The Small Business Tax Help Blog

Archive for April, 2011

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ZEITGEIST: MOVING FORWARD | OFFICIAL RELEASE | 2011

Question: My daughter wants to start a website sellling photography online. We need advice.?

My husband and I told her that she must have a business license and tax I.D. number before she began this endeavor. She insists that all her friends who do this do not have these. We are also worried about how she can protect her photos from just being copied and her “friends” did not give us any helpful information. She takes photos of places and people and would like to sell to magazines and such.

Answer: You don’t sell to “magazines and such” by setting up a website.

You sell to mags and such by submitting to the magazines and such.
You also need to know about licensing, usage rights etc etc.

You/she can lodge the shots with a stock agency (google photography stock sites or micro stock sites) which takes the leg work out but it is a full time venture if you want to make money and there are strict submission guidelines for the best sites.

here are some books you should be looking at before starting down this route

http://www.amazon.com/s/ref=nb_ss_1_20?url=search-alias%3Daps&field-keywords=photographers+market+2009&sprefix=photographers+market

Online and on-campus options for tax advice

The University of Kansas offers resources for students who need help filing taxes.

Business Loan 1099 – TaxMama.com

Question: Can I claim the difference between the IRS standard and my actual corporate travel reimbursement?

I’ve been doing a good amount of business travel lately. My employer reimburses mileage and provides a per diem. However, both those amounts are below the standard IRS rates. For instance, the IRS mileage deduction is $0.485 per mile, while my company reimburses $0.405 cents per mile. The IRS per diem for the region I travel to is $44 / day while my company pays $35 / day.
When I file my 2007 taxes, can I claim the difference between the allowable and actual reimbursements and an unreimbursed business expense?
I travelled 2,000 miles for business, so was reimbursed $810. At the IRS mileage rate, that would have been $970. Can I claim the $160 as an unreimbursed business expense? Is the scenario different for mileage and the per diem?

I’d prefer answers from folks who have actually faced the situation (or tax specialists) rather than speculation. Many thanks!

Answer: You can indeed deduct the difference. You use form 2106 Employee Business Expenses. Once that form is finished, the ‘bottom line’ will go to your Schedule A – Itemized Deductions. Any expenses you have that exceed 2% of your Adjusted Gross Income will go towards Itemizing your deductions. This will be added to your mortgage interest, medical expenses (in excess of 7.5% of your AGI – and in some cases 10%), charitable contributions, and what you’ve paid in state and local taxes.
IF, when you add all of that together, it is more than the standard deduction for your filing status, you will have successfully lowered your taxes and deducted your work expenses. If not, you have learned a new tax form.
But yes, you can deduct the difference between what IRS gives and what company pays.

Bronx Tax Preparer ‘Moses’ Pleads Guilty

A Bronx tax preparer who called himself “Moses” pleaded guilty to preparing false tax returns.

Buying a Home in 2010… Taxes Do Matter

Question: Employee/Independent Contractor Tax Dispute…Do I have to pay my employer the taxes or the govt?

My employer for the end of 2006 and beginning of 2007 wasn’t withholding my taxes and claimed me as an independent contractor on his taxes. I most definitely was not, and filed an SS-8 request. The govt decided I was an employee, and I’ve fixed my 2006 tax returns to properly pay the govt.

My employer is now demanding that I pay directly to him the taxes he did not take out for me in 2007, with no proof of how much he paid me or how he arrived at his numbers. I do not trust him (this is a very small business and I had no idea the mess I was getting into). Do I owe them to him to pay to the govt or do I pay the govt directly? Do I have to pay the govt now or when I file my 2007 taxes?
I worked at his business location and did not do any work at home or expend any of my own personal money in any way for this job. I would not be able to claim myself as self-employed because I wasn’t.

Answer: When you filed the SS-8 and won, the Employer is responsible not only for his matching taxes, but also Yours!!

You owe the government.

For year 2006 the employer must pay the IRS, SSA & Medicare.
For year 2007 the employer must pay the IRS, SSA & Medicare.

You would be responsible for your own state taxes.

By the way – ALWAYS look at your checkstub to see that taxes are being taken out and question everything. If the employer can not show you the Circular E and how he arrived a certain tax amount, then you should dispute it.

Social security is 6.2% of the first $97,500.
Medicare is always 1.45% of all earnings.

IRS Nightmare: What Employment Taxes?

You probably fear an IRS audit. See What’s Your IRS Audit Risk?  That’s only natural, like fearing heights or spiders, no matter how high or low your income.  See IRS Audit Risk If You’re “Rich.”  If you’re in business you may especially worry about a payroll tax audit.

The Law Show with Brian Dailey – 1099 Status for contractors in Michigan.

Question: Federal tax credit for Geo Thermal on a duplex that I own and live in?

I bought a duplex and live in one unit. I put geo thermal in and expected the full 30% tax credit but my accountant thnks that I may be only able to get the credit for the portion of my “residence” as the other unit is considered business. Since the tax code doesn’t specifically address this can I get the full credit for it or do I take a “commercial” tax credit for geo thermal for the space my rental unit represents? Thanks
I’m not sure what you are quoting but for Geo Thermal, there isn’t a cap on the amount of the tax credit. Total cost of the Geo Thermal was $36,000. If I can only take my unit’s “residential” credit, can I take the “commercial” credit on the rental unit for business at 10%?

Answer: Actually the tax code does specifically address this situation. For the energy credit to apply to you, it will have to be your residence. Since this is a duplex and you rent out the other unit, your residence is 50% of the floorspace, therefore you may use 50% of the total cost for the unit and installation as the price you paid for the Geo Thermal unit. If your unit is anything like mine, you will still get the full max credit of $1,500 as 30% credit on 50% of the unit.

Obama, Ryan Agree: Business Tax Codes Need Reform

The president and the Republican chairman of the House Budget Committee were on opposite sides of a heated debate this past week over the best way to cut the federal deficit. But there’s one thing Obama and Congressman Paul Ryan agree on: They both want to overhaul the corporate tax code.

How to Setup Complex Tax Code in SAP Business One?