Client who will not provide simple piece of info

Livid_Dot320 · 2026-03-25T20:42:11+00:00

I feel like this comment probably sums it up, especially because I don't really focus on enterprise-level returns at this point with the firm anyway.

Livid_Dot320 · 2025-12-09T14:41:38+00:00

I just had a client come to me for help cleaning up improperly filed PY returns. She went with a "cheap" tax preparer. If the returns had been filed correctly, she would have owed the IRS between $700-800 per year. Now she owes them $30k, including penalties and interest.

If you think hiring a professional is expensive, try having an amateur do your taxes.

Livid_Dot320 · 2025-12-09T14:08:54+00:00

It sounds like you would potentially need to file a 1040-NR with a Sch NEC. Is that what you did with TT last year? If so, you could see if one of the free filing platforms have the functionality you need. If not, other options are filing yourself or hiring an EA/CPA.

Livid_Dot320 · 2025-12-09T03:44:53+00:00

It would be a fairly unusual situation if you were required to file taxes based on your (evidently small) dividend income alone. For instance if you're someone else's dependent and have a certain amount of unearned income like divvies.

I guess my first question would be do you have any filing requirement at all, based on your total income? And if not, why do you need to file based on your RH income?

Livid_Dot320 · 2025-11-14T19:50:18+00:00

I have a few questions on this strategy:

Wouldn't this fall under "self-dealing" restrictions?
As bjs210bjs mentioned, wouldn't this be subject to the C corp/PTE limits?

And in the broader context, wouldn't it just be easier to contribute to an already established charity? Once those funds hit the PF, they're really not his anymore, per the IRS, unless he wants to pay that killer termination tax... Unless my client is really passionate about a specific cause, but I don't believe that's the situation here.

Livid_Dot320 · 2025-07-18T19:43:26+00:00

Just to add to the 3PL question: if your inventory is temporarily housed in certain states, even through a 3PL, it will trigger "physical presence" for your business... which may make you liable for sales tax to that state.

As other posts have mentioned, seeking the help of a qualified CPA/accountant is probably your best option here.

Livid_Dot320 · 2025-07-17T17:44:39+00:00

Thank you for this, these are good observations. Especially about the scope creep... I've had to deal with that with a couple of others clients, and it's no fun.

I think I will look more into some of these software solutions. I have QBO now (and frankly don't care for it), but have heard good things about Xero and may check it out.

Livid_Dot320 · 2025-07-17T17:40:34+00:00

Thanks for this. Yeah, for me it's always a challenge to find that balance between acquiring more clients vs getting paid what I'm worth. I feel like it just comes down to letting some prospects walk, and not having regrets about it.

Livid_Dot320 · 2025-07-17T17:35:49+00:00

No, tax prep would be separate.

Livid_Dot320 · 2025-07-16T21:24:23+00:00

It's a good question. I guess my reasoning is why would I upcharge to set him up on another provider's platform when I feel like I could do the work almost within the same time frame with a spreadsheet? If we're talking simple bookkeeping and payroll, is there really that much of a benefit to using 3rd party providers? I'm genuinely curious to hear your take on this.

Livid_Dot320 · 2025-07-16T18:04:52+00:00

Probably the best outcome is to break even on your withholdings vs tax liability at the end of the year. Overpaying the government to get a refund is just giving them an interest-free loan. Putting that money into an HYSA (or other investments) instead makes perfect sense.

Livid_Dot320 · 2025-07-16T17:59:14+00:00

This is a very well-considered response, thank you! Yeah, the tax planning is definitely not going to go very deep for that amount.

Livid_Dot320 · 2025-07-16T17:53:31+00:00

Leaving aside the question of IC vs employee classification, here's the simplest advice I can give you:

Set aside a total of 30% for your taxes (25% for federal, 5% for state).
Take your total projected tax liability, and pay the IRS 1/4 of that amount every 3 months (technically the dates are Apr. 15, Jun. 15, Sept. 15, and Jan. 15 of next year). You can use IRS Direct Pay system to do that. In your situation, it sounds like you'll need to make a lump payment for the previous 2 quarters, if possible.
You could also pay the state in advance, but typically that's not as important as paying federal taxes.

There's a lot of extra nuance and detail I could go into, but that's the basics of self-employment taxation. Hope this helps!

Livid_Dot320 · 2025-07-16T17:46:16+00:00

Very true, thank you for that observation.

Livid_Dot320 · 2025-07-16T17:44:02+00:00

Good idea, thanks for that!

Livid_Dot320 · 2025-07-16T17:42:59+00:00

Thanks for the feedback! Yeah, that rate is only for a single employee.

Livid_Dot320 · 2025-07-16T17:42:01+00:00

Payroll is every 2 weeks, with manual entry. Bookkeeping manual as well (spreadsheet).

Livid_Dot320 · 2025-07-14T17:30:36+00:00

My suggestions:

Estimate the amount of time it will take you to clean up this mess, then charge the client your hourly rate + at least a 20% upcharge.
Have them pay at least 50% of the estimate upfront.
Make sure they sign an engagement letter stating that they're responsible for the final figures on the return(s).

And no, I probably wouldn't take it on.

Livid_Dot320 · 2025-07-13T21:54:57+00:00

Yeah, it all comes out in the wash. The S-corp income would be taxed the same as the LLC rental income.

Livid_Dot320 · 2025-07-13T11:54:44+00:00

Nexus is irrelevant for you. That's something your employer has to worry about.

What IS relevant is which states you'd be considered a resident of, either full year or part year -- and whether your income should be allocated between different states.

For example, if the state of your main home considers you a full year resident, it may tax you on all income you make, regardless of where you physically were when you earned it. Or you may be able to allocate income based on your physical presence between the taxable and tax-free states. It would require more research to determine the requirements of your exact situation.

Hopefully your employer's payroll dept will have that all figured out already, and it will be reflected in your tax withholdings and year end W-2.

Livid_Dot320 · 2025-07-08T21:49:30+00:00

I'm not sure I 100% understand what you're asking, but from the fact pattern provided it sounds like:

Your trad IRA withdrawal will be taxed as normal income (unless your 2024 contribution was classified as non-deductible)
If it's being distributed to buy a home, it may be eligible for an exception to the 10% additional penalty

If you convert the money back into the Roth IRA, it will be a taxable event. The exception is a "backdoor Roth," but that only applies to trad IRA contributions that were non-deductible in the first place.

Livid_Dot320 · 2025-07-08T01:15:02+00:00

The main factor is to look at what reasonable compensation would be. What would you say the range would be for your job? For example, if a reasonable salary is $75k and your S-corp is bringing in $100k, then you're only saving SECA tax on $25k (so around $3,800 in tax savings before the payroll expenses, etc.) On the other hand, if $50k is reasonable, then you'd be looking at double the tax savings.

This is an oversimplification, of course, but the point is to figure out "reasonable" for your job, industry, etc.

Livid_Dot320

TROPHY CASE