The Tax Questions Blog

Archive for March, 2008

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Question: is a copyright settlement taxable?

i am a graphic designer.
i worked for 10 years as an independent contractor for a large company.
they then tried to stop working with me and offered me a small
settlement.
i hired a lawyer and went around in circles with them for a year and
they
finally gave me a settlement for copyright. they continue to sell their
products
with my designs.
the large company sold the company to another large company right after
they settled with me.
they never furnished me with a 1099 and when i pressed they said they
will
send me a 1099
indicating that the $$ was paid in settlement of a claim (box 3 - other
income) so that it is not subject to self employment tax. i never
received it.
but is this correct? do i have to claim the money i received as income
on my
self employment tax? it was not paid as wages as i had already left the
company a year before. also do i have to claim for federal and state
taxes? do i even mention it on my 1040 schedule c? if so where?

Answer: That's fully taxable, whether they send you a Form 1099 or not. If it was a lump-sum settlement for use of your copyrighted material, claim it under Other Income on line 21 of Form 1040, NOT on Schedule C. If it's part of an on-going income stream for continued use, claim it on Schedule E as royalty income.

It is not self employment income and no SE tax is due on it.

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Gainesville reaches $60,200 settlement with former code enforcement officer over unpaid overtime

By Christopher Curry Staff writer The city of Gainesville has reached a settlement in the amount of $60,200 with a former code enforcement officer to end a lawsuit over unpaid overtime filed in 2008.

Caesar III: Best settlement of wealth

Question: When switching jobs, where is it best to put your 401k...in new employer's 401k, a traditional IRA or a ROTH??

I am looking at switching jobs and am wondering where it would be best to put my current 401k money...into a new 401k, a traditional IRA or a ROTH IRA. I currently have a ROTH IRA and enjoy the ability to invest in what I want. I also enjoy knowing that the money I see will not be taxable upon retirement. I'm leaning this way because I'm 24, my wife is 22. We are both engineers, we have an AGI of a shade under 100k for 2007, and I anticipate retiring in a higher tax bracket (currently in the 25% range). Another factor is does the rollover count as a contribution for the current year? Also, are there any tax implications for any of the choices?? Any information on this would be helpful as I am pretty ignorant when it comes to rollovers. Thanks!

Answer: I would say it depends on the quality of your new employer's 401k and whether they will even take it. Most people like the independence of rolling it into a self-directed IRA so they have the complete investment control.

If you roll to a traditional IRA, there are no tax consequences, and it's not counted as a contribution for the current year.

If you roll to a Roth, you will have to pay the taxes on it and then invest the remainder. You can always change it to a Roth at any time, just paying the taxes on it when you make the change. Of course, if you anticipate earning more money, you will be out of the Roth IRA range. So, it might be to your advantage to pay the taxes now (out of the IRA proceeds) and then invest what is left in the Roth.

It wouldn't hurt to consult an accountant regarding the tax implications. If you have more questions, email me and I will get the answers for you.

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Cathay General Bancorp Reports First Quarter Results

Cathay General Bancorp , the holding company for Cathay Bank , today announced results for the first quarter of 2010.

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IRS is Taxing My Nobel Prize!

Most of us will never win a Nobel Prize, but if we do, it comes with a tax bill. The 2010 winners m

Question: How can should "Fidelity Cash Reserves" dividend be reported on Canadian tax?

Hi. Fidelity does some strange transactions for cash sitting in the account, where each month it would pay "dividend" on them (Fidelity Cash Reserves) and then remove money back and count the dividend as taxable income.

Question is, where do I report this dividend on Canadian tax forms?
Well, I called Fidelity and they said one of the removing transactions is for non-resident tax (which is like, 33% of the dividend).
I wonder if I still pay Canadian tax on that, or how it comes together

Answer: Other Investment income. Section II of Schedule 4. Transfer the amount to line 121 of your T1.

You may not receive a T5 slip if the amount is less than $50, but you still report this income.

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Question: Is the VA Disability Pension (non service connected) taxable by the IRS etc.?

Also can you draw the VA Disability Pension and any Social Security benefits, disability etc. without them offsetting each other?

Answer: I am a disabled Vet Viet Nam and i draw a pension and it is non taxable and my brother draws one he is non service connected,where mine is service connected and its non taxable and yes you can draw Social Security diasbility no tax however Just social security is taxable.Good Luck

Tax Tip: 7 tips for disabled taxpayers

Taxpayers with disabilities may qualify for a number of credits and benefits. Parents of children with disabilities may also qualify. Here is what they should be aware of.