Tax advice info

[CharityLynn]

Ok, I'm not looking at giving out a ton of information but I'm starting to question some advice I got a couple months ago.

I started working as an independent contractor in July, I don't make much at all, lucky if I make $400 a month (YTD is around $1800)

A friend of mine told me to just claim it as taxable income on our taxes. Is this the correct advice? I always do my taxes on my home computer do you think it would be smart to go to H and R Block this year and have them do it? We normally pay city and state tax (Always under $300) and we tend to get back around or over $2000 in Federal

I'm just worried that we will be getting drastically less. Sigh, any advice would be appreciated.

TIA, Charity

 

[mirmartinez]

Go to a CPA or a tax servive, they will be able to pinpoint business deductions

Ok, I'm not looking at giving out a ton of information but I'm starting to question some advice I got a couple months ago.

I started working as an independent contractor in July, I don't make much at all, lucky if I make $400 a month (YTD is around $1800)

A friend of mine told me to just claim it as taxable income on our taxes. Is this the correct advice? I always do my taxes on my home computer do you think it would be smart to go to H and R Block this year and have them do it? We normally pay city and state tax (Always under $300) and we tend to get back around or over $2000 in Federal

I'm just worried that we will be getting drastically less. Sigh, any advice would be appreciated.

TIA, Charity

 

[CharityLynn]

I'm pretty sure I won't have any business deductions. I don't have a room specifically for work. My computer is in my bedroom and I haven't bought anything for my job at all.

 

[SundancePass]

Are you a 1099 Independent Contractor? If so, there are MAJOR tax implications. I would suggest seeking professional (read CPA) advice, NOT H&R block. A 1099 person is eseentially (checking everything from here on with a CPA) running his/her own company using his/her Social Security number. This means that when "earnings" by the "company" are taxed, the "company" has to pay BOTH the employer AND the employee FICA tax. And if you claim unemployement, you won't get it because you are an independent contractor. My advice is do not use H&R Block or anyone like that. Pay the $100 it will cost for a consulting fee and get CPA advice now. Don't wait. Good luck!

 

[JB111107]

if you are working out of a home office there are several deductions you can use, but as an Independent contractor, you are not paying income taxes on most of your income off the top like you would from a regular employer. You will likely be receiving a 1099 from each entity that employs you, and you must claim that as taxable income. If it is below a certain amount (I'm not sure what the amount is now, it has been a few years since I did this) you won't be required to pay taxes on it, but if you are married filing jointly it will be a combined total of your incomes.

If you have a home office, you need to determine how much of your home is dedicated to your business (space-wise), and figure out what percentage of your square footage that is. You can deduct that percentage of your house payments, insurance, and utilities (water/gas/electric) as business expenses, phone lines and internet, office equipment (computer, fax machine, etc) can be fully deducted as business expenses. If you are "upside down" on expenses vs income you won't end up owing any taxes on the income.

You can also deduct mileage on your car for business expenses so hopefully you've been keeping track of mileage you incur on your vehicle for business.

One thing to keep in mind-having a home based business that has tax deductions is a very fine line, and should you ever be audited, please be sure you have good documentation and accountability for everything you deduct. Keep a good record of your mileage in a daily log, copies of your utility bills, receipts, etc.

 

[CharityLynn]

I work for ChaCha its a text messaging company so I don't have to travel at all for it. Man this sounds like it is going to be a pain in the butt lol.

 

[momof1princess]

lol, i work for chacha too, and have made a good bit more than you. now i'm scared...

 

[Cheshire Figment]

I would suggest that you get to a tax accountant now! YOu need to learn what records you have to keep and get an idea before the end of the year of what you need to do.

One thing to realize is that if you made $600 or more during the year they must report their payments to you to the IRS and they must send you a Form 1099-MISC showing that amount as "Non-Employee Compensation". And note the law only requires issuance of a 1099 if the income is $600 or more, but many companies will select a lower amount.

Mike (CPA Retired)

 

[momof1princess]

sheesh, if i had known i'd have to shell out several hundred bucks just for someone to do my taxes, i'd never have bothered taking the job. when i was broke, i could do them myself from home through turbotax. what a pain.

 

[CharityLynn]

I know! I am getting stressed out about this. A friend of mine did phone in surveys and she said she just added them to taxable income and that was all I'd have to do but the more I research the more nervous I get. Her sister is an accountant or whatever so I'll probably see if she won't help me out, she'll charge a lot less and she is licensed or whatever you need to be to do taxes.

 

[momof1princess]

ugh, i know a woman who's licensed to do them too, she used to do my taxes before i got my PC, but i don't know that she's qualified to handle THIS mess. as if, with all that's going on with work right now, we needed another headache.

 

[golfgal]

ugh, i know a woman who's licensed to do them too, she used to do my taxes before i got my PC, but i don't know that she's qualified to handle THIS mess. as if, with all that's going on with work right now, we needed another headache.

It is really not that much of a mess at all, especially if you don't really have any deductions yet. If this is something you will be doing long term and earn a lot of money doing you might want to invest in Quickbooks and get an accountant--they aren't all that expensive. I am an independent contractor but am a statutory employee at the same time-basically my 'employer' pays my FICA. I keep every and all receipts, notated with what they were used for-especially any meals. Since you don't travel for work you won't need to worry about tracking mileage-which is a pain in the rear.

 

[momof1princess]

thanks that makes me feel a little better. i don't really have any deductions. i guess i MIGHT be able to deduct the cost of my DSL, but that's about it. my computer is in my living room so i don't have an "office". i've made about $4,000 since mid-june, and it's the first income i've had in 9 years. figures i'd luck into something that's gonna give me a hard time, lol.

 

[corndog]

I always do my taxes on my home computer do you think it would be smart to go to H and R Block this year and have them do it?

It is NEVER smart to go to H & R Block. Period.

 

[momof1princess]

It is NEVER smart to go to H & R Block. Period.

ain't that the truth!