Taxes

[Gigi3000]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

[retiredguy123]

Sorry, but you will need to pay FederaI income tax on all of that income. The reason TurboTax asks about the Government securities income is because it is exempt from state income taxes. But, if you are a Florida resident, there is no state income tax.

[Stu from NYC]

Retired guy is probably right but think you should consult an accountant to make sure you can sleep at night.

[Gigi3000]

Even on this little bit on income huh? This year on my year to date earnings, Vanguard says its $45000( fell from $60000 high for this year) total but taxable earnings are only $15000 so far.

[Stu from NYC]

Even on this little bit on income huh? This year on my year to date earnings, Vanguard says its $45000( fell from $60000 high for this year) total but taxable earnings are only $15000 so far.

Do as you think is best. Personally I hate getting mail from the IRS but that is me.

[rjm1cc]

I have use Turbo tax and you should be able to do your own taxes. Use the interview option and Turbo tax will take you through all the questions. However you may not understand a question and answer it wrong so always watch the total tax due window and see if it goes up or down for each entry. US gov income is taxable for the Fed Gov. The 1099 you receive will tell you taxable and non taxable income. Thus when you enter it your tax due will increase. You could also email Vanguard and ask if the income is taxable for Federal. On the state level you could have interest income that is not subject to state income taxes.

[retiredguy123]

Even on this little bit on income huh? This year on my year to date earnings, Vanguard says its $45000( fell from $60000 high for this year) total but taxable earnings are only $15000 so far.
In January, Vanguard will send you a 1099-DIV form which will show your ordinary dividends, qualified dividends, capital gain income, and capital gain distributions. You can copy every number from every box on the 1099-DIV form directly into the TurboTax program. You may also get a 1099-B form or a retirement 1099 form if you sold any shares or took an RMD. The TT software will automatically calculate the tax you owe. Easy peasy.

[Babubhat]

They give you a percentage to apply to total interest at year end. No effect on federal liability

[spinner1001]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

I don’t know whether you need a tax accountant. No one on TOTV actually does.

VMFXX mainly holds US government securities and the fund’s income to its investors is dividend income and subject to Federal taxes. The annual tax form 1099 you get from Vanguard should describe the income as dividends and you enter the income amount on the 1099 in the relevant box of the TurboTax form. You may already know that. Generally, an investor will be taxed by IRS on such income.

Do you know which kind of ‘government’ securities that TurboTax asked you about? If not, check the TurboTax help feature. Use that help feature or Intuit’s TurboTax community forum frequently if needed rather than guessing.

Also, it’s best to understand differences between ‘government’ securities. The main types are US government and municipal government securities.

[retiredguy123]

VMFXX is a money market fund. All income you receive will be taxable income for your Federal taxes. You only get a tax exemption for Government securities income if you file a state tax return.

[OrangeBlossomBaby]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

Unless you're very wealthy and keep all your OTHER money in cash or zero-interest bank accounts, you have other income. I'm assuming that $15,000 taxable income is - the income from the Vanguard accounts. Not your total income. I doubt Vanguard keeps track of any income you earn that isn't one of their accounts.

If you receive social security, then that's income. If you receive a pension, that's income. If you receive interest from the other 40% of the funds you say you have, then that's income. If you rented out a room in your house for a month, that's income.

ALL of that income is tallied when it's time to figure out how much (if anything) you owe to the IRS. You take whatever deductions you're eligible to take - either itemizing or the standard deduction. Whatever is left, you pay income tax on. The amount and percentage will depend on the difference.

[manaboutown]

While I currently hold a significant portion of my portfolio in VFMXX it is there for short term purposes only, as in 'cash on hand'. I keep far more short term funds in a T-bill ladder. Ironically I just found this article informative about VFMXX. It brings up points I had never taken the time to research or discover. Eight Reasons Not To Own Vanguard VMFXX (https://www.bondsavvy.com/fixed-income-investments-blog/vmfxx-yield#:~:text=VMFXX%20Dividends%20Are%20Paid%20Mon thly%20%2D%2D%20Not%20Weekly&text=First%2C%20it%20assumes%20that%20the,a%20port folio%20of%20individual%20bonds).

[Gigi3000]

Unless you're very wealthy and keep all your OTHER money in cash or zero-interest bank accounts, you have other income. I'm assuming that $15,000 taxable income is - the income from the Vanguard accounts. Not your total income. I doubt Vanguard keeps track of any income you earn that isn't one of their accounts.

If you receive social security, then that's income. If you receive a pension, that's income. If you receive interest from the other 40% of the funds you say you have, then that's income. If you rented out a room in your house for a month, that's income.

ALL of that income is tallied when it's time to figure out how much (if anything) you owe to the IRS. You take whatever deductions you're eligible to take - either itemizing or the standard deduction. Whatever is left, you pay income tax on. The amount and percentage will depend on the difference.

My situation is quite simple. I have no other income currently. Haven't collected SS yet. I'm 64. Vanguard is it along with my small bank balance interest which might hit $8 this year. My expenses are minimal. I keep things simple or try to.

[Gigi3000]

While I currently hold a significant portion of my portfolio in VFMXX it is there for short term purposes only, as in 'cash on hand'. I keep far more short term funds in a T-bill ladder. Ironically I just found this article informative about VFMXX. It brings up points I had never taken the time to research or discover. Eight Reasons Not To Own Vanguard VMFXX (https://www.bondsavvy.com/fixed-income-investments-blog/vmfxx-yield#:~:text=VMFXX%20Dividends%20Are%20Paid%20Mon thly%20%2D%2D%20Not%20Weekly&text=First%2C%20it%20assumes%20that%20the,a%20port folio%20of%20individual%20bonds).

This article is deep...lol. All I know is I'm happy with what I'm earning each month from VMFXX. I see it going in. I don't plan on staying in VMFXX more than maybe another year. Then I don't know what. Trying to figure out how to buy into the Dinar or something. :)

[Jhnidy]

Income tax filing is free in the villages. They start making appointments early in the year.

[huge-pigeons]

Will you pay federal taxes on that small amount? Probably not. I’m not a tax guy but I’ve been doing this for many years, If you make < $89,000 and married filing jointly, using the standard deduction of $13k each, you will pay no federal tax. That $89k income is based on normal taxable dividends, short and long term capital gains (they are calculated differently), interest, maybe a part of your social security, etc..

If you take money out of your Ira/401k, non-taxable assets, then things change.
I have been using turbo tax premier because of the easy way it accesses all the brokerage accounts.

You don’t need to wait until next year (receiving your 1099’s) to do what you need to do for this years filing (2023 tax year). During the last week of December, I know exactly what all my 2023 dividends, short term and long term capital gains, my social security income was for 2023, and from this info, I can calculate my taxes and do any tax harvesting/selling/etc before dec 31. Been doing this for years. I will get the 2023 turbo tax app in December, calculate all my last minute gains/income/tax harvesting/etc, and will start playing the different scenarios in turbo tax to see what are my best moves to make in 2023 for my taxes. Then I don’t file my taxes until i actually get my 1099’s electronically.

[MidWestIA]

cpa won't stop you paying tax why not just do turbo tax or signup for aarp to do it at colony rec

[crash]

Even on this little bit on income huh? This year on my year to date earnings, Vanguard says its $45000( fell from $60000 high for this year) total but taxable earnings are only $15000 so far.

Don’t forget your SS will be taxed if your income including your SS is over $37,000. 85% of social security is taxed if you exceed the threshold. Turbo tax will handle it just fine.

[dewilson58]

My situation is quite simple. I have no other income currently. Haven't collected SS yet. I'm 64. Vanguard is it along with my small bank balance interest which might hit $8 this year. My expenses are minimal. I keep things simple or try to.

If quite simple.............I would say no.

TT asks a lot of questions and walk you thru the process.

The year-end tax forms provide information regarding taxability and exemptions.

Worse case.........try TT early in 2024, if you hit a wall, sniff out help......either TT or a local body.

[Caymus]

While I currently hold a significant portion of my portfolio in VFMXX it is there for short term purposes only, as in 'cash on hand'. I keep far more short term funds in a T-bill ladder. Ironically I just found this article informative about VFMXX. It brings up points I had never taken the time to research or discover. Eight Reasons Not To Own Vanguard VMFXX (https://www.bondsavvy.com/fixed-income-investments-blog/vmfxx-yield#:~:text=VMFXX%20Dividends%20Are%20Paid%20Mon thly%20%2D%2D%20Not%20Weekly&text=First%2C%20it%20assumes%20that%20the,a%20port folio%20of%20individual%20bonds).

Do you know if the income is treated as interest or ordinary/qualified dividends?

[Caymus]

If anybody wants free tax preparation software, check out Cash App. I used it for the past 2 years without any issues. Before that I used the free version on Credit Karma. After Turbo Tax's owner (Intuit) bought Credit Karma they eliminated that benefit.

During the year I also do "now look" estimates with Excel based "freeware" developed by Glenn Reeves. Federal Income Tax Spreadsheet Form 1040 (Excel Spreadsheet) Income Tax Calculator (https://sites.google.com/view/incometaxspreadsheet/home)

[retiredguy123]

Do you know if the income is treated as interest or ordinary/qualified dividends?
VFMXX is a money market fund that generates interest or ordinary dividend income, and maintains a stable one dollar per share asset value. Vanguard does not distribute any qualified dividends from the VFMXX fund. All income is taxed at your ordinary income tax rate. Vanguard reports the income to you on a 1099-DIV form, even though some of the income is actually considered interest income. So in that respect, the terms "interest" and "ordinary dividends" basically mean the same thing.

[PVR]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....
Turbo tax can also download your info into your form so it will be correct. They will also show you how to do it

[Haggar]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

I'm a CPA. My answer is no - you do not need to consult a CPA. If your tax last year was more than $1,000 you will need to make sure that the tax you paid in through withholding or estimates are at least what your tax was in 2022 to incur no penalties - just a balance due in April 2024 depending upon what your final tax is for 2023.

As to the poster who said anyone on TOTV doesn't need an accountant there are many situations where a good CPA CAN save a taxpayer money. Yes there are many on TOTV who do know many aspects of the tax law but this is what I do full time, reading extensively, and attending seminars and webinars and having discussions with colleagues to keep up on the latest and greatest from the IRS. There are over 60,000 pages of tax code, regulations and issuances from the IRS! Good luck to the preparer who doesn't know all the the key items to reduce your taxes. Turbo tax is excellent (I use the professional version - Pro Series) and it asks a lot of questions but IMHO it doesn't replace a professional tax preparer for all taxpayers.

[Wondering]

Why are you asking us? Either Google or call a CPA.

[Ecuadog]

Turbo tax can also download your info into your form so it will be correct. ...

Always check the info that gets downloaded. One year, Vanguard reported one of my transactions twice in the TurboTax download. I caught it by checking the worksheets.

[Whitley]

Even on this little bit on income huh? This year on my year to date earnings, Vanguard says its $45000( fell from $60000 high for this year) total but taxable earnings are only $15000 so far.

I need to be prudent as I do not want to risk my license, so let's start off with it always being a good idea to work with a licensed professional. One may say that with the modest numbers you are talking about, a program like Turbo Tax should suffice. Anything a licensed professional "may" be able to save, would most likely be more than offset by their invoice to you. This is especially true if you are a Fl Resident. Other states (NY) can get a bit complicated. I had my office in NYC, warehouses in NJ, residence in NYS. That can get a bit complex. Good luck.

[Boomer]

Why are you asking us? Either Google or call a CPA.



Wondering, huh?

Me, too.

I am wondering why the need to barge into a conversation among posters who are contributing and enjoying the thread — only to try to make the OP feel like she is not smart.

Geez.

Some of us learn from each other here by asking questions….

Good questions usually mean the asker is looking for a starting point to learn more through extending research or equipping oneself with the working vocabulary that can help when speaking with a professional.

Comparison: These threads are basically a little bit like Wikipedia. Any serious asker of questions knows that Wikipedia can be a starting point, but it is not a definitive reference source. Those who understand that always know to back-source Wikipedia.

Also — there is the value of remaining anonymous when talking about our money.

I think our OP might be from Ohio. So am I. We Midwest women who are interested in talking about investing and taxes don’t go around talking about such things with our friends and family — unless there is a good and private reason to do so.

Our OP is doing her homework. She has indicated elsewhere that she has found a fee-only advisor that she is happy with. Smart move.

Smart Midwest women do not take up with those guys who only want to buy them dinner first.

And, thank you to all of our regularly helpful posters who have added information here to be helpful to the OP.

(I always count on retiredguy123 to come through — and in this thread, may I especially thank Haggar the CPA.)

Please, carry on. This is such a good thread — for some of us. The rest don’t have to look.

Boomer

[spinner1001]

On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it.

You likely needed to report your income from the Vanguard fund for Federal tax purposes.

You might look at your form 1040 tax return of last year. Page 1 of the standard form 1040 on line 15 (see form at link below) is your taxable income. Above that line you will see a line for dividend income on line 3. Your Vanguard fund dividend income from your form 1099 is likely in the line 3b amount and perhaps explicitly stated on Schedule B of your tax return as Ordinary Dividends.

You can determine whether the dividend income from the Vanguard fund is part of your total reportable income on line 9 by using a calculator to add the amounts on the earlier lines identified on line 9 (i.e., add lines 1z, 2b, 3b, 4b, 5b, 6b, 7, and 8) and comparing the calculator result to line 9. Then you will know whether your dividend income from the Vanguard fund was part of your reportable income for Federal tax purposes.

STANDARD FORM 1040 FOR 2022:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

[spinner1001]

Do you know if the income is treated as interest or ordinary/qualified dividends?

Vanguard Mutual Fund Profile | Vanguard (https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx) (look in the Distributions section)

Topic No. 404, Dividends | Internal Revenue Service (https://www.irs.gov/taxtopics/tc404)

[Gigi3000]

Do as you think is best. Personally I hate getting mail from the IRS but that is me.

If you think mail is bad, try calling them. I waited one day for 2 hours to talk to a rep. Right at the 2 hour mark, my call disconnected. Infuriating. Budget cuts i guess....but that's ANOTHER story.....

[retiredguy123]

If you think mail is bad, try calling them. I waited one day for 2 hours to talk to a rep. Right at the 2 hour mark, my call disconnected. Infuriating. Budget cuts i guess....but that's ANOTHER story.....
Budget cuts? No way. The IRS budget is projected to increase by $80 billion over the next 10 years.

[Gigi3000]

I'm a CPA. My answer is no - you do not need to consult a CPA. If your tax last year was more than $1,000 you will need to make sure that the tax you paid in through withholding or estimates are at least what your tax was in 2022 to incur no penalties - just a balance due in April 2024 depending upon what your final tax is for 2023.

As to the poster who said anyone on TOTV doesn't need an accountant there are many situations where a good CPA CAN save a taxpayer money. Yes there are many on TOTV who do know many aspects of the tax law but this is what I do full time, reading extensively, and attending seminars and webinars and having discussions with colleagues to keep up on the latest and greatest from the IRS. There are over 60,000 pages of tax code, regulations and issuances from the IRS! Good luck to the preparer who doesn't know all the the key items to reduce your taxes. Turbo tax is excellent (I use the professional version - Pro Series) and it asks a lot of questions but IMHO it doesn't replace a professional tax preparer for all taxpayers.

When you says tax, do you mean my refund? I had $2600 refund on federal. My total income was $79000, most of which was from an inherited IRA. Is the penalty on the state taxes(Ohio) , cause i had a an underpayment on the Ohio tax for underpayment of school district taxes for $29? Maybe i do need a CPA this year to explain this to me? Wait, tax withheld on federal $15000.

[Gigi3000]

Budget cuts? No way. The IRS budget is projected to increase by $80 billion over the next 10 years.

My understanding is Trump cut the IRS budget when in office leaving them to cut staff and that is why i couldn't talk to a rep. Actually the cuts started before Trump went into office but continued with his tenure. Don't ask me any questions. That's all i know. :)

[retiredguy123]

My understanding is Trump cut the IRS budget when in office leaving them to cut staff and that is why i couldn't talk to a rep. Actually the cuts started before Trump went into office but continued with his tenure. Dont ask me any questions. Thats all i know.
As I understand it, the "Inflation Reduction Act" increases the IRS budget by $80 billion over the next 10 years.

[Gigi3000]

Why are you asking us? Either Google or call a CPA.

I'm trying not to sound completely stupid when i call them.

[Gigi3000]

As I understand it, the "Inflation Reduction Act" increases the IRS budget by $80 billion over the next 10 years.

I believe this is what the budget was cut over the last 10 years. Since dems are in office, they are reversing things. Again, I'm no expert.

[ton80]

When you says tax, do you mean my refund? I had $2600 refund on federal. My total income was $79000, most of which was from an inherited IRA. Is the penalty on the state taxes(Ohio) , cause i had a an underpayment on the Ohio tax for underpayment of school district taxes for $29? Maybe i do need a CPA this year to explain this to me? Wait, tax withheld on federal $15000.

I am not a CPA nor Tax Preparer other than my own via TurboTax. However I have been researching rules for inheritance for our children. I think that you accurately recognize the need for some help in understanding how to handle inherited IRA and property in another state.

Perhaps someone on this site can suggest a good Tax Preparer/CPA who can simplify the rules and give you a plan and good understanding. Inherited IRA's have rules as to how long you have to distribute the assets depending upon whom the IRA was inherited from and when the transfer occurred. This is too complex and private to be discussed on a public forum.
Perhaps Boomer may have some suggestions.

[Gigi3000]

I am not a CPA nor Tax Preparer other than my own via TurboTax. However I have been researching rules for inheritance for our children. I think that you accurately recognize the need for some help in understanding how to handle inherited IRA and property in another state.

Perhaps someone on this site can suggest a good Tax Preparer/CPA who can simplify the rules and give you a plan and good understanding. Inherited IRA's have rules as to how long you have to distribute the assets depending upon whom the IRA was inherited from and when the transfer occurred. This is too complex and private to be discussed on a public forum.
Perhaps Boomer may have some suggestions.

Actually, i'm past the point of needing help with inherited IRA. I cashed it out but i am aware of the 10 yr thing to disperse taxes under the secure act. I don't have property in another state yet.

[CoachKandSportsguy]

This is too complex and private to be discussed on a public forum.


Not really but for each individual to determine, the only private issue is the amount, and even then, round numbers can be used, or made up numbers. The complexity is dependent upon the quality of the explanation, and this bbs has had many, many discussions on the same topics over and over again, so searching the forum and looking at the links many have provided will provide one with general enough information to ask intelligent questions.

What many are missing here is how all the pieces fall together, as turbo tax doesn't have a good output for that in my opinion. It is a tax return software, not an analytical software to give you strategies, which have to be in place prior to filing.

I have responded to IRS letters about a missing or bad or erroneous or late filing and its not the worst of all letters. . . although depending upon the mistake, certain ones will trigger additional audits in the future, but also pay the fee for the INtuit representation if you are unsure about the output, and they will help represent you.

I had a missing RMD one year, I actually put the missing amount into the tax return, even though it was not distributed, and paid the tax, and put a note into the return about the missing distribution. Never heard back from the IRS and its been almost 5 years. . .

The link to the 2023 excel tax workbook is an excellent place to start getting an idea, as long as you have all the paperwork to find the answers.

[FredJacobs]

Remember, you pay taxes on your Adjusted Gross Income (AGI) - the net amount of taxable income, not all of your income may be taxable. For example, not all of the social security you received is taxable. Next, your AGI is reduced by your standard deduction or your itemized deductions, whichever is higher. For 2023, the Standard Deduction for a single person over age 65 is $15,700 and for a married couple, both over age 65, is $31,400.

You are taxed on any balance after the appropriate deduction above. If $23,000 is your 2023 total income and you are single, you would pay 10% tax on $7,300 or $730. If you file as a married couple, both over age 65, you would pay 10% tax on $1,000 or $100.

Hope this helps.

[Boomer]

- - - - - -

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Maybe i do need a CPA this year to explain this to me? - - - - - - - - .

Gigi,

There you have it.

If I were you, I would get a CPA, at least for this go-round.

But keep in mind that all CPAs are not created equal. Choose carefully.

I have read the website of the fee-only financial planner you found back in Ohio, Havanich Financial. On her site she lists “Tax reduction strategies and tax-planning” as areas she can address for clients. You might want to talk with her again — or see if she will just recommend a CPA — if your need is not so much long range as it is just needing to feel like you have a clear understanding of what you need to do tax-wise, for now.

Btw, that was a pretty big tax refund you mentioned. Maybe that was unusual for you. But when you go for advice, find out the best way to keep that money for yourself during the year instead of letting the government have it.

Also, I don’t know if this applies, but in some Ohio school districts, a tax is put on earned income only. I guess that is done to keep retired voters’ support for school taxes.

You have a lot on your financial mind right now, and you are being smart to be careful and to ask questions. But, like I said at the beginning of the post, if I were you I would find the right CPA. Go in with your list of questions written down. And if you come across one who is dismissive and does not listen or is condescending about questions, find a different one.

We will always have a CPA. We could wrestle our way through Turbo Tax, I guess, but don’t want to. Besides, I want my CPA’s signature on the return. (But that’s just how I am.)

At this point, I do know how to prepare very carefully for the CPA. But it has been a learning curve — and that’s OK.

Boomer

[Haggar]

Gigi,

There you have it.

If I were you, I would get a CPA, at least for this go-round.

But keep in mind that all CPAs are not created equal. Choose carefully.

I have read the website of the fee-only financial planner you found back in Ohio, Havanich Financial. On her site she lists “Tax reduction strategies and tax-planning” as areas she can address for clients. You might want to talk with her again — or see if she will just recommend a CPA — if your need is not so much long range as it is just needing to feel like you have a clear understanding of what you need to do tax-wise, for now.

Btw, that was a pretty big tax refund you mentioned. Maybe that was unusual for you. But when you go for advice, find out the best way to keep that money for yourself during the year instead of letting the government have it.

Also, I don’t know if this applies, but in some Ohio school districts, a tax is put on earned income only. I guess that is done to keep retired voters’ support for school taxes.

You have a lot on your financial mind right now, and you are being smart to be careful and to ask questions. But, like I said at the beginning of the post, if I were you I would find the right CPA. Go in with your list of questions written down. And if you come across one who is dismissive and does not listen or is condescending about questions, find a different one.

We will always have a CPA. We could wrestle our way through Turbo Tax, I guess, but don’t want to. Besides, I want my CPA’s signature on the return. (But that’s just how I am.)

At this point, I do know how to prepare very carefully for the CPA. But it has been a learning curve — and that’s OK.

Boomer

A good CPA MIGHT be able to save you more taxes than his/her fee. I agree that you should get one that will listen to your questions no matter how out of left field they may be. It's much like a doctor - you can't be helped if don't you ask your questions. Your CPA should also be asking you questions to see what you may not be aware can save you money.

How many Schedule C filers would be better off as a S Corp? Are you taking all the deductions that may be available. Are you making contributions that can reduce your taxes that all not deductible because you use the standard deduction? Many CPA's will give to an introductory no charge meeting to see if there's a way to save you money.

I've seen too many filers that missed deductions.

I believe that the services we provide are beneficial to our clients. If the taxpayer can do it him/her self I'll tell them.

[Stu from NYC]

My business is a sub chapter S and taxes change from year to year.

My cpa keeps up with this much better than I can and when I ask if I can do something different his job is to keep me out of trouble so I can sleep at night.

He also makes some suggestions to save me money

That is worth some dollars to me.

[CoachKandSportsguy]

Many CPA's will give to an introductory no charge meeting to see if there's a way to save you money.

True and useful, as long as the person brings along or has a workbook of all the income and assets, etc so that the CPA can get a sizing of the T-shirt. .

So to start, have at minimum all your income sources and expected amounts for the year, and the inherited IRA details, and then any other investment accounts such as IRAS,/401Ks for reference. For money market, take the latest dividend amount for the month and multiply it by the remaining months to forecast out the full year. from that number and sources, the CPA can ask some basic deduction questions and get the size of your t-shirt (english expression, breadbasket is the american equivalent)

good luck.

[Robbb]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

Well if a black helicopter circles around my neighborhood I will know what its about.

[kkingston57]

I'm fairly new to investing and have never talked to a CPA. According to Vanguard, I've made $15,000 taxable income so far in 2023 so i should make around $21-23,000 by year end. Most of this taxable income is from my VMFXX Money Market at Vanguard where i have 60% of my funds. I know that a large part of the income from that fund is government securities. On my taxes last year, which i did myself on turbo tax, it asked if my income was from government securities and i said yes so i assume I didnt pay taxes on it. Long story short, do i need a CPA consult this year? Appreciate any enlightment....

Money market proceeds = income. This is going to affect a lot of people who have conservatively invested their money, since these funds and other investments like CD's have skyrocketed in 2023. Saw a credit union CD recently paying 5.6% recently. 2-3 years ago they were below 1%

[Boomer]

Money market proceeds = income. This is going to affect a lot of people who have conservatively invested their money, since these funds and other investments like CD's have skyrocketed in 2023. Saw a credit union CD recently paying 5.6% recently. 2-3 years ago they were below 1%


Yep……

And……

For those on Medicare, there could be an experience lurking that was not expected…….

“Allow me to introduce myself” — My name is IRMAA!

The first AGI threshold to worry about this is higher than a lot of us will reach, but be aware. I think even crossing that threshold by a buck will cost you the same as if you cross it by a lotta bucks. (Somebody please correct me if I am wrong about that. I have some letters behind my name, but none of them have anything to do with money.)

Anyway, pay attention to that income. IRMAA can be stealthy. Pay attention if you have had a cap gain, too.

If you are of RMD age and it is starting to look like IRMAA is out to get you this year, you can possibly head her off at the pass with a QCD. Might be worth doing some projecting right now and running numbers if you think IRMAA might even come close. Maybe for you IRMAA is already a done deal. I think for singles, this can happen relatively fast. I am just doing my usual warning because I don’t like to see somebody blindsided by IRMAA.

Boomer

Yeah. I know I call IRMAA “her” but my reason is a story. I will spare you that this morning. :)

[manaboutown]

IRMAA and NIIT (Medicare Tax) are confiscatory, sheer evil and impossible to avoid once one reaches that level of income.

[Boomer]

IRMAA and NIIT (Medicare Tax) are sheer evil and impossible to avoid once one reaches that level of income.


I know it is harder for a single filer. Looks like the guess for 2025 IRMAA is $105,000 for one for 2023 income. (Not sure if I am right about that though. I don’t know if or how inflation factors in when the time comes.)

Married can allow more room to try to stay out of IRMAA’s clutches.

That darned look-back can catch taxpayers by surprise. A fat cap gain can do it. Gotta think two years ahead — and you have to know you have to think two years ahead — in case you might have a chance to duck IRMAA.

I know I sound a little obsessed with IRMAA sometimes. :swear: That’s the old teacher in me. Still trying to make a difference for somebody, maybe. Once a teacher always a teacher, I guess. At least, my state pension has the word ‘teacher’ somewhere in it.

Btw, manaboutown , I saw you picking on teachers earlier in a thread somewhere. (sigh) Oh well, I like to pick on you sometimes. ;)

Boomer

[manaboutown]

Since I took "once in a lifetime" LTCGs in both 2022 and 2023 I am stuck with both IRMAA and NIIT for two years running. I had no choice as the real estate properties were held by LLCs wherein the members were aging out. A few had already passed on or given their shares to younger members of their families and problems in dealing with 'the kids' were arising.

BTW waaayyy back in 1925 my mother at age 20 graduated from Goucher College and taught both math and French for fifteen years. I feel very fortunate to have had some wonderful teachers but I also had some awful ones.

[Stu from NYC]

Yep……

And……

For those on Medicare, there could be an experience lurking that was not expected…….

“Allow me to introduce myself” — My name is IRMAA!

The first AGI threshold to worry about this is higher than a lot of us will reach, but be aware. I think even crossing that threshold by a buck will cost you the same as if you cross it by a lotta bucks. (Somebody please correct me if I am wrong about that. I have some letters behind my name, but none of them have anything to do with money.)

Anyway, pay attention to that income. IRMAA can be stealthy. Pay attention if you have had a cap gain, too.

If you are of RMD age and it is starting to look like IRMAA is out to get you this year, you can possibly head her off at the pass with a QCD. Might be worth doing some projecting right now and running numbers if you think IRMAA might even come close. Maybe for you IRMAA is already a done deal. I think for singles, this can happen relatively fast. I am just doing my usual warning because I don’t like to see somebody blindsided by IRMAA.

Boomer

Yeah. I know I call IRMAA “her” but my reason is a story. I will spare you that this morning. :)

Another reason we do pay a cpa to keep us out of trouble

[Gigi3000]

A good CPA MIGHT be able to save you more taxes than his/her fee. I agree that you should get one that will listen to your questions no matter how out of left field they may be. It's much like a doctor - you can't be helped if don't you ask your questions. Your CPA should also be asking you questions to see what you may not be aware can save you money.

How many Schedule C filers would be better off as a S Corp? Are you taking all the deductions that may be available. Are you making contributions that can reduce your taxes that all not deductible because you use the standard deduction? Many CPA's will give to an introductory no charge meeting to see if there's a way to save you money.

I've seen too many filers that missed deductions.

I believe that the services we provide are beneficial to our clients. If the taxpayer can do it him/her self I'll tell them.

I contacted a well respected CPA. Is $1500 for a consult about average or were they trying to get rid of me?

[CoachKandSportsguy]

I contacted a well respected CPA. Is $1500 for a consult about average or were they trying to get rid of me?

way too expensive, imo for your simple questions.

[dewilson58]

I contacted a well respected CPA. Is $1500 for a consult about average or were they trying to get rid of me?

Unless he/she is going to review a few years of tax returns, meet with you to understand you & your situation................$1500 is aggressive.

$1500 is three to five hours of time.

[spinner1001]

I contacted a well respected CPA. Is $1500 for a consult about average or were they trying to get rid of me?

Many CPAs don’t want to bother with prospects for very small fees and, thus, they might not be very interested. If you want cheaper, you might look to an Enrolled Agent working at H&R Block rather than a CPA. That might be good enough for what you want.

[Boomer]

I contacted a well respected CPA. Is $1500 for a consult about average or were they trying to get rid of me?


Gigi,

I just looked at what we paid to have our taxes done by a CPA last year -- $325. I know ours are easy though because I always know what she will need and I hand over everything organized. The office runs the numbers in whatever program it is, and if there is anything else we need to know, we find out then. That $325 was for state and federal returns. Where we lived before, there was an extra form for the school district that cost a few extra dollars to file, but not much. I am talking about Ohio.

I hesitate to say this because I don't actually know anything about what all is involved in your situation, but from what I am piecing together from your posts, I am wondering if you might be worrying too much about this.

An inheritance can sometimes make the heir feel outside the comfort zone when it comes to handling the money carefully and wisely. I can see that you are trying to be careful and wise and it sounds like you have a handle on things, in general.

But. . .unless there is absolutely a decision you have to make before the end of the tax year, maybe the best thing to do is simply to have your 2023 taxes done by a CPA when the time comes. They always look at the previous year. . .I think. . .or they should anyway.

Get some recommendations though.

Boomer

[Gigi3000]

Gigi,

I just looked at what we paid to have our taxes done by a CPA last year -- $325. I know ours are easy though because I always know what she will need and I hand over everything organized. The office runs the numbers in whatever program it is, and if there is anything else we need to know, we find out then. That $325 was for state and federal returns. Where we lived before, there was an extra form for the school district that cost a few extra dollars to file, but not much. I am talking about Ohio.

I hesitate to say this because I don't actually know anything about what all is involved in your situation, but from what I am piecing together from your posts, I am wondering if you might be worrying too much about this.

An inheritance can sometimes make the heir feel outside the comfort zone when it comes to handling the money carefully and wisely. I can see that you are trying to be careful and wise and it sounds like you have a handle on things, in general.

But. . .unless there is absolutely a decision you have to make before the end of the tax year, maybe the best thing to do is simply to have your 2023 taxes done by a CPA when the time comes. They always look at the previous year. . .I think. . .or they should anyway.

Get some recommendations though.

Boomer


I'm sure you are right. I had a lot of decisions I had to make with this inheritance and feel like I'm in overdrive. I don't want to be frivolous with money my grandparents worked hard to save all their lives. They passed it to my aunt and she passed it to me, never spending a dime of it. Its not a lot of money but its the principle. I do know a CPA at H@R block that i will consult if my financial advisor can't help me.
Retirement is too much work!

[Boomer]

I'm sure you are right. I had a lot of decisions I had to make with this inheritance and feel like I'm in overdrive. I don't want to be frivolous with money my grandparents worked hard to save all their lives. They passed it to my aunt and she passed it to me, never spending a dime of it. Its not a lot of money but its the principle. I do know a CPA at H@R block that i will consult if my financial advisor can't help me.
Retirement is too much work!


Sounds to me like you are going to be OK. :)

Boomer