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Pampered Chef: Early Tax Question

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  1. amya

    amya Member

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    I know it is probably too early to think about taxes, but my family has experienced some financial difficulties and have had to really tighten up our budget. I only started with PC in March of this year so I have no idea what to expect in April when we do our taxes. Anyone who can let me know what to expect from the tax guy will be greatly appreciated.

    Thanks in advance.
     
    Sep 12, 2005
    #1
  2. BethCooks4U

    BethCooks4U Legend Member Gold Member

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    Unless you have had fabulous sales you don't need to worry at all. You can deduct ALL expenses and it will probably be a wash.
     
    Sep 12, 2005
    #2
  3. PampMomof3

    PampMomof3 Legend Member Gold Member

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    :) What would you consider fabulous sales, Beth? So far this year, I have turned in almost $9,500 in sales in 6 months. I don't think that's fabulous but it does get me towards a raise! I am really excited about that!
     
    Sep 12, 2005
    #3
  4. BethCooks4U

    BethCooks4U Legend Member Gold Member

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    That is great!! You are not far from your raise at all!! I started in May 2002 and hit $15000 in October. I didn't buy any big office supplies or anything that year and it was a wash for me so you should be good. :cool:
     
    Sep 12, 2005
    #4
  5. PampMomof3

    PampMomof3 Legend Member Gold Member

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    Really the only big thing I bought this year was my laptop as soon as I started and that was about $900 and paid the taxes on it when I bought it. Would that make a difference? :confused:

    WOW! You did great in your first year ( or should I say your first 5 months)!!! Congrats! :D
     
    Sep 12, 2005
    #5
  6. BethCooks4U

    BethCooks4U Legend Member Gold Member

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    Thanks!

    You can only claim part of your computer this year - your tax program walks you through that. You will be surprised what you can deduct. All your supplies and samples, your starter kit, your mileage (the government just raised the amount per mile for the last few months of this year because of the higher gas prices), pens, ink, paper, office supplies, consultant gifts, meals if they are eaten during any kind of meeting for your business (recruiting interviews, team meetings...), food that you purchase to try a recipe (you can do a recipe twice), food and supplies that you buy for a party... I'm sure there's more. The trick is keeping receipts. I do the taxes for my family but my husband has always insisted that if I don't have a paper trail I can not deduct!

    Hope this helps.
     
    Sep 12, 2005
    #6
  7. noradawn

    noradawn Guest

    It was reassuring to read your posts, Beth. Thanks!
     
    Sep 12, 2005
    #7
  8. PampMomof3

    PampMomof3 Legend Member Gold Member

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    Thanks Beth! I am curious though, why can I only deduct part of my computer? I thought that was a little weird so thought I would ask! Thanks! :)
     
    Sep 12, 2005
    #8
  9. gbirkes

    gbirkes Novice Member

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    You can only deduct part of the laptop because you have to amortize the cost over the useful life of the asset. (short answer)
     
    Sep 12, 2005
    #9
  10. BethCooks4U

    BethCooks4U Legend Member Gold Member

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    The IRS considers a computer a major investment and you have to deduct it over a couple years. I can't remember right now but I think it was like 50% the first year and a percent for the next 5? I really can't remember the details but it was something like that...
     
    Sep 12, 2005
    #10
  11. PampMomof3

    PampMomof3 Legend Member Gold Member

    5,662
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    Hmm, that's okay I guess. Thanks for answering my questions!! :)
     
    Sep 12, 2005
    #11
  12. Happy Mom

    Happy Mom Member

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    Tax deductions for small businesses

    These are general business expenses you can deduct:

    -Mileage: (to and from parties, for deliveries of catalogs, cold calls, shopping for supplies and food). *Keep a log to document your miles.
    -Supplies: (printer ink, paper, stamps, shipping to customer fees, envelopes, mailings, printing or copier costs, folders, pens, PC supplies, host gifts, cost of food for demos, containers for files and products, etc.) *Record all expenses in a logbook and keep receipts in a large envelope for tax time.
    -Your SS kit and any samples you buy to use at your show
    -Phone or cell phone charges used for your business (keep a log of calls)
    -Capital equipment: computer or laptop. Deduction is taken annually over a perriod of years.
    -Donations: If you make a personal contribution to a fundraiser or event like a PC product or 10% of your commission, this is a charitable contribution. I always type a letter to the fundraiser with the date, product, its value, etc. and ask the office to sign it. I leave a copy with them and keep a record for myself.

    Unless you make a large amount of money from PC, you should be fine. Also, you can also leave 15-20% of your commission check in your checking account as a buffer if you think you will owe additional taxes. You can also file quarterly tax statements with your state and the federal gov't if you want, but usually it makes more sense to just file a 1099 at the end of the year.

    -Home office: Read the IRS publication or talk w/ your accountant. You need to have a dedicated space to claim this deduction.
    *Sometimes it is not worthwhile. For example, when you sell your house, the percentage of your house used as a home office is subtracted from your $250,000 sheltered profit as an individual ($500,000 per couple). If you live in an area where house prices are very high, and you will make a huge profit when you sell your house, the home office designation reduces the amount you can shelter from capital gains upon the sale of the house. This could trigger the AMT tax and result in you owing more money the year you sell your house.
     
    Last edited: Sep 12, 2005
    Sep 12, 2005
    #12
  13. wow i had no idea all that stuff was deductable. With the reciets do you write on the back what the food was for and stuff like that? I am just worried about keeping all these reciets and they are basically useless.

    Thanks for all the great info!
     
    Sep 12, 2005
    #13
  14. Happy Mom

    Happy Mom Member

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    I would copy the recipe, circle the items on the receipt. Keeping and recording the receipts gives you an idea of what you spent, the amount you can deduct, and documentation if the IRS ever questions these deductions.
     
    Sep 12, 2005
    #14
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