Taxes for 2016

Post a reply

Smilies
:D :) ;) :( :o :shock: :? 8-) :lol: :x :P :oops: :cry: :evil: :twisted: :roll: :!: :?: :idea: :arrow: :| :mrgreen: :geek: :ugeek:

BBCode is ON
[img] is ON
[flash] is OFF
[url] is ON
Smilies are ON

Topic review
   

Expand view Topic review: Taxes for 2016

Re: Taxes for 2016

by CSMajor » Fri Aug 18, 2017 4:42 pm

Guest12345 wrote:I haven't seen this discussed or addressed but are we only getting taxed on the main stipend or are we also getting taxed on everything (misc stipend payments, internship support payments, etc....). I ask because Im having a accountant prepare my taxes for me and they weren't sure as to how the support payments will be treated.
I think its pretty important to note that in the tax memo from SMART they specifically said that we are ***NOT*** Self-Employed.

Re: Taxes for 2016

by Guest12345 » Fri Aug 18, 2017 4:03 pm

I haven't seen this discussed or addressed but are we only getting taxed on the main stipend or are we also getting taxed on everything (misc stipend payments, internship support payments, etc....). I ask because Im having a accountant prepare my taxes for me and they weren't sure as to how the support payments will be treated.

Re: Taxes for 2016

by kbl2017 » Sat Aug 12, 2017 7:41 pm

hello wrote:Will new scholars receive a 1099 for this year's tax payments soon? Or does it somehow get factored into the one we receive in January?
You'll get it in January, for all the stipends for August-december. Just like you would for any other stipend based job.

Re: Taxes for 2016

by Guest » Fri Aug 11, 2017 11:05 pm

hello wrote:Will new scholars receive a 1099 for this year's tax payments soon? Or does it somehow get factored into the one we receive in January?
You only get one 1099 per company/gambling/etc.

Re: Taxes for 2016

by hello » Fri Aug 11, 2017 9:44 pm

Will new scholars receive a 1099 for this year's tax payments soon? Or does it somehow get factored into the one we receive in January?

Re: Taxes for 2016

by hokie06 » Thu Aug 03, 2017 9:31 am

What kind of expenses are we allowed to claim? I know that another poster said we can't deduct living expenses and such for the actual internship, but what about educational expenses like textbooks?

Re: Taxes for 2016

by DifferentGuest » Thu Aug 03, 2017 7:49 am

guest-guest wrote:Do you all pay the payments quarterly or all in one lump sum? I have friends who do theirs as one big payment at the end of the year, but I know that SMART says we should be paying estimated payments quarterly. Are there different ways to do it? Which way is better (in your opinion)?
Because SMART doesn't withhold anything and the stipend is large enough, we are required to make estimated quarterly payments. If you've never had to make estimated tax payments, you'll get a free pass the first year, but every year after that you need to make quarterly payments, otherwise there is a penalty. So in my opinion, quarterly is better because you avoid paying the extra tax penalty, paying a yearly lump sum would incur.

Re: Taxes for 2016

by kbl2017 » Thu Aug 03, 2017 12:21 am

m
guest-guest wrote:Do you all pay the payments quarterly or all in one lump sum? I have friends who do theirs as one big payment at the end of the year, but I know that SMART says we should be paying estimated payments quarterly. Are there different ways to do it? Which way is better (in your opinion)?
My brother is an accountant and is doing my taxes and so he'll have me do it yearly - but he basically told me to save 20% of each stipend in a separate account so that it's there when he has me pay them in the spring. I think paying quarterly is a better way of budgeting but otherwise, it's a personal choice and you'll probably not get the exact payment correct.

In response to the other people, my taxes are CT which has one of the highest state tax rates and my brother is expecting it to be just under 20% of my total income. He's going to try to claim things for education but that number isn't going to be very high because our tuition is already covered.

Re: Taxes for 2016

by guest-guest » Wed Aug 02, 2017 7:27 pm

Do you all pay the payments quarterly or all in one lump sum? I have friends who do theirs as one big payment at the end of the year, but I know that SMART says we should be paying estimated payments quarterly. Are there different ways to do it? Which way is better (in your opinion)?

Re: Taxes for 2016

by smarttyyy » Wed Aug 02, 2017 5:16 pm

YeahNo wrote:
CSMajor wrote:What is the estimated amount of taxes you guys have paid in taxes in the past years? I've ran through turbo tax's estimator and it's pegging me at about $700 in taxes each year. Is this accurate? What educational expenses are you allowed to claim?
Is that both federal and state? That sounds low, but depending on your other income it could be right. With no income other the stipend, ISPs, and allowances, my estimated tax payments are a few thousand this year for federal and state.
Yeah, I am getting an estimate of about $6,000. $700 would be pretty low...

Re: Taxes for 2016

by YeahNo » Wed Aug 02, 2017 3:55 pm

CSMajor wrote:What is the estimated amount of taxes you guys have paid in taxes in the past years? I've ran through turbo tax's estimator and it's pegging me at about $700 in taxes each year. Is this accurate? What educational expenses are you allowed to claim?
Is that both federal and state? That sounds low, but depending on your other income it could be right. With no income other the stipend, ISPs, and allowances, my estimated tax payments are a few thousand this year for federal and state.

Re: Taxes for 2016

by CSMajor » Wed Aug 02, 2017 3:28 pm

What is the estimated amount of taxes you guys have paid in taxes in the past years? I've ran through turbo tax's estimator and it's pegging me at about $700 in taxes each year. Is this accurate? What educational expenses are you allowed to claim?

Re: Taxes for 2016

by I have a CPA » Wed Aug 02, 2017 3:16 pm

My mother is a CPA and she told me the correct way (and coincidentally the cheapest way) to report it is as "Other Incmoe". Even when doing your internship, you are not actually hired. The money you receive is not in exchange for work. Otherwise they would have to credit part of your service time based on the length of work that you do in your internship (this is how their other intern programs work).

You do not need to pay self employment tax, but this also means that you can not deduct your expenses associated with the internship. However, you should still save more money when it's reported as "Other Income" even without deductions.

Re: Taxes for 2016

by Guest » Sun Jul 30, 2017 12:35 pm

IDontKnow wrote:What about contributing the money to a 529 in your name and then withdrawing it to pay for qualified school expenses like housing etc.? Some states offer a tax benefit for contributing and the earnings are tax free. I haven't tried that yet, but it seems like a legitimate way to decrease your tax burden slightly.
Couldn't you essentially contribute all of it and then just write off school related stuff

Re: Taxes for 2016

by IDontKnow » Sun Jul 30, 2017 12:15 pm

What about contributing the money to a 529 in your name and then withdrawing it to pay for qualified school expenses like housing etc.? Some states offer a tax benefit for contributing and the earnings are tax free. I haven't tried that yet, but it seems like a legitimate way to decrease your tax burden slightly.

Re: Taxes for 2016

by littlehope » Thu Jul 27, 2017 12:56 pm

mrs080peel wrote:
Guest wrote:I'm not exactly certain how people did it before, but the statement from SMART is: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE." According to IRS, "The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax."


source: https://www.irs.gov/businesses/small-bu ... or-defined


The link provided above to the IRS page says "If you are an independent contractor, you are self-employed." Apparently SMART says that "You are considered an independent contractor, and not self-employed..." Those statements contradict each other, but, I'm inclined to follow SMART on this one as they are the ones giving us the stipend; I don't think we are self-employed.

For the IRS page, they are still referring to Independent Contractors as people who exchange work for compensation based upon a contract rather than full-time, which is not what SMART is doing with us. So I am more inclined to believe that SMART is just misusing the term "independent contractor". Also I don't know about you all, but I definitely plan to hire a tax professional this year. I feel like I've read that it definitely saved previous recipients a lot of headache, and then I can also run all these scenarios by them as well.

Re: Taxes for 2016

by mrs080peel » Mon Jul 24, 2017 1:35 pm

Guest wrote:I'm not exactly certain how people did it before, but the statement from SMART is: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE." According to IRS, "The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax."


source: https://www.irs.gov/businesses/small-bu ... or-defined


The link provided above to the IRS page says "If you are an independent contractor, you are self-employed." Apparently SMART says that "You are considered an independent contractor, and not self-employed..." Those statements contradict each other, but, I'm inclined to follow SMART on this one as they are the ones giving us the stipend; I don't think we are self-employed.

Re: Taxes for 2016

by Guest » Sun Jul 23, 2017 11:28 pm

Guest wrote:You don't have to pay the self employment tax.

-2011 scholar
And who informed you of this? Was it smart or the irs?

Re: Taxes for 2016

by Guest » Sun Jul 23, 2017 7:35 pm

You don't have to pay the self employment tax.

-2011 scholar

Re: Taxes for 2016

by Guest » Sun Jul 23, 2017 5:40 pm

I'm not exactly certain how people did it before, but the statement from SMART is: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE." According to IRS, "The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax."


source: https://www.irs.gov/businesses/small-bu ... or-defined

Re: Taxes for 2016

by Guest » Sun Jul 23, 2017 4:56 pm

YeahNo wrote:
taxes wrote:Looking through some of the older threads, other SMART scholars have assured that we are not considered self-employed. The stipends are considered scholarship income, which is different from self-employed income. It saves quite a bit in taxes.
Exactly. There is nothing to get "caught" for as the other poster suggests, as it is the correct way to report the stipend income. In 2015, SMART issued a tax memo that states the following: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE."

If you mark the income as self-employed you are portraying it as wages or funding in exchange for work, which it is not. This has also been explicitly stated by SMART as well. This is an important distinction because it excludes us from certain tax benefits, like contributing to an IRA, etc. (So if you lie and say you are self-employed, and then contribute to an IRA, there is a chance the IRS could fine you). Marking it as Other Income, still taxes it, just not with the self-employment taxes that don't apply in our case.

Like I said before, I am not a tax expert, but as I understand it, the most honest way to report the income is as other income. Turbotax just defaults it to self-employed because for 99% of other cases that is what it would be.
Does this mean that we only file after the end of the year or every quarter like if you were self employed?

Re: Taxes for 2016

by littlehope » Sun Jul 23, 2017 1:49 pm

Just for some clarification to make sure I understand what is being said because if this is true it could definitely be beneficial. When you receive the 1099-MISC form from SMART is the funding listed under Other Income but when entering it to the tax software, it is the software that fills out the form automatically with the value under "self-employed". Because however SMART fills out the forms is the same way they submit it to the IRA.

Also I can understand how that could happen because for the past two years I have had to deal with the 1099-MISC form for other reasons and I always choose to fill out the form the "hard way" so that it doesn't auto populate the fields incorrectly because it has before.

Re: Taxes for 2016

by YeahNo » Sun Jul 23, 2017 12:41 pm

taxes wrote:Looking through some of the older threads, other SMART scholars have assured that we are not considered self-employed. The stipends are considered scholarship income, which is different from self-employed income. It saves quite a bit in taxes.
Exactly. There is nothing to get "caught" for as the other poster suggests, as it is the correct way to report the stipend income. In 2015, SMART issued a tax memo that states the following: "You are considered an independent contractor, and not self-employed, and are not employed by either the United States Government or ASEE."

If you mark the income as self-employed you are portraying it as wages or funding in exchange for work, which it is not. This has also been explicitly stated by SMART as well. This is an important distinction because it excludes us from certain tax benefits, like contributing to an IRA, etc. (So if you lie and say you are self-employed, and then contribute to an IRA, there is a chance the IRS could fine you). Marking it as Other Income, still taxes it, just not with the self-employment taxes that don't apply in our case.

Like I said before, I am not a tax expert, but as I understand it, the most honest way to report the income is as other income. Turbotax just defaults it to self-employed because for 99% of other cases that is what it would be.

Re: Taxes for 2016

by for_reference » Sun Jul 23, 2017 12:34 pm

Re: Taxes for 2016

by taxes » Sun Jul 23, 2017 12:16 pm

Looking through some of the older threads, other SMART scholars have assured that we are not considered self-employed. The stipends are considered scholarship income, which is different from self-employed income. It saves quite a bit in taxes.

Top