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. any small business owners? or just smart people?
GreenLantern
Member Posts: 1,647 ✭✭✭
Hello everyone! I haven't shown my face around here in a long time. If I'd have known that having a kid took up so much of my free time, I would have just gotten another cat instead! [:D]
Seriously though, I'm looking for some guidence on how to approach my taxes for this year. To make a long story short, this year my wife (stay at home mom) started selling vacuum cleaners on the side. She isn't any employee of the company that she gets the vacuum cleaners from so they did not do anything witholding. We also want to be able to write off her mileage and other misc expenses on our taxes.
Secondly, 2 days a week she also watches another 1 year old. Unfortunately she didn't set the deal up as "cash only", so we give the parents a weekly receipt. My wife also thinks that we can now deduct things like part of our utilities, our mortage (or some of it anyways, not just the interest part), etc.
So, my thinking is that I probably can't go with filing individual/personal and need maybe file as a business but I don't know if this is the right way to go. My plan is to do the taxes myself and pay someone $150-200 to just look them over. Anyone know what kind of options I have here?
Seriously though, I'm looking for some guidence on how to approach my taxes for this year. To make a long story short, this year my wife (stay at home mom) started selling vacuum cleaners on the side. She isn't any employee of the company that she gets the vacuum cleaners from so they did not do anything witholding. We also want to be able to write off her mileage and other misc expenses on our taxes.
Secondly, 2 days a week she also watches another 1 year old. Unfortunately she didn't set the deal up as "cash only", so we give the parents a weekly receipt. My wife also thinks that we can now deduct things like part of our utilities, our mortage (or some of it anyways, not just the interest part), etc.
So, my thinking is that I probably can't go with filing individual/personal and need maybe file as a business but I don't know if this is the right way to go. My plan is to do the taxes myself and pay someone $150-200 to just look them over. Anyone know what kind of options I have here?
Comments
i am self employed as a private contractor, i get no taxes withdrawn, i pay no taxes, however i have to pay for the vehicle, gas and maintenance, so the mileage option always works for me, with my house and earned income credits, i will still receive a refund {i am not even going to state the amount some here would loose their minds}, and in my opinion the child care write off for the amount for two days a week could be a bit tricky, it works on a percentage basis, and since you are giving receipts, you are now bound to claim it as income, but writing off expenses could be risky, one rule i can tell you is do not get greedy
example, my sister in-law has ran a daycare out of her house for 15 years, she has a room dedicated for it, this room occupies 15 % of the square footage of the home, she is able to write off only 15% of the household utilities, she is able to write off mileage since she uses a dedicated vehicle to transport them, in addition to all receipts used for food and supplies for them{hope you have the receipts}
I myself have went to turbo tax since 00, and never looked back, my taxes before have cost me up to 750.00 for a cpa to file, and the deductions where the same, and turbo tax cost 35.00, it is done in one hour, filed right when I want it to be, it works easy, very self explanatory, and will throw up a red flag on any transaction that would be questionable to the irs, you can try it for free and pay when you decide to file
I am a one man shop and am incorporated as an 1120-S Corp. That's a pass through set up as your companies profits accrue to you so there is only a single tax paid on profits. The company owns the car, all gas and repairs are deductible. All office supplies, phone, etc. I don't pay any part of the mortgage, but, do contribute to electricity useage.
I don't take a step without talking to my accountant to make sure I'm clear. If you're serious about this do it right and get the bennies of the corporate veil.
If your filing staus is similar next year, you might try doing it yourself using this years return as a guide. The only reason to do this without an accountant is to save money for example:If your wife only made $1000 a year babysitting, I wouldn't spend $300 on an accountant(I'd find some way to hide the income and not declare it)
Maybe spending more for a cpa could get a little more return.
Go in with all reciepts and keep in mind to push for all deductions possilble, next year H&R will have you on file and can follow last years deductions makein the process smoother. Sometimes a CPA's moves, quites, etc, H&R will always be there, no worry.
My brother had a fancy CPA once and laughed at us for being so dependent on H&R Block.
One day he got audited - called the CPA and the CPA told him to "get in line" for his services. Seems that the CPA was going away for a while to FedMed and my brother escaped with only $10,000 in assessed fines and penalties. That was the last year he used the fancy CPA's.[8D]
Never a single question. If it looks reasonable, they will process it.
In the past I migbht do something wrong, and owe $50-$150, or the other way around.
http://roastedwholebean.com/
Unfortunately next year is going to look different from this one as far as tax/income. No vacuum cleaner sales but way more baby sitting money.
Right now we are looking at $1200 in vacuum income and $750 for babysitting. Next year it will only be babysitting, but more like $3000.
1911a1fan, thank you for your reply. It sheds light on how much of our house hold expenses I think we can write off. My wifes friend watches 3-4 kids per day (my guestimation), 5 days a week. Just enough to not have to be a licensed day care. She's got my wife thinking we can write off just about every little household expenditure, and I've tried to tell her that I don't think you can just write off anything and everything. I.E., my wife only watches 1 kid, 2 days a week!
Anyway, I've got a couple of months before it's sink or swim!
She's got my wife thinking we can write off just about every little household expenditure, and I've tried to tell her that I don't think you can just write off anything and everything. I.E., my wife only watches 1 kid, 2 days a week!
You can only write-off that portion of the house actually used to generate income, and only for that percentage of the time actually used for such purpose. I suppose you could get creative and write-off part of the kitchen for the time you use it to prepare meals for the kids being sat, but you better keep good records.
quote:Originally posted by GreenLantern
She's got my wife thinking we can write off just about every little household expenditure, and I've tried to tell her that I don't think you can just write off anything and everything. I.E., my wife only watches 1 kid, 2 days a week!
You can only write-off that portion of the house actually used to generate income, and only for that percentage of the time actually used for such purpose. I suppose you could get creative and write-off part of the kitchen for the time you use it to prepare meals for the kids being sat, but you better keep good records.
If you sell your house for a profit you will have to pay taxes on the profit from the portion of the house you wrote off. I know a lot of folks who lived in Silicon Valley and had home offices which they naturally tried to write off.
Home values skyrocketed and when they sold they wished they had never tried saving a a few bucks per month by writing off a spare bedroom. When your home value quadruples in ten years that bedroom office gains tens of thousands of dollars of taxable value.
When your home value quadruples in ten years that bedroom office gains tens of thousands of dollars of taxable value.
Yes, when I sold my porn business I had to pay capital gains both on the sale of the business and the use of the bedroom I had deducted on previous returns.
quote:Originally posted by hughbetcha
When your home value quadruples in ten years that bedroom office gains tens of thousands of dollars of taxable value.
Yes, when I sold my porn business I had to pay capital gains both on the sale of the business and the use of the bedroom I had deducted on previous returns.
If the IRS ever finds out about the girl you had chained-up under the stairs for seven years they might make prove you were not charging her rent.
With daycare, you can deduct expenses of the home, but is is dependent on the square footage of the space available to the kids and also the number of hours operated. Example - you have a 2000 sq ft home and the kids have access to half of it. Your wife is babysitting two days per week for 12 hours per day. You could deduct 7.14% (1,000/2,000 times 24/168) of the indirect expenses of the home (utilities, insurance, taxes, repairs, interest) in addition to 100% of the direct costs you have incurred. As mentioned before, you might depreciate a portion of the house, but I would strongly discourage that. If you sold it later, you would have to pay back taxes on all the depreciation you had taken.
I assume your child is just an infant, but if you have any other children old enough (but less than 18) for responsibilities, put them on payroll. Wages paid to a taxpayers child under age of 18 is exempt from social security taxes and under age of 21 is exempt from federal unemployment. The child will have a $5,000 standard deduction, so if you pay them less than $5,000 they would not have any income tax. You still get their personal exemption. Boom, you now have a $5,000 deduction saving you $$$ and there is absolutely no taxes to them. You would just need to make sure to file quarterly reports (941) and give them a W2 at year end. I do this myself and have my clients do the same.
Email me with any questions and I will be glad to respond. May take a couple of days, as tax season is starting, but I will get back with you.
This also depends on how much you make. Trust me It will keep you out of IRS woes. [:)]
H&R Blockheads can cause a lot of problems-