Tax Season

Post by **Troy Loney** » Tue Feb 20, 2018 9:08 am

We are going to owe money again this year. Tax season sucks.

Post by **count2infinity** » Tue Feb 20, 2018 9:25 am

We owe as well... we both adjusted our W4s so we owe far less this year than we did last year, but I'd still rather not owe, so we'll adjust again. Having a kid this year will help as well.

Post by **dodint** » Tue Feb 20, 2018 5:09 pm

Still waiting for 'forms to be available from the IRS'. Not impressed.

Post by **willeyeam** » Tue Feb 20, 2018 5:22 pm

dodint wrote: ↑Tue Feb 20, 2018 5:09 pm Still waiting for 'forms to be available from the IRS'. Not impressed.

You should have some idea of how the government operates

Post by **NTP66** » Sat Feb 24, 2018 5:51 am

Managed to owe $1500 this year, and our accountant thinks we’re going to get pounded next year with ****’s tax bill in effect.

Still beats a big refund.

Post by **CBear3** » Mon Mar 05, 2018 12:22 pm

It looks like we'll make $15k more gross thanks to my wife's job change, and pay about $1k more in taxes.
My wife sucks at filling out a W4, so our withholding was hosed over the last few months after she took her new job.

Post by **dodint** » Wed Apr 11, 2018 5:21 pm

If you're a beneficiary of a liquidated pension plan it counts as regular income since we don't have an inherited IRA to put it in.

PA will want 3.07% as income. Feds are getting 20% at disbursement to cover tax liability so that will get sorted later.

I'm trying to find out if there is a benefit in paying the tax now (I don't know the mechanism for that, estimated taxes or something?) or just waiting until we prepare taxes in February and anticipate owing the state a four-figure payment then. We can spend the year earning interest on it so we're leaning towards the latter, if possible.

My sister is a CPA/tax person so ultimately we'll end up taking her firms advice; just posing the question here so I can have the conversation intelligently.

Any advice or guidance on what to read up on?

Post by **robbiestoupe** » Thu Apr 12, 2018 8:22 am

Not a tax person by any stretch of the imagination, but I will advise you to pay the local tax portion of the payout right away. I took an early pension payout from my previous employer, and figured I'd just pay the local part come tax time. No, local taxes are due quarterly, so I owe a penalty for paying late.

A benefit of paying the federal tax now would be avoiding the penalty of owing too much to the feds. I avoided that this year since the feds paid me back quite a bit last year.

Post by **willeyeam** » Thu Apr 12, 2018 8:26 am

dodint wrote: ↑Wed Apr 11, 2018 5:21 pm If you're a beneficiary of a liquidated pension plan it counts as regular income since we don't have an inherited IRA to put it in.

PA will want 3.07% as income. Feds are getting 20% at disbursement to cover tax liability so that will get sorted later.

I'm trying to find out if there is a benefit in paying the tax now (I don't know the mechanism for that, estimated taxes or something?) or just waiting until we prepare taxes in February and anticipate owing the state a four-figure payment then. We can spend the year earning interest on it so we're leaning towards the latter, if possible.

My sister is a CPA/tax person so ultimately we'll end up taking her firms advice; just posing the question here so I can have the conversation intelligently.

Any advice or guidance on what to read up on?

you can make an estimated payment to prepay if you wish. Estimates are usually prepared when someone has income from a pass-through or investments.. non W-2 in short most times. If you don't have 100% of last year's tax paid in or 90% of the current year paid in, you can have underpayment penalties, which aren't too severe at the end of the day. Obviously your sister knows your situation better than any of us nerds, but I am going on a limb and assuming your income is from a W-2 source and you have tax withheld that should cover the safe harbor thresholds I described earlier, so no point in paying an estimate other than peace of mind that you won't have a big bill next April

Post by **Lemon Berry Lobster** » Thu Apr 12, 2018 8:39 am

Oh look, second year in a row I owe $695 to the government because I didn't have health insurance.

Post by **Freddy Rumsen** » Thu Apr 12, 2018 8:48 am

The government pays me to have children but I get penalized by the state of Mississippi for having children so I end up having to use some of my federal refund to pay the state of Mississippi an exorbitant amount of money. Thankfully South Carolina is not jacked up on the state tax front and I won't have to worry about this next year.

Post by **willeyeam** » Tue Apr 17, 2018 8:23 am

today is a good day

Post by **Troy Loney** » Tue Apr 17, 2018 9:44 am

willeyeam wrote: ↑Tue Apr 17, 2018 8:23 am today is a good day

https://www.cnbc.com/2018/04/17/house-g ... pular.html

House Majority Leader Kevin McCarthy, whom House Speaker Paul Ryan has endorsed to succeed him as House GOP leader, told CNBC that he believes voters will begin to understand the benefits of the law by the midterm elections. He even mused about the possibility of moving tax filing day to November instead of April so it is fresh in voters' minds.

Post by **Viva la Ben** » Tue Apr 17, 2018 9:50 am

Post by **tifosi77** » Tue Apr 17, 2018 9:56 am

We owed Uncle Sam $9500 this year. Methinks we both need to take a W-2 filling out class, because something is clearly amiss.

Post by **willeyeam** » Tue Apr 17, 2018 10:01 am

Troy Loney wrote: ↑Tue Apr 17, 2018 9:44 am
willeyeam wrote: ↑Tue Apr 17, 2018 8:23 am today is a good day
https://www.cnbc.com/2018/04/17/house-g ... pular.html

House Majority Leader Kevin McCarthy, whom House Speaker Paul Ryan has endorsed to succeed him as House GOP leader, told CNBC that he believes voters will begin to understand the benefits of the law by the midterm elections. He even mused about the possibility of moving tax filing day to November instead of April so it is fresh in voters' minds.

shut the f up

actually... if they did this and skipped an April tax deadline I would be all about it and would check all the things off my retirement bucket list - march madness, the masters, spring training, etc

Post by **Troy Loney** » Tue Apr 17, 2018 10:02 am

Yeah, but then you'd miss the Pirates WS.

Post by **dodint** » Tue Apr 17, 2018 10:21 am

willeyeam wrote: ↑Thu Apr 12, 2018 8:26 am
dodint wrote: ↑Wed Apr 11, 2018 5:21 pm If you're a beneficiary of a liquidated pension plan it counts as regular income since we don't have an inherited IRA to put it in.

PA will want 3.07% as income. Feds are getting 20% at disbursement to cover tax liability so that will get sorted later.

I'm trying to find out if there is a benefit in paying the tax now (I don't know the mechanism for that, estimated taxes or something?) or just waiting until we prepare taxes in February and anticipate owing the state a four-figure payment then. We can spend the year earning interest on it so we're leaning towards the latter, if possible.

My sister is a CPA/tax person so ultimately we'll end up taking her firms advice; just posing the question here so I can have the conversation intelligently.

Any advice or guidance on what to read up on?
you can make an estimated payment to prepay if you wish. Estimates are usually prepared when someone has income from a pass-through or investments.. non W-2 in short most times. If you don't have 100% of last year's tax paid in or 90% of the current year paid in, you can have underpayment penalties, which aren't too severe at the end of the day. Obviously your sister knows your situation better than any of us nerds, but I am going on a limb and assuming your income is from a W-2 source and you have tax withheld that should cover the safe harbor thresholds I described earlier, so no point in paying an estimate other than peace of mind that you won't have a big bill next April

I didn't see this until now, sorry.

The pension payout will be reported with a 1099-R and is a death benefit not subject to IRA withdrawal penalties, just regular income tax. The amount coming from the pension payout/inheritance is about 2x our normal W2 annual pay.

For last year, we owed like $328 to PA and they seemed annoyed that I didn't pay estimated taxes quarterly. Now with this pension/inheritance* that number will be in the four figures.

*it's not passing through the estate so it won't be subject to the 4.5% inheritance tax.

Post by **MrKennethTKangaroo** » Tue Apr 17, 2018 10:50 am

talk to your sister, but iirc death benefits aren't necessarily taxable for the state. don't quote me on that though.

Post by **dodint** » Tue Apr 17, 2018 11:00 am

That amount includes taxable and untaxable funds. There is a (small) portion we won't pay taxes on. She also advised us that we'd probably owe the City of Pittsburgh 3%, as Allison Park residents I don't actually know that I have a local tax obligation. I know my wife's employer takes out municipal taxes.

The only way for us to avoid paying taxes on it were if she had passed the IRA down intact and we kept it as an IRA. But it's being split between multiple beneficiaries.

Post by **NTP66** » Tue Apr 17, 2018 11:03 am

dodint wrote:Source of the post The only way for us to avoid paying taxes on it were if she had passed the IRA down intact and we kept it as an IRA. But it's being split between multiple beneficiaries.

Did you look into splitting the inheritance into separate IRAs?

Post by **Troy Loney** » Tue Apr 17, 2018 11:04 am

My wife had to pay some PA inheritance tax on her mom's IRA.

Post by **dodint** » Tue Apr 17, 2018 11:09 am

NTP66 wrote: ↑Tue Apr 17, 2018 11:03 am
dodint wrote:Source of the post The only way for us to avoid paying taxes on it were if she had passed the IRA down intact and we kept it as an IRA. But it's being split between multiple beneficiaries.
Did you look into splitting the inheritance into separate IRAs?

No. It wasn't an option as per the plan administration. And even if it were the funds are being used to pay for my wife's schooling. Having no student loans will be nice.

Only assets that pass through the estate are subject to the 4.5% PA inheritance tax. Life insurance payouts to a named beneficiary and anything else not reported to the estate administrator do not get taxed by the inheritance tax.

My MIL had some smaller life insurance policies to cover the practical aspect of covering the cost of her funeral. But she named both her kids as beneficiaries instead of the estate. My brother in law pocketed his half and stuck my wife with the bill. Luckily there was a policy from before they were born still out there that was paid out to her aunt, so that ended up covering the costs. If i had multiple heirs I would have a will, and a policy that funds the estate during the early part of administering the estate.

I can't wait until this is over.

Post by **Troy Loney** » Tue Apr 17, 2018 11:26 am

It's amazing to me that some people would be willing to sever familial ties over 5 figure estate payouts. Dodint's experience is different from mine, my wife was dealing with aunts and uncles that are surgeons and dentists that would rather write her and her sisters out of their life than give them uncontested access to their 1/28th of the estate.

Post by **dodint** » Tue Apr 17, 2018 11:32 am

Yeah, I mean, this is just two people splitting relatively small assets. I can't imagine what your wife had to endure, it's sad.

I really try not to interject myself into the situation. The only time I really did was when we were at the attorney's office picking which of the two of them was going to be the estate administrator. My wife, a certified paralegal with estate experience, or her brother, a part time shift manager at UPS. My wife started to defer to him and I put an end to that. She has been dutifully paying off the final bills and managing everything efficiently, I can't imagine what it would look like if he had been given that responsibility. He still wants to (illegally) rent the house out while the estate is still in probate so he can start earning income on it as soon as possible.

My parents have a will, thankfully.