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Tax question

TJMagoo

Member
Oct 11, 2011
116
0
I have this on my 2013 W2: Because your total earnings is below $600.00, you will not receive a 1099 for 2013...does this mean I don't have to list it on my taxes?
 

esavvymom

Legend Member
Staff member
Sep 8, 2008
7,895
146
No. You still have to report it. It just means that PC will not MAIL you a paper 1099.
You have to pull it off of CC. Go to the Financial Forms section (on Old CC- under Managing your Business -> Financial Forms -> Tax Information (bottom of page)- click on Learn More. Then under "Your 1099" section, click on "Access your 1099 Online". On the left side of the next page, you can click the 2013 1099 form.

If you are on the Beta site, it's under "Business Center" -> Financial Information. Then on the RIGHT side of the page, you'll be able to click on "My 1099". The list of years is along the left side. I had to click on the little arrow next to the "name" to get it to rearrange so the newest year (2013) was at the top.
 
Last edited:

higoobs

Member
Gold Member
Aug 3, 2011
218
74
does anyone know what happens when you made below $600 but have spent several hundreds $ on supplies, mileage, groceries, advertising, etc... Can you still claim these items even though the earnings were not great for the year?
 

esavvymom

Legend Member
Staff member
Sep 8, 2008
7,895
146
That is one I would ask a tax person. But my PERSONAL feeling is the more deductions I claim with no income to show for it, the more likely I may end up with an audit. They may consider my business a hobby since I dont make money. So when that has happened, i just made sure to not claim too many things. I claim some of the obvious....like mileage, advertising, or certain supplies. I dont claim groceries, or supplies that might be shared with my home office, etc. But that is just MY way...not necessarily the right way. I wouldrather eat the expenses than get audited! :)

I do know and have heard a tax advisor say that if you have meticulous records and a business plan to show you really do have a legit business, are actively working it, etc, then the losses can be expected or allowed.....doesnt mean you arent flagged for an audit.

Again, definitely something to ask your tax prep person.
 

SherryLynn

Member
Gold Member
Sep 6, 2013
74
18
I'm in the same boat and unsure myself. I am spending the money this year to have my taxes done professionally. I may do the same next year as I plan to write off more. I have been told you can write off your home office and part of your phone bills, etc. I'm not doing that this year as I just started and did not earn much. Next year will be a different story. We get a discount at H&R Block. It may be worth your money to have it done there this year instead of doing it yourself. Good luck.
 

ShellBeach

Veteran Member
Sep 5, 2008
1,266
26
does anyone know what happens when you made below $600 but have spent several hundreds $ on supplies, mileage, groceries, advertising, etc... Can you still claim these items even though the earnings were not great for the year?


Yes, you can claim those expenses! Even if it makes your PC effort show a net loss.
When starting out, many small business show a loss the first few years. But at some point you have to show a profit, or it will be considered a hobby.

Check this out from irs.gov:
http://www.irs.gov/uac/Business-or-Hobby?-Answer-Has-Implications-for-Deductions

"The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year..."

I hired a CPA to do my taxes the 1st year selling PC, and I wish I'd just researched the IRS website & called them, instead. She didn't know a lot about Schedule C for direct sales. She just knew about the supplies, mileage, advertising. She didn't know about groceries, cell phone, internet, and other expenses I'd incurred.
 

ShellBeach

Veteran Member
Sep 5, 2008
1,266
26
I'm in the same boat and unsure myself. I am spending the money this year to have my taxes done professionally. I may do the same next year as I plan to write off more. I have been told you can write off your home office and part of your phone bills, etc. I'm not doing that this year as I just started and did not earn much. Next year will be a different story. We get a discount at H&R Block. It may be worth your money to have it done there this year instead of doing it yourself. Good luck.

Ugh, no offense, but I think H&R Block would be even worse than the CPA I hired. They hire people off the street to plug numbers into their software. You could just as well use a PC tax program and go through the answers yourself.

Be careful on claiming home office expense. My CPA did say that is what gets a lot of people audited.
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction
 

ShellBeach

Veteran Member
Sep 5, 2008
1,266
26
Forgot to add, don't let fear of being audited cause you to not claim expenses that should be claimed. If you've got receipts & proof of expenses, the audit will find in your favor.

P3 is great at making a year-end report, assuming you put everything in there. It will definitely show supply orders, insurance, paperwork. I also use it to remind me of mileage for deliveries, meetings, trips to post office, groceries, etc. That first year, I learned just how bad my record keeping was.:yuck: haha, then disciplined myself to keep track of things through the year, because a mad dash to remember things from 9 months ago didn't work so well.:cry:
 

SherryLynn

Member
Gold Member
Sep 6, 2013
74
18
I put everything into beta and just printed out my report for last year. I'll pick up a turbo tax. Do you think I need one for business or just personal? I was talking to a CPA a few weeks ago that was very knowledgable but quoted me about $300 for my taxes. I just need to be walked through it the first time to see about deductions then I will be ok most likely. I don't think I want to claim part of my house but I wouldn't mind writing off my phone. I had a house line installed specifically for PC and calling customers/conference calls so I don't use shared minutes but my cell phone is on my business cards.
 

esavvymom

Legend Member
Staff member
Sep 8, 2008
7,895
146
TurboTx Home and Business is what we used....it is more than just personal, but not as much as the regular Business version for corporations, LLCs, etc.
 

ShellBeach

Veteran Member
Sep 5, 2008
1,266
26
.... I just need to be walked through it the first time to see about deductions then I will be ok most likely. .....

That was exactly why I hired a CPA my 1st year doing PC!

I know I said I wish I'd just researched myself, but looking back - who am I kidding? I was too frazzled during that time to do it.:eek:

My CPA was great; she just didn't know about specific deductions for PC that I later read about here on Chef Success.
And she was the one who explained that you can take a loss on a business, just not every year, or it gets considered a hobby.

That was the only year I hired her. After that, I just used the free fillable forms to efile and looked back at what she had done.
 

SherryLynn

Member
Gold Member
Sep 6, 2013
74
18
I'm going to try the Home and Business this year and have a friend of mine double check everything. (It's $69 at BJs right now.) She's an attorney that used to work for Turbo Tax through college and part of law school. I'm only claiming expenses and mileage. I'm not doing home office and phones this year. I was only a consultant for about 2 months. Next year may be a different story though.

Thanks for all of your help and suggestions.
 

leshelman

Member
Gold Member
Oct 16, 2013
94
25
I think I am taking my taxes to HRBlock because I am a student (Form1098), I worked for Pampered Chef for 1/2 the year (Form 1099), AND I had a Part Time nursing home job in Dietary for 3/4 of last year (Form W2). And on top of all of that I have a big stack of receipts (all put into Beta Expense log also) and do NOT want to fool around with my possibly "large" return.
I think it will be worth the money to get the most out of the return! But I guess this will be a trial, and if it does not work well this year I'll do it myself next year! :)
 
Jul 13, 2007
3
2
I'm a consultant and IRS Revenue Agent. Many things ppl are saying are true. Generally if you show a profit in 3 out of 5 years, we won't challenge a business, but if we're suspicious that people aren't claiming deductions just to show a profit, then you could get in trouble there too. As far as home offices go, they have to be used EXCLUSIVELY for your business or you can't claim it. Generally a reasonable amount for phone would be okay, but it depends on what you can show is business use of the phone. I personally don't argue with somewhere between 25% to 40% for the business line, nothing for kids, spouses, etc. --- Side note, don't worry I'm not turning anybody in. We tend to be small fish in a very big pond, and I have enough work :p
 
Mar 20, 2014
1
0
I'm a consultant and IRS Revenue Agent. Many things ppl are saying are true. Generally if you show a profit in 3 out of 5 years, we won't challenge a business, but if we're suspicious that people aren't claiming deductions just to show a profit, then you could get in trouble there too. As far as home offices go, they have to be used EXCLUSIVELY for your business or you can't claim it. Generally a reasonable amount for phone would be okay, but it depends on what you can show is business use of the phone. I personally don't argue with somewhere between 25% to 40% for the business line, nothing for kids, spouses, etc. --- Side note, don't worry I'm not turning anybody in. We tend to be small fish in a very big pond, and I have enough work :p
Thanks for the info! I only earned 117 last yr & my income info under the W2 link on the PC site is not on a 1099 misc. I always use turbo tax but somehow they didn't carry over ANY of my past info & I can't remember how I did it last year. Can you tell me, since I can't enter it under 1099 misc, do I have to go under business income? Turbo wants me to upgrade to Home & Business & it's just not worth it! My standard deduction is higher than my mortgage taxes/int & I'm trying to keep this simple.
 

E R

Mar 12, 2018
8
1
Newbie, bumping this thread.

My wife started as an Independent Consultant last year and did fairly well in the few months since she started.

I do our taxes, and am perplexed that both Box 3 (Other income) and Box 7 (Nonemployee compensation) are filled in on her 1099-Misc. The Other income was the start-up kit, PC bucks to be used later, and other non-commission stuff.

TaxAct doesn't care if both boxes are entered, but TurboTax won't let both boxes be entered, and says two separated lines should be entered.

Self employment tax changes if Box 3 figures do not go on Schedule C, and the IRS says Other income is not used to calculate self employment tax.

I'm leaning toward putting it all to Schedule C, but can find no good answers.

Thank you!
 

mspibb

Member
Gold Member
May 18, 2005
342
36
All reasons why I have someone do my taxes...a former recruit as a matter of fact, so she gets it!
 

chefjeanine

Senior Member
Gold Member
Jan 19, 2006
2,984
118
Newbie, bumping this thread.

My wife started as an Independent Consultant last year and did fairly well in the few months since she started.

I do our taxes, and am perplexed that both Box 3 (Other income) and Box 7 (Nonemployee compensation) are filled in on her 1099-Misc. The Other income was the start-up kit, PC bucks to be used later, and other non-commission stuff.

TaxAct doesn't care if both boxes are entered, but TurboTax won't let both boxes be entered, and says two separated lines should be entered.

Self-employment tax changes if Box 3 figures do not go on Schedule C, and the IRS says Other income is not used to calculate self-employment tax.

I'm leaning toward putting it all to Schedule C, but can find no good answers.

Thank you!

Turbo Tax Home & Business is what we've used for 16 years. Schedule C IS the key. We deduct the "other income" items as business expenses. They are either tools (new products) or publicity (logo items). I don't know what categories they end up under when my husband actually plugs them into the program, but I hope this helps a bit.
 
Jul 29, 2018
3
1
I'm a consultant and IRS Revenue Agent. Many things ppl are saying are true. Generally if you show a profit in 3 out of 5 years, we won't challenge a business, but if we're suspicious that people aren't claiming deductions just to show a profit, then you could get in trouble there too. As far as home offices go, they have to be used EXCLUSIVELY for your business or you can't claim it. Generally a reasonable amount for phone would be okay, but it depends on what you can show is business use of the phone. I personally don't argue with somewhere between 25% to 40% for the business line, nothing for kids, spouses, etc. --- Side note, don't worry I'm not turning anybody in. We tend to be small fish in a very big pond, and I have enough work :p
I'm a newbie but have done pretty well (at least I think pretty well) since I started in January. I haven't really put any money aside to accommodate for the 1099 and I'm freaking out some. Any suggestions for how I can determine maybe how much money to put aside in these last 6 months. I'm used to getting a refund and don't want to lose that refund or end up paying.
 

E R

Mar 12, 2018
8
1
I'm a newbie but have done pretty well (at least I think pretty well) since I started in January. I haven't really put any money aside to accommodate for the 1099 and I'm freaking out some. Any suggestions for how I can determine maybe how much money to put aside in these last 6 months. I'm used to getting a refund and don't want to lose that refund or end up paying.
You can make 'estimated tax' payments at irs.gov

We have been making payments of 15% of sales for each quarter, this year.

If you have other income, and withholding has been taken out, you likely won't HAVE to make estimated payments, as I believe you only would be penalized if you paid less than 90% of what your tax liability is throughout the year.

We also have made estimated tax payments of 15% to our State as well.

I don't know if you can start making payments mid-year (there's a payment schedule on irs.gov), but at the very least, you can start setting aside a percentage of your sales now.
 

E R

Mar 12, 2018
8
1
It seems that while my wife's self-employment tax liability was included in the 'underpayment' calculation, the quarterly tax payments we made were not included.

We use TaxAct, and in the underpayment section it said we were not liable for a penalty (we owed a bit under $200 in tax), but a form did print out requesting a waiver for the penalty. I may call the IRS to ask about this.

Seems stupid to include the tax liability, but not the tax payments, only my W-2 withholding amount, but it IS the federal government. :)
 
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