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Another option - check if you can find the business's EIN on any other documentation they might have sent you. Sometimes it's on invoices, contracts, or their website privacy policy. For publicly traded companies, you can usually find it in their SEC filings too.
That's a really smart idea, I didn't think of that! I just dug through my email and found an old contract with them that has their complete business information including what looks like an EIN. It's a 9-digit number that starts with 82, which I think is the right format for a business TIN?
Yes, that sounds exactly right! An EIN is a 9-digit number usually formatted as XX-XXXXXXX. If it starts with 82, that's almost certainly their EIN. Companies often include their EIN on contracts, official correspondence, and other business documents. You should be good to go now - just enter that number where your tax software asks for the payer's TIN. Problem solved without having to wait for them to call you back!
You could also check the Secretary of State business search for your state. Most states have online business entity searches where you can look up the company and sometimes their EIN is listed in public records.
This isn't entirely accurate. While Secretary of State business searches are useful for verifying that a business exists and is properly registered, they typically don't include EINs in their public records due to privacy concerns. You can find the business name, address, registered agent, and sometimes officer names, but tax ID numbers are generally not publicly available through these searches.
One thing nobody's mentioned - if you inherited property and then sold it within a year, you still get long-term capital gains rates because of the stepped-up basis. This saved me thousands on taxes when I sold my dad's house 4 months after he passed. Just wanted to share that tip since inheritance tax rules have some unexpected benefits sometimes.
Are you sure about this? I thought the holding period started over when you inherited, so if you sell within a year it would be short-term gains. Can you point to where you found this info?
You're thinking of the normal capital gains rules where you need to hold something for more than a year to get long-term rates. But inherited property is special - it automatically qualifies for long-term capital gains treatment regardless of how long you hold it. This is specifically addressed in IRS Publication 544 which covers sales and dispositions of assets. The rule is in place because you're benefiting from the stepped-up basis, so they consider it long-term regardless of your actual holding period.
Has anyone here dealt with inheriting an IRA? I just got one from my grandfather and I'm totally confused about the RMDs (required minimum distributions) and how they're taxed. Some people told me I have to empty it within 10 years now?
Yes, the rules changed with the SECURE Act. If you inherited the IRA after January 1, 2020, and you're not a spouse, you generally have to empty the account within 10 years. There are exceptions for certain beneficiaries like minor children, disabled individuals, and beneficiaries not more than 10 years younger than the deceased.
Make sure your subcontractor knows he needs to file Schedule C and Schedule SE with his tax return. Those are the forms for self-employment income and self-employment tax calculation. Also, he should track ALL his business expenses - miles driven, tools purchased, insurance, phone use for business, even a portion of home internet if used for business. These deductions can really reduce his taxable income. A friend of mine doing construction subcontracting saved over $4,000 in taxes last year just by properly tracking and deducting legitimate business expenses!
Do you have a simple system for tracking expenses? I always mean to keep good records but end up with a shoebox full of receipts at tax time lol.
I use a combination of a dedicated credit card for all business purchases and a simple spreadsheet. The credit card gives me electronic records for most expenses, while the spreadsheet is for tracking mileage and cash purchases. There are also some good apps specifically for contractors that let you snap pictures of receipts on the go and categorize them immediately. Much better than the shoebox method! Even just taking photos of receipts with your phone and organizing them into folders by month is better than nothing.
As someone who's been a construction subcontractor for years, tell him he's probably overthinking this. Yes, taxes on 1099 income can be significant, but the deductions in construction work are HUGE. If he's smart about tracking expenses (vehicle, tools, supplies, insurance, phone, even some clothing and meals), he'll likely only end up paying effective tax of 20-25% on what's left after deductions. I've been doing this for 15 years and rarely pay more than that percentage on my 1099 income.
This matches my experience too. The first year I paid way too much because I didn't track expenses well. Now I pay way less because I deduct everything legitimate. What tax software do you use? I've been using TurboSelf-Employed but wondering if there's something better for construction specifically.
Just to add my experience - I inherited some rental properties and mistakenly used my dad's original purchase price instead of the stepped-up basis. I ended up overpaying almost $32k in capital gains tax! Filed an amended return and got it all back plus interest. Definitely worth checking this carefully.
How far back can you go to fix this kind of mistake? My mom passed 3 years ago and I'm just now learning about step up basis.
You can generally file an amended return within 3 years from the date you filed your original return, or within 2 years from the date you paid the tax, whichever is later. So you're likely still within the window to fix it! If you sold inherited assets and used the original purchase price instead of the stepped-up basis, you definitely should file an amended return. The process isn't actually that difficult - just file Form 1040-X and include any schedules that change as a result of the correction.
Quick tip: for publicly traded stocks, get the high and low prices for the date of death and use the average. If the estate is large enough to file Form 706, you can also use the alternate valuation date (6 months after death) if that's more favorable.
Ev Luca
Pro tip: If u have simple taxes, try the IRS direct file pilot program this year! Totally free and handles W2s and basic 401k distributions. I used it and it took like 20 mins start to finish. Only downside is its only available in certain states right now. Check if ur eligible here: https://directfile.irs.gov/ TurboTax is straight robbing people now smh
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Avery Davis
•Which states is it available in? I'm in Florida and would love to try this!
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Ev Luca
•It's available in 12 states for 2024 filing season: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington, and Wyoming. They're planning to expand it next year if the pilot goes well. If you're in Florida, you're in luck! Definitely check it out. Super simple interface and you're filing directly with the IRS so no middleman taking a cut.
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Collins Angel
Happened to me to!!! Try H&R Block online, they usually have better free options than TurboTax. My husband and I used them last yr after TT tried to charge us $89 for a simple return with a HSA. H&R did it free!!
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Marcelle Drum
•Are you sure H&R Block is still free for 401k stuff? I just tried them and they wanted to upgrade me to "Deluxe" for $55 when I entered my 1099-R.
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