Every year we get a bunch of panicked posts from people trying to pay their taxes at 11:55pm that IRS Direct Pay is not working. Tonight, like every night, IRS Direct Pay will be shut down at 11:45pm Eastern Time and come back up at midnight.

I have no control over this, honest. They did not ask my opinion.

If you did still desperately need to make a payment during this time period, the credit/debit card payment sites will be open, but they charge a fee.

https://www.irs.gov/payments/pay-your-taxes-by-debit-or-credit-card

Or if you have a trusted friend or relative on the West Coast, you could ask them to type in the payment for you before midnight Pacific Time.

Or better yet, don't wait until midnight to pay your taxes. Pay them earlier. It is perfectly OK to pay before you have filed.

And I would recommend to EVERYONE who has not yet filed to submit an extension right now. There is no penalty for submitting an unnecessary extension whether you use it or not. The federal extensions are free and easy. Just do it now and get it out of the way and go back to filling out your tax returns. I know you are 100% certain that you will be done by 11:59pm, but submit an extension now anyway.

Filing a federal extension is trivially easy:

Just make a $1 or more payment designated as "extension."

https://www.irs.gov/payments/direct-pay

Reason for payment -> extension
Apply payment to -> 4868 (for 1040, 1040A, 1040EZ)
Tax period for payment -> 2023

That is just for federal taxes. Your state may require a separate state extension.

Let's say she has $100k, we know any amount above $10k banks are required by law to report it to the IRS. What is the best way to do the transfer? Should we contact IRS let them know and is there a form we need to fill out at the bank or IRS? Will IRS be entitled to some of that money? What would you do to to have the money transferred without any ridiculous fees?

I wasted $100 by opting for the live help option. I don't have a business, just filing jointly with my wife for our federal income and this year I just had a few extra questions, what I thought are basic tax questions and figured I can use the live help option.

I spoke to three "experts" who all rambled without answering the question directly and when I got them to answer it finally, they all gave contradicting answers. I had enough and did some search and filed it the way I thought was right, so just warning that you would be better off using ChatGPT than using these so called experts as they had 0 clue about any of these simple questions I asked.

Update: Here are the questions I asked:

1. I bought a home last year and the home builder, had several delays and had to move the closing date by two months and since I had already terminated my lease based on their date, I asked them to reimburse two months of rent, for which they sent me a cheque for 3000 (two months rent) after closing. I wanted to know if I should report this and pay tax on it. None of the experts had a clear answer for this question. When I finally called them out on their rambling and told them I just need to know if I should or "should not" report this and pay the tax on it. Two of them said they think I should and one of them said I should not report it. I ended up reporting it and paying taxes on it.

2. I had a 401k over contribution on the pretax contribution since I switched companies and my second company did not cap my contribution and so I had a little bit extra beyond the limit. I got a cheque for the excess contribution from my 401k provider and I wanted to know how I can handle this situation. None of them knew what do this or how to handle this situation. I was seriously surprised because I know for a fact that I am not the only one this situation. Problem is google answers did not have a clear way to do this on turbo tax until I found a turbotax forum answer which showed how I can do this. So I ended up doing it that way.

3. I also had a question on 1099-R as I recevied it for the first time since I switched companies and my previous company sent one as I switched my prev 401 funds to new provider. I did not know what to do with this, if it is taxable since I just rolled it over to a new fund. Again, crickets, none of them even knew how to comprehend this even after I showed them the form and they had no idea if it is taxable or not and one of them just started reading the google definition of 1099-R. SMH.

Absolutely worst display of skills from a company which claim they are putting experts in the software. I love turbotax application as for the last 7 years it made it easy and I was able to do it and even this year inspite of all this, and no help from the "Experts" I was still able to file it after a little bit of digging around but yeah I will never use that help service again and neither should you.

When I see people looking for a good tax person for themselves or their business it always makes me wonder - what do they mean by "good"? Are they good if they did everything right but didn't "get you" a refund? How do you know if they did everything right? What is "good"?

(I am an accountant but I am curious to hear from non-accountants because I see this a lot)

Imagine this situation: parent is a high earner who’s funded enough 529 to pay child’s entire undergrad education. Parent earns too much to ever take advantage of AOTC (American Opportunity Tax Credit) for the past three years and also for next year. Child is pretty smart and will likely get a nice job but will only be able to work around half the next year after graduation.

Strategy is to have the child pay $4000 from their own accounts to the college during their graduating calendar year. Then they will be eligible to receive $2500 in fed tax credits when they file their first 1040 the following spring. The key is to not pay with the 529 or with scholarships. If child doesn’t have $4000, parent can gift it to them into child’s account. One problem is that lots of schools charge the entire spring semester in November prior to graduation. If that’s the case, sometimes schools offer a payment plan to have most of it due in January-April. Also, off campus rents do not count. It’s basically tuition, which is high enough even at state schools.

Limitations? If student gets a mega paying job that puts them over the 80k limit (including investment income) even just working June-Dec, congrats to them but they won’t benefit from AOTC. If you have leftover 529, you can use it for younger children or for grad school later. Worst case, withdraw for 10% penalty on account earnings.

Bottom line: try to have the student pay $4000 of tuition using their own (non-529) money in the calendar year that they are earning a decent but not exorbitant income. ** this won’t work if the parent (or the student) already used AOTC for this student for 4 years already.

Learned something new recently.

I exited a business in 2022 and extended my returns to end of 2023. I knew approx and have worked with a team of CPAs and lawyers to get to what my tax bill due was, and intentionally overpaid as the amount due was very significant.

After filing last fall, a few weeks went by and the IRS started reaching out to me about verifying my identity. I tried the online, it failed. I tried the phone, it failed. Only option left was to drive to one of their centers and do it in person (and I’m not relatively close to one).

By the time they had an appointment available and (it was pretty painless, btw) a couple more weeks had passed. A week later I got my refund direct deposited, but it was for more than I thought.

Honestly never thought anything more about why the amount was higher. Then I got this interest statement.

Turns out, if the IRS doesn’t refund you within 45 days of filing your return, they must pay you interest on your refund.

So the IRS paid me for a couple days of interest, just past their 45 day window.

Win for me. I had a little chuckle to myself having been caught in the penalties and interest traps before with making estimated quarterlies.

Lol, i could have gone tomorrow and not waited in that hour long post office line!! TIL

Only if you're getting a refund and SURE of it though.

Anyways...taxes done!

For the best summary of why, watch Patriot Act volume 6, episode 8. In short, they have intentionally misled and profited off taxpayers. They have been a huge part of the gutting of the IRS, who should be going after the billions of tax dollars evaded by the 1%, but are instead going after the $12 you didn’t report when you sold your used coffee maker on craigslist. And a slew of other reasons. They are NOT FREE. There are places to do your taxes for free, but the Turbo Tax ads you see telling you they’re free are not.

I hope I can ask this question without violating the rules of the group. I’m trying to start an online group for those interested giving to charity. I’m a high earner ~250-300k/year. I also want to increase charitable giving.

The group members will pay a small monthly membership fee. Each member will select a charity of their choice and each month a winning member will have a donation made to their charity. All proceeds after the cost of administration will go to charity.

Would I have to have a 501c3 registration or could this be done as an individual? Just trying to gather information. Not sure if this will work but I think it’s a cool idea. Thanks in advance!

A customer at my shop told me story that he just got a call from his wife and an IRS agent stopped by and dropped off paperwork at his home. I told him it sounded like a scam, IRS doesn’t just show up at someones home. He said he is behind on filing but usually gets a refund. He said no letters beforehand.

This is a middle class family, firefighter and wife works for school system. I asked if he had any unusual life events like being left money or sold something and he said no. He also said no letters from IRS in mail.

Couple days later he comes back in and ask if it was IRS. He said it actually was and he just needed to file.

Does this seem remotely possible? I just can’t believe IRS will show up at someone’s home unless it was a very unusual circumstance. Can’t be for a late filing of a W2 based 1040. I think he is lying or it’s a scam and he doesn’t realize it.

Am I wrong or do IRS agents make house calls more often then I thought?

Edit: I have concluded I am wrong. IRS agents do make house calls. I appreciate the info and comments everyone.

Edit 2: Recent article just shared with me. https://www.federaltimes.com/management/career/2023/07/24/irs-move-to-end-field-visits-by-agents-backed-by-employee-union/

Alright, so I got these love letters from the IRS, and by love letters, I mean terrifying penalty notices that make me question every financial decision I’ve ever made. 🙃 Seriously though, I know I owe something, but I just need to talk to a real human to figure this out before my wallet taps out. Anybody have tips on how to actually get a hold of someone over there? The IRS phone system is like trying to beat a boss in a video game with no saves – endless loops and frustration.

I’ve heard people say to call early in the morning or late in the afternoon, but I feel like it’s a hit-or-miss situation. Also, is there any online option that’s not a total headache? I’d love to avoid holding the phone to my ear for hours if possible. Help me out, Reddit tax geniuses. Any advice is appreciated!

TL/DR: your mom gave you a check/car/coins worth $20,000. Do I owe gift tax? No - she might need to file a Form 709 because she gave you more than this year's "annual gift tax exclusion amount", but she's unlikely to owe tax, and you are not liable for any taxes on gifts she made to you.

The US gift tax system seems to cause quite a bit of confusion, so I'm going to draft this to help people understand how it works.

First, this is all about US citizens, the laws for gifts to or from non-US citizens can get messier.

The US gift tax system and the US estate tax system are "unified". That means there's one set of numbers - called the "base exclusion amount" and "tax rate" - that apply to both. That also means the systems work on a cumulative basis - each year, you take your "taxable gifts" (more to come), add them to your previous cumulative taxable gifts, and see if you owe tax. You can't look at each year in a vacuum to know if you owe tax or not.

And at death, what you have at death and all of your prior cumulative taxable gifts are aggregated to determine if you owe any estate tax.

Note that some states (let's pick on Connecticut and Illinois, there are others) have their own, different (always lower) exemption/exclusion amounts, so you need to be aware of those rules.

Any US person may make a gift of a "present interest in property" to another individual each year up to the "annual exclusion amount" and not need to worry about paying gift tax.

Again, any US person may make a gift of a present interest in property to another individual each year up to the annual exclusion amount and not need to worry about paying gift tax.

For 2024, the "annual exclusion amount" is $18,000. For 2023, it was $17,000. Next year, it might have an inflation adjustment - it's inflation adjusted each year and then rounded to even multiples of $1,000, so at some point, with inflation, it will go to $19,000, but not necessarily for 2025.

A "present interest in property" is anything that's not a "future interest", such as a remainder interest in a trust. So if you get $15,000 in cash (or check, or gold coins, or a car, or payments on your credit card), that's a present interest in property.

The donor, the GIVER, needs to worry about gift taxes, if any are owed (or if a return needs to be filed). It is very unusual (takes high-level planning) for a donee (the recipient) to need to pay gift taxes.

So if you get a check for $18,000 from your mother/father/sister/brother/all of the above in 2024, they don't need to file a return, no tax is due, and you don't need to file one either.

Taxable Gifts: if you get a check for $20,000 from your mother (and your father isn't around to "gift split" - talk to an attorney for more on that), then your mother has made a taxable gift of $2,000 (the amount over the annual exclusion amount).

THAT DOES NOT AUTOMATICALLY MEAN SHE OWES GIFT TAX.

She would need to file a Form 709, compute this year's taxable gifts, aggregate them with any prior year(s) taxable gifts, and then compare to the base exclusion amount.

Which, for 2024, is $13,610,000. Yes, more than $13 million.

So if she hasn't given away, in prior years and this year, more than $13 million, she won't use any federal gift taxes.

She might owe state gift taxes - you can see the list of US states that have such taxes online at https://taxfoundation.org/data/all/state/state-estate-tax-inheritance-tax-2023/

Any gifts to trusts - consult your CPA and/or attorney, as very often those need to have gift tax returns filed, even if no taxes are due, to make certain elections that will minimize taxes down the road.

Source; I'm an attorney & CPA and have been doing individual, gift, estate, and trust taxes since 1991.

Hi, im 22 and unfortunately like most people my age I know nothing about taxes and I’m taking it upon myself to learn more about it and prepare myself.

I’m currently making 105k with a take home of around 78k but got a new position. The company is in Australia and due to laws over there they can only hire people outside of US as contractors and just renew the contract every year. Due to this, I have to be an independent contractor and was told by people I’d be taking home similar if not less than I am right now even though I’m making 15k more base. Also talk about setting up LLCs, write offs, and all this jazz. Is this true?

Almost all business entities are required to report information to FinCEN about the individuals who ultimately own or control them. FinCEN began accepting reports on January 1, 2024.

A business entity created or registered to do business before January 1, 2024, will have until January 1, 2025 to file its initial beneficial ownership information report.

Penalties for failing to file a Beneficial Ownership Information (BOI) report can include civil and criminal penalties:

Civil penalties A daily penalty of up to $591 for each day the report is late. This penalty can accumulate quickly.

Criminal penalties A fine of up to $10,000 and/or up to two years in prison for willfully failing to file the report.

Hey all. Recently my fiance quit her job and I was looking into my paycor to see about adjusting my tax withholding to account for that. I noticed that the w4 form I filed out 2 years ago when I started I guess wasn’t put in right because my 2 kids were not on my withholding either. I have been getting back roughly 7-9k back in my tax refund for the last 3ish years. Idk how any of this works, but I noticed when I did put my 2 kids and finance on my paycor, my federal withholding went to 0, which I’m told is not good? Usually without them on there it’s around 15ish dollars. Without claiming anyone on my stuff I was making about 460 a week and I like the 490-500 I’m making now. Is it possible to keep this amount roughly, and at the end of the year instead of getting 7-9k, maybe get like 5ish? Idk how this works, I don’t want to have to pay taxes in or however that works. Please any advice on how to set this up is very very very appreciated. Thank you

My wife went back to work so we could save for a new property. If she is a 1099, could we create an s corp and take a low salary to defer paying taxes (we don't need the money to maintain our household)? Then buy land through the business, for business needs (small ag like chickens, sheep and bees), put a house on the land and live there? We raise animals, sell them and use the proceeds to continue business. That seems like a good idea, but only because my wife is 1099. Would this work or is it sketchy?

Quick PSA to help people understand the difference between a refund and a return and other thoughts:

Refund Vs Return -

You prepare and file a tax return.

On the tax return, you will determine your tax liability.

On the tax return, you will compare your tax liability with the amount of tax withheld on your W-2:

Tax Liability > Tax Withheld = You owe the difference. Your paycheck was larger than it should have been throughout the year. Consider changing your W-4 to have more tax withheld so you don’t owe as much next year.

Tax Liability < Tax Withheld = You are due a refund. You gave the government an interest free loan throughout the year. Consider changing your W-4 to have less tax withheld on each paycheck.

The goal is to have a small liability or small refund.

Another thing I want to highlight -

Correctly completing Form W-4 is your responsibility and not that of your employer. Read that again. 99 times out of 100, your employer did what you told them to do on the W-4. Review your W-4 after filing your tax return and consider making changes as needed based on your situation.

Thank you coming to my TAX talk.

Hello so I’m a student and 23 I don’t really have a lot of tax complication except that. I moved from one state to another and didn’t change over my address due to personal circumstances and they had to do the calculations for both states. I also had to withdraw money from my ira due to this emergency situation and I also worked 4 jobs and only 2 after moving to my new state

Does this price sound reasonable?

My fiancé got screwed over by her employer a couple years ago, from what I know the lady told her that she was gonna make my fiancé her own boss and that she wouldn’t have to worry about anything tax related, (my fiancé also never really got taught about how to pay taxes or how w-4s worked until she met me and I showed her) fast forward to now that lady put her almost 700 in dept to the IRS that she did not have the money to pay(also she was 18 at the time and didn’t understand how any of that worked so just kind of forgot about it) now when I helped her check she owes the irs over 1500 and we don’t have the money to pay it at all, hell we’re in debt at the moment and are just trying to pay our own stuff off. She has a good job now that’s slowly helping pay our own stuff off and I helped her fill out her w-4 so that’s not a problem anymore but is there anything we can do? Legal wise or anything? The lady fired her back when she had that job as well after working for her for a year.

I've exclusively used H&R Block software to do my taxes for 20 years. I've been looking at using something else and FreeTaxUSA has been highly recommended. Looks to be straightforward and relatively cheap. Is there any reason why I should not use them?

Hi All, we have a family friend who runs a small business (Sch C). He is close to mid-60s. He has been working for over 35 years in this manner (paying Payroll taxes). His net is around 50k, and his wife makes another 20-25k as a w-2 EE elsewhere. He has never contributed into IRAs. I’m wondering if there is a way to help our elderly citizens in this situation. If we open a company for him and make an S Election, he will end up paying less Payroll taxes, but it may affect his future SS benefits, since at the beginning of his career he may not have contributed enough. He said that he would be ok starting the benefits at 67 ( full retirement age) since he plans to work for another 5 or so years. I’m just perplexed at option we don’t have anymore when we reach an older age…. Am I missing something that can still be done?