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Thread: Yet another tax question

  1. #1
    Featured Member EvilChick1989's Avatar
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    Default Yet another tax question

    Everything is fixed. Yep
    Last edited by EvilChick1989; 03-22-2012 at 12:47 AM.


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    Banned Melonie's Avatar
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    Default Re: Yet another tax question

    In the past two and half years I have probably made about 20k. Maybe 15k...How would I go about filing taxes? I do NOT want to go to an H&R block. I want to find a CPA but Idk where to look or if that is the best route. I know I will be penalized etc...
    Just to be sure I'm understanding you correctly. You're talking about ( belatedly ) filing previous year tax returns for 2009 and 2010 in addition to filing your 2011 tax return ? If 1099's from a webcam host are involved, you basically don't have a choice about also filing previous year tax returns if 2009 and/or 2010 1099 reports of income with your social security number were filed by your webcam host(s). If you don't, the minute the IRS computers see a 2011 tax return with your social security number on it, they'll immediately puke out the existance of previous year 1099's with your social security number on them, as well as the lack of previous year tax returns having been filed.

    This is fairly complex and probably requires a CPA if you don't have a fair amount of financial / tax experience yourself. Yes you will owe penalties and interest. Yes you will owe previous year income taxes and social security / medicare taxes. Yes the IRS will readily grant you an 'installment payment agreement'.

    However, be aware of the following. Even if you only averaged $10,000 a year of camming income for the past two years, the IRS is going to collect 15% of that amount for social security / medicare taxes ... meaning you'll owe a minimum of $3,000 in back social security / medicare taxes for 2009 plus 2010 before penalties and interest are added. If you have similarly earned $10,000 during 2011, the IRS will be looking for another $1500 in social security / medicare taxes on your 2011 income in addition to back taxes. And then you may also owe a total of 5% federal income tax on $30,000 combined income = another $1500, plus yet another 5% state income tax on the same $30,000 or yet another $1500. Put it all together and you may wind up owing $7,500 in total taxes on your 2009 + 2010 + 2011 income.

    Now for the 'kicker'. In all probability, the IRS would approve a 3 year repayment plan on the $7,500 which amounts to about a $650 'installment payment' on back taxes due every quarter ( 3 months ). Additionally, now that you'll appear on IRS radar, you'll also need to make estimated tax payments on 2012 current year income to both the IRS and to the state of MN which will probably add up to somewhere around another $750 per quarter. So this basically means that, for the next three years, ~$1,400 per quarter = the first $110 per week you earn from future webcam work MUST go for back tax installment payments plus current year estimated income tax payments. If something happens and you are not able to keep up with the $1,400 or so in quarterly tax payments, odds are that the IRS will be 'on your case' like a ton of bricks. Thus signing on to an IRS repayment plan essentially obligates you to working / earning a fair amount of money each and every week for the next 3 years !

    ~
    Last edited by Melonie; 01-01-2012 at 12:00 PM.

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    Featured Member EvilChick1989's Avatar
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    Default Re: Yet another tax question

    Thank you. I am going to try to find a CPA.


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    Featured Member EvilChick1989's Avatar
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    Default Re: Yet another tax question

    ,.......................
    Last edited by EvilChick1989; 03-22-2012 at 12:47 AM.


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    God/dess Zofia's Avatar
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    Default Re: Yet another tax question

    I am not a Minnesota CPA, here is the website for their association. It is a good place to start looking for a CPA. http://www.mncpa.org/find-a-cpa/mn-cpa-referral/

    Look for "IRS Representation" in the search tool. That will help narrow down the choices a bit. Call a few and ask if they are "enrolled agents." An enrolled agent is the person within the profession most experienced at dealing with the service.

    HTH
    Z

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