To report or not to report

[Gtry.]

With tax time upon us once again, what are opinions on independent contractor status?  I had 3 jobs last year where I was a 1099/IC and I didn't receive any W2's or anything else from them for the work I did.  One job was a significant amount (over $2000) and another one was under $200.  Am I obligated to report this income?  What about deductions such as mileage and supplies?  Can I report these under my regular 'employee' job?  What about gratuities?  I know some people do and some don't, but I'm just worried about getting hit big time for the taxes that weren't taken out because I am self-employed....and are there people here that file on a quarterly basis that are self employed?  Any suggestions on the best way to handle this?

 

[Julia S]

hi Reba627,Here is some general advice from someone who is not an accountant.  Everything that is on paper (1099's, bank statements etc) absolutely needs to be reported, and I'll leave it at that.  My accountant would say to get aggressive with your mileage.  You cannot deduct mileage from your home to your regular office but you can deduct any mileage for networking, buying supplies, research etc.  Also she would say deduct everything that you purchased for your business, down to the tiniest bottle of oil.  Aside from that, it always helps to get a good accountant to do the figuring for you.  She/he can usually give you a quick idea of what you owe before doing the actual return.Hope this helpsCassandra

 

[Kkbetch]

Oh, I tracked mileage for everything...trips to the post office, office supply store, etc.  But what about my clients who pay me cash/checks?  I track my mileage from my home to theirs, can that be counted as well?  I've been pretty good about keeping track of the supplies that I buy as people tell me that there are SO many tax breaks for self employed individuals....let's see if they're right!

 

[summer is almost over]

Don't forget about all the fee for licensing, professional associations, business magazines, journals, furnishings, electronics, business meeting lunches, parking receipts and the list goes on.  Also, I realize there is a lot of cash in our business and some people choose to not report it but if you don't (first off, it's against the law but that's everyone's individual decision), AND if it's not reported to Social Security your benefits under Social Security will be lower at retirement.   Food for thought.  Joe E.

 

[John "THE GREAT"]

You're right!  I forgot all about everything else, my ABMP membership, the table I just bought, the magazine subscriptions, my cell phone, everything!!!  I want to report all of my cash income because right now I need as much income to be proved as I can, thanks Joe!

 

[Mommy to Max ~*6-11-09*~]

Reba,  I think the first thing that should be said.  Hire a tax advisor.  Around here the going rate for small business is $90 and that is a business expense.  It can save you a lot in the end.  They also know all the rules that change from year to year.  The first year I was in business I did my own taxes, then I friend from a previous job tell me she was doing taxes again.  I went to her and saved $1400 now she does them every year.  Some things I have learned from being audited.  You can not write off your home phone (I tried), or all of your cell phone (they want to know how many personal calls you get)  Some of your equipment must be depreciated (I think that changed this year, but I am not certain)  THE IRS CONSIDERS US A TIPPABLE SERVICE,  That means the expect that a perceneforum.xxxe of our clients give us a tip (around 15% I believe) and they will consider that into your income--UNLESS YOU HAVE A WRITTEN POLICY STATING THAT YOU DO NOT TAKE TIPS.  Nothing I read said you had to follow your own policy (not that I am suggesting this...lol)  But like I said talk to a pro.  after all thats what we want them to do after they do everyones taxes,  see a pro.  US....

 

[VINTAGE MUSIC]

To report or not to report

If you want to do your taxes yourself, try TurboTax for Small Businesses. I have been doing my own for years. Each years' version is updated with the newest changes in laws, info on tax benefits & deductions, etc. Not every Independent Contracter has to file quarterly (Turbo Tax also helps you to figure out if you are one of those with an easy worksheet & electronic feature).I may not be in the majority at all here, but I report everything. I also deduct everything allowable. The reason I report all income (including cash/checks & gratuities) is that its important to my future business plan & our goals as a family to buy a new home to be able to prove my income as a self- employed person. I honestly believe in being accountable too. Its a personal quest of mine.Jill/Sagetherapist

 

[Glenn T]

That's what I was thinking Jill....I want to be able to buy a house someday in the next couple of years and if my income is cut in half because I didn't report all of it, that will look poorly on me.  I am going to an accountant this year because I'm just not sure on what is allowed and what isn't.  I hope I can deduct part of my cell phone though!!!  I'm going Thursday, I'll let you all know!

 

[MikeE]

To report or not to report

I just received my license last week in NYS!!!! as far as taxes go, does our service charge sales tax???? I know people charge a round number like $70 but does that include sales tax when figuring out everything???

 

[MikeL]

To report or not to report

I would think that you would only be charging sales tax on resale items (i.e., merchandise) but I could be wrong...

 

[redapples]

To report or not to report

I have had an accountant do my taxes for the last several years. 2003 was the first year I had any sort of self-employment, ie a business. I talked with a bookkeeper and he said two things:Quicken (or MS Money)TurbotaxHe also stressed getting the BASIC versions of these programs, not the deluxe, professional, etc. His opinion is that the basic versions do all you need, and for this one-man operation, I found that to be true. Although I did use the Deluxe version of Turbotax because I got a rebate on it.MS Money really helped me find all my biz expenses and print a report listing them all.Turbo tax has all the formulas built in for depreciating large items, like computers, massage chairs/tables, even if you use that item partially for personal use. Turbotax made it very easy and it had lots of help file stuff.He also said you can count your mileage from your OFFICE (or your home IF you have a home office) to wherever you are going for business (client, office supply store, etc). Do not count the mileage from your home to a client's house, if you do not have a home office.I did not know the IRS considers our profession a tipping one, good to know.Anyone care to list common red flags to being audited?