Taxes...and the headaches they cause

[snickerd3]

Went to do the taxes this weekend only to find out we can't file yet. The schedule CR forms aren't ready yet since we have to file two state returns, IL and MO. It claims the fed should be ok to file...but I am going to wait to find out.

 

[Supe]

I don't have everything I need either. This year will be a **** show because we changed work states at the end of February, so now I have to file for both states and hope the withholdings were enough that I don't get penalties or owe.

 

[jeb6294]

State of Ohio still has our taxes all screwed up from last year. 2020 was the year the wife was doing all that travelling for work so she ended up paying state taxes to several other states, which would be fine because we should get credit for those taxes towards our Ohio return. I'm expecting a refund from Ohio...doesn't show, doesn't show...instead get a notice saying I didn't pay my taxes due and I owe them?!?!

We've been going back and forth for a while now. I tell them I have a hard copy of my taxes and the notification on TurboTax both showing my return was accepted and I'm owed a refund. All I get back from them are responses saying "that's not what they received" and I need to file an amended return. WTF am I supposed to amend? I've got a copy of my return and I verified it with TurboTax.

 

[Flyer_PE]

With any luck, this will be my last time dealing with a state income tax. Hoping I don't get too cross-wise with the state of IL since I moved out of state mid-year but didn't change jobs. At least it looks like the company got the W2 right and only reported wages I earned before the move.

 

[Dleg]

My wife sent me her W-2 a couple of weeks ago with the message "Does this look like the correct amount of Social Security?" and totally missed the 800-lb gorilla: her new employer didn't take any federal income tax out of her paycheck all year. How could she not have noticed that?? Ughhhhhhh........ We already had to pay a **** ton last year because I don't get enough federal income tax taken out (my bad for not correcting that), but now we are going to have to pay her entire year's worth at once, on top of my deficit. We will be dipping into the savings....

 

[csb]

My wife sent me her W-2 a couple of weeks ago with the message "Does this look like the correct amount of Social Security?" and totally missed the 800-lb gorilla: her new employer didn't take any federal income tax out of her paycheck all year. How could she not have noticed that?? Ughhhhhhh........ We already had to pay a **** ton last year because I don't get enough federal income tax taken out (my bad for not correcting that), but now we are going to have to pay her entire year's worth at once, on top of my deficit. We will be dipping into the savings....

This sounds like a nightmare.

My husband cashed in some savings. I was all excited that we might break totally even or get like $50 back this year but then he reminded me he cashed in savings and didn't pay the taxes. The last time he did this it was a $1300 tax bill and then the next year was still another penalty because of underpayment of taxes. I'm not looking forward to starting taxes. On the upside, we didn't get any pre-payment of the child tax credit, so I'm hoping that helps.

 

[snickerd3]

I got one prepayment before I could opt out. We still got mr snicks though because he has his credit on permanent freeze/lock out and it wasn't conducive to the opt out process. although his later payments ended up being like $16.

 

[jeb6294]

I'm sure ours will be FUBAR. I got the first check and then went online and opted out. Really stupid system though. We file jointly so first check shows up and it's got both our names on it. After I opted out, another check shows up, this one with just the wife's name on it for stepson. It was easy enough for me to opt out because I already had an IRS account, but when I tried to set up one for the wife to opt out (again), I gave up once I got to the rectal scan .

So, we got one check for both kids and then wife got checks, but same, they started petering out to nothing there at the end.

 

[mudpuppy]

Last year I found out that not all investments in an IRA are tax-sheltered. If you buy a limited partnership that generates passive income that they report on a form K1, you might owe tax on that. It's also not always clear what investments generate a K1 form. The best part is K1s are not due until March 15, so I had already filed my taxes when I started getting K1s and had to amend to fix everything.

 

[snickerd3]

efiled the fed return on saturday. Printed the two states to mail. $25 each to have turbo tax file. One of the state returns was only $16...not thanks. I thought the post office was open to noon that day. Missed it by about 5 minutes...they closed at 11:30.

Bonus yr with refunds all around...some super tiny, but isn't that point to basically break even.

 

[csb]

We "only" need to pay $360 or so. We were on track for a $150 return until I entered some 1099B info. This is a good reminder that I've got two years to get my husband to start paying extra or get ready for an extra hit when that child tax credit falls off our taxes.

 

[Dleg]

I am going to put mine together next week, probably looking at over $10k that I will owe based on the wife's employer not withholding anything. This is going to hurt, bad.

In other tax news (for next year) - one of my father's IRA accounts is about to be split and distributed to me and my sister. I am assuming I will owe taxes on that? Any idea what the rate ("death tax?") will be on that?

 

[leggo PE]

I am going to put mine together next week, probably looking at over $10k that I will owe based on the wife's employer not withholding anything. This is going to hurt, bad.

In other tax news (for next year) - one of my father's IRA accounts is about to be split and distributed to me and my sister. I am assuming I will owe taxes on that? Any idea what the rate ("death tax?") will be on that?

For your dad’s split IRA, I think it depends on whether you’re cashing it out or not. If you’re cashing it out, I believe you pay the taxes at that time. If you create the proper account for it to transfer into, and don’t cash it out, I am not sure you are required to pay anything for taxes until you take any distributions.

My husband went through something similar for a Wells Fargo IRA from his grandmother that passed through to him through his mother, who predeceased his grandmother (her mother) by about 1.5 weeks. Since they died so close together, the banks considered it basically the same loss of life (even if the deaths were unrelated) and my husband and his brother were the secondary beneficiaries.

Gosh, that reminds me of how god awful Wells Fargo was at directing that whole process. It was a mess and my husband was on the phone with them so much — it took literally like 8 months to get the freaking Wells Fargo people to do the right stuff on their end to get us the measly $1.5k (which we simply cashed out).

I would anticipate it being a simpler process for you, Dleg, as a primary beneficient.

 

[Dleg]

Thanks! That was really useful info. This is all new to me... I think we're looking at around $48k each (my sister and I) so this would be a pretty substantial tax bill, so if we can just keep it in an IRA until we are older I think that would be best. My mom is arranging this through her Raymond James financial advisor, so I anticipate (hope) that it goes much smoother than your process.

 

[leggo PE]

Thanks! That was really useful info. This is all new to me... I think we're looking at around $48k each (my sister and I) so this would be a pretty substantial tax bill, so if we can just keep it in an IRA until we are older I think that would be best. My mom is arranging this through her Raymond James financial advisor, so I anticipate (hope) that it goes much smoother than your process.

Good luck! Mr. Lego’s situation was definitely more complicated because his mom and his grandma died so close together, and infinitely more frustrating due to the general lack of common sense and ability of the people at Wells Fargo to do their jobs. Their estate department was utterly useless! I’d like to think it would be better at a different bank, but I’m not sure, haha! Having a third party person to help out definitely would have smoothed the process to, I think.

 

[mudpuppy]

Thanks! That was really useful info. This is all new to me... I think we're looking at around $48k each (my sister and I) so this would be a pretty substantial tax bill, so if we can just keep it in an IRA until we are older I think that would be best. My mom is arranging this through her Raymond James financial advisor, so I anticipate (hope) that it goes much smoother than your process.

The rules recently changed for inherited IRAs. You used to be able to take withdrawals over your lifetime. Now you only have 10 years from when the IRA owner died to withdraw all the money from the account. You'll owe tax on the amount you withdraw in the year(s) you withdraw it at your ordinary tax rate, same as earnings. That's assuming this is a traditional IRA (not a Roth IRA).

 

[mudpuppy]

Good luck! Mr. Lego’s situation was definitely more complicated because his mom and his grandma died so close together, and infinitely more frustrating due to the general lack of common sense and ability of the people at Wells Fargo to do their jobs. Their estate department was utterly useless! I’d like to think it would be better at a different bank, but I’m not sure, haha! Having a third party person to help out definitely would have smoothed the process to, I think.

I agree with you that most big banks are useless at stuff like this. I would hope that brokerages (Vanguard, Fidelity, Schwab, etc.) that are much more used to dealing with these types of accounts would be smoother, but based on some of my interactions with E*trade I wouldn't bet on it.

 

[Dleg]

The rules recently changed for inherited IRAs. You used to be able to take withdrawals over your lifetime. Now you only have 10 years from when the IRA owner died to withdraw all the money from the account. You'll owe tax on the amount you withdraw in the year(s) you withdraw it at your ordinary tax rate, same as earnings. That's assuming this is a traditional IRA (not a Roth IRA).

thanks @mudpuppy - good to know. My Mom's Raymond James advisor is really good, so I am hoping he will give us a strong recommendation on what to do.

 

[snickerd3]

took exactly a week to get the fed refund. That is record speed.

 

[jeb6294]

Finally got my tax refund from the City of Cincinnati today, but what a PITA.

So, even though I don't live within the city limits, they still deduct local taxes from my paycheck because I work in the city (even though they want my $$$ to pay for city "stuff", I am not allowed to vote to have some say in how they spend my $$$). If you work downtown but don't live there, you've always been allowed to file for a refund for any time you're outside city limits. Usually this is just a small fraction for telework/days off/holidays/work travel/etc. but the last two years we have been 100% working from home.

Two years ago when I tried for my refund, they just said no and sent a refund that was about 1/4 of what they took out....no idea where they got that amount. Last year, I guess the state finally told cities, "yeah, you're not allowed to do that" so I filled out the paper for a refund and got a denial saying I have to get a form signed by someone (turns out it could be my supervisor) saying I wasn't working in the city last year. Uhhh, how exactly am I supposed to get my supervisor's signature when we're working from home? Just so happens that, a couple days after I got the denial, we were going in the office to receive some award so I was able to get his signature.