Posted by John_NorCal on 11/14/06 11:12pm
Msg #160126

Update to previous post re: taxes

Larry/CA posted about his reporting of self employment tax on his tax return. Seems that he relied on advice from the IRS agent or at least his interpretation of the advice given. You have probably all heard that if you pose a question to the IRS "help" line 3 times, you will get 3 different answers. There have been cases in tax court where the tax payer was ruled against even though they relied on advice given by an IRS agent (in person no less!) in a particular case. The court ruled that since the advice was not given in written form there was no standing to rely on such advice. So get it in writing folks!
P.S. Notary income is reported on line 3 of Sched SE for the SE tax exclusion.

Reply by Larry/Ca on 11/15/06 1:15am
Msg #160149

John, I glad I posted and you.....

responded as it prompted me to search the tax laws and to my surprise what I was told by IRS on the phone was indeed incorrect. Although it is entirely possible that it was my misunderstanding of what the guy said. I thought I had the taxes on this gig in the bag until last night. I will certainly follow the tax law with regards to reporting this income as spelled out in IRS Pulication 525 and the Publication on SE tax as it applies to notary fees. I always have tax questions around tax time because I have never used a tax guy. I've always asked the IRS. I think that I will rely on the online tax publications this year.

thanks again, Larry

Reply by Larry/Ca on 11/15/06 1:20am
Msg #160151

Re: John, I'm glad 'correction' n/m

Reply by Lee/AR on 11/15/06 4:59am
Msg #160159

I have heard that calling the IRS provides incorrect info 38% of the time. And you really need to check out your own tax advisor because they often don't know everything due to the complexity of our tax laws.

Reply by Jason on 11/15/06 5:16am
Msg #160160

John: FreeTaxAct.com

FreeTaxAct.com offers an online program like Turbo Tax for free.

They take u thru a Q&A process to collect the data.

I use it 2 do my taxes. I use it during the yr to mock up how my tax liability is looking.

u might give it a try to help get the hang of how taxes work for biz owners.

+ see a tax professnl to do yr final tax return. Yr initial thought of taking notary fees off yr sched c could've gotten u into lots of trouble. b safe.

I was impressed u thanked the people who corrected u. That rarely happens on this board.

Reply by John_NorCal on 11/15/06 8:27am
Msg #160192

Re: John: FreeTaxAct.com

For a simple return programs like Tax Cut, Turbo Tax, etc are probably just fine. But when you get into complicated returns, with depreciation schedules, stock options, etc, it's best to go to a professional. Last year I correceted quite a few returns that people had prepared with their commercial software. the errors I found ranged from minor to significant. Tax law changes every year, that's why as licensed preparers we go many, many seminars. Just yesterday I learned some very interesting things about home mortgage deductions. Many people take deductions that they really aren't entitled to. And there are many business owners who can allocate their interest payment deductions to minimize their overall taxes.

Reply by MelissaCT on 11/15/06 8:54am
Msg #160204

I do my own taxes then take to my accountant for review

I also NEVER fully take what I might be entitled to deduct. If pulled for audit, I do want to have some items that I didn't deduct "in the bag".

Did a signing for a couple who had won the lottery ($5k per month for life). Got audited & had saved all the loser tickets for years (on advice of their accountant). Auditor found that the IRS OWED them money!! Better to be on that side of the fence than the other!

Reply by cassiewi on 11/15/06 9:10am
Msg #160214

Re: John: FreeTaxAct.com

Since I go to a tax preparer, he should know what he's doing right? My husband, before we were married, got audited 2 years in a row in 97 and 98. Since then, we have gone to the same person and have never had a problem. This is my first full year doing signings, so I'm slightly nervous about tax time. I've already spoken to him and he told me what to prepare for.