Tax Season

[mac5155]

So my option price was $195 and the sale price was $310. As mentioned I executed the option and sold the shares at the same time.

If I'm understanding properly I pay ordinary payroll tax on $115 * 150 (shares)

Then I pay short term capital gains tax on the same $115 * 150 shares

Is that real? Over a 50% tax? JFC.

[eddy]

Did PA change the way you file state taxes again? Looks like their efile is replaced with mypath or you can now use hr block or another site to file?

[Beveridge]

MyPath was in place last year for it. That's the free way to do it unless you qualify for free through other software, but I'm not sure what those software platforms are.

I believe MyPath was to open up the ability today to file. I know it wasn't there this weekend.

[eddy]

It appears I can just do it through HR block now. We have added a second W2 to our filing, good bye refunds of the past

[mamaemeritus]

So my option price was $195 and the sale price was $310. As mentioned I executed the option and sold the shares at the same time.

If I'm understanding properly I pay ordinary payroll tax on $115 * 150 (shares)

Then I pay short term capital gains tax on the same $115 * 150 shares

Is that real? Over a 50% tax? JFC.

You pay taxes on the shares when they're given to you. You pay capital gains if you sell them at a gain. So, if the value was $15k when given to you, you pay income tax on that $15k. If you sell them for $20k, you pay CGTX on $5k. I'm betting the IRS doesn't have the basis and the notice is based on the sale price ($20k sale price instead of the $5k capital gain).

[mac5155]

So my option price was $195 and the sale price was $310. As mentioned I executed the option and sold the shares at the same time.

If I'm understanding properly I pay ordinary payroll tax on $115 * 150 (shares)

Then I pay short term capital gains tax on the same $115 * 150 shares

Is that real? Over a 50% tax? JFC.

You pay taxes on the shares when they're given to you. You pay capital gains if you sell them at a gain. So, if the value was $15k when given to you, you pay income tax on that $15k. If you sell them for $20k, you pay CGTX on $5k. I'm betting the IRS doesn't have the basis and the notice is based on the sale price ($20k sale price instead of the $5k capital gain).

I paid nothing when they were given to me.. I only paid payroll tax on the Sale Price - Strike Price * shares exercised.

[mamaemeritus]

Right, sorry, I explained poorly. You paid ordinary income tax when the shares where exercised. So, the 115 x 150 shares. If you sold them at that exact price also, you would pay no gain. Because at that time, the calculation is based on your sale price ($310) vs. the market price at the time your options were granted ($310).

[mac5155]

Yes, I did sell them at that exact price.

The IRS says I owe capital gains on the same amount I paid ordinary income tax on, as my cost basis wasn't correctly adjusted up to be a wash (?) sale on the 1099 (by me, maybe??)

They're wrong, I think? I sent them documentation the week of Thanksgiving. Got a letter about 2 weeks ago they need more time to respond.

[mamaemeritus]

Oh interesting. I didn't even think of the wash sale rules. That's sort of confusing because that's if you sell at a loss I thought? Oy. Sorry I'm of no help, mac. But I'd be interested in hearing what the final resolution is.

[mac5155]

From what I can tell, the sale should've been recorded as a cost basis of 310 and a sale price of 310 for 1099 capital gains tax reporting.

[eddy]

I filed my taxes a couple days ago online. Today I received a 1098T from my daughter's AP high school class that qualifies as college credit. I'm not even sure if it would qualify for a credit because it was paid with a 529 plan. What the hell do I do now?

Nevermind, I guess I just file an amended return online after I get my initial refund

[mac5155]

You have to pay for AP classes? Or just pay for them to count towards credit hours?

[eddy]

You have to pay for AP classes? Or just pay for them to count towards credit hours?

I don't know exact details, but it was a program through the high school in which the classes they took counted as credit hours through a community college. Instead of paying for that class in college in full, you could pay half and have it go through a community college to transfer wherever later. Or something like that.

[dodint]

I think it's time for me to seek professional tax prep. It seems insane that my wife has to declare herself a business because she has some 1099 side gigs. It's probably true but I just don't feel like TurboTax is handling it correctly.

My situation is fine, two W-2 gigs and some investment income. She has a W-2 job and two 1099 gigs with four-figure income. Because of this we've owed thousands of dollars the last two years.

Any recommendations on where I should go for this? My idea of 'tax prep' is those people that sit in the little tax prep desk near the Wal-Mart cash registers. There's a better way, right?
Any idea what we should expect to pay?

[NTP66]

We pay $300 (after a 'discount') to have our taxes done, in case it helps. Got a call from our accountant earlier, and we're getting $8400 back (solar credit and HVAC stuff went a long ways here). I was also told that we need to bump our withholding another $2k between the two of us if we want to break even, everything else being equal.

[willeyeam]

I think it's time for me to seek professional tax prep. It seems insane that my wife has to declare herself a business because she has some 1099 side gigs. It's probably true but I just don't feel like TurboTax is handling it correctly.

My situation is fine, two W-2 gigs and some investment income. She has a W-2 job and two 1099 gigs with four-figure income. Because of this we've owed thousands of dollars the last two years.

Any recommendations on where I should go for this? My idea of 'tax prep' is those people that sit in the little tax prep desk near the Wal-Mart cash registers. There's a better way, right?
Any idea what we should expect to pay?

Probably 300-400 for a decent CPA that isn't at a big firm. I'd trust a smaller local joint, your situation doesn't sound too crazy. I've seen some individual tax preparers charging like $100 and it's honestly so low that I wouldn't trust them

[MrKennethTKangaroo]

Agree with ulfster

[dodint]

Thank you, gentleman.

My sister did it for us for a few years. She's an accountant that worked for a bookkeeper nearby and they did personal returns, so she did them for us at a good rate. Now she works as a forensic accountant dahntahn and doesn't have the software anymore.

[NTP66]

I'll say that one of the benefits I see in our accountant is that he provides comparison analysis between years, probably generated from whatever software he uses. Gives a nice overall picture of what changed and when.

[dodint]

One thing I'd like to have is a breakdown of our individual tax liabilities between the two of us. I know we're married filed jointly and our burden is intertwined, but it would be nice to know exactly how much each of her 1099 jobs is costing us. Because we had 15+ years of getting a return and ever since she started these side jobs we've owed thousands.

[NTP66]

One thing I'd like to have is a breakdown of our individual tax liabilities between the two of us. I know we're married filed jointly and our burden is intertwined, but it would be nice to know exactly how much each of her 1099 jobs is costing us. Because we had 15+ years of getting a return and ever since she started these side jobs we've owed thousands.

That's included in my tax documentation, so I see no reason why they couldn't do that for you.

[Beveridge]

When you say four figure income, I'd be curious to know the amount.

Say she's making 9,000 - you take that at 22% (if that's your bracket), plus another 15.3% for FICA. Even after some back-out credit due to self-employment, you're looking at 3k right there.

[MrKennethTKangaroo]

Let’s keep in mind that self employment tax is a distinct line item on a tax return

[dodint]

$3300 and $3100 in 2022. Probably more in 2023.

My W2 jobs put us into 22%, yeah.

[mac5155]

I'm paying for tax prep this year. Mainly as a thanks to the CPA friend of my moms who helped me with an IRS audit issue earlier in the year. But I put most of my stuff into turbo tax before hand so I have a general idea of what we should be receiving. Hopefully it lines up. We're pretty simple though too. W2s and some minor investment income/dividends. Childcare and student loan deductions.