So, I Finally Got Ym Tax Paperwork Back From My Accountant. He Had

[dannyzmom]

So, I finally got ym tax paperwork back from my accountant. He had filed an extension for me because he was "so busy." Anyway - he had been hounding me to "incorporate" myself/my business - for many reasons...to "protect" myself, to save on taxes...
Anyway - I have never EVER heard of any PC consultants incorporating so I refused. I figured it I "should" incorporate, wouldn't Home Office have recommended it to us??
So - according tothis guy - I owe $916!!!!!!
Baloney!!! I didn't make all THAT Much money - how can i possibly owe $916? He said it's not income tax...rather it is "social security"
Anyone know anything about this??
I would ilke to have someone else (another accountant) look at my paperwork because this seems OBSCENE to me. I would love any info anyone has...

 

[nikked]

Your guy is highYour guy is high on something! First of all, if you are paying for someone to do your taxes, he should do them, not file an extension. You file an extension when YOU (the client) are unable to gather all documentation in time...not because your accountant has his thumbs you know where.

Second, definitely take your taxes elsewhere. YOU DO NOT INCORPORATE! That guy must be smoking something really good...or he bought his degree on line! That's crazy.

I wouldn't let him touch my stuff, and I would report him to whatever governing boards CPAs use.

You can do Turbo Tax on line and not pay for it until you're ready to send it in...even if you are not comfortable with doing it yourself, that would at least give you an idea of what you're looking at. Do the Premier version...that has a detailed section for home-based businesses.

HTH!

 

[dannyzmom]

Thanks for confirming my suspicion that this guy is NUTS. Where/how do I find/use this Turbo Tax?

 

[pamperedlinda]

Thanks for confirming my suspicion that this guy is NUTS. Where/how do I find/use this Turbo Tax?

You can get in at any office supply store or on-line. I think there are 3 different versions - we use the 'middle one'. Just be sure that you put ALL of your expenses in Pampered Parnter, it makes it so much easier!!

 

[nikked]

WebsiteThe website is www.turbotax.com...just click on the one you want (again, I prefer Premier because it walks you through the Schedule C stuff). For you, if you still want to use someone else, I would definitely use the on-line version...You only pay for it if you actually send it in. This way, you can get a ballpark idea of what you should be looking at...

HTH!

 

[chefkristin]

Turbo Tax ?Do those of you that use Turbo Tax also have a full time job and a mortgage or anything like that? I work full time and own a condo. I paid way too much for taxes this year because of "my business". Doing my own taxes sort of scares me. Is it really that easy?

Kris

 

[pamperedlinda]

Do those of you that use Turbo Tax also have a full time job and a mortgage or anything like that? I work full time and own a condo. I paid way too much for taxes this year because of "my business". Doing my own taxes sort of scares me. Is it really that easy?

Kris

Are you taking ALL of your expenses? practice recipe groceries, mileage (to shows, to grocery, to post office, to bank, to office supply, to monthly cluster meetings....) office supplies, postage, internet, cell phone, consultant gifts, Pampered Chef Logo clothing, show expenses.... I claim everything I can think of!

 

[pamperedlinda]

Oops, forgot to answer your question: My husband has a full-time job and we have a mortgage. We did file together. And, my PC income & expenses did not add anything to our tax owed - it actually saved us some money. All I can say is keep excellent records and claim everything that you legally can!

 

[Shawnna]

Are you single? If filing jointly, your PC business will just be another page to add to your forms...My husband and I file jointly. I work outside the home, and he has a farm and a catering business...and now a restaurant....we have never had to pay anything near that amount...we still have 3 children at home, so that helps. I would definately get a second opinion.

Shawnna

 

[dannyzmom]

Is anyone out there incorporated??

 

[PampChefJoy]

You do not need to incorporate. Small business owners do benefit from incorporation, in that they (personal assets) are protected from liability should someone sue them...the corporation would be sued, not the individual. The liability to the corporation, and you as the head of the corporation, is limited to the amount invested in the corporation. If you were sued as an individual, your personal assets (home, belongings, etc) would be at risk.

Downside to incorporating is that you become an employee of your own business. You would pay yourself a salary from your corporation. Your corporation would also pay payroll taxes on you as an employee. You would actually wind up paying twice the amount of social security -- the employer and the employee portion.

Incorporating is an unnecessary step for direct sellers such as us.

The amount of social security you pay is dependent on your profit, so it's beneficial to have as many writeoffs asis legally possible, so your net profit is less and your taxable income is less. My first year in PC, I actually posted a loss (after writing off supplies, equipment, mileage, gifts, etc). I haven't done last years yet(I'm a major procrastinator) but I expect to pay a little bit (since I made some money!).

Anyway, I agree, your tax preparer sounds somewhat disorganized and/or uninformed. I would seek another opinion.

BTW, CPAs usually charge a fee (i.e. $500-1000) to file your incorporation papers for you, but anyone can do it for themselves by simply going through the proper steps with the state department of corporations. My state, California, actually has fairly detailed do-it-yourself info on their website.

 

[dannyzmom]

The amount of social security you pay is dependent on your profit, so it's beneficial to have as many writeoffs asis legally possible, so your net profit is less and your taxable income is less. My first year in PC, I actually posted a loss (after writing off supplies, equipment, mileage, gifts, etc). I haven't done last years yet(I'm a major procrastinator) but I expect to pay a little bit (since I made some money!).

Anyway, I agree, your tax preparer sounds somewhat disorganized and/or uninformed. I would seek another opinion.

I posted a loss this year...why in the heck does he have me paying $900+ in SS???

 

[BethCooks4U]

I have been using turbo tax for several years. I am married and we own a home. I have another part time job besided PC and my husband works full time. By the time that I have deducted all my expenses the amount we are responsible to pay in taxes is about the same as it would be without my PC business. I do not deduct anything that I don't have a receipt for and I claim a home office (so I can deduct mileage) but do not deduct anything for the space in my house - hubby doesn't want to deal with that. SO we COULD deduct more than we do.

You need to get a different accountant! We do NOT incorporate! We are Independent Sales people for The Pampered Chef. We have our own businesses but it's not the same as if we started a business from scratch!

 

[cmdtrgd]

Have you asked him to see his license? Seriously, I took one accounting college course about 5 years ago and even I know that you don't want to incorporate. If you have given him any money, get it back. If you can't, make sure to use it on your tazes as a write-off for next year. And, you might want to report him to the BBB or something along those lines for accountants. Whoever said that the extension was not for the accountant's benefit was correct. The only exception to the rule is if the taxes are so messed up that it takes the accountant a few extra months to work on it.

 

[dannyzmom]

I am SO frustrated with this whole thing.
Thankfully I didn't *pay* him per se. We worked out a barter - he did my taxes, and my husband is giving him a giftcard for $160 in free product from his business (hubby owns an Italian Ices business)

I don't even know where to begin looking for another accountant at this stage in the game and don't want to have to pay one

 

[AuntKat]

Any time your are self employed and there is a profit you have to pay social security. Usually this is quite high. If you don't trust the guy who did your taxes you can run it on turbo tax. You are required to file a Schedule C for your business. Actually the tax programs out there are quite easy, just answer the questions.

Kathy
Independent Consultant
W Memphis AR

 

[dannyzmom]

Any time your are self employed and there is a profit you have to pay social security. Usually this is quite high. If you don't trust the guy who did your taxes you can run it on turbo tax. You are required to file a Schedule C for your business. Actually the tax programs out there are quite easy, just answer the questions.

Kathy
Independent Consultant
W Memphis AR

I wish I could make heads or tails of the paperwork. I believe he told me I did NOT show a profit. And I can't imagine I showed enough of a profit to have to pay over $900...could I have?!!??

 

[samcmills]

Self employment tax is high but it is based on your profit from your self-employed business. The SE tax is about 15% of your profit. You list your income and take out your deductions, that is your net profit. You pay SE tax on a portion of that net profit. If you made 3000 and had 2000 in deductions your net profit would be 1000, you multiply the 1000 times 92.35% to get your net earnings, if less than 400 you don't owe anything. So 1000 times 92.35 gives you 923.50. To figure the tax you multiply 923.50 times 15.3% and you would owe $141.30 in SE tax.

I am self employed, my DH is full time with a company and I do our taxes using the tax softwares. Usually it is the TaxCut by H&R Block, this year I got TurboTax by mistake. Both work great, I prefer the TaxCut one though. All you do is input all your profit and expenses and the software does the rest.

I went to an accountant when we moved here because we had sold some mutual funds to get a down payment for our house, I normally did our taxes with a pencil and calculator but wasn't sure how to figure that. I paid the guy 90 bucks and sat there while he just input our info in the computer and printed it out, he was using a tax preparation software just like I could buy at walmart for 20-30 bucks depending on the rebates offered.

I agree with the other ladies, put it through the software and see what comes up. And especially if he was saying make the check out to him I would be wary.

 

[dannyzmom]

No no no - he did NOt tell me to make the check out to him - THAT would have been the very last straw. He told me to make the check out to the IRS and told me how/where to mail it.

 

[soonerchef]

If you didn't show a profit then you shouldn't owe anything to the IRS, they can't take money that you effectively didn't make!!

I too am married, own a home and have never had to pay because of my PC business...

 

[PampMomof3]

I'm so sad for you!Carolyn-I did my own taxes thru Turbo Tax and found it really easy for me to do it myself. My grandmother (she's my moms age, my grandpa remarried a woman 4 years older than his oldest daughter ), anyways, she works for H&R Block and she lives in Rockledge. I'm sure she would help you but it's somewhat of a drive for you.

 

[dannyzmom]

Carolyn-I did my own taxes thru Turbo Tax and found it really easy for me to do it myself. My grandmother (she's my moms age, my grandpa remarried a woman 4 years older than his oldest daughter ), anyways, she works for H&R Block and she lives in Rockledge. I'm sure she would help you but it's somewhat of a drive for you.

Thanks for the offer - where is Rockledge? (totally clueless here)

 

[PampMomof3]

LOL!! Rockledge is about 45 minutes south of Orlando.

 

[dollfangs]

I am a single Mom with a full time job and a mortgage and I use turbo tax online but actually used tax-act this year as the software is completely free. It is also listed on the IRS website. I got the same results with both because this year, I did my taxes online with both and then sent them in with tax-act. I wanted to make sure that the new one I was using was as good as turbo tax and it is. One thing that was mentioned above about taking deductions that is wrong is mileage to and from a show. You can't deduct that as it is the same as driving to and from work and it is NOT tax deductible. However, driving to the post office, grocery store, cluster meetings, office supply store etc are tax deductible.

 

[cmdtrgd]

Melissa - I have to disagree with the mileage! To and from a show has just as much to do with my business as the post office, grocery store, etc. If I were driving to an from one of my other jobs (ones that I am not the business owner), THAT is not tax deductible. But, anything you spend on your business is - including ALL the mileage you rack up. Think of it this way, would you be going to that person's house if you weren't doing a show or closing a show, etc. I knot this won't work all the time - like if you do a show for a friend - but it is a good rule of thumb. That being said, anytime you travel for PC business, it is tax deductible.

 

[BethCooks4U]

As I understand it, if you can only deduct mileage if you claim a home office. In order to claim a home office you need to have a dedicated space for your supplies (which I bet we all do!).

My dh doesn't want me to do any home office deduction on the value of our home (it is fine to do that - he just won't let me) so I do claim the "home office" but not depreciation on the house.

If I was audited they would easily be able to see my dedicated space and would probably say I am not taking all the credits I could! I also do not claim anything that I do not have a receipt for or record of.

 

[soonerchef]

I have always claimed mileage without claiming a portion of my house as business and that was per our CPA, there are some people out there that work from their car, I did it as a salesperson, and claimed mileage since the company didn't pay mileage and I have never had a problem.

 

[cmdtrgd]

Okay, I went to the IRS website for the "final word" on mileage, etc. Here is a bit of what is there.Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business is operated to make a profit.What Can I Deduct?
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.It is important to separate business expenses from the following expenses: * The expenses used to figure the cost of goods sold
* Capital Expenses
* Personal ExpensesNote: If you have an expense that is partly for business and partly personal, separate the personal part from the business part.Personal Expenses
Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct as a business expense only the business part.Business Use of Your Home
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. Refer to Publication 587, Business Use of Your Home, and Standard Mileage Rates.Business Use of Your Car
If you use your car in your business, you can deduct car expenses. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.If you want to read more on this, go to http://www.irs.gov/businesses/small/article/0,,id=109807,00.htmlThis is the main reason I get my taxes done by H&R Block and pay for the extra peace of mind guarantee - it costs about $50 or so. If I get audited and they screwed up, they pay for all or part of the back taxes...I have to look at the fine print, but you get the idea.

 

[dannyzmom]

This is the main reason I get my taxes done by H&R Block and pay for the extra peace of mind guarantee - it costs about $50 or so. If I get audited and they screwed up, they pay for all or part of the back taxes...I have to look at the fine print, but you get the idea.

Oooh Oooh OOOOOOOOhhhhhhhh!!
You mean I can go to an HRBlock office and they'll figure all this cr*p out for me and I can forget about the moron I dealt with in the first place and HRBlock will only charge me about $50? That would be SO ideal!!!

 

[cmdtrgd]

Well, the "peace of mind" guarantee is only about $50. To do our taxes for last year, including a schedule C (small business) was less then $200. The cool thing is that they keep records and when you go to them next year, the amount you paid for the schedule C is tax deductible because it was a business expense - you don't even have to tell them...they will automatically put it in!I'm all for CPAs going out on their own, but there is something reassuring about having a huge corporation back me up - especially if they did something wrong!

 

[dannyzmom]

Ok -- I'd hate to spend the $200 on HRBlock only to find out this nimrod was right...so I think I will sit down with that turbotax program and see what I can figure out on my own...IF it seems he was WAY off base, then I'll let HRBlock do it. And from now on EVERY YEAR I am going to a place like HRBlock.

 

[pampered1224]

WowCarolyn,

He is a nimrod for sure. Even if you have H&R block do the taxes for you, it sounds like you would still be ahead of the game. If you showed a loss for last year according to you PP Income and Expense report, then he is on something. How in the heck did he come up with $916? So you didn't pay into SS. I didn' tknow you had to on a commission based income. Sounds like hooy to me. I would love to know if you do use the Turbo Tax thing and how easy or hard it is to use. I am too afraid to do my own taxes because I am so afraid I will miss something. I paid H&R Block $220 for last years taxes. I took a loss on PC but ended up paying out because of my full time job. So...