Posted by eXpedN_TX on 12/16/05 10:09am
Msg #83008
Tax season is upon us
For those of you interested in learning more about taxes for yourself or what your CPA is working with, read on.
When you file the income tax return at the end of the year, you include the income from the business on the return. The forms to be filed are:
Form 1040 - http://www.irs.gov/pub/irs-pdf/f1040.pdf U.S. Individual Income Tax Return,
Form 1040, Schedule C - http://www.irs.gov/pub/irs-pdf/f1040sc.pdf Profit or Loss from Business
Form 1040, Schedule SE - http://www.irs.gov/pub/irs-pdf/f1040sse.pdf Self-Employment Tax.
If estimated tax payments where made during the year, they will be claimed on the individual income tax return as payments. See Form 1040, Line 57.
Form W-2 vs. Form 1099-MISC
Both of these forms are called information returns. The Form W-2 is used by employers to report wages, tips and other compensation paid to an employee. The form also reports the employee's income tax and Social Security taxes withheld and any advanced earned income credit payments. The Form W-2 is provided by the employer to the employee and the Social Security Administration.
A Form 1099-MISC is used to report payments made in the course of a trade or business to another person or business who is not an employee. The form is required among other things, when payments of $10 or more in gross royalties or $600 or more in rents or compensation are paid. The form is provided by the payor to the IRS and the person or business that received the payment.
If you do not receive tax paperwork from a Signing Service, it may mean you didn’t make more than $600 from doing business with them. You still want to report those earnings to the IRS.
Use of home for business/Deducting Expenses
To deduct expenses related to the business use of part of your home, you must meet specific requirements. Even then, your deduction may be limited. Your use of the business part of your home must be:
• Exclusive (exceptions - You use part of your home for the storage of inventory or product samples or you use part of your home as a day-care facility.
• Regular,
• For your trade or business, AND
The business part of your home must be one of the following:
• Your principal place of business,
• A place where you meet or deal with patients, clients, or customers in the normal course of your trade or business, or
• A separate structure (not attached to your home) you use in connection with your trade or business.
Business expenses that can be deducted can be found here: http://www.irs.gov/businesses/small/article/0,,id=109807,00.html
If you do not have an EIN/TIN, you may want to get one ASAP. It is a very quick and easy process to get one if you go to the irs.gov website.
If you would like to be your own CPA, there is a lot of training and free help available. http://www.irs.gov/businesses/small/article/0,,id=99202,00.html
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