2023 (for 2022) Income Tax Thread

[Parliament 14225]

Starting this early because I need to do some things this year yet.

I gotta sell some TSLA, held in a regular account, at a loss.  (Yeah I know.  Save it for the other thread.)  Are we allowed to claim only so much of a capital loss on stock sales in one year?  I recall that being a thing for options or something.  Something like $3k.

ETA

Seems the option thing is correct.  Just wondering if it's the same for stock.

 

Also.  (It was a joke.  I didn't short TSLA.  LOL?)

 

Edited November 28, 2022 by Parliament

[WithoutAClue 15329]

you can claim $3K of capital loss against regular income per year. any excess is carried forward to future years.

[Parliament 14225]

Man.  OK.

[WithoutAClue 15329]

let me expand on this a bit.

If you have capital gains and capital losses, your capital losses offset the gains until you run out of gains or losses. If you still have capital losses after offsetting the gains THEN you can offset up to $3K of capital losses against regular/ordinary income. See Schedule D for keeping track.

[Parliament 14225]

Yep, that part I get.  So sell enough winners to balance the losers.

[luke duke 6412]

And you can’t repurchase the same stock or a similar mutual fund for 30 days. Google “wash rule”

[dlatin 328]

I’ve always done my own taxes but this last year we bought a property we did a lot of work on an now rent via AirBnb. I definitely need help this year with navigating everything with what I depreciate and for how long vs. expense. Anyone recommend a good CPA / Tax help. I’m in East Texas.

[bluto 4912]

Let’s talk 401k rollover to a roth. If I do that in q1 then get married (eventually filing jointly for the yr) in q3 do I owe taxes on the rollover based on my single filing tax rate or joint filing tax rate? 

[Not a cat 5651]

56 minutes ago, bluto said:

Let’s talk 401k rollover to a roth. If I do that in q1 then get married (eventually filing jointly for the yr) in q3 do I owe taxes on the rollover based on my single filing tax rate or joint filing tax rate? 

Your marital status as of 12/31/22 determines your tax rate for the entire year.  So you'd owe based on your joint rate, even though you were single at the time of conversion. 

Also, don't do it, it's a huge mistake you'll eventually regret (the marriage, not the rollover).

[CooterBrown 18001]

We cashed in some stock from my daughter’s custodial account to buy her a car. Will those capital gains be applied to her or to me as the custodian?

I’m hoping her since that would eliminate any taxes since she has no other income and the capital gains were under the $41K limit.

[HiggyBaby 2528]

Ok possibly dumb question but I'm hoping this is a dumb questions about your taxes safe space.

How do I request a flat percentage rate be taken out of my pay via W4? I need to pull more than the current amount and need to get it to 25%.  But all I can do is specific dollar amounts. My pay varies month to month so it's hard to narrow it down by dollar.

 

I'll hang up and listen.

[hornbri 1391]

1 hour ago, HiggyBaby said:

Ok possibly dumb question but I'm hoping this is a dumb questions about your taxes safe space.

How do I request a flat percentage rate be taken out of my pay via W4? I need to pull more than the current amount and need to get it to 25%.  But all I can do is specific dollar amounts. My pay varies month to month so it's hard to narrow it down by dollar.

 

I'll hang up and listen.

I don’t think you can change it to a %, you can decrease your number of dependents which will result in a greater % of taxes withdrawn each paycheck.

 

[Enchubben 5510]

On 1/31/2023 at 7:37 PM, CooterBrown said:

We cashed in some stock from my daughter’s custodial account to buy her a car. Will those capital gains be applied to her or to me as the custodian?

I’m hoping her since that would eliminate any taxes since she has no other income and the capital gains were under the $41K limit.

How much was the gain, how old is your daughter (and where is the pic godammit) ?

Generally it’s reported on the beneficiary of the accounts return, but if you wish to report it on yours there is a mechanism to do that as well. You may have to file the return for her if she is not a normal filer yet.

[CooterBrown 18001]

3 hours ago, Enchubben said:

How much was the gain, how old is your daughter (and where is the pic godammit) ?

Generally it’s reported on the beneficiary of the accounts return, but if you wish to report it on yours there is a mechanism to do that as well. You may have to file the return for her if she is not a normal filer yet.

We started the account when she was 3 and invest monthly. This was the first withdrawal in 13 years. I don't remember the exact gains but it was probably $10,000 in long term gains. 

She's 16 so she's never filed a tax return. Sounds like a good time to start since she would owe zero taxes on the gains while I would owe the full amount if I claimed it.

and since you asked for pics:

[Kennythetiger 9374]

1 hour ago, CooterBrown said:

We started the account when she was 3 and invest monthly. This was the first withdrawal in 13 years. I don't remember the exact gains but it was probably $10,000 in long term gains. 

She's 16 so she's never filed a tax return. Sounds like a good time to start since she would owe zero taxes on the gains while I would owe the full amount if I claimed it.

and since you asked for pics:

Watch the kiddie tax 

[Enchubben 5510]

yep  - websearch for kiddie tax or custodian capital gain tax - something will pop up and its pretty straighforward. 

[Parliament 14225]

What tax form shows capital losses? the 1099-B Vanguard sent me only shows my gains.

Also.  I've used TurboTax for years, and I still hate them.  Is there a better online option?

[BrazilHorn 6586]

Any surly CPA? I’ve always done mine, but it’s getting to be pain. Also my mom passed so i need to do hers as well. 
I’m in Austin. 

[Catpfish 618]

12 hours ago, Parliament said:

What tax form shows capital losses? the 1099-B Vanguard sent me only shows my gains.

Also.  I've used TurboTax for years, and I still hate them.  Is there a better online option?

Are you sure your 1099-B isn't showing net gains?  Both gains and losses, short and long term, would be reported on the same form

[Parliament 14225]

The 1099-B is not.  Where they ARE being reported is in a 9 page "report" that Vanguard sent.  (And when I scan and upload it, Turbo Tax doesn't bring anything over.)

I guess I could do the math manually and type that in, but I'm not confident I'll get it right.  Good way to go to Federal pound-me-in-the-ass Prison."

[Kennythetiger 9374]

14 hours ago, Parliament said:

What tax form shows capital losses? the 1099-B Vanguard sent me only shows my gains.

Also.  I've used TurboTax for years, and I still hate them.  Is there a better online option?

Should be same form. 

[Parliament 14225]

Well that's what I was thinking.  Lemme go back to Vanguard and ask them what the heck.  I kinda remember this being a problem last year.

[0xdeadbeef 1645]

On 2/5/2023 at 8:32 PM, Parliament said:

What tax form shows capital losses? the 1099-B Vanguard sent me only shows my gains.

Also.  I've used TurboTax for years, and I still hate them.  Is there a better online option?

I switched to TaxAct.com from TurboTax about four years ago and it's handled every thing like a champ: rental properties, side businesses, weird inheritance issues, etc, except one issue.   I have trouble every damn year getting the 1099 from Schwab to import correctly. How can this be so f-ing hard.

Other than that Mrs. Lincoln, how was the play.

[Quagmire 2147]

Anyone know how to commit tax fraud ?

[Redneck Mutha 7952]

On 2/7/2023 at 7:14 AM, Quagmire said:

Anyone know how to commit tax fraud ?

If you're a cop, you have to tell us.

[squib 1120]

Sold a rental property in 2022. Got my disclosure sheet and a 1099 on the sale. I am hoping I don't have to pay taxes on the whole value of the sales price. Can I turn in documents on original purchase price and a list of improvements with receipts over the last 5 years, and have those deducted from the "profits?"

 

 

[NeverMarryAStripper 21865]

Your basis would be your cost, plus capitalized improvements, less any depreciation that was, or should have been taken.  The 1099 merely reports the proceeds from the sale.  The gain/loss will be calculated separately 

Edited February 9, 2023 by NeverMarryAStripper

[squib 1120]

Thanks a ton NMAS. So I suppose I have to establish and provide verification/documents for what you state. I will start the roundup this weekend. 

[NeverMarryAStripper 21865]

You need to have the documentation to back up your calculation, but it won't be provided to the IRS unless they audit you.  You also need to keep in mind that depreciation is a reduction of the basis for the calculation of the gain, but you also have to calculate the recapture of any depreciation taken in previous years that offset income.

[Kennythetiger 9374]

4 hours ago, squib said:

Sold a rental property in 2022. Got my disclosure sheet and a 1099 on the sale. I am hoping I don't have to pay taxes on the whole value of the sales price. Can I turn in documents on original purchase price and a list of improvements with receipts over the last 5 years, and have those deducted from the "profits?"

 

 

Careful so that you don’t add expensed costs back into the basis. 

[DalTxHornFan 3097]

3 hours ago, NeverMarryAStripper said:

You need to have the documentation to back up your calculation, but it won't be provided to the IRS unless they audit you.  You also need to keep in mind that depreciation is a reduction of the basis for the calculation of the gain, but you also have to calculate the recapture of any depreciation taken in previous years that offset income.

 

[Parliament 14225]

They Surly 99.5% as they click "submit" on their return:

 

[Wulaw Horn 19063]

On 2/9/2023 at 9:55 AM, NeverMarryAStripper said:

You need to have the documentation to back up your calculation, but it won't be provided to the IRS unless they audit you.  You also need to keep in mind that depreciation is a reduction of the basis for the calculation of the gain, but you also have to calculate the recapture of any depreciation taken in previous years that offset income.

People worry about this kind of thing a lot. Here is your friendly reminder that only 1 out of every 243 returns are audited, and the vast vast majority of audits don’t end in federal pound you in the ass prison. Especially for the dude who doesn’t have the receipt for “roof repair” in his shoebox of receipts. 
 

Note- this is neither legal nor tax advice, just actual statistics from the IRS mixed in with a little common sense. 

[JGrayDBU 338]

I like this topic.  

 

My story-I am on an "IRS Hitlist"....probably ever since I did several things to catch their attention years ago. 

1. I bought back my time from ERS long after I had left state of Texas employment. - I knew this would be problematic, so I called the IRS and made sure I was filling out the form correctly.  I bought the time with qualified money-an IRA, so paid $0.  I asked for the IRS agent's first name and badge number, emailed myself the info. ...sure enough a few months later I received a nice letter from the IRS...I filled out the form, referenced employee info. and received a letter a few months later saying everything is ok. 

2.  I found the MCC years ago, while we were still in the apartment.  I found 8396 on the back of the 1040, wondered what that was and boom!  An annual tax credit of $2000?  sign me up!  We had the MCC for 14 years until I left Texas in 2018.  $28000 in tax credits!!!!

3. One year I was doing taxes and realized we had about $5000 in tax credits, so I converted my wife's IRA to a Roth at the very rare 0% tax bracket.

Now, I get a nice "friendly" letter from the IRS about every other year complaining about something.  One year they complained about my educator tax deduction on one side of the paper and on the other side chided me for not filing with e-file.

I am making so much money(for a teacher) up here in the Arctic Circle that I finally went over to the dark side about 8 months ago, and have joined the ranks of the masses who have too much $ withheld.  I am passively aggressively doing them to death.  

Here is an example.  I had a personal record $39k deducted from my pay in 2022 going into the 457b, while at the same time withholding at the single rate.  The only reason I was able to deduct over $30k is that I found the special catchup provision in our plan and used that.  

Now, this year I have already increased my withholding as a response to the lower amount of $ withheld.  I am sure you guys have noticed your withholding has gone down starting in January.  I am going to drive the IRS crazy with kindness. 

Ha!

 

Yes, I am an outlier.  Over the top outlier.  All of those years of having about 90-95% of liability withheld and writing a super small check to the IRS every April 15 and now it is time to go over to the dark side!

[Doc Daneeka 6769]

16 hours ago, JGrayDBU said:

I like this topic.  

Yes, I am an outlier.  Over the top outlier.  All of those years of having about 90-95% of liability withheld and writing a super small check to the IRS every April 15 and now it is time to go over to the dark side!

I’m really going over to the dark side this year. I can start withdrawing penalty-free from my Roth IRA this year, so I’m done paying federal income tax until I die or the minimum required withdrawals from my rollover IRA starts screwing me, whichever comes first. So I have that going for me, which is nice. 

[wild_turkey 3159]

I'm having problems figuring out my backdoor Roth IRA conversions and reporting. I probably messed the process up and now it's made tax reporting more complicated. TurboTax support isn't giving me a straight answer.

I contributed $6,000 to my traditional IRA account, spread out in $1,000-2,000 increments throughout the year. It goes into the Vanguard Federal Money Market fund, where it typically gets converted within a week over to my Roth IRA account, then redistributed into my chosen funds.

Problem #1 - With my final contribution and conversion, I got distracted and busy towards the end of the year. The contribution to the traditional IRA occurred in 2022 but the conversion to Roth for that final amount didn't get done until 1/12/23, so it isn't showing up on my 1099-R. When I made the conversion, I realized this "mistake" but I thought it would be fine since IRA contributions are allowed up until April 15 for the previous year. Maybe that doesn't hold true for backdoor Roth conversions?

Problem #2 - At some point, I probably neglected to do a conversion in a timely manner and it accrued interest while still in the traditional IRA account. I'm not sure which time that was, but my 1099-R form shows a gross distribution of $5,005 (so clearly I picked up $5 somewhere) and that final conversion that didn't appear on the 1099-R shows $1,009 so there's an extra $9 accrued. This means that even though I contributed an even $6,000 to the traditional IRA in 2022, the total conversions is $6,015 which seems like a party foul. 

Is there a simple way to straighten this out? Do I need to contact Vanguard for help? Is this a big enough deal that I should take it to a CPA and let them do all of my taxes for me?

[Guest]

On 2/11/2023 at 4:06 PM, JGrayDBU said:

I like this topic.  

 

My story-I am on an "IRS Hitlist"....probably ever since I did several things to catch their attention years ago. 

1. I bought back my time from ERS long after I had left state of Texas employment. - I knew this would be problematic, so I called the IRS and made sure I was filling out the form correctly.  I bought the time with qualified money-an IRA, so paid $0.  I asked for the IRS agent's first name and badge number, emailed myself the info. ...sure enough a few months later I received a nice letter from the IRS...I filled out the form, referenced employee info. and received a letter a few months later saying everything is ok. 

2.  I found the MCC years ago, while we were still in the apartment.  I found 8396 on the back of the 1040, wondered what that was and boom!  An annual tax credit of $2000?  sign me up!  We had the MCC for 14 years until I left Texas in 2018.  $28000 in tax credits!!!!

3. One year I was doing taxes and realized we had about $5000 in tax credits, so I converted my wife's IRA to a Roth at the very rare 0% tax bracket.

Now, I get a nice "friendly" letter from the IRS about every other year complaining about something.  One year they complained about my educator tax deduction on one side of the paper and on the other side chided me for not filing with e-file.

I am making so much money(for a teacher) up here in the Arctic Circle that I finally went over to the dark side about 8 months ago, and have joined the ranks of the masses who have too much $ withheld.  I am passively aggressively doing them to death.  

Here is an example.  I had a personal record $39k deducted from my pay in 2022 going into the 457b, while at the same time withholding at the single rate.  The only reason I was able to deduct over $30k is that I found the special catchup provision in our plan and used that.  

Now, this year I have already increased my withholding as a response to the lower amount of $ withheld.  I am sure you guys have noticed your withholding has gone down starting in January.  I am going to drive the IRS crazy with kindness. 

Ha!

 

Yes, I am an outlier.  Over the top outlier.  All of those years of having about 90-95% of liability withheld and writing a super small check to the IRS every April 15 and now it is time to go over to the dark side!

I don't understand why the IRS would give a shit about your withholding.  It doesn't impact your taxes due.  It only takes money out of your hands throughout the year and gives them a free loan.

[Doc Daneeka 6769]

38 minutes ago, slorch said:

I don't understand why the IRS would give a shit about your withholding.  It doesn't impact your taxes due.  It only takes money out of your hands throughout the year and gives them a free loan.

I also can’t imagine why they’d care if you withheld too much. They frown on withholding too little, yeah, but too much?

[orange dream 1246]

On 2/2/2023 at 10:57 AM, HiggyBaby said:

Ok possibly dumb question but I'm hoping this is a dumb questions about your taxes safe space.

How do I request a flat percentage rate be taken out of my pay via W4? I need to pull more than the current amount and need to get it to 25%.  But all I can do is specific dollar amounts. My pay varies month to month so it's hard to narrow it down by dollar.

 

I'll hang up and listen.

Correct that you can't just do a set % of all income.  When you say your pay varies by month, it really depends on how much it varies.  Do you get between 7-9% of your annual income each month or do you get 4% some months and 20% in other months, or appoximately the same thing each month and a 20% bonus once a year? 

Is any of your pay considered "supplemental wages" (bonus, commissions, etc.)?  if so, that ought to be taxed at 22% as a minimum but you can elect higher if you want.

There are ways to approximate what you want to accomplish, but the method of doing it will vary depending on which of those cases best fits your situation.

The willingness of your accounting / payroll group to be flexible may also limit your ability to hit your target.

Edited February 15, 2023 by orange dream

[wild_turkey 3159]

On 2/13/2023 at 7:54 PM, wild_turkey said:

I'm having problems figuring out my backdoor Roth IRA conversions and reporting. I probably messed the process up and now it's made tax reporting more complicated. TurboTax support isn't giving me a straight answer.

I contributed $6,000 to my traditional IRA account, spread out in $1,000-2,000 increments throughout the year. It goes into the Vanguard Federal Money Market fund, where it typically gets converted within a week over to my Roth IRA account, then redistributed into my chosen funds.

Problem #1 - With my final contribution and conversion, I got distracted and busy towards the end of the year. The contribution to the traditional IRA occurred in 2022 but the conversion to Roth for that final amount didn't get done until 1/12/23, so it isn't showing up on my 1099-R. When I made the conversion, I realized this "mistake" but I thought it would be fine since IRA contributions are allowed up until April 15 for the previous year. Maybe that doesn't hold true for backdoor Roth conversions?

Problem #2 - At some point, I probably neglected to do a conversion in a timely manner and it accrued interest while still in the traditional IRA account. I'm not sure which time that was, but my 1099-R form shows a gross distribution of $5,005 (so clearly I picked up $5 somewhere) and that final conversion that didn't appear on the 1099-R shows $1,009 so there's an extra $9 accrued. This means that even though I contributed an even $6,000 to the traditional IRA in 2022, the total conversions is $6,015 which seems like a party foul. 

Is there a simple way to straighten this out? Do I need to contact Vanguard for help? Is this a big enough deal that I should take it to a CPA and let them do all of my taxes for me?

After talking with Vanguard, I think I figured it out, which made me realize I didn't understand the backdoor Roth IRA process as much as I originally thought.

I can contribute up to $6,000/year into the traditional IRA, which I did. (fwiw, it will be $6,500 starting this year) That is not tax deductible due to my income.

After that, it doesn't matter if it accrues interest before converting to Roth. It also doesn't matter which year I convert it to Roth, but whichever calendar year that occurs in, will be reflected on the 1099-R for that year, regardless of the year that the original contribution was made to my traditional IRA.

So for last year, I contributed $6,000 to my traditional IRA, and I took a $5,005 distribution as a backdoor Roth conversion.

At least that's how I now understand it.

[CooterBrown 18001]

I can transfer up to $16K of stock tax free to my kid’s custodial account.

“My kid” can then sell this stock and owe no capital gains since the proceeds would be below the minimum income for owing capital gains taxes.

Is there anything preventing this loophole I don’t know about?

[NeverMarryAStripper 21865]

Not unless you exceed the kiddie tax limit and I don’t believe that you get a step up in basis on gifted stock so for 2023 you could only get out of $2,500 in what would have been your gain

Edited February 16, 2023 by NeverMarryAStripper

[Bigbend1812 12915]

[JGrayDBU 338]

On 2/14/2023 at 7:22 AM, slorch said:

I don't understand why the IRS would give a shit about your withholding.  It doesn't impact your taxes due.  It only takes money out of your hands throughout the year and gives them a free loan.

Because they are unhappy with people like me who do not go along with the crowd and act like dumb sheep.  They want me to E-file, not write a check to them, and be just like 98% of the population who give Uncle Sam a free loan every year.  I am giving them the illusion that they have convinced me to join the 98% ers by doing this for a couple of years, and then I will revert to my previous rebel status. 

I have not been giving them an interest free loan for probably 35+ years and I have been rewarded with complaint letters about every other year from them.  I want them to think they have won.  Maybe I can fall off of the "hitlist" if I give the appearance of giving in.  

 

 

[Guest]

with enemies like that, the IRS will never know what hit them.

[boilerhorn 1371]

On 2/15/2023 at 10:00 PM, CooterBrown said:

I can transfer up to $16K of stock tax free to my kid’s custodial account.

“My kid” can then sell this stock and owe no capital gains since the proceeds would be below the minimum income for owing capital gains taxes.

Is there anything preventing this loophole I don’t know about?

Fwiw, your spouse (assuming there is a spouse) can also give $16k - tax free - to your kid's custodial account.  The gains on selling the stocks might exceed the 0-tax threshold, but it is still likely lower than yours.

You can also give $16k to anyone you want, tax free.  Basically, $16k per sender, per receiver.  DM me if you want to give more assets - tax free -  to others

CSB: I recently reviewed my lifetime earning report from SSA.  When I was 4, I had income of around $5k (a very long time ago).  I did not hit that point again until I was 15.  Child labor?  I suspect some form of tax shelter.

[NeverMarryAStripper 21865]

3 hours ago, boilerhorn said:

Fwiw, your spouse (assuming there is a spouse) can also give $16k - tax free - to your kid's custodial account.  The gains on selling the stocks might exceed the 0-tax threshold, but it is still likely lower than yours.

You can also give $16k to anyone you want, tax free.  Basically, $16k per sender, per receiver.  DM me if you want to give more assets - tax free -  to others

CSB: I recently reviewed my lifetime earning report from SSA.  When I was 4, I had income of around $5k (a very long time ago).  I did not hit that point again until I was 15.  Child labor?  I suspect some form of tax shelter.

For 2023 any unearned income (i.e. capital gains)on your child's tax return in excess of the personal exclusion ($1,250) + $1,250 will be taxed at your rate.  In addition the gifted stock retains your basis.  So while the $16,000 limit is calculated on the FMV of the stock, it retains your basis so that the gain realized by your kid will be the same as the gain you would have realized.  The only benefit is the ability to exclude $2,500 of the gain on your child's tax return.  At least this is my understanding and I'm not a tax expert, nor did I stay at a Holiday Inn Express

[Reynolds Woodcock 4738]

Any of you guys who do your own taxes do a mega back door Roth? My firm just added the after-tax contribution feature in 2022, so I threw in to that on top of traditional 401k and regular back door Roth. Just curious if it’s a complicated filing or just simple 1099-R? The regular back door can be a pain on turbo.

 

thanks 

[Not a cat 5651]

On 3/1/2023 at 6:20 PM, Reynolds Woodcock said:

Any of you guys who do your own taxes do a mega back door Roth? My firm just added the after-tax contribution feature in 2022, so I threw in to that on top of traditional 401k and regular back door Roth. Just curious if it’s a complicated filing or just simple 1099-R? The regular back door can be a pain on turbo.

 

thanks 

Been doing mega backdoor for a few years.  If you have it set so it immediately converts from after tax to Roth there will be no taxable gains and therefore nothing to report (fidelity does this automatically so if your 401k is with them call and set it up).  If there's a lag in the conversion process you'll inevitably have some income to report on gains, but your 401k custodian will send you a form if that's the case.

[Reynolds Woodcock 4738]

14 minutes ago, Not a cat said:

Been doing mega backdoor for a few years.  If you have it set so it immediately converts from after tax to Roth there will be no taxable gains and therefore nothing to report (fidelity does this automatically so if your 401k is with them call and set it up).  If there's a lag in the conversion process you'll inevitably have some income to report on gains, but your 401k custodian will send you a form if that's the case.

Thanks, I have auto conversion for sure.