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Just FYI - if you file for an extension but still don't file by October 15, that's when the penalties could kick in. So don't forget to actually file! I learned that lesson the hard way a few years back.
What happened when you missed the October deadline? Did they hit you with the full $435 penalty even though you had filed the extension?
I got hit with a failure-to-file penalty that started accruing after the October deadline. In my case I did owe a small amount (about $800) so the penalty was a percentage of that. It wasn't the full $435, but it was still annoying to pay extra for no reason. They also didn't process my capital loss carryforward correctly at first, which caused problems the next year. I had to call and explain the situation, and it took several months to sort out. Just not worth the hassle!
Has anyone used FreeTaxUSA for filing with capital loss carryovers? I'm wondering if it handles this situation well since I'm in almost the exact same boat as OP.
My wife and I both work two jobs and here's what we've learned: the key is filling out your W-4 forms correctly! On the W-4 for your second job, check the box in Step 2(c) that says "Multiple Jobs or Spouse Works." This tells your employer to withhold at a higher rate. Or you can use the IRS withholding calculator and follow the instructions exactly. We did this last year and ended up with a small refund instead of owing thousands like we did the previous year when we messed it up.
Thanks for the tip about checking that box on the W-4! I didn't know there was a specific option for multiple jobs. Does this mean I should check this box on both job W-4s or just the second one?
You should only check the multiple jobs box on one of your W-4 forms, not both. If you check it on both, you'll likely have too much withheld and end up with a large refund (which means you're giving the government an interest-free loan all year). For the most accurate withholding, I'd recommend using the IRS Withholding Estimator on their website. It lets you enter info from both jobs and will tell you exactly how to fill out both W-4 forms for the perfect withholding amount.
I worked 2 full-time jobs last year (65-70 hours weekly, it was rough!) and didn't adjust my withholdings. Big mistake! Ended up owing $3,200 at tax time because neither employer was withholding enough. Now I have extra withholding on my main job ($200/paycheck) and I'm much better prepared. Don't listen to people saying you'll get "screwed" - you just need to plan ahead!
Did you find that working that many hours was worth it financially? After taxes, did you still come out way ahead? Wondering if killing myself with 70-hour weeks would actually leave me with much after Uncle Sam takes his cut.
One thing not mentioned yet - if these were employment taxes, you need to understand the Trust Fund Recovery Penalty (TFRP). The IRS can assess personally against BOTH of you the portion of taxes that was withheld from employee paychecks but not remitted. This is critical because even if your business was an LLC or corporation, the TFRP bypasses that protection. And it applies to anyone who was "responsible" for collecting, accounting for, and paying those taxes. Since you were both owners, they can come after either or both of you. Definitely work with your tax attorney on this part specifically. If your spouse was the one handling finances, there might be a way to argue you weren't a "responsible person" under the TFRP rules, though it can be an uphill battle.
This is terrifying. So even though my spouse handled all the finances and made the decision not to pay these taxes without telling me, I could still be held personally liable? Do they ever consider these kinds of circumstances?
They do consider circumstances, but you'll need to prove you weren't a "responsible person" as defined by the IRS. The fact that you were an owner and involved in the business creates a presumption that you had authority. However, your tax attorney can help build a case based on your specific role. Key factors they look at: Who had check-signing authority? Who made financial decisions? Who had the power to determine which creditors got paid? If you can demonstrate your spouse exclusively controlled these functions and deliberately kept you in the dark, you may have a case. Document everything about your roles and responsibilities in the business.
Random tip from personal experience - request your IRS transcripts ASAP! You can get them online through the IRS website. They'll show exactly what's been assessed, when, and give a complete history of your account. My ex-husband hid tax problems from me too, and when I finally got my transcripts, I discovered some of the "tax due" letters were actually for periods that had already passed the 10-year collection statute of limitations. The collection agency was still trying to collect, but they legally couldn't! Also, make sure to ask your tax attorney about "innocent spouse relief" - it might apply in your situation since your spouse concealed the tax issue from you.
Has anyone here actually had to pay this Net Investment Income Tax before? I just realized I might need to file this Form 8960 this year because of some stock I sold. Is it a big red flag for audits or anything?
I've filed with Form 8960 for the past three years and haven't been audited. It's not a red flag by itself - lots of people pay NIIT. What matters more is large discrepancies between what you report and what the IRS already knows from your 1099s and other information returns. Just make sure all your investment income is properly reported, and the Form 8960 calculations are correct. And yes, put the amount from line 21 on Schedule 2, Part II, line 11 as everyone has said.
One thing nobody mentioned that's worth noting - if you're using tax software and it's not automatically calculating Form 8960 for you, you might need to upgrade to a premium version. Many of the free or basic versions don't support this form because it's considered "advanced." I learned this the hard way last year with [software name] and had to upgrade mid-preparation when I realized I needed Form 8960. Just something to be aware of if you're trying to DIY and getting stuck.
This is such a good point! I was using the free version of [tax software] and kept looking for Form 8960 but couldn't find it anywhere. Ended up having to upgrade to the "premium" version which cost $70 more just to access this one form. Feels like a scam but I guess that's how they make their money.
Everett Tutum
Have you checked out the IRS Direct File program? It's new this year and completely free. I think it's limited to certain states for now, but worth checking if yours is included. It handles basic investment income including Schedule B without charging.
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Misterclamation Skyblue
ā¢I just looked it up and unfortunately my state isn't included in the Direct File pilot program yet. Seems like it could be a good option in the future though! I'll probably go with one of the free alternatives mentioned here instead of paying for TurboTax.
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Sunny Wang
I've been using FreeTaxUSA for years and it handles Schedule B no problem. Federal is completely free regardless of which forms you need. They only charge like $15 for state filing. Way cheaper than TurboTax or H&R Block's "upgrades.
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Hugh Intensity
ā¢Is FreeTaxUSA actually reliable? I'm always worried about using less well-known tax software. Do they have good support if you have questions?
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