Replies to This Discussion

Permalink Reply by Billy Park Whyde on May 7, 2012 at 1:53am

Congratulations  and yes it is sad to have to pay taxes on that money like you have been rich all your life. Seems like the government wants to hold the commoner down. 

• ▶ Reply

Permalink Reply by Mike h on May 7, 2012 at 3:42am

The other thing to watch out for is getting hit by AMT the year after your signing bonus windfall. You will be back to your regualr income and if you itemize and deduct state and local income taxes you are almost sure to get nailed by AMT.

• ▶ Reply

Permalink Reply by Terry F. Offenberger on May 9, 2012 at 4:28am

You can avoid/manage this by doing a tax projection now...and paying Ohio & local taxes before year end....match the decution with your income....this could save you a lot of money.

• ▶ Reply

Permalink Reply by Steven Kacerski on May 10, 2012 at 7:23am

Taxpayers may still get nailed by AMT even by matching the state income tax deduction in the same year as the oil & gas bonus payment.  For 2012, a lot of it depends whether or not Congress renews the AMT patch to increase the AMT exemption.  If not, there will be a lot more individuals subject to AMT that were not subject to in the past. 

 

The best thing to do as you mentioned is meet with a tax advisor to do a tax projection.  This is something I regularly do for myself and my clients.  There are planning opportunities that could help minimize the tax bite, but a person does not want to wait until December to start planning for them. 

• ▶ Reply

Permalink Reply by Kathleen on May 7, 2012 at 6:20am

Congrats! I think this payment should fall under capital gains but they treat oil and gas different. Like timber as an example since I had it for more than a year when we sold the select cut
we paid the capital gains of 15%. I've sat on this land for way more than a year but nope pure income. This is why I do understand why people look into selling the rights since that's not taxed. We are losing a little less than 40% of our bonus between federal and than state. We are not the 1%'rs but we are being charged as if we are.
I can understand this more if we showed this income level for let's say 3 years in a row, not due to a one time payment. I'm very happy I got my bonus and I am not really complaining I just feel this rate for a one time payment on land we paid our taxes on year after year is just too high.
I really hope everyone that got a good size bonus puts aside at least 33% or more so this one time payment doesn't land up ruining their lives in a few years since the government never forgets you owe. So many people also don't know if you got a big bonus you have to start paying taxes now, not next April. You don't have to pay all of the taxes due right away but you have to give quarterly payments or you will be fined. Wouldn't that just stink to owe even more :0)

• ▶ Reply

Permalink Reply by Mike h on May 7, 2012 at 7:34am

Kathleen,

It's not true that you HAVE to make quarterly (estimated) payments for Federal - it depends on how much you paid (overpaid) the previous year. In Ohio you will get nailed for estimated payments.

• ▶ Reply

Permalink Reply by Kathleen on May 7, 2012 at 8:54am

Hi,
Of course everyone should look into this for themselves since every situation is different but we were told by two financial advisors that due to the amount we would be penalized by the federal government if we did not give payments on a regular schedule or estimate and pay at once.
I should have been more clear that this was just federal and I'm not talking about owing a thousand dollars. A lot of people received some pretty nice size checks ;0). Good for them.

• ▶ Reply

Permalink Reply by Mike h on May 7, 2012 at 9:03am

Ours was pretty substantial. Our taxes were in 6 figures from the signing bonus.

I guess my point is that when making statements of "fact", one should distinguish between facts specific to ones specific situation and facts which are generally true.

As always, people should do their own due diligence and get advice from lawyers and accountants as appropriate.

 

• ▶ Reply

Permalink Reply by CATHIE on May 7, 2012 at 11:21pm

KATHLEEN

WE WERE TOLD THE SAME THING THAT YOU ARE POSTING !

• ▶ Reply

Permalink Reply by Terry F. Offenberger on May 9, 2012 at 4:30am

You may not have to pay either yet...depends on whether or not you are "protected" from penalties and/or interest.  Seed the help of a good CPA.

• ▶ Reply

Permalink Reply by Tanya Gabriele on June 12, 2012 at 3:11am

My family is looking for a good CPA.  Can you refer me to one?

• ▶ Reply

Permalink Reply by Steven Kacerski on June 12, 2012 at 6:52am

Tanya,

I'm a CPA besides being a farmer.  I just moved back to the area in November from a national firm outside of DC and I'm now working with one of the local area firms as their oil & gas expert.  Driving back and forth from DC each weekend to farm was too much after 11 years, so I moved back home to the area.  I would be happy to meet with you and your family if you're interested.  I'm going through the leasing process myself, so I can relate to your family's situation.

• ▶ Reply

• ‹ Previous
• 1
• 2
• 3
• …
• 8
• Next ›
• Page