Where to turn for tax advice?

Question

My fiance has recieved a small amount of money from a trust fund, he is only responsible to pay taxes on the interest the way the trust was set up. How much should he set aside, or who should we talk to to find out?

Answer 1

Here's a simple solution:

Look at 2006 tax return. Add the taxable income (interest) from the trust to the TAXABLE INCOME on his Fed tax return.
Go to irs.gov & look up form 1040 instructions, find the tax table therein and look up the amount of tax for the new total (based on his filing status). Now, compare it to his 2006 withholding on the tax return. If new tax is greater than withholding, that will be the shortage. If less, it has merely reduced his refund for 2007. ( IT's OK to do this using 2006 data because everything for 2007 takes inflation into account-- if anything there is a little margin in favor of less tax than figured using this method)

Now, if it turns out he's short & it's less than $1000 he can pay it next April 15. If he wants he can either increase his withholding or make estimated tax payments.


THe same method works to figure next years state tax using the additional trust income.

Good luck!

HankRoitman, EA
Sacramento CA

Answer 2

Contact a financial advisor. They can go through all your current finacial situation, your goals for the future, and set up the best solution to achieve those goals while minimizing the tax impact.

Answer 3

It depends on his tax bracket. Unless he has very high income, 15% - 25% should be plenty.

Answer 4

GO TALK TO AN ACCOUNTANT OR IF U HAVE AN ACCOUNT HE PROBABLY WONT EVEN CHARGE YOU FOR THE ADVICE