sounds lib
He would describe himself as such.
This year, I get the joys of figuring out how to (correctly) fill out Form 1041 for trust funds.
Assuming I donât do it wrong itâs not too complicated, just has itâs own income table and you pay tax accordingly. Although things get more complicated if you take assets out.
I think Iâm undertaxed and Iâve in just in mid 6 figures, not 8, lol.
Guy is way undervaluing his time.
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Iâd almost agree . . . but this seems to be where theyâll get you.
FTR, the trust Iâm working with is an irrevocable trust that Iâm doing the initial filing for; I just want to get the initial filing done right to avoid âcorrective changesâ later on (where Iâm guessing itâll get flagged for review).
At the moment, there arenât any assets in the trust, so Iâm not worried about âthe numbersâ . . . but wanting to make sure I also understand those other aspects (like disbursements) to make sure that I can set up the accounts effectively to help with keeping track of things a bit easier.
My initial read of the instructions indicate that creating (and sending) Form K (or was it schedule K?) to the recipient of any disbursements for their taxes.
Oh thatâs interesting if there arenât yet assets. Mine is similarly an irrevocable trust. I file the federal every year but I donât believe the state return is required because it falls below the minimum income. My federal filing is very simple, just dividend income at the top, then have to do a bit of calculations on this worksheet/exhibit which results in the tax bill.
Iâve never removed assets but when my sister did it was a lot more complicated I believe, although she has an accountant do it each year.
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I suppose this is more effective than sending them a strongly letter. At least this guarantees it will be read
I think you accidentally the whole thing.
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By filing paper tax returns instead of e-filing?
Iâm getting better with the software now but when I was new to VITA and also working on a slow internet connection I was apologizing to my taxpayers saying things like âIf I was allowed to paper file your return weâd be done already, but itâs not allowedâ. Internet at the site is better now and I know the software better so thatâs maybe no longer true, but itâs debatable. Certainly depends on what all is going on with the tax return.
And certainly if you use the software to input everything and then print the return out at the end that takes the same amount of time ⌠maybe even a little faster, depending on the speed of the printer. Then itâs just a question of calculating the postage and getting it to the mailbox.
So I donât do trust tax returns, but I occasionally get a taxpayer with a K-1.
My understanding is that if the income was disbursed to the beneficiaries then it is taxable to the beneficiaries (reported on a K-1).
But if the income was not disbursed to the beneficiaries then the trust pays the tax on the income.
And I donât think the IRS particularly checks if you do it wrong so long as the tax is getting paid somewhere. That is to say⌠if it should be paid by the trust and is actually paid by the beneficiaries, or vice versa, the IRS doesnât appear to care.
I went back to doing my taxes by hand again. I think I did it all in about 4 hours but to be fair Iâve done them many times. Hopefully the IRS (or the USPS) wonât lose them this time. Getting about $2,500 - $3,000 back.
More like, if I have >$10M in assets, Iâm not sitting down to do my own taxes. Iâll chuck $200 at a professional at that point.
Having perhaps $350k myself, I am doing my own for sure.
Meh⌠if youâve got all your W2s and 1099s and other inputs and you know what to do, throwing the numbers onto the forms is pretty easy.
It does depend on how complicated they are. If youâve got rental properties, or a small business, or you did a 1031 exchange on a REIT, or youâre married and/or had more than one job and your wages are in Additional Medicare territory, or you deal in cryptocurrency, or you exercised stock options, or something else complicated and youâre not sure what to do, or even anything not complicated where you donât know what to do, sure, by all means, consult a professional.
But if itâs just copying numbers from these forms to those forms and you know what youâre doing⌠meh. It would take more time to deal with the professional than to just take care of it.
TaxSlayer does what I need for filing taxes.
The $45 (more or less) covers the costs to file electronically both federal and state taxes.
Sure but if you particularly wanted to mess with the feds you could just as easily print out the forms and paper file.
Thatâs a weird goal to have, admittedly, but I doubt itâs costing much in terms of time.
If Iâm getting a refund . . . then that time is my money.
True. The richer you are the less likely you are to have a refund though. Youâre especially unlikely to have a refund that you actually receive and are not simply applying to next yearâs estimates. Because you probably have enough investment income that doesnât have tax withheld that you are usually required to make estimated payments.
So itâs probably not costing him that either. And maybe the year it does then he wouldnât paper file that year. Or maybe heâs so rich he doesnât care.
If it was $200 Iâd probably use a professional. I used to have one and it was more like $400-500, although he often gave us money off for new child or marriage (and it was a relatively busy time in my life for that stuff). If you had >10m in assets I think youâd be looking in the multiple thousands for an accountant, unless your income was simple.