Taxes
Re: Taxes
Hi,
It's NOT self employment income; if it were, it would be in Box 7 of the 1099-MISC (and you would have to pay 12% soc. security and medicaid tax in addition to the regular income tax). They put it in Box 3 which is the same that would happen if you won the lottery or something like that.
As such, its taxable income at the regular rate. Taxact.com figured this out automatically for me, but I had to figure it out last week on my own to do the estimated tax payments for this year.
Good luck!
It's NOT self employment income; if it were, it would be in Box 7 of the 1099-MISC (and you would have to pay 12% soc. security and medicaid tax in addition to the regular income tax). They put it in Box 3 which is the same that would happen if you won the lottery or something like that.
As such, its taxable income at the regular rate. Taxact.com figured this out automatically for me, but I had to figure it out last week on my own to do the estimated tax payments for this year.
Good luck!
Re: Taxes
For federal taxes, go to http://www.irs.gov/pub/irs-pdf/p505.pdfhandle2 wrote:Can I ask if you used some sort of calculator to determine the quarterly filings?
I haven't done much research into it (I understand it isn't all that difficult), I just didn't know if someone could pass along a link or info they've found helpful.
Cheers!
This will take you through the form that determines whether or not you need to pay quarterly estimated taxes. Remember that the income from SMART is not subject to the self-employment tax. Also remember that you might have to go through a similar process for state taxes.
Re: Taxes
I did report it as income. But instead of paying a tax rate based on the amount I made, they said I have to pay the rate based on how much my parents made because they claimed me as a dependent on their taxes. I just want to know if other people were told this or if this tax professional just doesn't know how to deal with the SMART income properly.
Re: Taxes
At least for me, my parents were unable to claim me on their taxes due to SMART and money I made last summer. I ended up having to file as a dependent, but we were able to find a student credit I could apply for, so I am getting almost all of my taxes back.Confused wrote:I did report it as income. But instead of paying a tax rate based on the amount I made, they said I have to pay the rate based on how much my parents made because they claimed me as a dependent on their taxes. I just want to know if other people were told this or if this tax professional just doesn't know how to deal with the SMART income properly.
As far as I am aware, your tax rate should be independent of your parents even if you are a dependent.
Re: Taxes
My parents claimed me the first tax season after I started getting smart payments and I was livid. The way taxes work is that your parents get a dependent credit for claiming you ($3,700). And if you are a dependent, you don't get deductions on the income you've made, your parents get them. For most college kids, it's usually not a big deal to be claimed until they graduate but when you haven't had taxes taken out the whole time it adds up and not being able to get deductions from it makes it even more. 2010 taxes I had like 10 or 11,000 taxable from SMART. I paid $1,500 in, and was told it would have been close to $300 if I was filing independent. File on your own if you can. This year because its been a full year with SMART and my internship, I had about $36,000 taxable. So I filed on my own and got to deduct a lot of the expenses from my internship so I will hopefully not have to pay in as much. I'm still waiting for them to be finished.. Anyways there's technically a lot of rules for parents claiming kids, but they get swept under the rug when it's going to help them out. :/
Re: Taxes
I would recommend that you run your taxes both ways, both as a dependant with your parents and separately. Whichever way gives your family the most total benefit would be what I would go with--- and if it's better financially for them to claim you, maybe you can make a deal with your folks that they reimburse you for any extra taxes you have to pay, but they still get the deduction/credit(s) for you. If it were my folks, they would have done it that way, but we have a good relationship and no money weirdness.
Re: Taxes
I did during my second year. If you don't use it you will likely have a penalty to pay at the end of the year.tdavis4 wrote:Does anybody use the 1040-ES form to pay quarterly taxes?
My first year was covered under a "prior year safe harbor" provision in the tax law. Basically, the year before joining SMART I had a refund due, and I applied my tax liability for the year (it was about $400) toward the next year's tax due (the tax due the first year I had SMART).
Re: Taxes
Search the internet, there's plenty of knowledge out there. Lots of calculations to follow. The 1040-ES worksheet is the best thing to use. Use the internet as a supplement to explain why you're putting in each set of numbers in each line if you're confused.tdavis4 wrote:quarter
However, the EASIEST thing to do is get your prior year's tax liability (it's the Total Tax line of your previous year's return minus any credits you had) and divide that by 4. This will not guarantee you a refund, but it will guarantee that you won't be paying a penalty.
I'm anal about giving the government too much of my money, so I always try and withhold the minimum. But you should be MOST worried about penalties, as those are more costly than an interest free loan to the government. In fact, the first year I had SMART I had to pay like $3000 in taxes in April because I had paid quarterly taxes of $0. However, I didn't have to pay any penalties because I had already withheld the prior year's tax liability.
Re: Taxes
There are a few situations that enable you to avoid a penalty. For example, at the end of the first year of SMART for me I had 0 tax liability so I didn't pay quarterly taxes in year 2 and there was no penalty. There are other situations so look at it closely. I think one of them may be if you didn't have to pay quarterly taxes last year...but don't take my word for it. Anyway, the penalties are crazy low. My penalties would have only been like 30 bucks and I made over $50k the second year of SMART. I had to pay about $1500 in taxes at the end of the year. These are ballpark numbers only. If you don't mind a little penalty then just don't pay them...avoid the hassle.
I didn't claim moving expenses...but perhaps I should have. I'm going to look into that. I don't have the receipts though, I'd have to prove it off bank statements...
I didn't claim moving expenses...but perhaps I should have. I'm going to look into that. I don't have the receipts though, I'd have to prove it off bank statements...
Re: Taxes
Guest wrote:There are a few situations that enable you to avoid a penalty. For example, at the end of the first year of SMART for me I had 0 tax liability so I didn't pay quarterly taxes in year 2 and there was no penalty. There are other situations so look at it closely. I think one of them may be if you didn't have to pay quarterly taxes last year...but don't take my word for it. Anyway, the penalties are crazy low. My penalties would have only been like 30 bucks and I made over $50k the second year of SMART. I had to pay about $1500 in taxes at the end of the year. These are ballpark numbers only. If you don't mind a little penalty then just don't pay them...avoid the hassle.
I didn't claim moving expenses...but perhaps I should have. I'm going to look into that. I don't have the receipts though, I'd have to prove it off bank statements...
How did you only pay 1500 in taxes on 50k of smart scholarship money?
I made 48k last year for my smart stipend and internship and my taxes came out to over 4k.
I would greatly appreciate any info.
Re: Taxes
I'm not single-1. I am married-4. $2000 in child tax credits, over $13k in standard deduction.i am ian wrote:Guest wrote:There are a few situations that enable you to avoid a penalty. For example, at the end of the first year of SMART for me I had 0 tax liability so I didn't pay quarterly taxes in year 2 and there was no penalty. There are other situations so look at it closely. I think one of them may be if you didn't have to pay quarterly taxes last year...but don't take my word for it. Anyway, the penalties are crazy low. My penalties would have only been like 30 bucks and I made over $50k the second year of SMART. I had to pay about $1500 in taxes at the end of the year. These are ballpark numbers only. If you don't mind a little penalty then just don't pay them...avoid the hassle.
I didn't claim moving expenses...but perhaps I should have. I'm going to look into that. I don't have the receipts though, I'd have to prove it off bank statements...
How did you only pay 1500 in taxes on 50k of smart scholarship money?
I made 48k last year for my smart stipend and internship and my taxes came out to over 4k.
I would greatly appreciate any info.
By the way, someone asked about moving expenses. I have it from a CPA that we cannot deduct internship costs as moving expenses. Also, we cannot itemize those as deductions because 1) they are not officially job related since we aren't employed by SMART 2) SMART includes these costs as other compensation on the 1099-MISC with the stipend money. However, since we are NOT employed by SMART and we do not receive the money in return for any services we do NOT have to pay self-employment taxes (social security, medicare etc...).