Tax returns
 

To keep up with "Spend all your tax return money at 949" tradition, I'll be buying XIDAs this year :drool:

Anyone else?

I wont get a return.

All of mine is going straight to student loans. Once those are done I will go back to the toys.

Hopelessly spending it all on the camaro. Depends what Ill need though. Buying Springs, shocks, and mounts this week. Sways next week. Rear LCAs and Panhard bar week after. I should be done with suspension by tax time and will be on interior stuff.

Ill probably use it for recovering my TA seats or something like that.

This.

I would much rather not get a return. It's just my own damn money, a year later :vash:

Guys this is Merica you dont have to pay your debts, just ask the other 99% of people around you.

with no interest paid... :brain:

Yeah, 2011 was a pretty good year, so I expect I'll be writing another sizable check.

single claming 8 exemptions and my wife and I still get a small return. I should have her change her withholding.

I just forgot to change my deductions.

I usually get a couple hundred back from the state, and basically nothing from federal.

Student loan smashing...unless I'm feeling crazy enough for an OSGiken or trailer or something.

Going to pay off the rest of my MR2 before I sell it.

Smart man.

This thread is now about how l33t it is to get no money, or owe because you didn't give the government a interest free loan.

I saw our tax paperwork at the shop today and it gets me excited just thinking about it.

Pics?

Well MR-S. They are on here somewhere. I was planning to turbo it at some point.

I make shitty money, they take out about 17.5% which I believe is fairly standard for a single man. I'm curious on my return this year. It wouldn't make sense if I had to pay-out since I make beans.

With the money I do it, it'll be going to a new couch and TV. Just moved into a new house the living-room is completely empty, lol.

I think I may actually set aside some $ for MS for the NB.

I didn't realize they changed the tax code to allow you to claim cats as dependents.



When you're a 1099er paying quarterly taxes, there really aren't any loopholes. If you owe at the end of the year, you get slapped with a penalty unless

A: The amount owed is less than 10% of the total current-year tax burden, or
B: You paid at least as much in estimated taxes as 100% of the prior-year tax burden.

Needless to say, if your taxable income regularly fluxuates by 20-40k from year to year, this makes things rather annoying. You pretty much have to base your estimated tax payments on 100% of the prior year and risk winding up with a massive refund or else the penalties sting.


This thread has reminded me that it's just about time for the 4'th 2011 quarter payment. There goes another $9,500 out the door... :sadwavey:

I changed my exceptions half way through the year, but return will go to being completely debt free by the end of the year. As much as I would like to spend it all on gofast parts, priorities come first.

I never had any real debt in my life (fawk yeah cheap Canadian education!) so I'm happy to spend it all on shiny things.

Next year will be different though - buying a house. Yay mortgage payments.

Well, I know I'm not getting a refund back at least. We'll see what happens past that.

Like complaining the caviar doesn't match your silk smoking jacket.

NB miata, black, Torsen, 5 or 6 speed, factory options, not $hitty interior. Tax return may or may not cover sales tax on car.

:bowrofl:

In all seriousness, it really kind of pisses me off when I finish my Schedule SE and Form 1040 and realize that, for what I just paid in taxes, I could have purchased a brand new 3-series BMW / C-class Merc / Audi A5. I know, it's a first-world problem. But when you're driving an $800 car, it's still rather off-putting.

I only paid one of my quarterly estimates last year - have until April to drop in another - but still - I could probably get 3 or 4 Xida double/triple sets for what Uncle Sam will ---- from me. Hmmm.. Xidas fit my GMC 1500 work truck right? I see a tax write-off in the near future...

Try living in Canada or Europe. You would have paid like 50% more, if not much more than that.

Holy ----. When I was a 1099 consultant, I was making $40/hr and my taxes were 8500 per YEAR. You're paying 9500 per quarter?! Jesus. Ballin.

FRT_Fun...I'll sell you my PNP NB MS.
As for my tax money, I think I'm going to concrete the floor in the new garage. I better get more money back than I did last year. I filed my wife and mine together, but we both claim single with 0 dependents. I can't even tell you how much we got back last year, but it wasn't much. This year we made like $30,000 more than last year, so hopefully we get at least $4,000 back.

Tax money. Hmm I deduct like a champ (Those PETA lifetime memberships aren't cheap) so I guess with my refund I will. Um

put all my refund in OTM options.

I've had to pay the last two years. Total household income went up 8% this year but we also had a child. Not sure if I will owe or not.

Also had ~ $2000 in racing contingency payments which aren't taxed from the SCCA but are taxed at the end of the year as extra income. Trying to figure out how to deal with that. Treat it as self employed Race Car Driver income? My expenses for that self employment greatly exceeds the few bucks in contingency...

Meh, I'll be getting some back...would rather be paying up a little. But I get to put down my tuition. That money will go toward paying off the last few dollars of my car. Once the car is payed off, I'll start taking those payments and dumping them into my ING account.

Joe, just a heads up. Iirc for next year if you are considered a high income earner (forget the threshold, but it's not that high), I think I read somewhere that you have to pay 110% of the past years taxes to be immune from any underpayment penalties vs. the current 100% same as prior year. Ymmv.

Per IRS Publication 525 "Taxable and Nontaxable Income," under "Prizes and awards" on page 35, such income is reported on line 21 of form 1040 under "Other Income" and is taxable at the regular rate. It's treated the same way as gambling winnings, lottery and raffle winnings, Nobel / Pulitzer prizes (yes, they have a whole section on those), and so on.

It also notes that "Prizes and awards in goods or services must be included in your income at their fair market value," so if you want to be Dudley Do-right,
don't forget all of those free tires. :D

My tax refund goes into savings that is our house down payment. Will hopefully be a homeowner this summer!

All of mine is going to credit cards... bleh

But if I paid $6000 to win $2000 how do I deal with it?

My understanding is I have to treat it like a business, i.e. my business is being an amazing race car driver. Entry Fees, Tow Fuel, Race Fuel, etc. etc. etc are business expenses. Contingencies are business income. IRS will say racing is a hobby... I kept most of my racing expenses receipts from this year in anticipation of this mess...

Luckily I don't win tire contingencies...

A) Do you have a business entity (e.g. LLC) set up?

B) Talk to a CPA, not a bunch of goons on a Miata forum. ;)

A) No, but I was under the impression I could do it as self employment without the LLC

B) The goons on this miata forum are full of excellent information.

Luckily, I'm not an idiot and I set aside ~30% of my contingency winnings for paying taxes on them, if I can't get around it...

How much bro?

You could try, but under an audit, you'd need to prove that you are substantially committed to the business of auto racing as a source of income. They're not stupid.

My guess would be that the IRS would treat this the same way as someone who tries to deduct the cost of lottery tickets, claiming that they are engaged in the business of trying to win the lottery.

The closest thing I can imagine to this is that you are permitted to deduct gambling losses up to an amount equal to gambling income, however that's quite a stretch. I can't find an actual definition of the word "gambling" from the IRS, however every example which they list seems to involve a wager. There is no wagering process in auto racing.

The IRS would more likely regard auto racing at the level most of us engage in to be a "hobby", and expenses related to hobbies are specifically designated as non-deductible.

There are other guys that I work and race with that are in the same situation as I. My understanding from them is that there are different ways to do it. I certainly don't plan on claiming buisness income of $2000 and business expenditures of $6000, and trying to claim a business loss of 4 grand. That is a sure fire way of getting audited. What I hope to do is claim $2000 of business income and ~$1600 of business expenses (I have receipts for much more than that) so that my tax burden is more appropriate.

Yes, I should probably talk to a CPA. Or at least, talk to the other guys I work with to get more details on how best to do it.

Just do it as a sole proprietership.

As a business, other than the money hemorrhaging from your pocket, here's NOTHING wrong with taking a big fat loss. It costs money to make money and many businesses operate at a loss for years before becoming profitable. In the meantime, you can deduct away and have a valid tax shelter.

IF you are serious about racing, and seriously intend to be winning more money, then perhaps you can turn your racing hobby into a defacto "business". You would need to track your income and expenses. You could even turn your car into a business asset and deduct your parts and depreciate the car.

I have been audited by the IRS before for my small business and it is not a horrible thing. If your goal is to make money then have at it. Congrats on making some money racing.

Here's an example:

http://taxdood.com/2011/07/15/cheque...g-for-the-irs/

Treat it like you're pro and maybe you've got a case for your deductions.

Actually, he can claim a loss equal to his racing income according to that case Fae. Just not in excess.

My federal return is one tax form away from getting filed (just need a 1099-INT) and it's about a $3k refund. My state returns should get me another $1400 or so, mostly because my company jacked up my CT witholding when they changed their income tax a few months (increased income tax in september, retroactive for the whole year means a shitty paycheck for 3 months). I should use it to pay off student loans, but I'm going to pocket it and use it as house modding money when I finally buy one lol.

The IRS has sent more letters of inquiry in the past two years than we have seen before. Some are practically just "fishing," but they are more proactive then in the past.

Because some guys at the track may or may not have gotten away with something does not mean they know why or why not.

Joe put up a lot of good info on the topic regarding "business" vs "hobby."


It may make sense to establish a business entity for the racing, but getting audited and potentially paying fines because you are too cheap to spring for a CPA is being penny wise and pound foolish in my opinion (which is worth exactly what you paid for it). :)

When I was hauled in for an audit years ago they seemed pretty damn stupid to me.

FWIW, if you guys ever do go in for an audit be ready to answer some pretty strange questions. Where do you get your hair cut?, How old is that watch?, Do you go to the movies?, etc. Brutal, but stupid...

How the ---- is that any of the IRS's business?

Mine weren't like that. Then again you're in south carolina and I'm in DC.

Burn.


Paying for a CPA does NOT guarantee that you will not be audited.

I think I'll be disappointed after last year, when I was unemployed for three months but didn't file for unemployment, and still paid some student loan interest.

Which is why I don't get why this economy sucks. I quit my job, got training to start in a completely new field (machining->nursing), interviewed, hired, and started working all within a little over three months.

Bad economy?
http://i0.kym-cdn.com/entries/icons/.../challenge.jpg

Don't sell yourself short bro. That IRS auditor thought you looked good and was trying to ask you out on a date!

You don't have to answer questions outside the scope of the audit. Your notice should identify a specific tax year and the items in question. Auditors are aware they are not well liked so they may try to be friendly to defuse some of the animosity. If it goes beyond idle chit-chat and you feel the questions are overly personal, or of a "fishing expedition" nature, you can politely decline to answer them. If you're an a$$h0|e and the auditor thinks you're being defensive and trying to hide something, they may expand the scope of the audit.

This is my goal, to break even on the racing stuff.

I'm not trying to use racing as a tax shelter. I just don't think I should have to pay income taxes on $2000 when I personally shelled out $6000 for entry fees, hotel, race gas, tow gas etc. etc. for those same events. That doesn't even include the cost of the tow vehicle or race car, since I don't own them.

My understanding is that at least two of the guys I work with have set up LLCs and have "real" businesses outside of just contingency winnings. One guy sells go-pros and traqmates (though not very many...) and the other guy does data analysis, coaching, sells DL1s, and can get parts, etc. etc. Both of these guys end up even or with a small profit, but are essentially using the LLC to offset any contingency winnings.

I know of one other guy who has done it as a sole proprietership, and I don't believe he does anything outside of what I was thinking of doing. That is, the only income of his business is contingencies and he claimed his racing expenses as business expenses. As long as he wasn't claiming some huge loss there was never any issue with the IRS.

Anyway, thanks for the replies and advice.

I will be paying a lot to the tax man. Luckily no penalty since I had no tax liability last year at all, IE got a refund. I will have to start doing estimated payments though this year. The good news is that I will be getting about a $5k refund from VA after claiming FEIE on my taxable income.

Just finished my taxes. w00t. Must resist urge to buy turbo goodies.

I have had mine done since about January 2nd based on our online W2's. I am just waiting for my real paper one to come in to make sure it is all correct before I submit it.

My w2 showed up today so I knocked it out. Got more than expected. Win.