Tax questions, Please help!!

[Tiocfaidh ar la]

t100 I have been self employed and an IC most of this year. I worked very little though until this month really, so I just wasn't really worried about taxes, oops. Now that I'm making more money I figure I'd better get organized.

Self employment tax, is this paid on ALL income before deductions? Or do I figure my deductions and then pay in the 15.3% of what is left? Do most MT's file quarterly?

Deductions, can I deduct as a business expense the following?
Cell phone, how much, I use it for all of my business calls and personal calls.
Internet, I e-mail clients and maintain my website, and network.
Travel mileage between appointments (not counting the first and ride home as that is commuting)
Supplies (oil sheets ect..) Marketing materials, computer ink, and paper.
Home office, I do the occasional massage at home, also I have my computer and all of my class planning materials in my office (I teach part time at a local massage school, they do not provide office space)
ABMP dues
Books? and trade journals
CEU classes, travel, and meals? (Does the 50% rule apply here? for meals and lodging.)
Is there anything I am forgetting?

Not necessarily business but deductions
Childcare
Payments on medical bills ?? (If the total with insurance is more than 10% of income?)
What other medical/health expenses can be deducted? (I always here of people "writing off" massage, and spa treatments, is this market research or medical?)
Health insurance premiums, I pay for myself and two children.

Does anyone know of a good tax estimating site? Also how do you keep your records organized?
Thanks!!

 

[Maria]

Tax questions, Please help!!

#1 - consult a tax professional to set up your chart of accounts --- whether you use QuickBooks, excel or a collection of shoe boxes.
#2 - don't believe everything you read here. you and yoru paid preparer -- should you choose to retain one -- are ultimately responsible for what you file.

Self employment tax, is this paid on ALL income before deductions? Or do I figure my deductions and then pay in the 15.3% of what is left?

The latter. But don't forget you have to file estimated income taxes for both fed & state. SET is just the self employed substitute for the FICA and Medicaid taxes that are payroll taxes for employed persons.

Do most MT's file quarterly?

If you pay estimated taxes and don't withhold, you SHOULD file quarterly. Has nothing to do with being an MT, has to do with saving your *ss. If you underpay estimated taxes by a certain amount, you get hit with a nasty penalty, plus you face a large bill at the end of the year.

Deductions, can I deduct as a business expense the following?

This is where you need to consult your tax professional.

 

[Callisto]

Tax questions, Please help!!

#1 - consult a tax professional to set up your chart of accounts --- whether you use QuickBooks, excel or a collection of shoe boxes.
#2 - don't believe everything you read here. you and yoru paid preparer -- should you choose to retain one -- are ultimately responsible for what you file.

Self employment tax, is this paid on ALL income before deductions? Or do I figure my deductions and then pay in the 15.3% of what is left?

The latter. But don't forget you have to file estimated income taxes for both fed & state. SET is just the self employed substitute for the FICA and Medicaid taxes that are payroll taxes for employed persons.

Do most MT's file quarterly?

If you pay estimated taxes and don't withhold, you SHOULD file quarterly. Has nothing to do with being an MT, has to do with saving your *ss. If you underpay estimated taxes by a certain amount, you get hit with a nasty penalty, plus you face a large bill at the end of the year.

Deductions, can I deduct as a business expense the following?

This is where you need to consult your tax professional.

Thanks, I will definitely get up with my cpa, just trying to get started with some btdt experience.

 

[Oliver Clothes-off]

Tax questions, Please help!!

You DO need to speak with your tax return preparer...
you can get the forms and filing schedule from her

I am NOT an accountant at all -however,

to set your mind at ease a little bit...
your income tax will be based on what you earn for the entire year - so don't worry if your income spikes in the odd month.

If you did not or will not earn enough to end up owing anything in taxes then you can breathe easy because you do NOT have to file quarterly.
Pay attention though because what happens THIS year will affect what you do next year ( I am assuming that this is your first year that you have self-employed income)
If you owe taxes this year (State and Federal) then you will be required to pay ESTIMATED quarterly taxes next year.
I wouldn't worry about penalties at all - most MT's are not earning enough to worry about this.
I am a single parent so my deductions are high enough that I have not had to pay any additional taxes for 3 years (when I filed jointly previously when married we always had to pay - but that was because my ex underpaid and we were in a different tax bracket)

Your income tax preparer will help with deductions.
But good record keeping will make that easier.
Keep a record of all expenditures - whether you are sure or not - keep receipts
Your car mileage is a big one - keep good records for this.
I made up my own forms to track mileage, income and expenses - I like to write things down - I am so old school!
But you can keep electronic records - you'll probably have to print stuff out for your preparer.

Your website is a business expense.
Your phone is a business expense - since it is also for personal use you may not be able to claim this.
ALL supplies are a business expense.
You home office is NOT a business expense unless that area is not used for anything else - since you are only doing a few massages at home I wouldn't worry about using this as a deduction for 2009. However, you might want to consider for next year setting up a dedicated home work space.
Education is a deduction - cost of class, lodging, and travel. Meals only if the class is not local.
Books, trade journals, training materials are a deduction.
ABMP is a deduction - it is your INSURANCE not dues.

Personal Life and Health insurance is not a deduction as far as I know - but you can check.
Uncovered medical and dental payments ARE.
Disability insurance might be - I don't know

I don't have little kids any more so the child-care thing doesn't come up for me anymore. Keep your records on this too. If you have kids in daycare the daycare provider is required to give you a form for this.

This all stuff your tax preparer can answer for you though.
H & R Block is a good option - costs a few hundred but they answer a lot of questions and give you some guarantees. And their rates are certainly less than most independants. See if there is a center near you and call and see if there is a preparer who is expert with small business/self-employed filers.
If you do it yourself you could miss a LOT - and the time and worry involved is tremendous. Paying someone else is very worthwhile.
Remember - your good record keeping will help the most.
Good luck

 

[RJDm]

Tax questions, Please help!!

You DO need to speak with your tax return preparer...
you can get the forms and filing schedule from her Done, emailed her all my ?'s

I am NOT an accountant at all -however,

to set your mind at ease a little bit...
your income tax will be based on what you earn for the entire year - so don't worry if your income spikes in the odd month.We are very seasonal here, so hopefully spiking for the next 4 months, yes it's hard to plan having no idea really how much I'll make.

If you did not or will not earn enough to end up owing anything in taxes then you can breathe easy because you do NOT have to file quarterly.I won't, but with my husband working too, we might have to pay in.

Pay attention though because what happens THIS year will affect what you do next year ( I am assuming that this is your first year that you have self-employed income) In several years, and the last time I was single.

If you owe taxes this year (State and Federal) then you will be required to pay ESTIMATED quarterly taxes next year.That makes sense.
I wouldn't worry about penalties at all - most MT's are not earning enough to worry about this.

I am a single parent so my deductions are high enough that I have not had to pay any additional taxes for 3 years (when I filed jointly previously when married we always had to pay - but that was because my ex underpaid and we were in a different tax bracket)

Your income tax preparer will help with deductions.
But good record keeping will make that easier.
Keep a record of all expenditures - whether you are sure or not - keep receipts
Your car mileage is a big one - keep good records for this.
I made up my own forms to track mileage, income and expenses - I like to write things down - I am so old school!Me too! I just bought an old black log book. lol
But you can keep electronic records - you'll probably have to print stuff out for your preparer.

Your website is a business expense.
Your phone is a business expense - since it is also for personal use you may not be able to claim this.
ALL supplies are a business expense.
You home office is NOT a business expense unless that area is not used for anything else - since you are only doing a few massages at home I wouldn't worry about using this as a deduction for 2009. However, you might want to consider for next year setting up a dedicated home work space.
Education is a deduction - cost of class, lodging, and travel. Meals only if the class is not local.
Books, trade journals, training materials are a deduction.
ABMP is a deduction - it is your INSURANCE not dues.

Personal Life and Health insurance is not a deduction as far as I know - but you can check.
Uncovered medical and dental payments ARE.
Disability insurance might be - I don't know

I don't have little kids any more so the child-care thing doesn't come up for me anymore. Keep your records on this too. If you have kids in daycare the daycare provider is required to give you a form for this.

This all stuff your tax preparer can answer for you though.
H & R Block is a good option - costs a few hundred but they answer a lot of questions and give you some guarantees. And their rates are certainly less than most independants. See if there is a center near you and call and see if there is a preparer who is expert with small business/self-employed filers.
If you do it yourself you could miss a LOT - and the time and worry involved is tremendous. Paying someone else is very worthwhile.
Remember - your good record keeping will help the most.
Good luck Thank you!!

 

[ddrum]

Tax questions, Please help!!

Basic version of Quickbooks is well worth the outlay, and it is a depreciable business investment.

 

[Audrey Hepburn]

Tax questions, Please help!!

LOL - I have to laugh because I just got an email today from H&R block (speak of the devil...)that listed 10 deductions for small businesses
Check 'em out...

1.Self-employed health insurance deduction

You can deduct 100% of the premiums for your business health plan. Do you know how to set up a qualifying health plan for your business?

2. One-half of self-employment tax

To help “even the score” with employees, half of your self-employment (social security and Medicare) tax is deductible.

3. Office-in-home

If you use an area of your home regularly and exclusively for your business, you may qualify to claim an office-in-home deduction. Just keep good records. See Business Use of Your Home for details.

4. Retirement plan contributions (your own and your share of employee contributions)

There are many types of plans that are suitable for small businesses. Find out which retirement plan is best for you and your employees.

5. HSA contribution

A qualifying high-deductible health plan, in combination with a health savings account, can provide a tax-advaneforum.xxxed way to pay medical expenses and reduce costs. HSA contributions are deductible in addition to your health insurance deduction.

6. Depreciation of business assets and equipment

In addition to “regular” depreciation, don’t forget bonus depreciation and special expensing options are available this year.

7. Business insurance

Is your business insured? If so, the premiums are generally deductible. If you don’t have business insurance, can you really afford not to?

8. Business fees and licenses

They may not amount to much, or they may be a big part of your operating budget—but they’re deductible in any case.

9. Obsolescence

Keep good records of inventory that is discarded for any reason. If you cannot sell it, the cost can usually be written off.

10. Interest on business loans

It’s best to keep business loans separate, but you can prorate interest paid on a loan used both for business and other purposes, and deduct the business portion against your business income.

 

[Pompal 09.]

Tax questions, Please help!!

I file quartly, 1040 ES form, you can pay online. And 25% of what I send to the feds I send to my state. And I save everything bc it all ads up durning the year. I use turbo tax to file my taxes and it was farley pain less and it explains all of your dections. Just becareful about the home office that send red flags to the IRS for an audit so you want to make sure all of your ducks are in a row.

 

[Valeria1203]

Tax questions, Please help!!

You can also write off child care too on your personal taxes, but you need to have your child care providers SS# to file for this and they need to be a legal provider in your state

 

[Diddy]

Tax questions, Please help!!

I file quartly, 1040 ES form, you can pay online. And 25% of what I send to the feds I send to my state. And I save everything bc it all ads up durning the year. I use turbo tax to file my taxes and it was farley pain less and it explains all of your dections. Just becareful about the home office that send red flags to the IRS for an audit so you want to make sure all of your ducks are in a row.

I used Turbo-tax delux for fed and state in 2006.
H&R Block re-did that in 2007 and I got almost $400 more.

Really - PAY someone to do it. Less time, less worry, and less likely to be subject to review/audit.

 

[Pompal 09.]

Tax questions, Please help!!

You can also write off child care too on your personal taxes, but you need to have your child care providers SS# to file for this and they need to be a legal provider in your state

He's in a center, so I'm good there.

 

[malik]

Tax questions, Please help!!

I file quartly, 1040 ES form, you can pay online. And 25% of what I send to the feds I send to my state. And I save everything bc it all ads up durning the year. I use turbo tax to file my taxes and it was farley pain less and it explains all of your dections. Just becareful about the home office that send red flags to the IRS for an audit so you want to make sure all of your ducks are in a row.

I used Turbo-tax delux for fed and state in 2006.
H&R Block re-did that in 2007 and I got almost $400 more.

Really - PAY someone to do it. Less time, less worry, and less likely to be subject to review/audit.

My CPA has done my taxes since I was 16, now she trades for massage. She said don't do the home office unless it's my main source of income.

 

[Midnight Rider]

Tax questions, Please help!!

You can also write off child care too on your personal taxes, but you need to have your child care providers SS# to file for this and they need to be a legal provider in your state

He's in a center, so I'm good there.

Since when is the requirement to have the child in a registered daycare to have the daycare be a tax deduction? I haven't done daycare for several years, but I only had a few kids part time so never did any state licensing, and the people all deducted child care from their taxes. Interesting - and sad - if they don't allow deductions for such nice alternatives anymore.

 

[Braniac w/ no Brain]

Tax questions, Please help!!

You can also write off child care too on your personal taxes, but you need to have your child care providers SS# to file for this and they need to be a legal provider in your state

He's in a center, so I'm good there.

Since when is the requirement to have the child in a registered daycare to have the daycare be a tax deduction? I haven't done daycare for several years, but I only had a few kids part time so never did any state licensing, and the people all deducted child care from their taxes. Interesting - and sad - if they don't allow deductions for such nice alternatives anymore.

I think it has to do with the daycare provider reporting and paying taxes on their income. Many don't. I can't just say I paid $4k in cash for "babysitting". You at least need the providers SS #. It does not have to be a center, but they do give you a form at the end of the year to use, which is nice.

 

[reitakitty]

Tax questions, Please help!!

Ah, yes, I did provide them with my SS #, and paid taxes on the income, though I didn't give them a form. We did check our records against each other to be sure we both had it right - and the same!!