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Help, I am very bad at my taxes! [2019 Tax Thread]
mxmarks
Registered User regular
Registered User regular
I think it's finally time to hire someone to do my taxes for me, because I think I'm making huge mistakes - well, I KNOW I am.
I have always owed money because I used to be a freelancer. I just got used to never getting a refund because freelancing you have to figure out your taxes yourself.
3 years ago I got married and everyone said oh, you'll get a break now. Well - I really didn't. We still owed and I again chalked it up to freelancing.
2 years ago we bought a house and everyone said, oh man now you'll get some back because you get a lot of benefits. What ended up happening - weirdly - was we OWED about $6,000 in Maryland state tax (where we bought the house, in Feb), but we got a refund in VA of about $6,000 so it evened out.
It gets complicated because I always do my taxes myself, on TurboTax, and for awhile we lived part year in VA, part year in MD, and worked in DC. So it was always weird, and we always ended up owing but I chalked it up to us being in a weird situation. At the end of 2018 I took a full time job, and asked my other freelance employer to switch me to W-2's. They did.
So I was all excited for this year because everything was in place: We lived full year in MD, I had no 1099's, everything seemed good.
...I owe Federal $700 and the state of MD like $8,000.
I am REEEEEEEALLY hoping I am filling out shit wrong, but at the VERY LEAST I need someone to explain to me what I'm doing that this is happening so I can make it fucking stop. I'm losing my mind. I have my witholdings at 1 and 0 (Fed and State), and my wife THINKS she does but it may be 1 and 1. That's IT. There's nothing else weird about our situation, so what the hell is happening?
Anyone able to point me in the right direction? I was going to just call H&R Block today or a local accountant because I am just so lost.
I have always owed money because I used to be a freelancer. I just got used to never getting a refund because freelancing you have to figure out your taxes yourself.
3 years ago I got married and everyone said oh, you'll get a break now. Well - I really didn't. We still owed and I again chalked it up to freelancing.
2 years ago we bought a house and everyone said, oh man now you'll get some back because you get a lot of benefits. What ended up happening - weirdly - was we OWED about $6,000 in Maryland state tax (where we bought the house, in Feb), but we got a refund in VA of about $6,000 so it evened out.
It gets complicated because I always do my taxes myself, on TurboTax, and for awhile we lived part year in VA, part year in MD, and worked in DC. So it was always weird, and we always ended up owing but I chalked it up to us being in a weird situation. At the end of 2018 I took a full time job, and asked my other freelance employer to switch me to W-2's. They did.
So I was all excited for this year because everything was in place: We lived full year in MD, I had no 1099's, everything seemed good.
...I owe Federal $700 and the state of MD like $8,000.
I am REEEEEEEALLY hoping I am filling out shit wrong, but at the VERY LEAST I need someone to explain to me what I'm doing that this is happening so I can make it fucking stop. I'm losing my mind. I have my witholdings at 1 and 0 (Fed and State), and my wife THINKS she does but it may be 1 and 1. That's IT. There's nothing else weird about our situation, so what the hell is happening?
Anyone able to point me in the right direction? I was going to just call H&R Block today or a local accountant because I am just so lost.
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I'm not an expert but simpsonia's assumption would be mine as well. There's no harm in talking to someone about your taxes, though. I generally do my taxes through turbo tax just for ease of use since I also route my income through their self employed quickbooks. I've not compared their live services to H&R block, but I imagine its similar. Just make sure you've really gathered all your documents so you can maximize your time.
Going to use this as the general taxes thread if that's okay so at least it's all in one place
My wife has 0 exemptions for both, I have 1 for state and I'm paying an extra $150/paycheck on top of it federal, and it's looking like we'll end up even-ish for the state and owing a bit federal (not quite as lopsided as yours - we were worse last year, if you can believe).
So yeah, I can give a second anecdote that state/federal can be super out of whack (but in the opposite direction, in my case). We're just adjusting how much we take out of the paycheck every year until we settle at about right.
I would suggest looking for a local CPA to help you out, check if family or friends can help you out with a recommendation or just look for one with good Google reviews. I would stay away from one of the "big 4" accounting firms (PwC, KPMG, Deloitte, and E&Y) since they will charge more for the same level of service that a local firm offers since they have a ton more overhead. I have a dislike for H&R Block for a few reasons, but in short they're scumbags on the level of payday loan stores.
I went and looked at WHERE my state witholdings were going and saw it was to VA. That's where my company's HQ is.
Going back into Turbo Tax, and adding that I "worked, but never lived" in VA suddenly gave me the ENTIRETY of that back.
So I still owe $2,000 now, but this gives me hope that I'm simply still just overlooking things and I'll get a professional involved.
It's insane to me that inputting everything but not checking that one box meant I was going to just owe $8,000 and everyone would have just happily accepted that and moved on.
The clusterfuck that is taxes in DC/MD/VA continues...
Wait how the fuck
Did your company give you the wrong state's W4? If so, you need to go berate your HR people. I've been living in MD and working in VA/DC for 8 years and have never had this happen before.
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Now you get to think about how many years' worth of amended returns you can file to get that money back from VA!
-Google maps isn't the best source for your mileage. While you could potentially use it to fill in the blanks if you forget to properly track your mileage via a dedicated app or log book on a particular trip or two, if its your only source and you get audited, its up to the auditor to determine if your map usage is trustworthy. If the rest of your documentation is poor, you're looking at an uphill battle. You should do it properly, Google Maps -is- evidence, but not sole evidence. Its best as backup corresponding evidence if your main logs are questioned.
-Strictly technically speaking, you should account for personal detours as personal mileage separate from your business mileage. As in, if you detoured 1 mile out of your way for personal business on a 20 mile trip that was otherwise for business, you can claim 19 miles. Strictly technically speaking too, you should be reporting that quarter you found laying on the sidewalk as income as well. Whether it is material overall is something you need to decide. It is understood that sometimes trips to the same location might take extra miles based on route and detours. If you drive an extra half block to pick up a coffee, unless you've really pissed off your auditor, no one will care if you don't make it an issue yourself.
-Mixed use vehicles make things more complicated (for you), but can be claimed too.
My wife got totally fucked by this before, and she ended up owing like 6k for MD and local taxes and fees because they didn't withhold nearly enough. I almost got fucked by this but I fought the good fight because of my wife's experience and they got it mostly right.
In most cases, I think you have to apply a non resident state return for the state you worked.
Fun fact: I live in DE and work in Philadelphia. Our (fed govt) HR department assumed that DE and PA have a reciprocal agreement; similarly to how PA and NJ have an agreement. They do not.
I discovered this about 4 years ago, and had to file amended returns to PA and DE for the preceding 3 years, so I could get the numbers right. That was a fun year. (the numbers worked out to be a wash for taxes owed between the two states)
Since then, I had my taxes updated to pay $25 per paycheck to DE state taxes (after consulting with a CPA in DE) and I've come out not owing since then.
Considering that full-time, minimum wage employment before taxes is 15k, I can't imagine that 6k is too little to just ignore on your tax returns, so is there actually a minimum amount before you can deduct expenses?
Most likely she will fill out a Schedule C, which actually has a nice set up for figuring out incomes and expenses to deduct, then carry over the net income or loss from there to the 1040.
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That being said, it's never a bad idea to report your actual expenses and income for something small like that.
For November and December she worked for a second doctor, who abruptly let her whole staff go in January. She provided no pay stubs, only the checks.
Now, neither employer provided a w2. We complained through the IRS and got a call that the first doctor will get it to us before April 1, but no contact from the second despite being fined for being late.
That deadline is looming, but we have no idea what was withheld from the Nov-Dec checks and they don't seem to correlate to her hours worked. Can we file with 2 out of 3 and amend later?
Or if nothing else, just use the net paycheck amount that she received as her gross pay. That's likely not right, but it's certainly better than nothing.
Regardless, though, you would want to use Form 4852 when filing your return, instead of reporting it as a W-2 (because you didn't receive a W-2). It goes to the same place on your 1040, but it tells the IRS that these are estimates, not necessarily the exact right numbers.
Although if it's not a huge amount of wages, yeah, you could probably just file without it, and then amend later if necessary.
I'm sure this sucks, so sorry for the trouble. But good luck!
@Klein you likely do still need to file a return. I earn all my income in another state but still pay taxes to both states because there's no reciprocal agreement between them.
Took Mugsley's advice and took what we had to the CPA Tuesday. They fiddled with the numbers and couldn't come up with any combination of withholding that made the checks work out (the fact that they were all an even dollar amount concerned him).
So, what we found out digging:
Doctor does NOT have a 2019 or 2020 business license for the address
Doctor's LLC is not in good standing since 2016*
Doctor does NOT currently have a federal tax ID
Doctor DOES have a state tax ID, but it's tied to the LLC that hasn't filed annual papers since 2013*
Now both *'s raise questions as this was ostensibly a NEW practice opened last year
All contact information of the practice's online presence are under the domain of a real estate shell corporation, property has massive liens on it for debts of said corp.
CPA was able to walk in and ring the bell but nobody answered. One car in the lot regularly but no employees at the front desk and few if any patients. Is convinced something shady is up.
Offered us a few options:
Their recommendation: File with dr.#1 and mine, ignore #2, or amend if we get information. If #2 reported the income our liability is only around 120 since bounced paychecks didn't actually get dated until January so three of seven paychecks won't even be under this tax year.
File with #2 and assume what we got is everything with no withholding - the technically legal action if #2 didn't do their job (meaning they were underpaying and not actually withholding taxes), lose that 120 right now.
File with #2 and kind of fiddle out the withholding. Could backfire if #2 didn't report the income, will be roughly a wash on the return.
Still don't know what the fuck to do, so I told the well paid professional I'll get back with him this week while I ask internet randos what the fuck all this is.
If it were a bigger amount, I'd suggest filing that 4852. But if I were preparing a client's return, I'd probably charge $120+ just for that form, so it doesn't seem like it's worth messing with.
I've had to file amended returns before and while they're a little work, they're not that bad.
Everything else from 2019 was there, doctor #2 WAS NOT.
Went ahead and filed without it.
Thanks for those who offered advice, this is a fucked up situation and I hope I never have to sort out something like this again.
Federal you have until July 15 to pay without penalty or interest. State varies - some have extended to match the fed, some have not.
Or if it's a matter of tracking down his HSA contributions, those should show up in box 12 of the W-2.
So for most people, the only thing that matters is the distributions. And only because if you don't report them, the IRS won't have any choice but to assume they were not qualified. But that can always be cleared up later, if you don't have any easy way to get a hold of the distribution amount.
I have two W2s here because the company "divested" (lol) in the first half of the year, both have a 12a with "W" code and the second has a 12b with "DD". There will likely be no answers from the company that did the first W2, and the second laid him off in March and getting answers was always tricky at best even when he was employed. A quick search tells me it's the cost of employer-sponsored health coverage? I don't even know where the hell I'm supposed to put that.
edit: it looks like DD doesn't really go on your return anyway, so I just need to make sure W does, and it does look like that made it without further input from me. It looks like that's more or less all I need to do for my return? Thanks localh77
And yep, if you put 12 W in the software, I think it should add Form 8889 to return, but make no change to your overall refund/bill. So sounds like you should be good to go.