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Everyone's talking about services but no one answered OP's actual question about how much they'd need to donate for it to make sense. For 2023, you need your TOTAL itemized deductions to exceed $13,850 (single filer). This includes: - State and local taxes (capped at $10k) - Mortgage interest - Charitable donations - Medical expenses exceeding 7.5% of AGI So if you have like $8k in state/local taxes, $3k in mortgage interest, and say $1k in medical expenses that qualify, you'd need about $2k in charitable donations to make itemizing worthwhile.
Thanks, this is exactly what I needed to know! I pay about $6k in state income taxes, no mortgage, and minimal medical expenses. So it sounds like I'd need to donate around $8k worth of stuff to make itemizing worthwhile, which is definitely not happening this year lol. I'll just take the standard deduction and be happy the clothes are going to someone who needs them more than me.
Yep, you've got it right. In your situation with $6k in state taxes, no mortgage, and minimal medical expenses, you'd need about $8k in charitable donations to make itemizing beneficial. The good news is that even without the tax benefit, your donation will help others. And if your financial situation changes in future years (like buying a home with a mortgage), the equation might change too!
Am I the only one who thinks it's weird that we penalize people who donate to charity by only giving tax benefits to those who donate a lot or have expensive homes? Like, someone who donates $500 while earning $40k a year is probably making a bigger sacrifice than someone donating $14k while making $500k, but only the rich person gets a tax break. The system is messed up.
You're not wrong, but there are other tax benefits designed for lower/middle income folks that high-income people don't get. The tax code is complicated. Also, the standard deduction is basically a "freebie" deduction whether you donate or not, so at least there's that.
Don't mean to scare you, but my brother got audited for this exact thing - selling a car he used for Uber at a loss. The issue wasn't reporting the loss itself, but that he claimed 90% business use when his actual mileage logs only supported about 55% business use. The IRS made him pay back a portion of his refund plus penalties. Make sure you have good documentation showing exactly what percentage of the car's use was actually for business vs. personal! Delivery apps sometimes track your miles while delivering, but they don't track miles between deliveries or personal usage.
This is exactly what I was worried about. I kind of estimated my business use at around 75% but I don't have perfect records. I do have all my delivery app summaries though - would those be enough to support my claim if I get audited? And how long after filing did your brother get audited?
The delivery app summaries are a good start, but they usually only show miles while actively on deliveries. They don't capture dead miles (driving to busy areas, returning home, etc.) which are still business miles. My brother got audited about 14 months after filing, and the IRS wanted to see a mileage log showing business vs. personal trips. If you don't have perfect records, reconstruct the best log you can from the app summaries, your calendar, bank statements showing gas purchases, etc. Even a reconstructed log is better than nothing. Also, in my brother's case, they only went back one year, so if your return from last year doesn't get flagged in the next 6-12 months, you're probably in the clear.
Has anyone here dealt with the QBI (Qualified Business Income) deduction for delivery driving? I think OP was right to put zero since they're not doing deliveries anymore, but last year I qualified for a 20% QBI deduction on my net profit from deliveries which was sweet. It's one of the few perks of being a 1099 contractor instead of an employee.
Yeah, the QBI deduction is awesome! But keep in mind it gets complicated if your income is above certain thresholds or if you have multiple businesses. For simple delivery driving below the threshold amounts, you basically get to deduct an extra 20% of your net business income, which can really help offset the self-employment tax burden.
Make sure you're tracking different state nexus requirements! Even though Florida and Texas don't have state income tax, having a physical presence in Georgia might create nexus there which could trigger other filing obligations. I learned this the hard way after working in another state temporarily.
Thanks for bringing that up! Do you know if just working from a temporary apartment in Georgia would definitely create nexus? Or does it depend on what kinds of activities I'm doing there? I won't be meeting clients or making sales there - just doing the same online work I'd be doing from Texas.
It really depends on Georgia's specific rules, but physical presence often creates nexus regardless of what specific activities you're doing. Being physically present and working from Georgia for 6 months would likely trigger nexus in most states. However, Georgia may have thresholds based on income earned while in the state or number of days present. Some states have COVID-related exceptions that might still apply for remote workers, but these are being phased out in many places. I'd recommend checking with Georgia's Department of Revenue directly or having a tax professional review Georgia's specific nexus requirements for your situation.
Don't forget about setting up a reasonable salary for yourself as an S-corp owner! The IRS looks closely at this. I made the mistake of setting my salary too low and got flagged for audit. Make sure your compensation is comparable to what you'd pay someone else to do your job.
Just a tip from someone who's been there: Keep careful records of all your Roth IRA contributions over the years. I had to go back and reconstruct 5 years of contributions because I didn't have good records and it was a nightmare. The IRS assumes the worst if you can't prove which part is contributions.
Is there an easy way to get this information if you haven't kept good records? I'm in the same situation with an early distribution and have no idea how much I've contributed over the years.
You can contact your IRA custodian (the financial institution where your Roth IRA is held) and request statements showing your contribution history. Most major brokerages keep these records, but they might not go back indefinitely. You can also look at your previous tax returns if you kept them. While Roth contributions aren't deductible, they might be mentioned in some of your tax documents. As a last resort, you can request a transcript from the IRS of your past returns, which might have some of this information.
Weirdly, my tax software (TurboTax) asked me if I knew the basis amount even though box 2a was blank on my 1099-R. Anyone else have this happen? Not sure if I should override what's on the form.
Yes! Same thing happened to me. I ended up calling my brokerage (Fidelity) and they gave me my "basis information" which is basically the total amount of contributions I've made. Since my withdrawal was less than my total contributions, I entered that info into TurboTax and it properly showed the distribution as non-taxable.
Dmitry Petrov
Something nobody has mentioned yet - there could be state tax implications here too depending on where you live. Some states don't recognize all federal filing statuses the same way or have different rules for non-citizen spouses. I found this out the hard way last year. Saved a bunch on federal by filing HOH but got hit with a surprise state tax bill because my state has different rules for qualifying dependents when one parent has exempt status.
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Ava Williams
โขWhich state was this in? I'm in California and my husband works for a consulate with tax exemption. Been wondering if state taxes work differently for us.
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Dmitry Petrov
โขI'm in New York, which has some unique rules for diplomatic and international organization families. California also has its own system that doesn't perfectly align with federal filing statuses, especially for international employees with special tax treatment. For California specifically, even if your husband has federal tax exemption through his consulate work, you may still need to report his income on your state return depending on your filing status. California looks at worldwide income for residents even when it's exempt at the federal level. I'd recommend consulting with a tax professional who specializes in diplomatic/international tax situations in California to avoid surprises.
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Miguel Castro
Has anyone actually amended previous returns after filing incorrectly? I've been doing Single for 3 years now when I should've been HOH (my wife works for World Bank, tax exempt). Worried about triggering an audit if I suddenly change and file amendments.
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Zainab Ibrahim
โขI amended 2 prior years returns in a similar situation (spouse with NATO exemption). No audit but the refund for the older year took almost 11 months to process! The more recent one came in about 5 months. Just be prepared to wait forever if you're owed money.
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Connor O'Neill
โขGet everything documented before you file amendments. I amended 3 years ago and got audited because I couldn't properly document my wife's exempt status. The IRS wanted a letter from her employer confirming her tax exemption status. Took forever to sort out.
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