I would like to hear some advice from others who have received their signing bonuses, as to the best ways to minimize and/or defer the taxes due.  Thanks in advance for your feedback.

Bob Ellis

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Here's a new wrinkle. I just got a 1099 from BP declaring my signing bonus as income for 2012. While BP dated the check 12/20/12, I did not receive it until the middle of January 2013.

That's a sticky one. When was it postmarked?  That seems to be the IRS date for what we owe them.

Robert

Buy a lottery ticket immediately.  This is your lucky day!!

Care to tell us how you pulled this off?  I mean, do you attend church regularly?  Is that it?  Do you do a lot of charitable work?

Look, I've no clue how you accomplished what you did . . whether by luck or owing to merit.  But you are one lucky son of a gun!

Honestly, I intend no disrespect.  But my guess would be that BP was trying to help you out.  Whatever the reason for your amazing coups, the Force clearly is with you.  What happened to you is like finding money in the street . . . . a LOT of money!

Megacongratulations.  And remember, many others are not as fortunate as you.  You really dodged a bullet.  

Robert,  The 1099 I received from the leasing company for the bonus they paid me, had the box marked  to file as as "Rents & Royalties".

Make sure you pay a Quarterly Tax Payment or you will be fined for not meeting the +/- 10% of the amount owed April 15th. Those IRS folks have more ways to take your money than Carter has Liver Pills. Plus the penalty is 20% of the amount over $5,000 which is a lot more interest than I get on my bank account. 

I understand that if you were going to form a LLC or a trust you had to do it before the Bonus was paid.

When the Gov figures out that everyone is forming LLCs to avoid taxes they will eventually find a way to take more from an LLC than they would from an individual. Just my opinion.    Good Luck. 

 

 Give to your favorite charity in a big way,10%. Pay two yrs of your property taxes up front, start a farm if you can, be creative. God bless you...  

Lance, question ...how does starting a farm help me with a signing bonus or royaltys?  Are the farm expenses deductible from the royalties?

You just need to spend some of the money on your farm, tractors, trucks, mowers, tools to work farm and other expenses are added to your deductions, as your bonus and royalties are part of your yearly income. That's how I understand it. When I got my bonus I imediately started building my berry farm, I needed to by berry plants and tools to work my farm. I needed a building to house my tools and equipment, freezers, and my truck...Having a farm also gives you a nother tax advantage with the state of ohio....That's how I understand it. If I'm wrong I'd like for some one to tell me....  

anyone familiar with farming will understand that you NEED a gas well to finance the farm!  although, if the price of corn keeps going up........

Seriously though, I would assume that the farm needs to be established as a business already before the gas money starts rolling in.

This gas and oil money is financing my dream of owning a berry farm cause I love berries...Seems right to me that I can make an investment in a berry farm that might not yeild a profit for a couple years. Does that make my farm any less than legit? I hope not because I'm bankin on it. A farm is a farm is a farm. If you have 10 acres or more you can call it a farm. even if you break even or take a loss...Sooner or later youll make a profit...Berries are sky high at the store. I plan to sell mine to wine makers for a tidy profit. I frankly dont know why I waited til now. I guess this money has set me free to do things and try things I alwys wanted to do.... 

So if I am on the cauv tax does that mean I have a "Farm" in tax world?  So last year I bought a trruck, tractor and tools....can I deduct all that? 

Yes,  definitely give to your favorite charity,  and don't forget maxing out your 401(k) ,  IRA,  or 403(b) if you can,  Buy a new car and give your old one to charity !

People need to hire an accountant. Capitol Gains Tax. If you've own your property for "I think 5 might be 7" years, your gas profits can fall under Capitol Gains tax. Not sure what the rates are but they adjust according to size of gain. Many with just a few acres would probably pay 15%. I think thats the low wands current rate. It could be as high as 30-32%. Get an accountant and it might pay to find one that knows a little about where to invest some of your money. Most are going to continue to work and need to wonder what this does to your over all tax bracket.

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