any accountants out there that i can ask a question?

[YitzyS]

Question: Does rental income (from a basement) disqualify a person from Child Tax Credits more than regular earned income? Also, how much of it (approximately) counts as income and how much of it can be offset with reductions?

I know this may be simple, but I tried searching for it and didn't see anyone here who spells this out.

[yosefsv]

Question: Does rental income (from a basement) disqualify a person from Child Tax Credits more than regular earned income?

It’s usually considered as unearned income, which won’t increase the CTC amount. but it will be counted in your AGI. So, if this brings you over the limit (400k for married filing jointly) you will disqualify.

Also, how much of it (approximately) counts as income and how much of it can be offset with reductions?

You would calculate what percentage the basement is from the whole house, and then divide all the expenses accordingly.
And since its unearned income, it could be offset by a loss on a different business, by contributing to an IRA etc.

Disclaimer: I am not an accountant. (But I have the same scenario and that's what I was told)

[Jack out of the box]

It’s usually considered as unearned income, which won’t increase the CTC amount. but it will be counted in your AGI. So, if this brings you over the limit (400k for married filing jointly) you will disqualify.You would calculate what percentage the basement is from the whole house, and then divide all the expenses accordingly.
And since its unearned income, it could be offset by a loss on a different business, by contributing to an IRA etc.

Disclaimer: I am not an accountant. (But I have the same scenario and that's what I was told)

You've got the general idea. I'm just wondering though if he may have mixed up CTC with EITC for which passive income is a factor.

[yosefsv]

You've got the general idea. I'm just wondering though if he may have mixed up CTC with EITC for which passive income is a factor.

Correct. A higher AGI will reduce the EIC amount.

[myi]

Can anyone tell me what exactly this is on the tax return?
Line 27.

[drosenberg88429]

Can anyone tell me what exactly this is on the tax return?
Line 27.

1098T
Tax credit for undergrad tuition.

[yosefsv]

1098T
Tax credit for undergrad tuition.

Or other education expenses that's not reported on the 1098T. (i.e. books that were purchased by yourself)

[dm123]

Its a bit off topic but seems like the financially inclined in this group might be able to help. Can you reduce your tax awithholding amount by paying the IRS directly?

Any personal/payroll tax accountants here know?

Seems the IRS says you have the option of withholding or paying as long as taxes are paid in a timely manner throughout the year it's fine. Of course speak to your accountant to make sure you're paying in the correct amount and the correct tax and verify with your company that they're adjusting your withholding properly.

Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments.
...
Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
...
If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings.

https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

[Thingywingy]

Any personal/payroll tax accountants here know?

Seems the IRS says you have the option of withholding or paying as long as taxes are paid in a timely manner throughout the year it's fine. Of course speak to your accountant to make sure you're paying in the correct amount and the correct tax and verify with your company that they're adjusting your withholding properly.

https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes

Thanks for the response.

The IRS language may by suggesting that it is okay but it is not convincing to me. I think the first quoted sentence is just introducing that there are two ways that personal tax are paid—not (necessarily) giving TP the option to do either as they choose. Regarding the last sentence, it makes sense that the IRS would allow withholding instead of Estimated Tax Payments, but not the reverse. Witholding is paid earlier and is therefore preferred from their perspective.

In light of @Dan posts about paying IRS with CC, I am sure there are people here that have looked into this and tried it. I hope someone with experience can chime in.

Also, the DirectPay website asks what the payment is for. If you select Estimated Taxes, the only option is to apply it to your 1040ES. Does that mean I need to file a 1040ES even though all my income is from Salary?

[Jack out of the box]

Thanks for the response.

The IRS language may by suggesting that it is okay but it is not convincing to me. I think the first quoted sentence is just introducing that there are two ways that personal tax are paid—not (necessarily) giving TP the option to do either as they choose. Regarding the last sentence, it makes sense that the IRS would allow withholding instead of Estimated Tax Payments, but not the reverse. Witholding is paid earlier and is therefore preferred from their perspective.

In light of @Dan posts about paying IRS with CC, I am sure there are people here that have looked into this and tried it. I hope someone with experience can chime in.

Also, the DirectPay website asks what the payment is for. If you select Estimated Taxes, the only option is to apply it to your 1040ES. Does that mean I need to file a 1040ES even though all my income is from Salary?

Form 1040ES is not a form which is submitted to the IRS. You can technically pay in as much as you want along the way and mark it as estimated tax. Your employer, however, has a requirement to withhold certain amounts using your W-4 as a guide. If you prefer that your employer withholds less and you then pay in on your own, you should provide your employer with a new W-4. See the W-4 instructions to figure out the correct entries for your situation.
(Whether through withholding or through estimated tax payments, the IRS is supposed to be receiving tax payments at certain markers throughout the year. If everyone follows the rules then there are no penalties for anyone.)

[Thingywingy]

Form 1040ES is not a form which is submitted to the IRS. You can technically pay in as much as you want along the way and mark it as estimated tax. Your employer, however, has a requirement to withhold certain amounts using your W-4 as a guide. If you prefer that your employer withholds less and you then pay in on your own, you should provide your employer with a new W-4. See the W-4 instructions to figure out the correct entries for your situation.
(Whether through withholding or through estimated tax payments, the IRS is supposed to be receiving tax payments at certain markers throughout the year. If everyone follows the rules then there are no penalties for anyone.)

I did not realize that the 1040-ES does not need be filed, thanks! I understand the need to submit a W-4 to my employer to lower the withholding amount. I have looked at the W-4 instructions and it is not clear to me whether you can include reductions based on planned direct payments to the IRS.

If it can be included, I am pretty sure it would be added to line 3, which states: Add the amounts above for qualifying children and other dependents. You may add to this the amount of any other credits. Enter the total here.

Aside from instructions about dependents, the form instructions add: You can also include other tax credits for which you are eligible in this step, such as the foreign tax credit and the education tax credits. To do so, add an estimate of the amount for the year to your credits for dependents and enter the total amount in Step 3. Including these credits will increase your paycheck and reduce the amount of any refund you may receive when you file your tax return. The instructions do not say anything about including past of future payments to the IRS.

[av83]

I am on HUD Home buyer program (where Hud send me $ each month ti be used towards my mortgage payments) I received a 1099MISC -Rental Income for the payments received. Is this a mistake? Did they think I was a landlord?

[best]

Question: is changing an LLC member more then one year from passive to non passive a problem? is it better to file a 95/5 partnership?

[YoelFried]

Question: is changing an LLC member more then one year from passive to non passive a problem? is it better to file a 95/5 partnership?

You are not filing a partnership return yourself, ask your accountant. It seems like you didn’t like your accountant’s answer.

[best]

You are not filing a partnership return yourself, ask your accountant. It seems like you didn’t like your accountant’s answer.

spoke to 3 different accountant’s about this and everyone gave different answer soooooo which answer didn't I like???

[YoelFried]

spoke to 3 different accountant’s about this and everyone gave different answer soooooo which answer didn't I like???

They I guess anyway will be fine.

[avadah]

Any accountants want to weigh in on Dan's post about FDIC coverage? Customer service at my bank (doesn't necessarily mean anything)  told me they only pay $250k per bank.

[Dawie]

Any accountants want to weigh in on Dan's post about FDIC coverage? Customer service at my bank (doesn't necessarily mean anything)  told me they only pay $250k per bank.

The standard insurance amount is $250,000 per depositor (EIN or SS#), per insured bank, for each account ownership category

[gozalim]

1. I have a brokerage account which consists mainly of a few Mutual fund positions.
in 2022 the value (balance) went down considerably.
When I now download the 1099 into my tax software, I'm seeing dividends, interest (and some gains) but no losses.
Is that because the losses are unrealized until I sell the MF shares? those losses don't 'pass through' to me? the way (some of) the gains/dividends/interest do pass through?

[gozalim]

2. is there a line on my tax return that can be seen as a (somewhat accurately) reflecting a total of my bank interest/market gains made in the past year? (possibly for maaser purposes)?