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Don't forget to consider state tax implications too! Depending on your state, the capital gains from the partnership buyout could be treated differently than at the federal level. Some states don't offer preferential rates for capital gains. I sold my stake in a family business in California and was shocked at the state tax bill.
That's a really good point I hadn't considered. I'm in Minnesota, and I have no idea how they handle capital gains from partnership sales. Will definitely add this to my list of questions for the CPA!
Minnesota does tax capital gains at the same rate as ordinary income, which can be quite high depending on your income bracket. They don't have a separate preferred rate for capital gains like the federal government does. One thing to ask your CPA about is whether structuring the buyout over multiple tax years could help reduce the overall tax impact. Sometimes spreading a large gain across tax years can keep you in lower brackets. This gets complicated with partnerships though, so definitely get professional advice.
Just a heads up that if your partnership owns any appreciated property (real estate, equipment, etc.), there could be additional tax implications. Sometimes a partnership buyout can trigger something called "hot assets" taxation where some of what looks like capital gains actually gets taxed as ordinary income.
Has anyone tried FreeTaxUSA for filing an extension? I switched from TurboTax this year because of all their limitations on the free version, and FreeTaxUSA let me file an extension in like 5 minutes for free. No waiting until May or calling customer service. Might be worth checking out if you're still stuck.
Does FreeTaxUSA also let you file state taxes for free? I'm in California and the state filing is what keeps me using TurboTax even though I hate their limitations.
FreeTaxUSA is free for federal filing including extensions, but they do charge about $15 for state filing. Still way cheaper than TurboTax's $50+ for state filing. Their interface isn't as slick as TurboTax but it gets the job done and doesn't hide features from free users. For me the savings and not dealing with the upsell tactics was worth the slightly less polished experience.
Suggestion for everyone: Just file the extension directly through the IRS website. Go to irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return and you can e-file Form 4868 for free without any third-party software. I've been doing this for years rather than dealing with the limitations of free tax software. Takes about 10 minutes max.
I thought about doing this but wasn't sure if it would cause problems when I eventually file my full return through TurboTax. Will the IRS system know I already filed an extension?
I would be very careful about StopIRSDebt or any of these tax resolution companies that advertise heavily. My brother used them last year for a similar situation (5 years unfiled) and ended up paying WAY more than the initial quote. They kept finding "complications" that required additional fees. Look for a local Enrolled Agent instead - they typically charge less than CPAs but are still licensed to represent you before the IRS. Mine charged me $350 per year for relatively simple returns, which sounds like it would be much less than either quote you received.
Can I ask how you found a reliable Enrolled Agent? I've been looking for someone to help with my tax situation but everyone I find online seems sketchy or has terrible reviews. Did you just Google local EAs or is there a better way to find them?
I found my EA through the National Association of Enrolled Agents website (naea.org) - they have a directory where you can search by location. I interviewed three before choosing one, asking specifically about their experience with unfiled returns and payment plans. Another good option is the IRS's own Directory of Federal Tax Return Preparers with Credentials, which lists all certified professionals. Some EAs specialize in exactly the kind of resolution work you need, and their credentials mean they're authorized to represent you in all matters before the IRS.
Has anyone actual used StopIRSDebt though? That was the original question and nobody has answered it directly. I'm considering them too for about 10 years of unfiled taxes (yes I know I'm screwed lol).
I used them 2 years ago. They were ok but not great. They did prepare all my returns but their communication was terrible - I'd go weeks without updates. Their initial quote was $3200 for 8 years but ended up at $4100 after "additional complexities." The work got done though and I'm back in compliance with the IRS now.
You should immediately consult with a trust litigation attorney. The accountant's obligations are important, but your primary concern should be protecting the remaining trust assets ASAP. In my experience, once a trustee starts misappropriating funds, they rarely stop voluntarily. Your attorney can seek a temporary restraining order to freeze the trust accounts while the investigation proceeds. Also, document EVERYTHING from this point forward - every conversation, email, and phone call related to the trust. Keep copies of all statements and documents you receive. This documentation will be crucial for any legal proceedings.
What kind of attorney should I look for specifically? Is there a certain specialty that deals with trustee misconduct? And roughly what should I expect this to cost? I'm worried about spending a ton on legal fees when the trust assets have already been diminished.
You want an attorney who specializes in trust and estate litigation specifically - not just any estate planning attorney. Many estate planners focus primarily on creating trusts and wills but have limited experience with litigation when things go wrong. Look for terms like "trust litigation," "fiduciary litigation," or "trust disputes" on their website or firm description. Ideally, find someone who has experience specifically with trustee removal cases and financial misconduct. Regarding costs, most trust litigation attorneys work on an hourly basis, typically $300-$500 per hour depending on your location and the attorney's experience. Many states allow for attorney fees to be paid from the trust itself when the litigation benefits the trust (like removing a dishonest trustee), but this usually happens after the case concludes. You might need to pay upfront and seek reimbursement later.
Has anyone considered criminal charges? When my cousin stole from our family trust, we initially just tried to remove her as trustee. But our attorney explained that trustee theft over certain amounts is actually felony embezzlement in most states. Filing a police report created a lot more pressure and ultimately led to a much better settlement because she wanted to avoid prosecution. Just something to consider alongside the civil remedies.
This is an important point. My family went through something similar, and we found that once we filed a police report, the trustee suddenly became much more cooperative with returning funds. The district attorney in our county had a financial crimes unit that took it quite seriously.
Esmeralda GΓ³mez
One thing to remember is that you'll need to pay quarterly estimated taxes next year if you continue doing deliveries. Since there's no withholding on cash payments, you're responsible for making those payments yourself if you expect to owe $1,000 or more in taxes. The IRS can charge penalties if you wait until filing season.
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Klaus Schmidt
β’How do you figure out how much you owe for the quarterly payments? I just started doing deliveries this year and am totally lost.
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Esmeralda GΓ³mez
β’You need to estimate your annual income from deliveries, calculate the taxes you'll owe, and divide by four for each quarterly payment. The simplest approach is to set aside about 30% of your delivery earnings (15.3% for self-employment tax plus your income tax rate). You can use Form 1040-ES to calculate the exact amount, or many tax software programs have quarterly tax calculators. The quarterly due dates are April 15, June 15, September 15, and January 15 of the following year.
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Aisha Patel
Just want to clarify something - I did UberEats and Instacart last year and I got 1099s from them. But it sounds like the original poster was just doing cash delivery work directly for people in the neighborhood? The reporting would be the same (Schedule C) but obviously there's no 1099 form in your case.
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Giovanni Rossi
β’That's right - this was all word of mouth with seniors in my community. No app involved, just me picking up groceries and prescriptions for cash payment. No 1099s or any official paperwork.
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