Recent Posts

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Investing / 403(b) affecting side hustle tax sheltering
« Last post by Veiled on November 19, 2017, 08:11:40 PM »
I am employed by a hospital and have a 403(b), no 457. I also have an unrelated side hustle that  eventually may produce enough profit so that I can use a solo 401(k) to shelter more of my income from taxes.

But as I read more about 403(b)s, I understand that they are "controlled entirely by the employee." I'm confused by how this affects my plan to sequester not only the maximum (employee pre-tax, employer, and employee after-tax) into a 403(b) but also into an unrelated 401(k). How much can I put into a solo 401(k) if I'm maxing out a 403(b)?

Better question: where do I go to learn about tax code to answer these questions myself?
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Investing / Re: Solo 401k recommendations
« Last post by Veiled on November 19, 2017, 08:06:21 PM »
Fidelity seems to win out whenever I hear this discussed. Ironically, I've heard they give better access even to Vanguard funds (or admiral shares with lower ERs).
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Entrepreneurship / Re: Multiple Side Gigs- accounting and tax help
« Last post by Veiled on November 19, 2017, 08:00:33 PM »
I would advise to continue to file as a sole proprietor and claim the income as business income.... On top of that you are intending on making a profit in future years. To try and take the position that teaching piano lessons is a hobby and not a business venture is pretty thin.
I had the same reaction to that post. I thought "d'oh! I could have saved myself so much SE tax last year!" But I realized that I'm intending to make money for years on my side hustle and I agree with Maccountant. I think WA's idea makes most sense if you plan not to continue the activity more than 2-3 years.
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Entrepreneurship / Re: Franchise vs Solo
« Last post by Veiled on November 19, 2017, 07:53:29 PM »
My initial, and recurring, thought is that I am not looking for a full time job, and the franchise sounds like that plus more. 

My heart is definitely not into running a business day to day, and both my husband and I are very interested in real estate...
Looks to me like you answered your own question. Running just one franchise, let alone two, is a TON of work and has to be at least in part a passion project. But it's been a while, wondered what you ended up deciding?
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I need a Tax Accountant to Help Me With ____ / Re: S Corp private stock
« Last post by Maccountant on November 15, 2017, 11:31:23 AM »
Is there a possibility to structure a buyout agreement so it's not all taken in one lump sum in one tax year?

It really depends on what the buyer is willing to commit to, and what you feel comfortable with. The nice thing about a lump sum payment is it all shows up at once so you don't have to worry about collecting your payout in future years. The downside is the taxes.

Agreeing to an installment agreement or some other structured buyout would reduce your lump sum payment (thus reducing taxes) but would also create uncertainty about collecting in future years. What if you agreed to a 7 year buyout and in year 3 the new owners run the company into the ground? Then your stuck with worthless shares and embroiled in an endless legal battle trying to recoup money that is not there.

There are potentially options but it depends on what the parties are willing to agree to and your faith and confidence in the future of the company under new management.
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Real Estate / Re: Housing Real Estate in an LLC
« Last post by Maccountant on November 15, 2017, 11:21:21 AM »
Usually the big sticking point with placing a rental property in a LLC is financing on the property.

Typically if the property is mortgaged the bank will disallow a transfer of title of the property. You signed up for the mortgage, so they want you to hold title to the mortgage in case things go sideways.

If the properties are owned free and clear, then it's just a matter of transferring title of the property from your name into an LLC. There are formation costs and your state may charge an annual LLC franchise fee, but otherwise maintaining an LLC is not too expensive. You'll have to see what your state requires exactly.

If the extra shroud of legal protection offered by a LLC helps you sleep at night it might be worth it. If not then continue to carry adequate insurance at a minimum.
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Entrepreneurship / Re: Creating an LLC with Multiple Lines of Business
« Last post by Maccountant on November 15, 2017, 11:13:35 AM »
I'm not positive MMM only has one entity. Typically you should segregate different business ventures, generally speaking - placing them all in one entity is not correct.

Do all of these lines of business have a common theme or propose?

Some states are offering "serise LLC's" which is basically one LLC that is partitioned by each business venture. Maybe worth looking into to see if your state offers a series LLC.
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I need a Tax Accountant to Help Me With ____ / Re: Social security exemption
« Last post by Maccountant on November 15, 2017, 08:38:50 AM »
I am not completely familiar with the social security exemptions, but my understanding was that you submitted a form every year (with your income tax returns) stating you wanted to be exempt from payroll taxes (FICA), then you were not assessed the tax based on that exemption.

I am not sure if you actually have to file a revocation or if you just quit claiming the exemption going forward.

I am comfortable saying that you will not go back and pay any payroll tax on prior years. Paying payroll tax will be prospective not retrospective.

The social security administration takes your highest 30 years of contributions to determine your retirement benefit. So just work and pay into the SSA until you are 57 and the exemption years will not effect you.

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I need a Tax Accountant to Help Me With ____ / Re: W2 or 1099
« Last post by Maccountant on November 15, 2017, 08:24:18 AM »
There is alot of debate over what qualifies a worker from being an independent contractor versus an employee.

Check out this page on the IRS website:
https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

Basically there are 20 different factors that boil down to three different areas of scrutinization:
- Behavior Control
- Financial Control
- Relationship

The easiest and safest path for employers to take is to error on the side of caution and consider you an employee. Hence the W-2 you receive. As a W-2 employee you can still deduct unreimbursed work expenses on form 2106 when you file your taxes, but you will only be able to deduct a portion of the expenses if you itemize. If you take the standard deduction you will not receive a benefit.

I would say you have two options for your situation:

1. (Preferred Option) Go to your employer and say - Hey I am an employee and I need to be reimbursed for expenses I incur on the job. Then submit your receipts and mileage logs and everything else you can prove is a reasonable and necessary business expense for reimbursement.

2. (Less Preferred) Have  a conversation with your employer and ask what would be required to operate as a independent contractor? You may have to incorporate or form an LLC to show a ratified business entity and then become an employee of your corporation that is hired by your current employer for services. This will require corporate filings, payroll, you will have to pay payroll tax out of your pocket (15.3%) plus income tax, I don;t know what kind of liability insurance you have to have for your line of work but a policy will be required to cover you. But the good news is you will be able to deduct all your expenses!


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Wealthy Accountants in Your Area / Re: Accountant Wanted: familiar with TX and RI
« Last post by Maccountant on November 15, 2017, 08:07:46 AM »
Are you looking for someone to prepare your taxes for you? Or are you planning on preparing them yourself but are looking for guidance on the preparation?

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