Assessed for Taxes question


J

John

Yesterday I seperated from my company due to a their offices
relocating 2 hours away. I received a good golden handshake and we
parted amicably. I am now setting up my own business and think it will
probably take a fair amount of time before I get to the same income
level again. I have heard a few folks say to be careful not to be
assessed for taxes at my old income level - not sure I understand what
they mean - I have started an LLC with pass through taxation - I am a
member, not an employee.

Can someone shed light on this so I can avoid any costly mistakes...

Thanks
John
 
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H

Helen P. OPlanick EA

Yesterday I seperated from my company due to a their offices
relocating 2 hours away. I received a good golden handshake and we
parted amicably. I am now setting up my own business and think it will
probably take a fair amount of time before I get to the same income
level again. I have heard a few folks say to be careful not to be
assessed for taxes at my old income level - not sure I understand what
they mean - I have started an LLC with pass through taxation - I am a
member, not an employee.
This would not be federal income taxes, but perhaps a
local occupational tax?

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org
 
P

Phil Marti

I am now setting up my own business and think it will
probably take a fair amount of time before I get to the same income
level again. I have heard a few folks say to be careful not to be
assessed for taxes at my old income level - not sure I understand what
they mean -
Neither are they. Ignore them and get an accountant, if you
don't already have one.

Phil Marti
Topeka, KS
 
G

Gene E. Utterback, EA

John said:
Yesterday I seperated from my company due to a their offices
relocating 2 hours away. I received a good golden handshake and we
parted amicably. I am now setting up my own business and think it will
probably take a fair amount of time before I get to the same income
level again. I have heard a few folks say to be careful not to be
assessed for taxes at my old income level - not sure I understand what
they mean - I have started an LLC with pass through taxation - I am a
member, not an employee.

Can someone shed light on this so I can avoid any costly mistakes...
The best person for you to get help from is the tax pro that
helped you set up the LLC. They will know your situation
best because you will have gone over all your pertinent
details; you had to go over these details before you could
determine that an LLC was the best entity for you. You did
work with a pro before setting up the LLC didn't you? If
not, how do you know that an LLC is the best entity for you
and your circumstances?

As far as being assessed taxes for an old income level - I
have no idea what this could mean, it makes no sense and I'm
sure no one who had any idea of what they were talking about
would say such a thing.

As a side note, after years of going back and forth with
clients who kept saying "well, so and so says this is the
best thing for taxes" or " my friend says I should have done
this" I now ask these clients if "so and so" or their
"friend" is going to sign their tax return after taking a
recommended position and if they feel comfortable relying on
this "friend" to make sure their work is right.

This is a great forum for getting general information, but
it does not and can not replace good, first-person
professional advice.

Good luck,
Gene E. Utterback, EA
 
H

Harlan Lunsford

John said:
Yesterday I seperated from my company due to a their offices
relocating 2 hours away. I received a good golden handshake and we
parted amicably. I am now setting up my own business and think it will
probably take a fair amount of time before I get to the same income
level again. I have heard a few folks say to be careful not to be
assessed for taxes at my old income level - not sure I understand what
they mean - I have started an LLC with pass through taxation - I am a
member, not an employee.

Can someone shed light on this so I can avoid any costly mistakes...
Frankly, I'm as confused as you are.

Every tax year stands on it's own, and each year's tax is
based on twelve months' income, whatever that figure happens
to be.

We all probably would be interested in knowing what those
few folks really meant, so if you get a chance to query them
further, please do, and let us know.

IMWTK.

ChEAr$,
I'm Harlan Lunsford, and I approve this message.
 
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H

Helen P. OPlanick EA

As far as being assessed taxes for an old income level - I
have no idea what this could mean, it makes no sense and I'm
sure no one who had any idea of what they were talking about
would say such a thing.
Just an explanation of my answer. Here in PA, we have an
occupational priviledge tax (yes, we pay for the right to
work) and mostly it is $10, but localities (ie school
districts) have the right to vote for those based on your
type of employment. In one area, a friend said he was a
manager - his tax was $500. Had he said he was a store
clerk (and actually, that was more what he was) the tax came
down to about $50.

So I don't feel this is a federal question, but a state
question. I don't know if the OP lives in PA, or lives in a
state that accesses taxes in this manner, but the question
made perfect sense to me. Misinformed, yes - but based on
truth.

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org
 
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