The Small Business Tax Help Blog

Archive for the ‘Business Taxes’ Category

Question: What records should I keep for small Business Tax puposes?

I am a Real Estate Appraiser. Any advice on records to keep please. Are bank statements sufficient for deposits and expenses? Thanks

Answer: If you are serious about running a business, you need to learn how to do REAL research.

Yahoo is not research.

WHY WOULD YOU NOT GO TO THE IRS WEBSITE?
Seriously.
I want to know.

http://www.irs.gov/businesses/small/article/0,,id=98575,00.html

Small Business Tax Advice – Employee or Subcontractor

Question: Will I be taxed on this stipend? Is it considered income/tax deductible?

I got this description from a stipend letter, of which the stipend I will be receiving at the end of the summer. I was wondering if I will have to include this as part of my tax payments, because I don’t understand the description (below) completely. Keep in mind that the stipend is for more than $600.

“Fellowship payments (via the SU-21 form) to U.S. citizens, permanent residents, and residents for tax purposes are taxable to the recipient, but are not reported by [school name] on a tax document. [school name] does not withhold tax from these payments. We recommend that recipients make quarterly tax payments to the IRS and the State of California. Please see Form 1040ES at www.irs.gov and Form 540ES at www.ftb.ca.gov. A courtesy letter summarizing payments greater than $600 is mailed to recipients in January and should be used in year-end tax reporting. Your pay statement also contains year-to-date payment totals.”

Answer: They are advising you that your stipend is taxable and must be reported to the taxing authorities as income. There is no withholding so you may have to file a Schedule C or simply report it as other income not subject to self employment tax. Whatever way they report it to you such as a 1099misc you will need to put that as income on your 2010 tax forms. Consult someone at H & R Block at that time. In the meantime if you have legitimate expenses such as supplies, car expenses or books then that can be charged against your earnings.

Wikirebels

Question: This year i plan to start a small business as well as a rental property, I have a few tax questions?

concerning my rental. I wanted to charge $750.00 monthly minus certain utilities included amounting to $150.00. So I have a proffit of $600.00 each month. Can I offset this proffit with the monthly mortgage payment of $600.00 (P&I )or can I just claim mortgage interest, insurance costs and depreciate the buliding over 30 years. Can I exspense any repairs against the profit or do I have to depreciate them. Example a new roof might cost 5-7 thousand dollars. If I have to depreciate that over 30 years that doesn’t amount to much but that sure was a lot to come up with now.
Concerning the business, I plan to start a home based carpentry business. I would like to spend roughly 20k – 30k on a workshop that will serve as a business hub at my physicall residence. I would prefere this over an in town based business for obvious reasons. Now can the business pay myself rent to use the bulding and claim this as a business exspense, and I claim mortgage intrest and depreciation for myself.

Answer: When renting out real estate, these are the expenses you can take to offset your costs: Mortgage Interest, Insurances, Utilities, costs of finding tenants (advertising fees, credit checks etc), repairs,depreciation of the building and any furniture and fixtures you have placed in the home.

You can expense repairs such as painting, fixing plumbing etc. If you replace something such as the carpet or a toilet, you have to depreciate that new asset you placed in your rental. Any capital improvements you put into the house should be depreciated over 15 years. The building can be depreciated over 27.5 years.

If your business uses a building you own, it can pay rent to you and you would claim it on Schedule E of your 1040. Any expenses you incur (not your business) would be deducted from the rental income you report on Schedule E. If the business pays for any of the expenses related to the rental, the business would deduct them and you’d put that income and deductions on Schedule C.

Check out the IRS’s website for small businesses to get answers to any specific questions you may have: http://www.irs.gov/businesses/index.html

Manitoba scraps small Business Tax

Question: Tax Cut Software Glitch warning?

There seems to be a temporary glitch in the H&R Block Tax Cut software until a fix occurs which is planned for Jan 31st. If you have federal withholding on Govt Payments 1099-G such as Unemployment Comp., the software may prevent you from e-filing unless your interest, pension, Soc Sec, or IRA income exceeds the withholding. If anyone using this software (and maybe other tax software vendors also), you may need to wait a few more weeks for a fix. The problem is blamed on a faulty IRS update & cannot be fixed until the next scheduled IRS update.

Answer: that’s correct per IRS waring in December.Congress screwed up by takeing all year to patch the AMT law.

Crisis is Not Behind Us

Question: Independent Contractor And Taxes?

I Know being an independent contractor that I do need to file taxes, question is, how do I go about doing this correctly?. If someone can give me a step by step process and a list of the forms I will need..it will be appreciated. I have used search engines to help answer some of my questions but their written very confusing.

TIA

Answer: 1040 and your 1099 form showing your income.

Listing of any tax payments you made.

www.irs.gov

Determining the Legal Status of Your Workers: Independent Contractor vs. Employee