more money grievances

[mamajoan]

I got the check for the stock from my former company that got bought out. Except the check is for $1600 and change instead of the $2000 that I was expecting. Apparently they took out almost $400 for "ESC" which I can only assume means Escrow. The hell? Does that mean I'm going to get the money later, or no? Confused.

I also did my tax return online (at TaxAct.com, where I did it last year) and it says I should get about $450 back from the feds. Considering that I was expecting to get more like $3000 back, this does not make me happy. But I don't understand tax stuff, or the website, well enough to figure out where that huge discrepancy comes from. I'm wondering whether it might have to do with the deduction for child-care expenses. I paid over $15,000 for daycare in 2004, but you can apparently only deduct up to $5000. I also put $5000 into a flexible spending account (FSA), which basically lets you put the money aside from your paycheck, pretax, to pay for daycare. I've heard conflicting things from different sources as to whether you can then deduct another $5000 or whether the $5000 that went into the FSA counts as the deduction. It may be the latter, which would suck. Wah.

I'm going to have to do some serious reconsideration of my plans for the rest of 2005, if it's true that I'm getting a paltry $450 instead of $3000 in tax refund. :( Time to place a call or email to my mom's friend the tax expert guy.

Comments

[ww1614.livejournal.com]

I think it's $5000 total. :(

I have to get my W2s and run my tax stuff. Again, I have to file in three fucking states.

[mamajoan.livejournal.com]

Lucky you! I remember the two years I had to file in both MA and GA. That was really ugly.

[emrinalexander.livejournal.com]

Oy, I think you're right - you need to talk to the tax expert guy. The laws and regulations are so weird, interpreting them is impossible for us mere mortals. And you should get deductions for your interest paid on your house, since you bought it in 2004, and so forth, which makes things tricky, plus he can tell you about itemizing in a way that maximizes your refund.

[mamajoan.livejournal.com]

Yeah, well, I told the online thingie about my house and the mortgage interest and etc., but apparently it was unmoved, so to speak. Well, we'll see what the actual human being has to say.

[mogwar.livejournal.com]

You cannot use an FSA and also claim a child care credit on form 2441. IRS does not like it. You already got the "credit" by not paying tax on the money that went into your FSA.

</your friendly neighborhood tax accountant>

[mamajoan.livejournal.com]

yeah, that's kind of what I thought. Well, damn. *pout*

Hey, while you're dispensing free tax advice ;) , how much of the check from my former employer's stock should I set aside for next year's taxes? I know it's a long-term capital gain because I owned the stock for 2.5 years, but I don't actually know what that MEANS.

[kenboy.livejournal.com]

Joan, my hunch is that the $400 is withholding on the stock sale -- but call and ask, don't take my word for it.

Long term capital gains are taxed at something like 15%, assuming you're in the 25% tax bracket.

[mamajoan.livejournal.com]

You're absolutely right, I should call -- but why would I do that when I could just ask a bunch of strangers on the internet? ;)

If it turns out that the $400 is indeed withholding, does that mean I don't have to set anything aside for taxes?

[kenboy.livejournal.com]

Correct. And if it turns out it's NOT for withholding, but something else (I can't think of WHAT, though), I suppose you should put aside 15% of it to be safe -- but I can't decide if that would be 15% of $1600 or of %2000!

--Ken

[mogwar.livejournal.com]

Neither! It'd be 15% of 2000-"whatever she originally paid for it". :)

[mamajoan.livejournal.com]

OK, so assuming that I paid $900 for the stock originally (I can't remember the exact amount but it was around that), then the tax I would owe is 15% of about $1100, which is $165. So since they withheld $400, does that mean at some point I'll get the other $235 back? Or does it go into the black hole of the bank's coffers?

[mogwar.livejournal.com]

Presumably if they withheld it for taxes, they sent it to IRS, and when you file your taxes, you'll get it back as a refund, just like any other tax you had overwithheld.

[mogwar.livejournal.com]

The current tax rate for long-term capital gains is 15%. So if you take the amount you sold the stock for less the amount you originally paid for it, and multiply that by 15%, you should get the tax you'll owe, assuming you'll have no losses to offset the gain. It'll at least be close enough for estimated tax purposes.

[retch.livejournal.com]

w00t, that is indeed long-term so much lower tax rate. Yay. :)

[maggiesox.livejournal.com]

Oh, fuuuuuuck. I forgot all about doing my own taxes this year. Shitballs. H&R Block, here I come...

[retch.livejournal.com]

I;m not sure I should be happy or not. I can do the super simple taxes this year. Why? Because I earned $0 last year. No income, no stock sales, nothing. Whee.

Anyhow, if you exercised stock options, and immediately sold them, then it is treated as income, and they withhold taxes as such... Not sure if that was the case for you, but perhaps?

Good luck figuring out the deductions. I hate doing taxes. Bleh

[hawkeye7.livejournal.com]

I call that pretty good! In this country I get slugged half my marginal rate for long-term (ie > 1 year) capital gains = 24%