Tax Season
Tax Season
Not a big deal
Tax Season
Ugh
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Tax Season
you got some first world problems my man, congrats
edit: make sure lady mac is maximizing her contributions as well
edit: make sure lady mac is maximizing her contributions as well
Tax Season
Am I misunderstanding something then? Because I don't think I make that much money.
IRA:
IRA:
I'm over $124k but not by a ton.joint filers with income of up to $104,000 can deduct their full contribution for the 2020 tax year. Deductions thereafter decrease and phase out completely once income reaches $75,000 for singles and $124,000 for joint filers.
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Tax Season
I know you guys went through this but can the pros explain the action required on these child tax advance payments?
We are in the phase out range, and our 2021 AGI is going to be significantly higher than 2020 (but not above the phase out).
If I accept those monthly payments, is there a risk of having to pay a bunch back at tax time? I was thinking I should be OK for 2021 since there weren't any payments in the first half of the year so I'm unlikely to be overpaid. Then probably opt out in 2022 and reconcile to whatever I'm eligible for when I file my return.
Am I way off base?
We are in the phase out range, and our 2021 AGI is going to be significantly higher than 2020 (but not above the phase out).
If I accept those monthly payments, is there a risk of having to pay a bunch back at tax time? I was thinking I should be OK for 2021 since there weren't any payments in the first half of the year so I'm unlikely to be overpaid. Then probably opt out in 2022 and reconcile to whatever I'm eligible for when I file my return.
Am I way off base?
Tax Season
401k and IRA aren't the same thing. Same investment vehicle but a 401k is employer only and IRA is your end and you get the tax break on the back end.
401k - Tax Deferred Contributions up to 19,500 (under 50)
IRA - Max Contribution of up to 6,000 (under 50), creates a basis if you're over threshold and can't get a tax break. Threshold is applied if you or spouse are covered by 401k at work.
Also, if you're just over 124k what is the problem? The threshold for CTC phaseout starts at 150k MFJ.
401k - Tax Deferred Contributions up to 19,500 (under 50)
IRA - Max Contribution of up to 6,000 (under 50), creates a basis if you're over threshold and can't get a tax break. Threshold is applied if you or spouse are covered by 401k at work.
Also, if you're just over 124k what is the problem? The threshold for CTC phaseout starts at 150k MFJ.
Tax Season
For 2022 it might not matter cause the beefed up CTC is for 2021 only unless it gets extended. Even then who knows if they will do it over 12 months or keep it at the 6.I know you guys went through this but can the pros explain the action required on these child tax advance payments?
We are in the phase out range, and our 2021 AGI is going to be significantly higher than 2020 (but not above the phase out).
If I accept those monthly payments, is there a risk of having to pay a bunch back at tax time? I was thinking I should be OK for 2021 since there weren't any payments in the first half of the year so I'm unlikely to be overpaid. Then probably opt out in 2022 and reconcile to whatever I'm eligible for when I file my return.
Am I way off base?
For 2021, it depends. Is your refund usually based on having CTC? If yes, then you might owe. If not, you should be ok. If you already owe with it, you'll owe more without it.
You're getting an advance on the credit. In your case your advance is going to be more than 50% because your 2021 income is higher than 2020.
If last year my CTC was 4,000 and my refund was 5,000 then this year my refund would be 3,000 if everything was the same, including CTC, because my refund was advanced in half the CTC. You can kind of use this model to your situation.
My advice would be to first contact your tax preparer as they know your situation.
If you don't do that, I would advise setting those funds aside if you don't need the money and label it as "Tax Credit Advance" so you can use it to offset any amount you might owe next year.
People who don't pay attention, so A LOT of people, are going to be upset come February/March when their refund isn't what it usually is because they accepted part of their refund in monthly installments. This is going to be like the Stimulus payments. This is an advance, not a freebie.
Tax Season
I made significant money on stock, and received a very nice bonus this year. Which I hadn't last year.401k and IRA aren't the same thing. Same investment vehicle but a 401k is employer only and IRA is your end and you get the tax break on the back end.
401k - Tax Deferred Contributions up to 19,500 (under 50)
IRA - Max Contribution of up to 6,000 (under 50), creates a basis if you're over threshold and can't get a tax break. Threshold is applied if you or spouse are covered by 401k at work.
Also, if you're just over 124k what is the problem? The threshold for CTC phaseout starts at 150k MFJ.
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Tax Season
I have 2 kids under 6 so my credit for this year would be $7200 instead of $4000 if I received the full credit, right? Shouldn't that in itself create a situation in which my withholding was too large? Or would that have already been adjusted automatically to account for my dependent situation?You're getting an advance on the credit. In your case your advance is going to be more than 50% because your 2021 income is higher than 2020.I know you guys went through this but can the pros explain the action required on these child tax advance payments?
We are in the phase out range, and our 2021 AGI is going to be significantly higher than 2020 (but not above the phase out).
If I accept those monthly payments, is there a risk of having to pay a bunch back at tax time? I was thinking I should be OK for 2021 since there weren't any payments in the first half of the year so I'm unlikely to be overpaid. Then probably opt out in 2022 and reconcile to whatever I'm eligible for when I file my return.
Am I way off base?
If last year my CTC was 4,000 and my refund was 5,000 then this year my refund would be 3,000 if everything was the same, including CTC, because my refund was advanced in half the CTC. You can kind of use this model to your situation.
So basically I'd get $3600 paid to me now and the other $3600 later. If it turns out I should have received $5000 for the year instead of $7200 I'll still get another $1400 credited on my return?
Tax Season
Your last statement is correct.
And you won't have an adjustment unless you changed something.
Most likely you won't owe but I don't know your tax situation to give you a good answer.
And you won't have an adjustment unless you changed something.
Most likely you won't owe but I don't know your tax situation to give you a good answer.
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Tax Season
RE: Maction
Correct me if I’m wrong here, but how about contributions to an HSA? If mac or lady mac’s employer has an HSA, employee contributions reduce your W-2 wage, right? How about giving that a shot? Or is $mac$$$$$ money bags maxing out his HSA contributions, 401k contributions and wiping baby mac’s ass with 20 dollar bills in his big ass RV
Correct me if I’m wrong here, but how about contributions to an HSA? If mac or lady mac’s employer has an HSA, employee contributions reduce your W-2 wage, right? How about giving that a shot? Or is $mac$$$$$ money bags maxing out his HSA contributions, 401k contributions and wiping baby mac’s ass with 20 dollar bills in his big ass RV
Tax Season
HSAs indeed reduce wages if you have a qualifying high-deductible health plan. Contribution limits are $3,600 for individuals and $7,000 for those with a family HDHP.
Tax Season
Neither of our employers offer an HSA. Both still have traditional health insurance.
We do max out her dependent care FSA at $5k and contribute a little to a Healthcare FSA. With lil mac x2 on the way next year I'll up that number.
We do max out her dependent care FSA at $5k and contribute a little to a Healthcare FSA. With lil mac x2 on the way next year I'll up that number.
Tax Season
I've been tasked with finding my boss an accountant in Pittsburgh to handle his personal, business, and charity taxes. Any accountants here looking for a new client or does anyone have any recommendations?
Tax Season
Woke up to a $1236 tax rebate in my account today. I believe this was the wife's unemployment income tax coming back to us.
Tax Season
Woke up to this note and some cash deposited into my bank account today.
IRS TREAS 310
I was not expecting anything and we opted out of the child tax credit. This would have been much larger than that anyway. From looking, I think it may be from my unemployment when I was laid off last year, but I don't know. Anyone know what this could be ?
IRS TREAS 310
I was not expecting anything and we opted out of the child tax credit. This would have been much larger than that anyway. From looking, I think it may be from my unemployment when I was laid off last year, but I don't know. Anyone know what this could be ?
Tax Season
Oh, didn't see that post dodint. You find out anything about yours?
Tax Season
Yes, that was your unemployment. As both my wife and I spent a month or so on unemployment last year, the amount was sizable.
Tax Season
I'll take it
Tax Season
I'm busy turning mine into a new golf driver.
Tax Season
Cool, I think mine will turn into a nice weekend in Letchworth state park
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Tax Season
FYI, you have to pay taxes on unemployment unless it was taken out already.
Tax Season
From the IRS: If your modified adjusted gross income (AGI) is less than $150,000, the American Rescue Plan enacted on March 11, 2021, excludes from income up to $10,200 of unemployment compensation paid in 2020, which means you don’t have to pay tax on unemployment compensation of up to $10,200.
That's why we are getting the refunds; because it was not taxable in this instance.
That's why we are getting the refunds; because it was not taxable in this instance.
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Tax Season
Nice. Wasn't aware of that.
Tax Season
Pros: Not having to make student loan payments all year
Cons: barely having any student loan interest to deduct all year
Cons: barely having any student loan interest to deduct all year
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