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Post by elmerfudd on Dec 23, 2021 13:36:01 GMT
beginning in January, please keep this thread clear for serious tax business only. stuff like section 1031 exchanges, for example. or strategies to employ when filing in a state that requires federal itemizing in order to itemize on state even when the state standard is far below the federal standard. I think Maryland may be one of those. Maybe not, but there are a few and there are things one can do.
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Odysseus
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Post by Odysseus on Dec 24, 2021 9:11:21 GMT
beginning in January, please keep this thread clear for serious tax business only. stuff like section 1031 exchanges, for example. or strategies to employ when filing in a state that requires federal itemizing in order to itemize on state even when the state standard is far below the federal standard. I think Maryland may be one of those. Maybe not, but there are a few and there are things one can do.
Well, that sounds like a good way to commit thread suicide.
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Post by elmerfudd on Dec 24, 2021 13:50:38 GMT
beginning in January, please keep this thread clear for serious tax business only. stuff like section 1031 exchanges, for example. or strategies to employ when filing in a state that requires federal itemizing in order to itemize on state even when the state standard is far below the federal standard. I think Maryland may be one of those. Maybe not, but there are a few and there are things one can do.
Well, that sounds like a good way to commit thread suicide.
Never mind, then. |
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Post by Deleted on Dec 24, 2021 16:53:15 GMT
beginning in January, please keep this thread clear for serious tax business only. stuff like section 1031 exchanges, for example. or strategies to employ when filing in a state that requires federal itemizing in order to itemize on state even when the state standard is far below the federal standard. I think Maryland may be one of those. Maybe not, but there are a few and there are things one can do.
Well, that sounds like a good way to commit thread suicide.
That's hardly worth the effort, these threads are already moribund as it is. |
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Post by elmerfudd on Dec 27, 2021 21:36:20 GMT
this one might get more traffic later, as struggling taxpayers attempt to minimize the bite Uncle Sugar takes. one way to do that is to employ competent, qualified tax help. CPAs are good, but so are Enrolled Agents. Enrolled Agents may be better in some cases. For that matter, H&R Block probably do a good job, but cheap they aren't. and their business model generally requires the taxpayer to sit with them while they do the return. at least it once did - I guess it still does. For simple returns no biggie, but if it's a big 'un you might be there a while.
just remember - any advice given here will be worth every nickel you pay for it, and if you're not happy you get double your money back. and anybody can give advice here.
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Odysseus
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Post by Odysseus on Dec 28, 2021 0:49:50 GMT
this one might get more traffic later, as struggling taxpayers attempt to minimize the bite Uncle Sugar takes. one way to do that is to employ competent, qualified tax help. CPAs are good, but so are Enrolled Agents. Enrolled Agents may be better in some cases. For that matter, H&R Block probably do a good job, but cheap they aren't. and their business model generally requires the taxpayer to sit with them while they do the return. at least it once did - I guess it still does. For simple returns no biggie, but if it's a big 'un you might be there a while. just remember - any advice given here will be worth every nickel you pay for it, and if you're not happy you get double your money back. and anybody can give advice here.
Well, I've always done my own taxes, and even have helped my mother do hers, RIP.
I even did my own taxes when I ran a one-man consulting/resale business. I admit I might have sought out help had I hired on anyone, but I was spared that evnetuality when one of my clients hired me. And from there on until it wasn't, it was Fat City. Yay.
With the internet these days and pros like Elmer, I'm not sure it's necessary to go to HR Block or a CPA.
OTOH, our home will need a new roof sooner than later, and I'm wondering tax wise what's the best way to handle that, if any. Would it be a tax-deductable expense? Stuff like that.
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Post by elmerfudd on Dec 29, 2021 17:06:45 GMT
this one might get more traffic later, as struggling taxpayers attempt to minimize the bite Uncle Sugar takes. one way to do that is to employ competent, qualified tax help. CPAs are good, but so are Enrolled Agents. Enrolled Agents may be better in some cases. For that matter, H&R Block probably do a good job, but cheap they aren't. and their business model generally requires the taxpayer to sit with them while they do the return. at least it once did - I guess it still does. For simple returns no biggie, but if it's a big 'un you might be there a while. just remember - any advice given here will be worth every nickel you pay for it, and if you're not happy you get double your money back. and anybody can give advice here.
Well, I've always done my own taxes, and even have helped my mother do hers, RIP.
I even did my own taxes when I ran a one-man consulting/resale business. I admit I might have sought out help had I hired on anyone, but I was spared that evnetuality when one of my clients hired me. And from there on until it wasn't, it was Fat City. Yay.
With the internet these days and pros like Elmer, I'm not sure it's necessary to go to HR Block or a CPA.
OTOH, our home will need a new roof sooner than later, and I'm wondering tax wise what's the best way to handle that, if any. Would it be a tax-deductable expense? Stuff like that.
no tax benefits for a new roof, unless it's put on business property. and a home that's partially used for business can create a tax benefit, but there are downsides to doing that. well, not necessarily downsides, but possible ramifications. and I am not much of a pro any more. never was, come to think of it. |
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Post by Odysseus on Dec 30, 2021 1:31:05 GMT
Well, I've always done my own taxes, and even have helped my mother do hers, RIP.
I even did my own taxes when I ran a one-man consulting/resale business. I admit I might have sought out help had I hired on anyone, but I was spared that evnetuality when one of my clients hired me. And from there on until it wasn't, it was Fat City. Yay.
With the internet these days and pros like Elmer, I'm not sure it's necessary to go to HR Block or a CPA.
OTOH, our home will need a new roof sooner than later, and I'm wondering tax wise what's the best way to handle that, if any. Would it be a tax-deductable expense? Stuff like that.
no tax benefits for a new roof, unless it's put on business property. and a home that's partially used for business can create a tax benefit, but there are downsides to doing that. well, not necessarily downsides, but possible ramifications. and I am not much of a pro any more. never was, come to think of it.
Thanks for the info. I doubt very much I'll start another home business. At least not one I'd tell the IRS about ;-).
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Post by elmerfudd on Jan 1, 2022 17:56:46 GMT
good a place as any. I just calculated the rate of return on my investment accounts, all of which are various mutual funds in retirement accounts. 20% return during 2021, achieved by leaving them alone. I think I'll do that for 2022, too.
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Post by Deleted on Jan 1, 2022 18:11:23 GMT
good a place as any. I just calculated the rate of return on my investment accounts, all of which are various mutual funds in retirement accounts. 20% return during 2021, achieved by leaving them alone. I think I'll do that for 2022, too. You must be used to getting free stuff. |
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Post by Odysseus on Jan 2, 2022 10:16:43 GMT
good a place as any. I just calculated the rate of return on my investment accounts, all of which are various mutual funds in retirement accounts. 20% return during 2021, achieved by leaving them alone. I think I'll do that for 2022, too.
I agree. You've done well.
In my fairly conservatively allocated Vanguard account, I think I got about 9% return on the year. That's with a lot of funds in bonds or just plain cash. Fidelity did a bit better, more like 13%, again, with a lot of bonds.
Schwab? More like 25% on the year. Yay?
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Post by elmerfudd on Jan 2, 2022 23:33:20 GMT
I didn't do anything other than leave well enough alone. But annual returns are only a part of the picture. Long term results are what matters. There, too, I have been blessed. The big deferred comp account (big to me, anyway) has delivered in excess of 10% APR since 2013, the last time I made any contributions to it and I have never taken anything out. There, too, I have left well enough alone.
25% is very good. The S&P 500 did close to 30%, but it's 100% stock and I would never be 100% stock even when younger. And young I ain't. But since its inception a hundred years ago or so, it has an average APR of around 10%. And that goes through one big depression and quite a few recessions.
Your weighted average across all funds would be interesting to know. For you, anyway, and I'd be curious. Don't need to know amounts of anything. You probably know how to calculate it, but here's a rough and fairly accurate way:
year end balance of account that returned 9% times 9%
year end balance of account that returned 13% times 13%
year end balance of account that return 25% times 25%
sum the product of each of the three equations and then divide by the sum of the three accounts.
the REAL return would vary from that, and maybe by more than a little depending on how much you added or withdrew and timing of same, but this would give you an idea. assuming equal year end balances, the average return for the whole would be 47% divided by 3, which is better than 15% which ain't bad. But if you had a lot more in the 25% return account than the other two, it'd go up from that.
Say if you had half your total in the 25% account and the other half evenly split between the other two. Then it'd be 72% divided by 3 which is 24%.
Back to taxes:
Anybody have an S corporation in which he or she is also an employee? If you do, be aware of the "reasonable compensation" rule. I won't post on that unless someone is interested, though.
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Post by Odysseus on Jan 3, 2022 7:45:16 GMT
I didn't do anything other than leave well enough alone. But annual returns are only a part of the picture. Long term results are what matters. There, too, I have been blessed. The big deferred comp account (big to me, anyway) has delivered in excess of 10% APR since 2013, the last time I made any contributions to it and I have never taken anything out. There, too, I have left well enough alone. 25% is very good. The S&P 500 did close to 30%, but it's 100% stock and I would never be 100% stock even when younger. And young I ain't. But since its inception a hundred years ago or so, it has an average APR of around 10%. And that goes through one big depression and quite a few recessions. Your weighted average across all funds would be interesting to know. For you, anyway, and I'd be curious. Don't need to know amounts of anything. You probably know how to calculate it, but here's a rough and fairly accurate way: year end balance of account that returned 9% times 9% year end balance of account that returned 13% times 13% year end balance of account that return 25% times 25% sum the product of each of the three equations and then divide by the sum of the three accounts. the REAL return would vary from that, and maybe by more than a little depending on how much you added or withdrew and timing of same, but this would give you an idea. assuming equal year end balances, the average return for the whole would be 47% divided by 3, which is better than 15% which ain't bad. But if you had a lot more in the 25% return account than the other two, it'd go up from that. Say if you had half your total in the 25% account and the other half evenly split between the other two. Then it'd be 72% divided by 3 which is 24%. Back to taxes: Anybody have an S corporation in which he or she is also an employee? If you do, be aware of the "reasonable compensation" rule. I won't post on that unless someone is interested, though.
Well, I'm afraid your formulae leave me scratching my head.
What I understand would be to add up the EOY balances for all accounts, subtract from it the addition of the BOY balances for all accounts, take that difference and divide by the BOY total for all accounts. That would give the total profit (or loss) for all my investments, which is what I *think* you are asking for.
Is it?
Where it gets a little complicated is figuring out the sums I added from my bank account/earnings to the Schwab account. My solution for that is to subtract those sums (substantial) from the EOY balance, and compute the profit (or loss) based on that. Of course this doesn't eliminate the profit (or loss) that might have occured in the course of the year from those sums, and may make the gain (or loss) appear greater than it otherwise might have been, but hey, nobody's perfect, right?
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Post by elmerfudd on Jan 3, 2022 14:26:19 GMT
No, nobody's perfect, and it's those substantial additions to the Schwab account that makes it a little mathematically challenging in both methods. Weighted averages correct some issues, but not that one. I've always been kind of brain damaged with respect to using weighted averages. I like to find ways they can be used.
one solution would be weighted average daily balance in the Schwab account, which requires some arithmetical gyrations.
I don't have that problem with my three accounts because they each returned 20% within a decimal or two and even if they hadn't 95% of my stuff is in the deferred comp account.
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Post by elmerfudd on Jan 3, 2022 21:08:42 GMT
here's an example of weighted average in this example, a person has the sums in the far left column invested to yield the percent shown in the middle column. He wants to know what his rate of return is on the whole deal. Since the amounts invested at each rate differ, a simple average of the yield amounts won't work. He has to give appropriate weights to each amount, with bigger amounts weighing more than smaller amounts. This is not the only way to get the answer, but it is a relatively easy way. his rate of return on the whole pile is 8.9% Attachments:A.pdf (209.06 KB)
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Odysseus
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Post by Odysseus on Jan 3, 2022 23:25:51 GMT
Um, Elmer, your math seems to be way off.
For example, a 6% annual rate of return would turn 25k into 26,500 after one year, with an increase of 1,500, not 150,000 as you said. Similarly for the other amounts. Or am I reading this wrong? But I'd love to live in your world where returns are automatically multiplied by 100. LOL. Although your final estimate of 8.9% on the "whole pile" does seem to make some sense.
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Post by elmerfudd on Jan 4, 2022 14:22:44 GMT
Um, Elmer, your math seems to be way off. For example, a 6% annual rate of return would turn 25k into 26,500 after one year, with an increase of 1,500, not 150,000 as you said. Similarly for the other amounts. Or am I reading this wrong? But I'd love to live in your world where returns are automatically multiplied by 100. LOL. Although your final estimate of 8.9% on the "whole pile" does seem to make some sense. I'm not using the numbers as percentages. I am just using them as raw numbers. Like 6 times 25,000,not 6% times $25,000. at the end I get a raw number, which in this case is 8.9, and in this case I know it represents an average rate of return on the whole pile. I was just illustrating using weighted averages. I could have done percentages and the final answer would be .089. as a percentage, that would be 8.9 percent. But I hate decimals when they can be avoided. |
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Post by Odysseus on Jan 6, 2022 9:00:13 GMT
Decimals don't bother me. After all, most of us have ten fingers.
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Post by elmerfudd on Jan 10, 2022 16:20:41 GMT
found this and copied and pasted with permission: www.cnbc.com/2021/12/22/tiktoker-started-with-a-bobby-pin-and-bartered-her-way-to-a-house.htmlThis is a neat story with income tax implications the lady might learn about the hard way. I hope not, though. This article tells of a lady who started with a bobby pin and traded her way up to a house with a value of $80,000. Her plan now is to trade it back down to a bobby pin. Neat story with possible income tax consequences and she's done the work for the IRS in making it happen. Her "basis" in that house is whatever she paid for that bobby pin. She says that was one cent. She says the value of the house she ended up with in 2021 is $80,000. That's a taxable gain of $79,999.99 over the period that began in May of 2020 and ended when she got the house, late 2021. So taxable over two years. And it's taxable as ordinary income. And she's done all the work for the IRS except in allocating it between the two tax periods, 2020 and 2021. They know who she is and how much she made. Maybe she reported it as income already, but I doubt it. And as she trades her way back down to the bobby pin, none of the losses are deductible. Because that constitutes a hobby under IRS regulations, and hobby losses are not deductible. Hobby gains are taxable, but losses are not deductible. Beware sharing your good news in the media. |
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Post by Odysseus on Jan 13, 2022 7:31:18 GMT
found this and copied and pasted with permission: www.cnbc.com/2021/12/22/tiktoker-started-with-a-bobby-pin-and-bartered-her-way-to-a-house.htmlThis is a neat story with income tax implications the lady might learn about the hard way. I hope not, though. This article tells of a lady who started with a bobby pin and traded her way up to a house with a value of $80,000. Her plan now is to trade it back down to a bobby pin. Neat story with possible income tax consequences and she's done the work for the IRS in making it happen. Her "basis" in that house is whatever she paid for that bobby pin. She says that was one cent. She says the value of the house she ended up with in 2021 is $80,000. That's a taxable gain of $79,999.99 over the period that began in May of 2020 and ended when she got the house, late 2021. So taxable over two years. And it's taxable as ordinary income. And she's done all the work for the IRS except in allocating it between the two tax periods, 2020 and 2021. They know who she is and how much she made. Maybe she reported it as income already, but I doubt it. And as she trades her way back down to the bobby pin, none of the losses are deductible. Because that constitutes a hobby under IRS regulations, and hobby losses are not deductible. Hobby gains are taxable, but losses are not deductible. Beware sharing your good news in the media.
Wow, that's fairly incredible. What I don't quite understand, is, if she trades back down to a bobby pin, then she'd have zerio gains, right?
And if these are really non deductible hobby gains/losses, then would a work around be to create a business around the bobby pin bartering, so everything can be reported as income and losses?
The other thing, which you hint at, is to keep one's mouth shut about any private bartering/deals, gains or losses. Right?
What am I missing here?
PS-When I first saw that she's bartered her way up from a bobby pin to an $80,000 house, I thought, and she is from San Francisco, where the heck did she find a house in California for $80k???. Then I saw the house is in Tennessee. OK. Then I saw the photo of the house. Sort of a shack with a sagging roof. But I suppose livable for someone who's never owned a house. I applaud her intention to basically gift the house to some needy person for a bobby pin. Perhaps the solution for her then could be to start a gofundme campaign to help her pay the income taxes?
The other thought would be: no good deed goes unpunished.
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