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#21
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File as a pro- and open a SEP to deduct up to $45k this year. It also grows tax free until retirement. $45k will be a sick amount by the time u retire. [/ QUOTE ] I will have to look into this. My dad (a human resources businessman) recommended I open an LLC for similar reasons, but I don't know they difference, will have to do some research. |
#22
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obv set aside enough for estimated quarterly tax payments right away, don't risk confronting a big tax bill next April without enough money to pay. Open a Schwab or something like it brokerage account. Deposit all into money markets currently paying near 5%. Schwab has a feature called MoneyLink. It hooks up your checking/ATM account with your Schwab account. You can transfer funds both ways. Transfer enough money quarterly into regular checking to pay estimated taxes. Schwab also offers a ATM/debit card for those accounts. While your money is earning nearly 5%, you can then figure out what you want to do with it. Warning: all brokerage accounts holding cash are not federally insured like a bank. If this makes you nervous, chuck it all into your bank & buy, say 3 CD's, one 90day, a 180, and a 360.
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#23
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Pay taxes, invest into Vanguard.
ps: There's a financial forum here on 2p2. |
#24
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[ QUOTE ]
obv set aside enough for estimated quarterly tax payments right away, don't risk confronting a big tax bill next April without enough money to pay. Open a Schwab or something like it brokerage account. Deposit all into money markets currently paying near 5%. Schwab has a feature called MoneyLink. It hooks up your checking/ATM account with your Schwab account. You can transfer funds both ways. Transfer enough money quarterly into regular checking to pay estimated taxes. Schwab also offers a ATM/debit card for those accounts. While your money is earning nearly 5%, you can then figure out what you want to do with it. Warning: all brokerage accounts holding cash are not federally insured like a bank. If this makes you nervous, chuck it all into your bank & buy, say 3 CD's, one 90day, a 180, and a 360. [/ QUOTE ] I am a nit and would probably go the CD route. I actually considered putting it into CDs right away, but my concern is how much do I need to leave out now (if any) or can I just dump it all (well, I will spend SOME of it) and just make sure I have anough available in April to pay the taxes on it. |
#25
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I am a nit and would probably go the CD route. I actually considered putting it into CDs right away, but my concern is how much do I need to leave out now (if any) or can I just dump it all (well, I will spend SOME of it) and just make sure I have anough available in April to pay the taxes on it. [/ QUOTE ] You need to make estimated payments now. Not literally now, but Sept 15th and January 15th. If you don't make those quarterly estimated payments, you'll get charged interest and penalties which in your case could be quite substantial and total thousands of dollars. |
#26
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EDIT: Appears you might want to contact Ann-Margaret Johnston Poker tax web site [/ QUOTE ] I recommend you email Ann-Margaret. She's very sweet and really knows her stuff. |
#27
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[ QUOTE ] obv set aside enough for estimated quarterly tax payments right away, don't risk confronting a big tax bill next April without enough money to pay. Open a Schwab or something like it brokerage account. Deposit all into money markets currently paying near 5%. Schwab has a feature called MoneyLink. It hooks up your checking/ATM account with your Schwab account. You can transfer funds both ways. Transfer enough money quarterly into regular checking to pay estimated taxes. Schwab also offers a ATM/debit card for those accounts. While your money is earning nearly 5%, you can then figure out what you want to do with it. Warning: all brokerage accounts holding cash are not federally insured like a bank. If this makes you nervous, chuck it all into your bank & buy, say 3 CD's, one 90day, a 180, and a 360. [/ QUOTE ] I am a nit and would probably go the CD route. I actually considered putting it into CDs right away, but my concern is how much do I need to leave out now (if any) or can I just dump it all (well, I will spend SOME of it) and just make sure I have anough available in April to pay the taxes on it. [/ QUOTE ] No need to be a nit if you have more than 10 years until retirement. The market has down years...but never for greater than a 10 year period. Just stay properly diversified in different types of equities. It will also be a bitch to track capital gains every year. GO into an annuity and your money will grow tax deferred until you withdraw it. |
#28
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[ QUOTE ] I am a nit and would probably go the CD route. I actually considered putting it into CDs right away, but my concern is how much do I need to leave out now (if any) or can I just dump it all (well, I will spend SOME of it) and just make sure I have anough available in April to pay the taxes on it. [/ QUOTE ] You need to make estimated payments now. Not literally now, but Sept 15th and January 15th. If you don't make those quarterly estimated payments, you'll get charged interest and penalties which in your case could be quite substantial and total thousands of dollars. [/ QUOTE ] I'm almost positive this isn't true. You only need to pay your quarterly estimates up to the amount you paid last year. For example, you paid 40k in taxes this year, even if you think you will owe >100k this year you only need to pay 10k each quarter to avoid penalties. Presumably this is his 1st year as a pro so he doesn't have to pay any quarterly. |
#29
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I'm almost positive this isn't true. You only need to pay your quarterly estimates up to the amount you paid last year. For example, you paid 40k in taxes this year, even if you think you will owe >100k this year you only need to pay 10k each quarter to avoid penalties. Presumably this is his 1st year as a pro so he doesn't have to pay any quarterly. [/ QUOTE ] From TurboTax : <font color="#666666"> "How Do I Calculate My Estimated Taxes? In most cases, you must make estimated tax payments if you expect to owe $1,000 or more in taxes for the year - over and above the amount withheld from your wages. In some cases, though, the $1,000 trigger point doesn't matter: * If your prior year adjusted gross income was $150,000 or less, then you can avoid a penalty if you pay either 90 percent of this year's income tax liability or 100 percent of your income tax liability from last year (dividing what you paid last year into four quarterly payments). This rule helps if you have a big spike in income one year, say because you sell an investment for a huge gain or win the lottery. If wage withholding for the year equals the amount of tax you owed in the previous year, then you wouldn't need to pay estimated taxes no matter how much extra tax you owe on your windfall." </font> So I think you're right he might not be on the hook for penalties if he waits until April 15th, but I suspect he'll still be on the hook for interest no matter what. Having said that, his rate of return from a decent yeilding CD or similar investment vehicle is probably higher than whatever interest rate he gets levied on him, so he might be better off not paying estimated taxes. I'd still go see an accountant now if i were the OP. |
#30
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100k in a high yield money market= $500/ mo. interest, total access, no withdrawal penalties.
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