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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
The Alternative Minimum Tax is yet another 'surprise' from the IRS. This tax was passed some 40 years ago in an attempt to force 'millionaires' with 'wall to wall' tax shelters and tax free investments to actually pay something in the way of income taxes. Unfortunately, a million dollars in 1969 or whatever is worth far less than a million dollars in 2009, but this law was never indexed for inflation. Thus the trigger amounts of earnings which bring the AMT into play can now apply to a much wider range of US taxpayers ... including high earning dancers.
To keep things simple, if you live in a low tax rate state, if you do NOT own a home, if you do NOT own 'tax shelter' investments, or if you earn less than $46,700 per year, odds are that the AMT will not affect the amount of income taxes you will have to pay at all.
In essence, below a $175k per year income level, the AMT amounts to a 26% flat federal tax on income exceeding $46,700 ( for a single status taxpayer's 2009 income) ... which supersedes the normal federal tax brackets. The intent was that the AMT would begin to cancel out the federal tax deductions for state income tax, property tax, home mortgage interest, tax shelter investments etc. that were making it possible for 'rich' Americans to pay a much lower de-facto federal income tax rate than 'middle class' Americans. Unfortunately, because of the failure of congress to adjust this tax for inflation, it now squarely strikes 'middle class' earners.
And at the risk of political accusations, I would also point out that it is the stated intent of our current President and Congress not to pass any more 'temporary fixes' to the AMT thresholds ( as had usually taken place in previous years), thus allowing the $46,700 income threshold to stand in 2010.
At any rate, if you do purchase the TurboTax program it automatically runs through the zillion AMT calculations for you, and 'fills in the blanks' accordingly.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
That makes sense. Thanks for the clarification. Are you familiar with form 2210 though? (Underpayment of Estimated Tax by Individuals).
www.irs.gov/pub/irs-pdf/f2210.pdf
Would that apply to my first quarter? (Q4 of 2010).
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
Useful FREE Small Business Products made available by the IRS
I ordered some of the products and there was no shipping cost, no nothing. If you are a dancer or are going to start dancing then these free small business products could help you! You can order them at this link, there is no monies involved:
http://www.irs.gov/businesses/small/...html?portlet=2
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
^^^ no for two reasons ...
A. the tax code allows a 'first year in business' exemption from estimated tax penalty assessments due to underpayment ... but it does not exempt you from potential IRS interest charges. If you fail to pay a sufficient amount of estimated tax money, the IRS then takes the position that they are 'loaning' you the money needed to satisfy your estimated tax payment obligation ... at interest rates that can range up to 8%.
B. the tax code also allows for a 10% margin of underpayment before estimated tax penalty assessments kick in ... although there is talk in Washington that this may be changed for 2010 ! But in any case it wouldn't apply to the 4th quarter 2009 estimated tax payment, since 2009 tax law is already 'cast in stone'.
Well to be technically correct, it IS still possible for congress to change 2009 tax law right up to december 31st, but on the few occasions where congress has actually done this it has caused a s#!tstorm of hate and discontent from both the IRS / state and local income tax agencies, as well as from taxpayers.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
So I should ignore that form altogether and just start with using the 1040-ES and MI-1040ES forms for Q4 of 2010 when I start to dance, making my first payment January 15, 2011. I would continue on and use those forms for Q1 of 2011 and make my Q1 payment on April 15, 2011 as well as send in forms 1040, MI-1040 and attached duplicate 1040 Schedule C forms for my state and federal income tax returns.
That sounds a lot simpler than what I first thought it would turn out to be.
Geez, these loonies really do want some ballpark estimates.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
^^^ yes that's exactly right ... unless ...
... unless of course your quarter's worth of earnings indicate that you will likely earn more than $46,700 total during 2010 ... at which point the AMT could kick in ... which would make the estimated tax calculations on the estimated tax form incorrect ... which in turn would make your 2010 estimated tax payments too low ... which in turn could result in the assessment of an underpayment penalty and interest charges on your 2010 tax return when you file it in April of 2011 ! Don't you just love the IRS ?
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
I created an amazing cheat sheet today thanks to the IRS' information online, some web publications about taxes, and Melonie's further explanation. I appreciate the assistance with everything. Tomorrow I'm going to create a .pdf or online web page that has all of the information which is so neatly organized in my cheat sheet. It will be titled "Basic Tax Information for the Self-Employed".
I'll post it up in this thread once it's completed.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
Just hire a CPA, and keep your records in Excel or Quicken.
Voila, done.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
Might want to pin this one to the top of the forum.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
Oh shit, I never posted up my tax cheat sheet. I got so busy!
I have my ultrasound tomorrow at 8:30 AM--we find out what we're having. I'll try and work on it afterward and post it on up.
Yes, I agree, this should be a sticky.
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Re: Oh me oh my so many tax forms... (estimated taxes and dancer tax returns)
^^^ I'll stick it after you add your 'magnum opus' !
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
Alright, my desktop AND laptop crashed one day apart and my mom went into rehab three days ago so things have been hectic and I still haven't posted my cheat sheet. I haven't forgotten, it will be up soon.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
Okay, after much delay... my tax cheat sheet for the self employed:
http://i45.tinypic.com/234p5z.jpg
I apologize that they are not actual clickable links, this is a .jpg file. I cannot thank everyone, particularly Melonie, enough for their help because without them this information would not have come together so nicely.
I truly hope this helps some young ladies out!
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
Melonie, upon reviewing the 1040-ES form that was updated for calendar year 2010, I found that something had changed.
http://i48.tinypic.com/14typ1j.jpg
http://www.irs.gov/pub/irs-pdf/f1040es.pdf (page 9)
Can you explain why they are talking about a payment on January 18th, 2011? I don't want to screw anything up!
Also, on form 1040-ES when calculating the estimated payment you are supposed to use form 6251 or the Alternative Minimum Tax Worksheet... we've gone over this once before but I don't quite remember... what are dancers supposed to do with that?
When estimating the Q1 payment for a new dancer they ask you to estimate your total adjusted gross income for calendar year 2010. How should one go about doing this if they are starting to dance in February 2010? (My friend is starting sooner than I expected so I'm trying to buckle down and get all this shit finalized for her).
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
as far as the 'odd' dates, this probably has to do with the 15th falling on a weekend or a holiday so the filing deadline gets pushed to the next normal business day.
As far as using form 6251 or the AMT schedule to try and arrive at an 'effective' tax rate to use for estimation of quarterly taxes, in the final analysis all that matters is getting 'close'. Where effective federal tax rates for dancers are concerned, from dollar one dancers must pay a 15.3% Social Security / Medicare tax. From there the federal income tax rates ratchets up beginning at around $30k annual ( = $600 a week ) ... hitting 10% by $50k ( = $1000 a week ) ... hitting 15% by $75k ( = $1500 a week ) ... hitting 20% by $100k ( = $2000 a week ) more or less. And these income tax rates are in addition to the Social Security tax rate. Of course this year the AMT fix has not been passed by the US congress, so it remains to be seen how high the income tax rates will actually be for those dancers earning more than $75k per year.
As to pro-rating estimated taxes for partial quarters worked, I'd simply recommend a time based adjustment i.e. if a dancer starts in February pro-rate first quarter estimated taxes on a 9 week / 13 week basis or 70% of 'normal' estimated taxes due.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
so basically what you are saying If i start in the middle of a quarter I still have the 70% estimated taxes ? as if i were working at the beginning of january?
I'm Kadence btw.. :D Laurisas friend
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
^^^ no I am saying that if you work 9 of the 13 weeks in a quarter, that you should figure on 9/13ths or 70% of the estimated taxes being due compared to having worked the entire 13 weeks !
Obviously, if you were talking about starting work in November rather than February the progressive income tax rate versus total annual income would be a major factor. But if you're talking February, with 48 weeks worth of remaining 2010 income, then the progressive income tax rate issue is a much smaller factor.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
Ok so I know this thread is old, but it needs to be revived and updated with the new 2011 info if possible- I'm frustrated with doing estimated taxes (first time doing them, but also first time being LLC which I know exempts me from something.) I'll also be a student, and be deductions from that, and my loans, and write offs. I need desperate help with doing estimated taxes for NJ, and then i recently started working in NYC and have logged all of my funny money earnings that they report. If someone could please point me in the right direction, I'd SO much appreciate it. The next payment I know is due June 18th (and made a boo boo of not submitted NJ state estimated tax in april, but I did do the federal estimated in april). Also all of my taxes for 2010 are already paid off, if that makes a difference. Thank you!!
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
actually, after Obama's last minute extension of previous year's lower federal income tax rates, not much actually changed for 2011. It remains to be seen what will happen in 2012 as there are a host of potential changes i.e. GWB's lower income tax rates set to expire, the AMT 'patch' set to expire, new Obamacare taxes set to take effect etc. But before then, 2011 tax provisions are pretty much identical to 2010.
As to state and city income tax rates and state and city income tax requirements, these are changing as we speak. If you worked in NY CITY you will actually need to submit estimated tax forms to both NY CITY and NY State in addition to NJ. Then next April you will need to fill out a non-resident tax return for NY CITY, another non-resident tax return for NY State, as well as a resident tax return for New Jersey.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
Sunshine, I'd suggest you hire an accountant to do this for you at least for the first year (if not for the first few). Have them go over everything with you, & ask them to make you a list of what you need to keep. This way you'll start getting an idea of how it's done without being so overloaded & concerned. Eventually you probably will want to do them yourself, but the reality is that learning tax information in baby steps is much easier, then when things change your just have to stay up-to-date.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
I do have an accountant that did last years and of course, I didnt realize that hes seasonal, so hes not around to ask these questions. He gave me the forms for NJ, but I wasnt working in NYC at the time so thats why I came here.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
New York estimated tax form is available at . The NY State form includes the estimated tax payment both to the state and to the city of New York. But when next April rolls around, you'll have to fill out separate NY state and NY City tax returns.
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
^Thank you SO much, I tried finding that very info today, and was over a 40 min wait to talk to the NY IRS today, so that didnt work so well. Thank you! So, when I do the estimated tax on that form and send the 1 check, it covers both state and city, right? Just have to file different state/city forms when I file?
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Re: Oh me oh my so many tax forms... (US estimated taxes and dancer tax returns)
^Oh also saw you can pay it online, is that safe? I use EFTPS for the NJ federal tax, but not a fan of paying taxes online? Do you have any idea what the percentage for NY state versus NYC tax is? I know the state is probably the same, 20%, but I couldnt find a bit of info on what NYC tax is? Thank you so so much!