almost tax time

Jourabchi

Jourabchi

Well-known member
Search function is down sorry if its been brought up befor

So those who bought equipment last year for small business work, and when i mean small i mean small, i only had the oppertunity to do around 4 projects last year bringing in income around 8k total, ive spent over 10k on equipment.

and now it comes time to taxes..

I dont really have a registered business with a tax id cause its more of a hobby style part time job...

should i include any of this info in my taxes, ive always used EZ forms because i havent owned a house until the beginning of this year 06, have no kids and the only deductions i have are interest from studant loans...

any advice would be greatly appreciated....

thanks guys
 
if you received INCOME , were paid for those projects then if you want to be a good USA tax payer you would include it ... and by including the income under a schedule C you could then list your expensive and you would have a 2000 loss.
the loss you could carry forward to next year ( future) and if you have a job that you received income then depending on the amount you might be able to deduct the whole 2k loss from that income = lower taxes .. you don't need a business license , permit , business tax id etc to pay tax to the IRS.

if you consider it a "hobby" then you would just list 8000 as INCOME and not fill out a schedule C ... so you just add 8000 in under other income ... one doesn't charge if it's a hobby ..one does it for the fun

or you just NOT list the 8000 on your 1040ez and perhaps those that paid you the $$ will not list it on their 1040's as expenses ( payable to your SS # or name) .. anybody that i pay over 400 total in tax year = i list their name, SS#, address etc and why i paid them or include a copy of their invoice
 
Jourabchi said:
Search function is down sorry if its been brought up befor

So those who bought equipment last year for small business work, and when i mean small i mean small, i only had the oppertunity to do around 4 projects last year bringing in income around 8k total, ive spent over 10k on equipment.

and now it comes time to taxes..

I dont really have a registered business with a tax id cause its more of a hobby style part time job...

should i include any of this info in my taxes, ive always used EZ forms because i havent owned a house until the beginning of this year 06, have no kids and the only deductions i have are interest from studant loans...

any advice would be greatly appreciated....





thanks guys
Click to expand...

This is definitely not a hobby. You have already generated income and your expenses are necessary and ordinary for this line of business.
Right now, you are considered a sole proprietor. Depending what state you live in, I would think of changing to a different structure (LLC, S corp, etc)

You dont need to be a registered business or have a EIN (you use your Social security number) You are going to file a schedule C, report income if anyone 1099 you and section 179 your equipment purchases. However, it depends on how much income you made at your other job(s) to make this determination. This is tax planning.

Technically, you are suppose to report all worldwide income. But as a sole proprietor, your clients are going to treat you as an independent contractor. Did you fill out any W-9s? If you dont get 1099, then there is no report of income to the IRS. Always always report your income you know the IRS will receive like 1099s and W2. It is your deductions that you will have to prove were legit.

Right now, if you section 179 all your eq expense, you are at a -2k loss, plus you didnt add the ordinary expenses related to this business, like travel, office expenses, and any other business related expenses that were needed to generate income.

I would need to know more to give you the proper advice.

As a CPA you will get some really bad advice on these boards. Ill do what I can to clarify things, then take this knowledge to your cpa to see what he is doing.

note. it is good you bought your house beginning of this year, rather than in nov or Dec. Your mortgage interest expense would have been useless since you dont itemize or file a Schedule A
 
donatello said:
if you received INCOME , were paid for those projects then if you want to be a good USA tax payer you would include it ... and by including the income under a schedule C you could then list your expensive and you would have a 2000 loss.
the loss you could carry forward to next year ( future) and if you have a job that you received income then depending on the amount you might be able to deduct the whole 2k loss from that income = lower taxes .. you don't need a business license , permit , business tax id etc to pay tax to the IRS.

if you consider it a "hobby" then you would just list 8000 as INCOME and not fill out a schedule C ... so you just add 8000 in under other income ... one doesn't charge if it's a hobby ..one does it for the fun

or you just NOT list the 8000 on your 1040ez and perhaps those that paid you the $$ will not list it on their 1040's as expenses ( payable to your SS # or name) .. anybody that i pay over 400 total in tax year = i list their name, SS#, address etc and why i paid them or include a copy of their invoice
Click to expand...


You need to have a W-9 on file for any of your vendors that you plan to pay more than 600.00 in a calendar year. This is sent to the IRS by feb 28 on form 1096, along with your 1099s. Dont put the SS number on invoices. use W-9s. if they are a corporation, they are exempt from 1099 filing.

www.irs.gov Go to forms and look up 2006 Form W-9
 
you do have to watch out for persons that paid you and were suppose to send you a 1099 by X date and they did NOT send you a 1099 ... well that doesn't mean they didn't file a 1099 it only you didn't get one - they may have filed it and the IRS has a copy ...
it's just like working for any employer that is suppose to send you a W2 at end of year - if they didn't send you a W2 it doesn't mean you don't report the wages they paid you !!!
the IRS doesn't like looking at their records showing your were paid 10k and you're stating only 2k .. and jsut becuase you didn't receive a 1099 or w2 , or interest/dividend statment etc is NOT a good reason to not report income.
 
donatello said:
you do have to watch out for persons that paid you and were suppose to send you a 1099 by X date and they did NOT send you a 1099 ... well that doesn't mean they didn't file a 1099 it only you didn't get one - they may have filed it and the IRS has a copy ...
it's just like working for any employer that is suppose to send you a W2 at end of year - if they didn't send you a W2 it doesn't mean you don't report the wages they paid you !!!
the IRS doesn't like looking at their records showing your were paid 10k and you're stating only 2k .. and jsut becuase you didn't receive a 1099 or w2 , or interest/dividend statment etc is NOT a good reason to not report income.
Click to expand...

What??? that is why you call them. You are talking nonsense.
 
I greatly appreciated your help Marquee, i guess ill try and hunt down a CPA, its not like im a big company im just a 24 year old who graduated school lookin to make some extra money...all the tax stuff is confusing to me, especially since ive been filing 1040EZ since ive been working....
 
Jourabchi said:
I greatly appreciated your help Marquee, i guess ill try and hunt down a CPA, its not like im a big company im just a 24 year old who graduated school lookin to make some extra money...all the tax stuff is confusing to me, especially since ive been filing 1040EZ since ive been working....
Click to expand...


I've been there, and it can be mind numbing at first.
if you know anyone who is in this line of work in your area, ask them for a recommmendation on a CPA.

Trust me, a good CPA is well worth the money - and the money can be deducted as a business expense anyhow.

Don't sweat it - but find an expert to help you figure it out.
You'll be very glad when you do.
 
Tax code is still confusing to me as well. My area of specialty involves tax planning with financial planning. Making money with the money you have.

Granted, you are young and your business is just getting off the ground, a sound and savvy CPA is definitely worth using. However, I have met some really stupid cpas so just be weary. You will want to find someone who understands your business. A lot are just "paper pushers" They;ll get your work done, but are they really working for you? That is a problem, they have so many clients and not enough resources to really put their clients interest first.

You can probably get by without a CPA for now since it maybe out of your budget, Ill help you with any questions, but definitely try and network and see if you can barter something with a CPA. Shoot their wedding for free, make a commercial for the, etc.

Buy turbo tax to do your return this year. Very easy interface.
 
yeah i got turbo tax premiere witch asks questions about the schedule c and what not, im waiting on my w2 from my day job so well see what happens...

thanks again
 
You must log in or register to reply here.
Back
Top