E-Filing Tax Question

paoli2
  |     |   2,584 posts since 2011

After umpteen years of doing my own Federal and State taxes, due to health problems, I have decided to pay a professional tax preparer and take a break. I am new to this and wondered if someone could answer a question for me? The preparer says they will "E-File" both my taxes and I guess this is the way it is done now. However, can anyone who has had this done or just knows about "E-filing" tell me if we will be able to get a paper copy of our taxes from them for our records if they will be doing them this way? I don't want some disc I have to take home and open in my computer like the doctors give us.

I would appreciate any info you can share to help me understand what I should expect when I get them done, hopefully, soon. I will still be paying our estimated tax 100% with one check which I will mail in myself at the local post office like I always do. Thanks.



Answers
Ally6770
  |     |   2,864 posts since 2010
I used Turbo Tax and a few others in the past. You could always get a copy. I have mine done the last few years and they always give you a copy. Because I do Roth conversions I cannot get them done for free. There are several places that use registered agents that do them for free.
Check the free ways to get yours done by a registered agent. Check your local senior services agency, local library, your local city or county representative etc. They will give you the local places to have it done. If you belong to AARP they also will have the local agencies that have registered agents that do it for you for free. They all give copies of your returns.I picked my return up last Wednesday and it is all done. He also makes appointments and you can have a seat by his desk while he does it. I just drop it off and he does it in the evening or on the weekends and calls when it is finished and I can ask him any questions if I have any when I pick it up. It costs about the same as buying the program. I picked up my return 2 days after I dropped it off. You can go to the IRS site and put in the information and they will tell you the date to expect your direct deposit. 
me1004
  |     |   930 posts since 2010
I'm still not sure this talk of taking your annual distribution in December and paying estimated taxes for the entire year only then is on the mark. I suspect there is a bit of confusion over what is being said. I have been paying estimated taxes for decades, and I have never seen anything in the IRS material about the suggestion here. It also is NOT on Form 2210, that would show you owe a penalty.

I suspect one of three things, but please clarify or correct as needed:

1) The taxes they are talking of being paid in December are only for the amount of that distribution, not for all other estimated tax due for the year. Yes, you can pay as you earn through the year, and fill out Form 2210 to show you were all paid up for the mount of income realized through each quarter. And since the distribution was only in December, that is when the tax on that amount was due. (I've been filing 2210 for several decades -- the bulk of my yearly income all comes in December, but not from an IRA distribution).

2) (This is less likely) The tax they are paying after the December distribution is being paid for 2020 taxes, not 2019 (the Jan. 15 estimated tax is for 2019, but someone could misunderstand that and mark it as for 2020 payment), and so it is in there all year and will likely cover the distribution the following December.

3) The comment about paying in December was actually talking of the tax paid being EQUAL for each quarter. The IRS talk of four equal payments is actually for payment of at least the amount that would be equal payments, you can overpay some for any of each quarter, and it doesn't matter that technically that was not "equal" as long as it was at least the "equal" amount.

Again, please correct or clarify.
MY2CENTSWORTH
  |     |   45 posts since 2016
As per IRS Publication 505 - The United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

This can be fairly easy to do if you have a good handle on your taxable income and can make an educated guess on the taxes due.
NYCDoug
  |     |   114 posts since 2011
"A little-known fact about IRA distributions is that when you have taxes withheld from the distribution (which are then sent directly to the IRS), the withheld money is considered to have been received throughout the year – even if it is received late in December. Using this fact to your advantage, you could figure out how much your total estimated tax payments should be for the year sometime in early December, and then take a distribution from your IRA in that amount. Here’s the trick: Instead of taking the distribution yourself, fill out a form W-4P (or use your custodian’s form) to direct the total amount of the withdrawal to be withheld and sent to the IRS. Voila! You’ve now made even payments to the IRS for each of the four quarters, on time with no penalties!"

Source: 
https://financialducksinarow.com/1663/ira-trick-eliminate-estimated-tax-payments/
Ally6770
  |     |   2,864 posts since 2010
Here are a couple of links and some phone numbers to get places that will do your taxes or help you with them. Just copy and paste and put each address separately into your browser.
https://www.irs.gov/individuals/free-tax-return-preparation-for-you-by-volunteers

https://www.aarp.org/money/taxes/info-2018/aarp-tax-help-fd.html
Choice
  |     |   83 posts since 2020
The IRS has several purported free filings available...I tried TurboTax through it and the process yesterday. But I found out that some state forms were not yet available and I stopped for now. One plan is to set up a new/unique email...one that can be tossed away, register under unreal names, etc, use their forms (primarily to check your work), print and mail in. If mailed in, use correct info.

Personally, I stopped paying est. taxes since taking IRA distributions. I have taxes withheld in December distributions (know where I am tax wise at that point) and IRS deems there are Equally paid over that year with no penalty due.

Have fun
Ally6770
  |     |   2,864 posts since 2010
These agencies actually do your taxes for you for free. They are registered agents. Forms that I have to use they do not do. I cannot use them.
paoli2
  |     |   2,584 posts since 2011
Thanks people for the help and replies. Ally, I tried calling those free people but for one reason or another it never worked out. I found this person in my own city who was on AARP's list. We have to pay her to do both Federal and State taxes etc. but she seems to have good reviews on her work. We have an appointment in a couple of weeks to get it done. I was just confused since she does all "e-filing" and I wanted to make sure we can still get copies for our records. I called her and was told she does give us copies. My biggest concern about not doing it myself is that all the forms I need to do it in February are not usually available as "fill-in" forms which I like to fill in, print out and mail to addresses. Evidently, she won't have that problem and getting it done in February is worth it to me even if I have to pay for it.

Thanks again for help and advice.
ORInvestor
  |     |   31 posts since 2014
Would you please clarify. I plan on making a conversion from a traditional IRA to a Roth IRA in 2020. If I make the conversion in December is it correct that the IRS will treat the funds as if they were distributed over the year? Do the taxes have to be paid with IRA funds? Can you provide a reference for this position?
Ally6770
  |     |   2,864 posts since 2010
Taxes are due the year of a conversion, state and federal. Never pay taxes out of your IRA funds. It is a very dumb thing to do. I always have too much in taxes taken out of my incoming money so I do not have to send in another check to the gov. Make sure it is the right decision for your stage in life and circumstances. It is not for everyone. Stay within your own tax bracket and depending on your age there is a limit of income before your Medicare premium goes up. Make sure you know of all the rules.
ORInvestor
  |     |   31 posts since 2014
thanks for the reply, but it did not address my concern. I am trying to avoid a penalty for not paying enough taxes through the year and, if possible, avoiding using the "Annualized Income Installment Method". I was planning on waiting until a CD matures to have sufficient funds to pay the taxes on the conversion until I saw the response from "Choice".

"Choice" indicated that " I have taxes withheld in December distributions (know where I am tax wise at that point) and IRS deems there are Equally paid over that year with no penalty due."
Choice
  |     |   83 posts since 2020
I stand by my quote...but in the context of IRA distributions. Have fed and any state states be from the IRA and have the trustee pay and you get a 1099 showing a distribution and withholding of taxes which you file with your return. Aside from no est tax return required, I can calculate where I want to be tax wise at end of year and plan distributions and income accordingly.
MY2CENTSWORTH
  |     |   45 posts since 2016
OR, I just converted a Traditional IRA to a Roth prior to the end of 2019 and I did exactly as Choice is describing. I knew how much I was going to owe in income taxes for 2019 and had the financial institution withhold $5K which was reflected on the 1099 that was generated. In my experience I have never been assessed a penalty when done that way and do not file quarterly income taxes. Works for me, no muss and no fuss.
ALLY 6770 mentions not having the taxes paid from the IRA and I have heard that elsewhere, but I honestly don't know why that may be considered "a dumb thing to do".
Ally6770
  |     |   2,864 posts since 2010
Read this and make sure you know the tax laws with age also.
https://www.marketwatch.com/story/is-it-ever-a-good-idea-to-pay-roth-conversion-taxes-with-ira-money-2018-06-28
MY2CENTSWORTH
  |     |   45 posts since 2016
Thanks Ally6770. I had actually already seen that article. It obviously does not pertain to everyone or every situation and as for me because of my circumstances along with my age paying the required tax from my taxable Traditional IRA near year-end to cover any amount that might be due April 15th has always been the best possible scenario when considering all available options.
Ally6770
  |     |   2,864 posts since 2010
OK. Just wanted to point out when using money from the traditional IRA that you are converting to pay taxes is just giving you less money in your retirement account. Paying taxes from a RMD is fine and doing a conversion before 59 1/2 may have additional tax consequences and also doing a conversion while on Medicare may have additional consequences. For every action there are reactions we are not always aware of.
me1004
  |     |   930 posts since 2010
Withholding and estimated tax payment count the same for this purpose.
cdqueen
  |     |   58 posts since 2016
My tax preparers (for 36 years) have used the e-file method for my changing household going on ten years. Attritioned down to one grown lady now from three of us while my two children, now young adults emancipated and transitioned into independent living and working lives. Yes, the pros give you two copies per filer, one for your records, and one for their files for reference after you return it to them signed and acknowleged. It isn't free, but nice to have the imprimatur of professionals-- a job done right and well.


The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.