Any Fed Tax gurus here?

flatbutt · 12-18-2015, 09:40 AM

I just found out that my disability insurance company has not been witholding tax on my benefit since June. I can't get thru to the IRS on phone. I'm hoping I can send in a payment before year end and reduce the penalty I'm going to get hit with.

Any help here?

tia

LakeCleElum · 12-18-2015, 10:17 AM

Should be able to do this anytime before April 15, 2016.....

MRM · 12-18-2015, 10:23 AM

Is your disability benefit taxable? It depends on who paid for the plan and whether it was paid for with pre or post-tax dollars. Here's a chart that answers your question and gives you a form to submit estimated taxes directly to the IRS. If your benefits are taxable you might want to pay the estimated tax yourself for 2015 and have your insurer withhold taxes starting in 2016.

https://www.irs.gov/Help-%26-Resources/Tools-%26-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-%26-Answers/Interest,-Dividends,-Other-Types-of-Income/Life-Insurance-%26-Disability-Insurance-Proceeds/Life-Insurance-%26-Disability-Insurance-Proceeds-1

KFC911 · 12-18-2015, 10:27 AM

This advice is worth what what you're paying me

.

I'd roughly calculate what the tax would be and immediately send that amount in to the IRS (stopping the penalty immediately....probably not THAT much anyways) while you get it all sorted out. You will be reimbursed any overpayments later. IRS disputed my IRA early withdrawal last year and said I owed them x as they misinterpreted the tax codes. I said "maybe", and sent in 2/3rds of the amount with an explanation. They agreed and sent me back the whole amount plus interest....Good luck!

MRM · 12-18-2015, 10:41 AM

Here's a really nice explanation of disability taxation.

https://www.ameriprise.com/research-market-insights/tax-center/tax-planning/taxation-of-disability-insurance/

flatbutt · 12-18-2015, 10:45 AM

Thanks gang.

qikcpa · qikcpa's Garage

Safe harbor rules....100% of last year or 90% of this year
interest runs till you pay.

LakeCleElum · 12-18-2015, 07:57 PM

Quote:

Originally Posted by KC911

This advice is worth what what you're paying me

.

Stand by my advice.........If you owe tax, you have up to April 15 to submit.........Being Disability, you may not owe tax........Crunch the #'s........

KFC911 · 12-19-2015, 02:35 AM

True, but if there are significant taxes owed, there will be a penalty & interest for not paying as you go. Hence my suggestion for a rough calculation, and a payment to stop that portion. Again, that's probably not a huge amount, but could be....and once again my advice is FREE

. I've learned to dig in and read the IRS regulations myself on a few specific topics over the years fwiw....it amazes me how clueless "paid professionals" can be and how they misinterpret the tax codes. Particularly when it comes to IRAs, etc., simply bad advice is often given and it pays to read.

Good advice throughout this thread IMO....for FREE

qikcpa · qikcpa's Garage

Quote:

Originally Posted by LakeCleElum

Stand by my advice.........If you owe tax, you have up to April 15 to submit.........Being Disability, you may not owe tax........Crunch the #'s........

April 15 is deadline to file (without extension) not deadline to pay. IRS requires payments equally throughout the year (aka estimated payments) to avoid penalties and interest. Next payment due date is Jan 15.

If youve got the money sitting in your account making zero interest i would pay sooner rather than later to avoid IRS interest charges.

John Rogers · 12-19-2015, 10:32 AM

If it were me and fortunately I am too old to have to worry about this sort of thing, I would go to an IRS office and talk to an IRS person face to face and have them supply you with references, etc. If you need to pay, do it then and get a receipt and keep the person's info and any paperwork they give you. If you send in money, even with a form of some sort, it can disappear since no one would know what to do with it. This is because I trust the IRS even less than I do the BATF and that is pretty low!

KFC911 · 12-19-2015, 10:38 AM

I'm guessin' there's a pro (CPA) on this thread...it ain't me

I pay the IRS via electronic transfer fwiw....ain't nothing getting lost or disputed

berettafan · 12-19-2015, 05:31 PM

Safe harbor rules are your potential out if you have withholdings from another income source this year that satisfy the rules.

flatbutt · 12-20-2015, 05:52 AM

Quote:

Originally Posted by berettafan

Safe harbor rules are your potential out if you have withholdings from another income source this year that satisfy the rules.

Except that my income is significantly lower this year. Approx 30% lower than last.

berettafan · 12-20-2015, 08:30 AM

Then you are looking to get at least 90% of current year tax paid in and will have late pmt issues since not paid qtly. Unless you can show income earned last qtr which doesn't appear to be the case.

We're not talking huge bux here. If I had a client in your situation id project '15 tax, subtract withholdings to date and advise pmt of the diff ASAP.

qikcpa · qikcpa's Garage

better yet, just photoshop a few deduction receipts and claim your car as a dependent...tax goes away.

lastly, if you call the IRS they have a "first time offender" program where you can get relief from the statutory additions if you have good history. again...penalties only...interest is never waived since you got to use the money and uncle sam did not.

and if none of that works tell them you are conscientious objector and refuse to pay tax because its against your religion and/or its against constitutional law. i had a new client tell me this after he got nailed for not filing for a few years.

flatbutt · 12-21-2015, 04:57 AM

Quote:

Originally Posted by berettafan

Then you are looking to get at least 90% of current year tax paid in and will have late pmt issues since not paid qtly. Unless you can show income earned last qtr which doesn't appear to be the case.

We're not talking huge bux here. If I had a client in your situation id project '15 tax, subtract withholdings to date and advise pmt of the diff ASAP.

I used a 2015 worksheet (1040 ES 2015) to do that. Would you recommend e-payment or paper check via snail mail (so I have a cancelled check in hand)?

berettafan · 12-21-2015, 01:57 PM

Epayment. Print confirmation and be careful to apply it to correct tax and period.

flatbutt · 12-21-2015, 04:04 PM

Thanks! I got a big check to write

. Oh one more thing...the due dates have all passed save for January 2016 so sending in a payment now will still have a penalty attached right?

MRM · 12-21-2015, 06:19 PM

The penalty for missing quarterly taxes is almost nominal. If you pay it before the end of the year and you started to accrue taxes mid year the IRS might not even impose a penalty. Either way you'll want to consult a real accountant but you might not have any penalty this year. Just get on automatic withholding from now on and you'll be fine.

Did you confirm your benefits are taxable?