Jaquen H'gar
04-13-2005, 06:47 PM
Forget bragging on a reload, I'm gonna brag on my CPA. Great anecdotal evidence for hiring a CPA when the income isn’t straightforward.
Requisite background: On two separate occasions, I’ve battled through a preliminary audit and a full audit. On the full audit, the IRS agent admitted that if a CPA had signed off on my return, they would have likely limited it to just a simple inquiry since their likelihood of finding extra tax funds would have been lessened and thus not worth their limited time/resources. Light bulb goes off. I went and found me a sharp but straight-laced CPA to do my taxes. Sharp because I want every deduction possible; straight-laced because I didn’t want to have to suffer/sweat through another audit, worried about disallowances of deductions.
I work a regular fulltime job and make very good income with taxes withheld. Last year I made a little over $100k profit on the side (mainly BJ and video poker and holecarding one-card poker. I’m still a low limit poker player online/B&M but improving). Of this, approx $80k was won with no taxes withheld ($21k was made via a royal at VP with taxes withheld). Of this $80k, I held on to $26k and put it in a money market account to hold for taxes this month.
I gave all the paperwork to my CPA who went to work and came up with a few key ideas. I would file Sched C on the gaming in light of my substantial income and hours put in. Obviously quite a few deductions follow. In addition, because my regular job doesn’t have a retirement program and I can’t qualify for an IRA due to income, I would start a Uni-K (401k) and would be eligible to contribute up to 40% of my taxable gaming income which would then be tax deductible. On his recommendation, I contributed $24k I had set aside for taxes, leaving me sweating with only $2k in cash to pay taxes (without drawing from 2005 profits). He tells me not to worry. He then breaks out a list of various deductions allowed by the IRS and we go through them one by one. Stuff on here I would never have considered. In addition, he points out that I held out too much (32%) from my gaming wins because I don’t have to pay social security on them (having reached the cap with my regular job). In addition, I find out (actually already knew it but finally realized it) just how much of my gigantic house mortagage payment is actually interest and not principal and thus tax deductible (one good thing about living beyond my means!).
Bottom line when all said and done: the feds owe ME an $1800 refund!! I owe my state $2100 in taxes. It’s almost a complete wash! I go from thinking I owe the IRS $26k to just about breaking even.
I’m still out my $26k I had set aside but rather than it going to the IRS, $24k of it is working for me, rolling over until I retire. The other $2k went to my state, and the IRS refund I then applied to my first quarterly payment of 2005. I’m so paranoid, though, that I pay another CPA just to look over my return and see if it is all legit. Per him, it is.
My CPA bill $550
My CPA reviewer’s bill $50
Having $80,000 in non-withheld declared income and paying only $300 in taxes: PRICELESS
Requisite background: On two separate occasions, I’ve battled through a preliminary audit and a full audit. On the full audit, the IRS agent admitted that if a CPA had signed off on my return, they would have likely limited it to just a simple inquiry since their likelihood of finding extra tax funds would have been lessened and thus not worth their limited time/resources. Light bulb goes off. I went and found me a sharp but straight-laced CPA to do my taxes. Sharp because I want every deduction possible; straight-laced because I didn’t want to have to suffer/sweat through another audit, worried about disallowances of deductions.
I work a regular fulltime job and make very good income with taxes withheld. Last year I made a little over $100k profit on the side (mainly BJ and video poker and holecarding one-card poker. I’m still a low limit poker player online/B&M but improving). Of this, approx $80k was won with no taxes withheld ($21k was made via a royal at VP with taxes withheld). Of this $80k, I held on to $26k and put it in a money market account to hold for taxes this month.
I gave all the paperwork to my CPA who went to work and came up with a few key ideas. I would file Sched C on the gaming in light of my substantial income and hours put in. Obviously quite a few deductions follow. In addition, because my regular job doesn’t have a retirement program and I can’t qualify for an IRA due to income, I would start a Uni-K (401k) and would be eligible to contribute up to 40% of my taxable gaming income which would then be tax deductible. On his recommendation, I contributed $24k I had set aside for taxes, leaving me sweating with only $2k in cash to pay taxes (without drawing from 2005 profits). He tells me not to worry. He then breaks out a list of various deductions allowed by the IRS and we go through them one by one. Stuff on here I would never have considered. In addition, he points out that I held out too much (32%) from my gaming wins because I don’t have to pay social security on them (having reached the cap with my regular job). In addition, I find out (actually already knew it but finally realized it) just how much of my gigantic house mortagage payment is actually interest and not principal and thus tax deductible (one good thing about living beyond my means!).
Bottom line when all said and done: the feds owe ME an $1800 refund!! I owe my state $2100 in taxes. It’s almost a complete wash! I go from thinking I owe the IRS $26k to just about breaking even.
I’m still out my $26k I had set aside but rather than it going to the IRS, $24k of it is working for me, rolling over until I retire. The other $2k went to my state, and the IRS refund I then applied to my first quarterly payment of 2005. I’m so paranoid, though, that I pay another CPA just to look over my return and see if it is all legit. Per him, it is.
My CPA bill $550
My CPA reviewer’s bill $50
Having $80,000 in non-withheld declared income and paying only $300 in taxes: PRICELESS