Help Needed: Tax Return Charge of $300 for Pampered Chef Member

[Darcy Sharpe]

I had a question asked at our cluster meeting and I need help to answer it.
One of the ladies on our team was charged Over $300.00 on her tax return due to "having her own business". She has been a with PC for 3 years and never had that happen. I have never heard of this and have not been charged this fee. Can anyone help out help make sense of this and is there anything that she can do to get a refund if it should not have happened.

Thanks in advance.

 

[tys1031]

Who prepared her taxes? This is probably a fee they charge because it's not an IRS fee.

 

[Intrepid_Chef]

This really sounds like we are not getting the full story. Could it be that she finally turned a profit this year and has to pay taxes on it? Could it be that after 3 years, her business has become a "hobby" and thus her expenses are no longer deductible?

 

[Darcy Sharpe]

Di, She just made enough each month to say a float. It has been a hard year for her and this was an added expense that she can not afford.

Kisha, she had them done where she went last year, but had a different person do them for her. When she questioned them, they said it was owed.

Does anyone know if she had have her taxes re done?

 

[robochick84]

If the fee was a fee imposed by the CPA, then it is something that she has/had to pay no matter what. I have a lot of CPA friends, some of them do it in different ways, but some - especially in more populated areas will charge by the "form" they must complete, and for business/PC there are several additional forms that must be completed.I had this problem one year when DH tried to "convince" me to use the same CPA as him. When I noticed that they were trying to do illegal things to increase the tax return I immediately demanded my documents back and never returned. However, if I did not pay the fee (since they were complete) my documents would not be released to me.She can choose to go anywhere, and pay another fee for a CPA to complete her taxes, but has to know if it is worth paying any fees again.

 

[mountainmama74]

Did she claim all of her expenses, including any new products she purchased? Mileage? Ingredients for shows, or for recipes she tried out at home? There are many more things that are expenses for us....

She would have had to make some money in order to owe $300 in taxes on her PC income. It's also possible that her PC income may have been what it took to kick her into that next tax bracket if she's filing with another income!

 

[AJPratt]

Did she claim all of her expenses, including any new products she purchased? Mileage? Ingredients for shows, or for recipes she tried out at home? There are many more things that are expenses for us....

She would have had to make some money in order to owe $300 in taxes on her PC income. It's also possible that her PC income may have been what it took to kick her into that next tax bracket if she's filing with another income!

I agree. And, anything we earn can also be deducted if we use them at shows.

 

[Darcy Sharpe]

Thanks for all of your input. I have forwarded all of your information on to her. If you come up with anything else it would be great. She did not have a great year, so her income was not higher, it would have been lower than in the past years.

 

[nene960]

My husband is self-employed and so am I with my PC business. When you are self-employed you will pay what is called a self-employment tax which can make your taxes higher. I totally sucks but we have paid more than someone making the same amt of money that has their taxes taken out. It could just be that her self-employment tax wasn't added in years past and someone caught it. It happened to my brother, who works for us as a 1099 employee, a couple years ago and he ended up paying a lot more Unfortunately you can deduct like crazy when you are self-employed but as our accountant told us, we will be screwed next year thanks to a certain "someone"

 

[AJPratt]

Hopefully the suggestions will help.

 

[AJPratt]

Nene: I know what you mean! I had a cafe and my husband is also self-employed. Deductions only go so far to help.

 

[tys1031]

This has to be a CPA fee because the self-employement tax wouldn't be charges separately as a fee. She would see this on her 1040 form on the second page under the tax section. I am an accountant, and fees are only for preparation....not for taxes. The fees also are for these crazy rapid refunds that people are doing now. If she doesn't see the amount somewhere on her actual 1040 form, it's not a tax and she just needs to get someone else to prepare her return.

 

[Intrepid_Chef]

Also, if she actually made enough to stay afloat without another source of income, than she probably DID turn a profit ... or did not deduct enough. I also deduct mileage for product delivery and book delivery, postage for host packets and invites, and mileage to stores if I buy ingredients for hosts.

 

[ShellBeach]

Self-employment taxes pay into social security and medicare, for those who are self employed.
Schedule SE states if you have a profit of $400 or more, SE taxes are owed.http://www.irs.gov/pub/irs-access/f1040sse_accessible.pdfIf she paid over $300 in SE taxes, she had a profit of over $2000. If I understand the math on that form!

 

[lesliec]

DH and I own a business the first couple of years we were married we had our taxes done for about $300 ($150 business and $150 personal), but the guy was older and did everything by hand (not a problem b/c he did a great job). One year we were attracted by a large firm in our area that had everything computerized and could synch with our bookkeeping software. We had them do our taxes as well as our payroll for a few months. Then we started getting bills in the mail....... They charged us $1500 for our business returns, $1500 for our personal returns, and were charging us $200 a week for doing our payroll. There were some weeks that we didn't even have $200 left for our own family budget, so needless to say this was outrageous for us. We are still trying to pay off our debts to this company and have gone back to using the little old man who does everything on paper and does a great job.
All that said, it could just be a crazy fee that this company is charging her. Self-Employment taxes are high, but we are so blessed by being self-employeed. You can write off so many things. About 20% of our house is office space, so we write off 20% of the mortgage, water, electric. All of our phone, internet, most of our mileage. Plus I know that DH will never be laid off. We have lots of slow months, but my husband is so talented and has so many connections that he has always been able to find enough business to put food on the table.