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Income Taxes

Discussion in 'Picture Framing Business Issues' started by bruce papier, Feb 14, 2019.

  1. bruce papier

    bruce papier MGF, Master Grumble Framer

    Has anybody figured their taxes yet? How did you come out compared to last year?

    I'm hearing some disturbing rumors (i.e. people's taxes went up instead of down).
     
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  2. cjmst3k

    cjmst3k SGF, Supreme Grumble Framer

    You mean people who get a paycheck, or people who own their own company and their corporate earnings are their income? From my basic understanding, those are two very different things tax-wise.
     
  3. tedh

    tedh PFG, Picture Framing God

    So take this year's tax package and put in last year's numbers. Compare the two to see if you're paying more or less.
     
  4. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    We're an S-Corp. Any profit made by the company is put on my personal tax return.
     
  5. cjmst3k

    cjmst3k SGF, Supreme Grumble Framer

    I'm an S-Corp too. Hoping the tax changes will mean a more reasonable rate.
     
  6. bruce papier

    bruce papier MGF, Master Grumble Framer

    We're in the S-Corp boat also. I have no idea what to expect. I could give you a more accurate guess using a dart board. The reason I asked was because a number of my brother's friends who don't own businesses have had their taxes go up because of changes in deductions. One of them had less taken out of his paycheck every week in accordance with the new tax rate, but ended up owing at year's end.
     
  7. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    If you are in a state with high state and local taxes and didn't change the "extra deductions" in your withholding, the lower tax rate would have triggered possible under withholding due to the cap on local tax deductions. In a worst case your actual taxes would go up under the new law. The logic being that Federal taxpayers in other states will no longer subsidize excessive state and local taxes. Good or bad? Depends on where you live.

    The pass-through provisions of Corporate Income Tax Reform may more that compensate for businesses that pay tax on profits as personal income.
     
  8. Grey Owl

    Grey Owl SGF, Supreme Grumble Framer

    Taxes done, submitted, and accepted. Company sales / profit up slightly. Used withholding based on calculation based on last years tax returns. Got a slightly larger refund from Feds and lower refund from state.
     
  9. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    we paid less. One problem is many people equate 'refund' to how they did. We saw rate changes with tax cut plan and adjusted withholding to reflect change. In essence, take home pay went. Year's end, we receive about the same 'refund' as last year-next to nothing due to proper planning. In essence, we kept more of our own money

    Only way to compare is drag out 2017 return and compare liability percentage to 2018

    Observation: seems there is a little 'political agenda' in discussing 'refunds' according to our tax guy. Refunds are a great way to identify folks that have no tax planning. It's your money, why let IRS keep it for a year

    just my opinion
     
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  10. artfolio

    artfolio SGF, Supreme Grumble Framer

    On the subject of taxes our Australian Governments of both sides of politics is fond of trotting out the line that we are a lightly taxed nation but they use some very creative accounting to achieve this claim.

    One treasurer, Peter Costello in the then Howard Government once threw out a figure of 22% as the total Government take from the G.D.P. A reporter at the press conference scribbled on the back of an envelope and challenged him that he had omitted the Goods and Services tax from his calculations. Costello did not even blink as he said "That is right. The commonwealth collects that tax but it is a State tax". Now you and I know that a tax is a tax is a tax and it is something we pay, regardless of who we pay it to. Or, to put it more crudely - a punch in the nose hurts whoever it comes from.

    Just for fun, add up your State and Federal taxes, Local Government charges and all those other Government owned entities which charge you for their "services" and see how much they are collectively sucking out of your business.

    By my estimation all branches of the Australian Government, State, Federal and Local plus Government run utility companies which charge rates suck up close to half of our Gross Domestic product. Not bad for what is supposedly a free enterprise economy. Some openly socialist countries actually manage with less.
     
  11. tedh

    tedh PFG, Picture Framing God

    You guys have it easy.

    Google Tax Freedom Day, like I just did.

    Australia, April 16

    USA April 19

    Canada June 10.

    Quit complaining.
     
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  12. wpfay

    wpfay Angry Badger

    On the thought of keeping your money. Wouldn't be a bit smarter to underestimate your taxes, and put the difference from withholding and what you will owe in an interest bearing account for the year? Tax filings aren't "due" until Jan 1 of the following tax year and generally aren't penalized or bear interest until after the April 15th deadline. The payment of any unnecessary withholding allows the government access to free money up to a year in advance of it being accounted for. Underpayment could provide you with the use of that money, but you have to plan on paying it eventually, and in a timely manner to avoid costs. Of course, this would be a fool's errand to argue the point with an IRS auditor, but still...

    Back to the question. The answer isn't money back or money owed, it is the ratio of taxable earnings to taxes by an annual comparison. This gives you a percentage figure that has a meaningful answer about your income and changes in the tax code. This is where the money spent with a CPA proves valuable.
     
  13. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    I've thought about estimating that for my entire business, INCLUDING the taxes that I and all our employees personally pay. Then I get depressed and stop before I'm finished.
     
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  14. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    i hear you, Wally, but with interest rates at microscopic levels, we prefer to 'use it' as we earn it. I know daughter-in-law sees it as a 'forced' savings plan and uses it to splurge. She has no idea of her effective tax rate:eek:

    haven't asked her how she 'did'
     
  15. Ylva

    Ylva SPFG, Supreme Picture Framing God

    We set money aside to pay for taxes. We always end up having to pay.

    We are not sending it to the government in advance just so we don’t have to pay at the end of the year. We’d rather keep it in our own pockets and pay when due.

    We have an s-Corp and three LLCs plus our personal taxes.
    It is all at our accountant now.
     
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  16. Eric The Framer

    Eric The Framer CGF, Certified Grumble Framer

    I always have to pay, because my money will stay in my pocket until the government takes it away. I did a lot better this year, and I think the reason was that I switched to a "Higher End" accountant, like the one the millionaires use. Well worth the money.
     
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  17. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    For 53% of us, that is true. Like Eric says, it's when. The key is noyhow much a 'refund' or 'payment' but if your percentage of 'taxes due' changed.

    this year we improved; partly tax cut bill, mostly good planning. Our tax guy said their biz was down slightly as more of his clients are using short forms
     
  18. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    Maybe I'm misunderstanding, but I interpret that as you having to pay a penalty. Unless your net income is virtually 0. In which case "congratulations". Or "sorry".

    I always pay last years' liability, except that sometimes in years we are making large capital investments we may skip the last 1 or 2 estimated payments if we are planning to use the Section 179 deduction.
     
  19. neilframer

    neilframer PFG, Picture Framing God

    Here you go...
    Poor Amazon...:oops:
    How do they manage to go on?....
    Screen Shot 2019-02-18 at 10.19.26 PM.png
    Maybe Amazon could build the wall...
    I'm surprised that they didn't get a refund.:cool:


    But you know, if YOU underpay YOUR taxes by $10, watch out.o_O
    I can guaranty that Amazon is not the only large company doing this.
    (doesn't this make you a little p#ssed off?)
     
    Last edited: Feb 19, 2019
  20. Eric The Framer

    Eric The Framer CGF, Certified Grumble Framer

    I never pay penalties, or estimated payments, and no my net income is not zero, if it were I would be doing something else
     
  21. Pat Murphey

    Pat Murphey SPFG, Supreme Picture Framing God

    Amazon filed to make a profit for years. I'm sure the have large loss carry forwards to offset current taxes. Do any of you framing businessmen fail to take valid offsets?
     
  22. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    Amazon pays gazillions in property taxes and bazillions in matching Soc Security funds, creates 100,000's of jobs with internal and external relationships. They take full advantage of tax laws written by Congress. Been that way for years and years. The simple fact that cities compete aggresively by offering great tax advantages to them only affirms those cities feel an Amazon presence offers great benefits. Pretty

    Baffles me why some have to relate everything to a political opponent. If they paid no taxes for two years, care to blame that on previous administration?

    I didn't think so

    Bottom line: if anyone feels Amazon is a bad corporate citizen, create a Boycott Amazon campaign. Will those protesting the loudest quit shopping at Amazon?

    I didn't think so
     
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  23. Grey Owl

    Grey Owl SGF, Supreme Grumble Framer

    Don't do an underpayment, unless you want to pay the penalty for underpayment.[form 2210]

    After you do your taxes this year, calculate the minimum you need to withhold without incurring a penalty. [for 2019 tax estimates, it is based on what was due in 2018]. Make sure you pay that minimum each quarter, then if you make more, fill out the form 2210 next year and you won't have a penalty [some exceptions if you have really high income].
     
  24. neilframer

    neilframer PFG, Picture Framing God

    I was paid as an independent contractor for a number of years a while back, even though I was probably really an employee although it is debatable.
    This was at a previous job and it was changed at the request of the company tax person.
    It allowed me to take many deductions for business expenses, mileage, maintenance, equipment, etc.

    I withheld the minimum amount quarterly and I had to pay an amount at tax time that wasn't huge but I never incurred a penalty.

    I have now been a regular employee for years and because of my over withholding from the Fed, I get a refund which is OK.
    With the State, I usually wind up even.

    Just as an aside, I received a letter from the IRS a few years ago.
    I thought "Uh Oh"...
    But, guess what, the letter said that I had made a small error in my filing from a few years before the letter.
    I had OVERPAID my taxes by $186 and they sent me a check...:D
    They found my error and sent me a check....;) (I looked and still couldn't figure out what the error was, but OK who cares:p)

    I have always done my own taxes myself (why not) and I am pretty good at it.
    One overpayment of $186 in 50 years that was refunded to me and no other issues ever.:cool:

    But then, I didn't clear 11 billion in 2018 and almost 6 billion in 2017 and pay NO taxes like Amazon....o_O
    I must be doing something wrong..:rolleyes:
     
    Last edited: Feb 20, 2019
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  25. bruce papier

    bruce papier MGF, Master Grumble Framer

    On the Tax Freedom Day front- Here's a fun little calculation- add in your health insurance premium. My day comes out to be somewhere around July 10.
     
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  26. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    I don't have a tax freedom day. I pay more in taxes than I pay myself.

    Maybe I should go work for Amazon for a few years.
     
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  27. Grey Owl

    Grey Owl SGF, Supreme Grumble Framer

    Maybe you should try to relocate your company to to new york - maybe they will offer something - just don't go to Queens
     
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  28. bruce papier

    bruce papier MGF, Master Grumble Framer

    My brother got his taxes back and we noticed 20% of his K-1 earnings were not taxed. I think that's new. He also thought he got more of a deduction for health insurance premiums than last year. So, both of those are good.
     
  29. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    Bottom line: some will benefit, some not so much. The vast majority will even if 'refunds' seem smaller.

    Want a larger 'refund' next year? increase witholdingthis year
     
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  30. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    If true, yes that would be new. And fantastic.
     
  31. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    I haven't got my personal taxes back yet, but on the bill for our S-Corp taxes our accountant noted as part of what they did "review Tax Cut Act 20% business income deduction calculations". I did a search using that terminology and found the following:

    https://www.yallccpa.com/tax-cuts-and-jobs-act-20-pass-through-deduction

    Sounds like there are some exclusions but if I understand it correctly it should apply to most small business owners that have a business structure with pass-through income (Partnership, Sole Proprietor or S-Corp).
     
  32. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    I dropped off my personal stuff to my accountant yesterday and got this report:

    Yes, we will qualify for the 20% K-1 deduction. HOWEVER, it will almost certainly be offset by the fact that TAXES*, as a deduction, are limited to $10,000.

    *in our case, State Income and Real Estate
     
  33. bruce papier

    bruce papier MGF, Master Grumble Framer

    Got the fateful call from my accountant yesterday. I get the 20% off K1 deal, so my taxes are less than they would have been under the old code. He did mention something that irks me. I owe a small penalty because I underpaid my estimated quarterly taxes in 2018. I'm paying the IRS before the tax is due. I don't see how I can be behind on something I paid ahead.
     
  34. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    There may be some exceptions, but as I understand it, as long as you pay 100% of your previous years' liability, or 85% of the current year liability there should be no penalty. You DO have to pay at least 1/4 of the amount by each of the deadlines. You can't pay 24%, 26%, 25%, 25%, although you could do 26-25-25-24.
     
  35. bruce papier

    bruce papier MGF, Master Grumble Framer

    I must have fallen short of the 85%. I had a lot of income from investment funds. They get you coming and going.
     
  36. David Waldmann

    David Waldmann SGF, Supreme Grumble Framer

    We always start out with 100% of last year's. By the time the third installment is due we may drop it a bit and I've completely skipped the last one a few times - usually when we decided to make a large capital investment and deduct it all under Section 179.
     
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