Anyone here file their own taxes, and have to file a Schedule C?

[Clay]

This is really more geared towards those who have a small part time business, and not those who work full time for themselves.

My wife started selling Tastefully Simple (an MLM similar to Mary Kay or Avon, but with food products) last year, and actually must have sold a bunch, because she received a 1099 for it.

I've always done my own taxes, so Im working my way through the Schedule C for her business. Im just wondering who else files a Schedule C, does it themselves, and under similar circumstances, so that I might pick your brain.

I'm considering going to a Pro, but its getting kind of late for that, and I dont know of many that I would trust, OR that aren't so busy they can take on extra work.

thanks!
Clay

 

[woowoo2]

I have done it for years, using taxcut software.
Rule of thumb for 1099's, you owe 25% of the total in taxes.

 

[Fletch]

 

[Clay]

yeah I figure we will owe something in taxes on it, but Im also trying to figure in what ever deductions I can for mileage. Ive used Turbotax, and the last 3 years Ive started using TaxSlayer. I get tripped up on some of the questions about my house/mortgage/etc. I mean she does have a small area in the house she uses for her business, and she does use the internet for most of her business transactions, and her cell phone as well.

My goal is to minimize the amount of profit, to minimize the amount of taxes we owe, with out going overboard.

 

[Clay]

^^^^^^^ Yup, thats me!!!!!!!!!!!

 

[Hkindiana]

I've read that taking a deduction for the business use of your home is one of the major red flags for an audit. IMO, it is not worth the risk. Also, be sure to fill out a schedule SE for her to pay social security tax on what she has earned.

 

[jsharmon7]

I have done it for years, using taxcut software.
Rule of thumb for 1099's, you owe 25% of the total in taxes.

I have owed enough to Uncle Sam to buy a very nice 1911 every year since I started my side business 10 years ago. I just set aside part of it every time I get paid and wait patiently to send it to our friend the IRS. It just BARELY makes it worthwhile to keep the business up and running.

 

[pjcalla]

yeah I figure we will owe something in taxes on it, but Im also trying to figure in what ever deductions I can for mileage. Ive used Turbotax, and the last 3 years Ive started using TaxSlayer. I get tripped up on some of the questions about my house/mortgage/etc. I mean she does have a small area in the house she uses for her business, and she does use the internet for most of her business transactions, and her cell phone as well.

My goal is to minimize the amount of profit, to minimize the amount of taxes we owe, with out going overboard.

For the mileage expense, there are two ways of computing it. First, the actual expenses, which isn't used that often because of the pain in the ass to support it/compute it. Second, the standard mileage deduction. It is $0.50 per mile driven for business purposes. If using this method, it is best to have written documentation to support it if you get audited.

IRS Announces 2010 Standard Mileage Rates

As far as the home office deduction, that's a crap shoot. Generally, you have to only use that room for the business, nothing else. Does she meet clients in the home office? Here are some guidelines for that deduction:

Work From Home? Consider the Home Office Deduction

For the internet, is it a different line/connection that she uses exclusively for the business? If you use it to surf INGO, it probably won't fly with the IRS. If you want to deduct the cell phone, you will probably have to get the detail of all the calls, and separate the business from personal, use that percentage of the total expense.

Here is some guidance from the IRS:
Publications and Forms for the Self-Employed

All this being said, you probably won't get audited, but I would be sure to have everything ready to back up your deductions. You don't want to be caught on the wrong side of the IRS for trying to reduce you tax by a few hundred dollars. It will cost you way more than that if they think you are trying to cheat the system.

Good luck!

* * * * * * * * * Circular 230 Disclosure Footer* * * * * * * * * * * * * *

IRS rules dictate that we give you the following notice: Any tax advice or opinion herein contained is not intended to be used, and cannot be used, by anyone to avoid the imposition of any federal tax penalties.

 

[spasmo]

I have done our taxes for years. On occasion I have to have a professional do it like this year.

I have always used TurboTax. I have never used my house as a right off until this year. The CPA talked me into it. What I did before that though, is I calculated internet usage based on 40 hours a week for the year and took that percentage of the internet bill as a write off for my business.

This year for mileage though I know that either TurboTax itself or the government changed things. TT wanted me to determine how many miles the car itself was driven and then how many miles I drove it for work related miles and then it used that somehow in its calculations.

So this year because I also have a second business I got the CPA so I could determine what I need to do for future years. My one business is service only so I have no sales tax. The second one is retail like your wife. I'm not sure how taxes and things are handled on what your wife does. I created an LLC and I also have to get a tax id from the state. It's difficult to answer because I'm not a CPA.

I wish I could give you a better answer because I've been in your boat which is why I went to a CPA this year. I went to one who does it out of his home so I didn't have to pay the prices of what H&R Block charges.

I would recommend trying to find a CPA this year to see how they are done and then do them yourself next year. You can file an extension up until the 18th if you can't get it done before then and the CPA if he/she can't do the taxes will usually finally the extension for you.

 

[pjcalla]

You can file an extension up until the 18th if you can't get it done before then and the CPA if he/she can't do the taxes will usually finally the extension for you.

Just remember, if you file an extension, it is an extension to file your tax return, not an extension to pay. You MUST send in an estimated tax payment with your extension. If you "estimate" extremely low, you could also be liable for penalties and interest.

 

[Clay]

well I contacted a local INGO member / CPA and have an appt for this afternoon. I will sleep better at night knowing its done right!!!!!!!!!!

thanks for all the info guys!

 

[Indy_Guy_77]

The rules/regs covering the tax laws / deductions for home office space are VERY well defined and pretty narrow. It can also affect your property taxes...

My suggestion is that you don't fiddle with that what-so-ever.

As far as cell phone for work, internet for work... Figure out what "percentage" of that usage is for work and deduct that.

 

[Clay]

Well, got my taxes knocked out yesterday!

Big Thanks to Beans&Bullets for all the help!!