost their home are not rebuilding. Me included, I know 5 fully trained carpenters leaving Sonoma County, that most of the carpenters I know. Rebuilding is going to take 20 years to regain what we lost. Rents and prices will forever stay high. It's just terrible.
 
stigeon

stigeon

The Cake is a LIE!
Raider said:
So I’ll jump in on this thread... I’ve normally used turbo tax to file my taxes for the past forever...

I’m going through a divorce, soon to be ex hasn’t lived at the house since August... lawyer suggests I should do a mairried-filing-seprately tax thing since she’s been dipping into her IRA for money.

I have simple taxes. Same employer for 13 years, basic 401k, student loans, child care (I have full custody currently) and that’s about it.

So I want to go see someone to figure out the IRA situation. My name isn’t on her bigger IRA aspect of it, but it is on a joint married something or other at Edward Jones that’s only worth about $900.

HR Block? Liberty Tax? Jackson Hewitt? What’s the call? I’m in Tracy and have all my tax paperwork already.
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having gone through this recently i can speak to the complications re: Divorce

some bullet point thoughts
  • the court may direct you to file jointly or separately
  • confirm w your soon to be ex how she's filing (and who's claiming any dependants) and if you agree, great
  • if you don't agree, ask the court to rule. if it's too late ask your lawyer for formal direction on how to proceed because they may have to defend your choice in front of a judge
  • are you in the house currently? she could be claiming Epstein Watts credits which may be a hit against you
  • who was paying the mortgage and who is being awarded the property (or is it being liquidated)
  • 401k's can be tricky because they can be divided and split among parties or they can be awarded in whole depending on the division of marital assets
  • your wife using her 401k for liquid assets doesn't really impact your taxes as much this year as it does your potential future debts (guess how I know) based on who's assets she's spending (and that's determined by the court settlement)

i know that probably didn't answer your question but i hope it helped give you something to consider. at the end of the day you're responsible for filing in a timely manner or getting an extension to get a ruling from the court on how to file

p.s. - feel free to PM
 
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stigeon

stigeon

The Cake is a LIE!
i ended up here because i have my own *hypothetical* question

IF....

1. - a divorce was finalized in 2016
- as a part of the settlement she was awarded a small $5000 IRA that was in her name and ssn only

2. - the court required them to file 2016 jointly
- they used a private tax person who collected documents from our individual accounts

3. - January of 2018 one party receives a notice saying they owed $2,340 in back taxes for unreported 2016 income

4. - after investigating it was for the IRA under her SSN
- she liquidated the account in 2016
- she did not reinvest the cash into a tax protected financial vehicle
- she did not report the income for the 2016 joint filing
- tax preparer received a delinquency notice for the amount not reported in 2017
- at her direction they re-assigned the full tax liability to me (learned he's her family friend lol)

My take on this hypothetical situation is that she was awarded an IRA in 2016, not cash, and the tax liability should be hers

Her take is apparently that she felt like she was receiving the cash value of the IRA and the tax liability is joint (well, all mine since shes also refusing to pay half lol)

Any non-binding or formal thoughts on this aside from the obvious "that's fucked up"?

How would a person *hypothetically* dispute this with the IRS?
 
afm199

afm199

Well-known member
stigeon said:
i ended up here because i have my own *hypothetical* question

IF....

1. - a divorce was finalized in 2016
- as a part of the settlement she was awarded a small $5000 IRA that was in her name and ssn only

2. - the court required them to file 2016 jointly
- they used a private tax person who collected documents from our individual accounts

3. - January of 2018 one party receives a notice saying they owed $2,340 in back taxes for unreported 2016 income

4. - after investigating it was for the IRA under her SSN
- she liquidated the account in 2016
- she did not reinvest the cash into a tax protected financial vehicle
- she did not report the income for the 2016 joint filing
- tax preparer received a delinquency notice for the amount not reported in 2017
- at her direction they re-assigned the full tax liability to me (learned he's her family friend lol)

My take on this hypothetical situation is that she was awarded an IRA in 2016, not cash, and the tax liability should be hers

Her take is apparently that she felt like she was receiving the cash value of the IRA and the tax liability is joint (well, all mine since shes also refusing to pay half lol)

Any non-binding or formal thoughts on this aside from the obvious "that's fucked up"?

How would a person *hypothetically* dispute this with the IRS?
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If the IRA is in her name, it's her problem.
 
byke

byke

Well-known member
Not quite income tax related, but for the small business owners out there, I'm wondering about using a seller's permit to not pay sales tax on a purchase if you don't really plan on reselling the item and collecting/paying the tax later. Let's say I wanted to order a hundred feet of steel tubing, but half of it will be resold and half of it will be used to build a workbench that may never be sold. Does the state have a mechanism in place to keep track of purchases to ensure that sales tax is collected at some point? I'm guessing it's a honor system kind of thing because it seems impossible to keep track of, but I dunno..
 
Abacinator

Abacinator

Unholy Blasphemies
I think you're ok... we don't pay sales tax on parts that have been sitting in our inventory for 20 years :laughing I imagine it'd be different if we used a VAT system here.
 
Abacinator

Abacinator

Unholy Blasphemies
Looking for a little advice for my fiancee. Her divorce isn't final yet and her 3 kids live with their dad, not because of a judgement or anything, just due to economic circumstances. Their dad claims them as dependents because they live with him, but my fiancee pays all the tuition for private school, plus daycare for the younger 2. He gives her nothing in the way of child support.

My question is, is there any way she can get some kind of credit for the childcare without claiming them as dependents? Her ex is very uncooperative, and despite my urging her to take further legal action against him, she wants to keep everything uncontested. I'm thinking she's probably hosed unless she really wants to dig her heels in and take him on.

I have a feeling, "talk to an attorney" is going to be the best suggestion.
 
rodr

rodr

Well-known member
Abacinator said:
Looking for a little advice for my fiancee. Her divorce isn't final yet and her 3 kids live with their dad, not because of a judgement or anything, just due to economic circumstances. Their dad claims them as dependents because they live with him, but my fiancee pays all the tuition for private school, plus daycare for the younger 2. He gives her nothing in the way of child support.

My question is, is there any way she can get some kind of credit for the childcare without claiming them as dependents? Her ex is very uncooperative, and despite my urging her to take further legal action against him, she wants to keep everything uncontested. I'm thinking she's probably hosed unless she really wants to dig her heels in and take him on.

I have a feeling, "talk to an attorney" is going to be the best suggestion.
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I'm guessing his claim has more merit:

https://www.1040.com/tax-guide/taxes-for-families/claiming-child-when-divorced/

And also, the person in the higher tax bracket will benefit more from the deduction.

Rather than go legal, what if she just stops paying for school and/or daycare? Lawyers are expensive.
 
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Smash Allen

Smash Allen

Banned
Abacinator said:
Looking for a little advice for my fiancee. Her divorce isn't final yet and her 3 kids live with their dad, not because of a judgement or anything, just due to economic circumstances. Their dad claims them as dependents because they live with him, but my fiancee pays all the tuition for private school, plus daycare for the younger 2. He gives her nothing in the way of child support.

My question is, is there any way she can get some kind of credit for the childcare without claiming them as dependents? Her ex is very uncooperative, and despite my urging her to take further legal action against him, she wants to keep everything uncontested. I'm thinking she's probably hosed unless she really wants to dig her heels in and take him on.

I have a feeling, "talk to an attorney" is going to be the best suggestion.
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my unqualified opinion is that she may be able to claim the childcare credit, but see pub 503 below

https://www.irs.gov/publications/p503#en_US_2017_publink1000203279
 
1962siia

1962siia

Well-known member
byke said:
Not quite income tax related, but for the small business owners out there, I'm wondering about using a seller's permit to not pay sales tax on a purchase if you don't really plan on reselling the item and collecting/paying the tax later. Let's say I wanted to order a hundred feet of steel tubing, but half of it will be resold and half of it will be used to build a workbench that may never be sold. Does the state have a mechanism in place to keep track of purchases to ensure that sales tax is collected at some point? I'm guessing it's a honor system kind of thing because it seems impossible to keep track of, but I dunno..
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I'm not a expert but that is what the "Use Tax" line is for on the Sales Tax payment form.
 
Abacinator

Abacinator

Unholy Blasphemies
rodr said:
I'm guessing his claim has more merit:

https://www.1040.com/tax-guide/taxes-for-families/claiming-child-when-divorced/

And also, the person in the higher tax bracket will benefit more from the deduction.

Rather than go legal, what if she just stops paying for school and/or daycare? Lawyers are expensive.
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That's what I'm thinking, RE the claim.

She doesn't want to disrupt her kids' lives any more than necessary and keeping them at the school they've always been at has a higher priority for her in that regard.

Smash Allen said:
my unqualified opinion is that she may be able to claim the childcare credit, but see pub 503 below

https://www.irs.gov/publications/p503#en_US_2017_publink1000203279
Click to expand...

I'll check into that! Thanks!
 
Smash Allen

Smash Allen

Banned
unfortunately it looks like their dad is the custodial parent. because of this, your fiancee doesn't need to pay these expenses to work and is ineligible for the childcare expenses credit

you are right in thinking to speak with a lawyer, the amounts she is paying for childcare should be recorded in the divorce

best of luck to you both :)
 
CABilly

CABilly

Splitter
Any help in this thread? I got fucked by an old student loan debt my wife had before we were married. Apparently part of her diveorce settlement laid that burden on her ex. But my whole federal refund went to pay it. According to my research I have no relief as an Injured Spouse, given California's community property laws. Is that true?
 
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afm199

afm199

Well-known member
Years ago I got an IRS letter telling me I was receiving a refund of $1.87 and owed them $7. To this day I have no idea why, but I paid them.
 
Cycle61

Cycle61

What the shit is this...
Bumping this with a very silicon valley question.

1) 2008 - Received some stock options from an employer. Classified as ISO.

2) 2013 - Exercised said options, my cost was let's say $2 and the pre-IPO price was somehow established at $20. This triggers enough of a paper gain to put me in AMT territory, which I then paid ($,$$$) out of pocket.

3) 2018 - company executes a 3:2 reverse split and goes public at $15. I now have 66% as many shares as before, and my cost basis is either $3 or $30.

4) 2019 - employee shares come out of lockup and I sell for $10 a share.

5) Underpants?

At step 2, I paid a non-negligible amount of taxes on the difference between my option price and the imaginary market value of the shares at the time. However, the documentation I have now shows my cost basis in the $2-3 range, rather than the $20-30 I was expecting. Also, the shares have declined significantly from that heady pre-IPO valuation, and since I paid tax at $30 and sold at $10, do I somehow become eligible for capital losses that I can carry forward?

Taking all this to my tax guy soon, but he's a bit busy this time of year. :)
 
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