Tax Deductions for New Pampered Chef Musicians: 2007 or 2008?

[shuttermonster]

Big question. I just started with PC in Nov. I want to take advantage of my taxes this year and get a laptop to use at my shows. I know I have to earn at least $600 to be able to deduct my expenses. I'm going to qualify in my 30 days and get the extra PC$. My 30 days ends in Dec... it's my understanding that I won't "get" my PC$ until January. This is my question (finally)... will the earnings from my PC$ be on this years 2007 1099... or since I officially don't receive them until Jan... on next years? Thanks!!!

 

[shuttermonster]

Okay... did I stump you all? Haha
I called HO and I guess my director was mistaken. If I qualify in Dec I will receive my PC$ in December.
Thanks anyhoo!

 

[stacywhitlow]

Not only will your PC$ be on the 1099 but any free products you earn from incentives.

 

[chefann]

However, because you use the PC$ and earned products for your business, you can also count them as an expense.

 

[lkprescott]

Big question. I just started with PC in Nov. I want to take advantage of my taxes this year and get a laptop to use at my shows. I know I have to earn at least $600 to be able to deduct my expenses. I'm going to qualify in my 30 days and get the extra PC$. My 30 days ends in Dec... it's my understanding that I won't "get" my PC$ until January. This is my question (finally)... will the earnings from my PC$ be on this years 2007 1099... or since I officially don't receive them until Jan... on next years? Thanks!!!

You have to earn at least $600 to get a 1099 but you can still claim the expenses. You'll just claim it as a loss if you had no income and only expenses... just keep track of all your purchases and receipts. The schedule C that is what 1099ers fill out for their taxes to claim income and expenses will outline what kind of expenses and such. Remember, your taxes will be based on your net income which is total revenues less business expenses (in a nutshell).

It's good to be looking to working with taxes now before the year is over. Lots of folks make the mistake of waiting and finding out that a late year purchase could have helped them out! With the computer company DH and I have, we have a client that almost always has DH go out and do something big at the end of the year.. helps us with income and helps him with the deduction. LOL...

I started in September but my commissions by year end will be well under $600 but I've tracked all my commissions and expenses since the beginning (former freelance bookkeeper - so it comes naturally to me to do so) so hopefully in January I'll have my ducks in order so much I can hand over my reports to the CPA and make him happy! He likes getting 'small business' folks out of the way early in the year so he's not swamped in March (when C-corps are due) and April (when everyone else is due)... Even though I'll not get a 1099 it's still my responsibility to claim the income... it's just the IRS doesn't require a company to do 1099s for under $600 to help keep paperwork down for companies mostly.

 

[shuttermonster]

Thanks everyone... great advice!

 

[ahammons]

Okay, so this may seem like a stupid question, but as of right now I'm just under $600 in commission for the year. So they won't send a 1099 if I don't reach that, right? I'll be doing my own taxes, so that's why I'm double checking.

 

[ahammons]

Sorry, I don't think I worded that correctly! I mean, if I don't get a 1099, then I'll just have to make sure the figures are correct since I don't have something to copy off of, right?? lol

 

[chefann]

That's right, Ashlee. Make sure you have all your commission statements for the year and double check your math.

 

[lkprescott]

Sorry, I don't think I worded that correctly! I mean, if I don't get a 1099, then I'll just have to make sure the figures are correct since I don't have something to copy off of, right?? lol

Yep! Under $600 no 1099 but still you should report your income and expenses. If you've got a software program like Quickbooks or Peachtree it makes it easy if you track as you go along during the year... then you just hit print. If you've got paperwork though, consider doing some categorizing in Excel or even on paper.. group like expenses together and add them up. Keep track of everything including your math so when all is said and done you can box things up for future reference. You'll want to keep all records for at least 7 years... they can go back that far for auditing purposes and having them organized NOW will make for a lot easier everything in the long run.

 

[Kitchen2u]

I just bought 2 GB card from Circuit City last Friday for $6.99!!! Another write off! Especially since my thumb drive (small one) is getting full ~ love it ! ! !

 

[ahammons]

So, as mentioned earlier, you can write off a laptop purchase as a business expense if you use it for shows??

 

[lkprescott]

Yup... though depending on how much you spend on said laptop it may be considered an asset rather than an expense (this gets into 'fancy' accounting verbiage)... then you'll want to depreciate the expense over a certain number of years depending on what the item is and the cost. This is where having a good CPA comes in handy (and they're deductible too!!)... they can whip up depreciation schedules like candy.