My Odeo Channel (Code: 11a1db75c4117aa5)

TaxMama's Tax Quips - the Gig Economy

2017-08-16 by Eva Rosenberg

airbnb photo
Today TaxMama® says that estimated tax payments are due – and that’s timely information for the “Gig” economy. http://deducteverythingbook.com/

 

Dear Friends and Family,

Here are 15 tips for Uber, Lyft and AirBnB workers and others out there on your own. Some of the information comes from chapters 7 and 8 of Deduct Everything

 

1) Be sure to track all rental days –  and/or rental hours if you’re doing pet sitting or providing child care or adult care.

2) Buy rental foods and supplies separately from personal supplies – keep the grocery or store receipts and track them. You can scan them directly into your accounting system if you use Xero or QuickBooks

3) When setting up the house to depreciate the office in home, use your basis (purchase price) or the current fair market value (FMV) – but only if FMV is lower. Be sure to deduct the value of the land first, before computing depreciation.

4) YES, if you are renting your home, you MUST claim depreciation – or use the simplified office in home deduction. Which doesn’t give you enough value when you are renting to tenants instead of using a small office area.

5) For Uber or Lyft drivers with an Office in Home, the simplified method is probably a better idea than all the fuss about actual expenses. You can claim up to $1500/ year ($5×300 sq ft) for a separate office area.  https://www.irs.gov/businesses/small-businesses-self-employed/simplified-option-for-home-office-deduction

6) The biggest fallacy of people who get 1099s – you are not an employee – you are in business for yourself. Act like it. After all, you will be paying self-employment taxes of 15.3% on all your net profits.

7) Open a separate business bank account.

8) Make IRS and state estimated tax payments each quarter – the next one is due on Sept 15th

9) You can avoid making estimated payments by raising your withholding if you also have a job.

10) How much should you pay in estimated tax payments? Add 15.3% to your IRS tax bracket  (say 15% = 30.3%) + whatever your state bracket is.  Figure with IRS and state – you should pay about 35% of your profits for the quarter.

11) What’s the best way to pay? Since you don’t have employees, and probably don’t want to go to the trouble of linking your bank account to the IRS’s system (via www.eftps.gov ), use the IRS’ Direct Pay system. It’s free, takes the money from your bank account, provides an instant receipt – and you control where the money is applied – so do it carefully and slowly.
Check to see if your state has a similar system.  Of course, you can always use something like www.pay.gov  (you can use bank account or debit/credit card)

12) Tracking mileage isn’t too hard, since Uber has a tool that handles it for you. Lyft doesn’t seem to, so use MileIQ or something similar

13) In all cases, be sure you have all the correct licenses. Generally getting them is inexpensive and easy. But not having them generates penalties.

14) If you have people working for you – be sure to put them on payroll if they really are your employees. Treating them like freelancers will cause you untold problems – from so many different sources.

15) If they are really in business for themselves  have them fill out a Form W-9 to collect each person’s Social Security number or employer ID number, address, and type of business they operate, if they are an entity. Get this before making the first payment to them. Otherwise, you might have to start holding back 30% of their compensation, or get into trouble yourself.

 

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about gigs and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies to this post in the TaxQuips Forum.

Photo by quinn.anya

Download the MP3 (0:00min, 0MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The best Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


Disasters and Other Pleasant Experiences

2017-07-10 by Eva Rosenberg

explosion, photo
Today TaxMama® wants to talk about sudden, unexpected events – and some tips on how to prepare for them.

                                                                      

 

 

Dear Friends and Family,

Saturday we came home from a delightful evening with friends, only to see traffic lights out half the way home. Then we noticed, all other lights were out. Arriving home, our power was off – except for that persistent beeping sound from the back-up power for our U-Verse devices. No lights, no power, no air conditioning, not even the ceiling fan – on the hottest night of the year.

Fortunately, my husband keeps small, powerful LED flashlights all over the house. So we were able to get around, turn things off that would be harmed when the power would surge back on – and perform our nightly ablutions.  For a little while, we still had Internet and learned that a major transformer had exploded (probably from the intense heat) and knocked out 154,000 homes and businesses.  We called it a night, went to sleep, hoping the power would be on in the morning. It wasn’t…but, with DWP working through the night it came back up by 7:59 am. Whew!

What I learned:

  • Keep LED flashlights all over the place – they are cheap. Especially this week with Amazon’s Prime campaign – you can get a pack of 18 mini LED flashlights (with batteries) for under $20.
  • Check the flashlights periodically to make sure the battery is charged. The flashlight on my desk lit up for a couple of minutes then went to sleep forever. (And when changing the batteries, don’t lose the little spring between the battery pack and the connection. Sigh.)
  • Avoid using candles – they drip and make a mess. Worse, they can start fires.
  • Keep your devices charged up regularly, while they are not in use. (I forgot to charge my smartphone and was down to 72%. Enough for an emergency, but not much else.)
  • Do go through the house and turn off appliances that are normally set to on. (Or, save time. Turn off the fuses in your fuse box, except for a set that only operates lights – to avoid power surges.) Leaving one set of fuses functioning, you will know when the power comes back on, and can safely re-set all the other breakers.
  • When you’re in an area with frequent outages, get a back-up generator. Make sure it’s always fueled and accessible in the event of an emergency. Teach everyone in the family how to use it safely. This is especially important if you have aquariums or enclosures for animals that require power.
  • Keep an emergency supply pack at home, containing enough fresh water for several days, and non-perishable foods that don’t require cooking. Amazon.com has several earthquake survival kits – for various family sizes.
  • You cannot make coffee or toast the usual way – the toaster, coffee maker and microwave all require electricity. But if you have a gas stove and/or oven, you can boil water for coffee, cook omelets, and toast bread (or make quesadillas) in the oven. Or, you can always use your barbecue outside and invite some neighbors for camp-out coffee and food.
  • Be very sparing about opening the refrigerator. As long as it’s closed, everything in the fridge and freezer is safe. Each time you open it, cold air departs. As evidenced by the Twilight Zone feeling at the supermarket on Sunday, where all the dairy areas were covered and sealed off with warnings that nothing was for sale. But the food in the closed cases was still being sold.
  • When the power comes back on, if you have food or other things that have spoiled, you might be able to file an insurance claim. So photograph all the spoilage to prove what happened. Unfortunately, we cannot record smells. Whatever the insurance doesn’t reimburse, might turn into a tax deduction. (Or not.) For disasters where you face tangible damages, there may be tax breaks for casualty losses. Read more about them here.


Note: If there is a major problem that will take days to resolve, consider getting out of the area for a few days. Friends, family or hotels are viable options. Especially if you have health issues and need power for the devices that keep you alive. (Refrigeration for meds/syringes, power for breathing devices, recharging wheelchairs, etc.) Also, to get work done using the Internet, you may need to get some temporary lodging outside the affected area.

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about casualties and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies to this post in the TaxQuips Forum.

Download the MP3 (0:00min, 5MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The best Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


TaxMama’s TaxQuips Unused LLCs and Corps

2017-05-26 by Eva Rosenberg

closed,  photo
Today TaxMama® hears from several people who have questions about tax returns for entities they created – but never used. This recent question from Debbie, on behalf of one her clients, is far too common.

 

 

 

 

Dear Friends and Family,

STOP IT! Just flat out STOP IT!

Why do you keep forming LLCs, partnerships or any kind of corporation when you’re not really ready to do business?

Then, you have these legal entities, with stringent tax filing responsibilities – and you do nothing.

Or you start them and operate the business for a while – but don’t file tax returns – because you don’t really know how. And you just simply flounder around trying to deal with it yourself, instead of doing the logical thing – taking the whole to thing to competent tax professional.

Instead, you rack up non-filing penalties, like those for partnerships and S corporations. Did you know?

“The penalty is $195 for each month or part of a month (for a maximum of 12 months) the failure continues, multiplied by the total number of persons who were partners in the partnership during any part of the partnership’s tax year for which the return is due.”

And
“For each failure to furnish Schedule K-1 to a partner when due and each failure to include on Schedule K-1 all the information required to be shown (or the inclusion of incorrect information), a $260 penalty may be imposed for each Schedule K-1 for which a failure occurs, with a maximum penalty of $3,193,000.”

And let’s not forget state penalties.

If you’re not going to use the entity you created, you’re done with it, remember to dissolve it or shut it down. That’s so important.

Better yet, wait to incorporate or to set up your LLC until after you have your business plan and financing in place. Then establish your business entity and open a separate bank account for it. Yeah, stop operating it out of your own personal account or back pocket. Uh huh. Another brilliant thing tax pros like me are having to fix, when you’re audited.

A lot of businesses fail because of sloppy, indifferent and irresponsible practices.

Ahhhh….but the ones that succeed! Those start out doing it right in the beginning. With the current economic and administration climate, it’s like the Wild West. This is a GREAT time to start a business and get rich – but you must do some smart planning and then act on your plans.

Sure, we have no idea what the tax climate is. But if your business depends purely on the way the tax wind blows – you won’t succeed in the long run, anyway. Instead, find your vertical, target market. Learn how to reach them and how much time and money it will take to be profitable – and lay the groundwork properly.

There are so many thing people overlook, that I could write a book about the things you should be doing.

Heck! I did. Read it before you start your next business – or to improve your current one. Small Business Taxes Made Easy will help you avoid a lot mistakes and hundreds (or thousands) of dollars in penalties. And it will save you a fortune in taxes.

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about forming entities and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

Please post all Comments and Replies to this post in the TaxQuips Forum.

Photo by Steve Snodgrass

Photo by Steve Snodgrass

Download the MP3 (0:00min, 4MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The best Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


TaxMama’s TaxQuips False Social Security Numbers

2017-05-02 by Eva Rosenberg

mask, disguise photoToday TaxMama® hears from Lue with a question that is more common than you may realize.” A friend who’s been doing work for my husband regularly for the past two years knowingly gave him a false Social Security Number. We were just notified of this by the IRS. He won’t provide us with a real Social Security Number, which I think is so messed up, considering he’s supposed to be a good friend. What can we do so we don’t suffer the repercussions of this?”

 

Dear Friends and Family and Lue,

Frankly, while I know how you feel, it’s not your problem. The IRS sent your husband a notice. It tells your husband to withhold 28% of all money that is paid this contractor.

He MUST do this if this man continues to work for him.

One of the problems with this withholding is – without a Social Security number, that money won’t get credited to your friend’s income tax account as his tax payment.
And if he never files a tax return, HE is throwing this money away.

Your husband has no choice in the matter, if this person continues to work for him. If your husband tries to be a good guy and does not withhold the money and send it to the IRS, your husband (and you) will have to pay the friend’s taxes.

So suggest to your husband that HE has two choices.
1) Continue to hire his friend and withhold the money.

or

2) Stop hiring his friend and get out of this conflict that your husband never created.

Good luck with this. I see a fight coming – and perhaps at least 1 broken relationship.

I hope it’s not yours.

Please drop by MarketWatch.com and the TaxWatch columns for more tips.

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about IRS notices and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the TaxQuips Forum.

Photo by c.paras

Download the MP3 (0:00min, 2MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The best Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments


TaxMama’s TaxQuips End of Tax Season Payments and Tips

2017-04-17 by Eva Rosenberg

Today TaxMama® wants to talk about Extensions, Payments and End of Tax Season stuff.

Dear Friends and Family,

Today is April 17th. Don’t panic! Tax season isn’t quite over yet. You have until tomorrow to file your tax return or extension.  Here are some last minute tips.

But before I do, let me remind you (and pass this on those friends – you know who they are) that tomorrow is the absolute deadline to file the 2013 tax return and still collect a refund from the IRS. There’s a BILLION dollars sitting there, unclaimed.

OK – this year’s tips. (You may have heard or read them before.)

Do not file your tax return if you’re not totally ready with all the information. Get an extension. It’s free…sort of. Don’t just skip it until you’re ready. The penalty for filing late is 5% per month, up to 25%. The extension makes those penalties disappear.

To get an extension – use Form 4868 for personal extensions. Use Form 7004 to extend gift tax returns and trust or estate tax returns. Most states will accept the IRS extension. But make sure your state complies.

When you expect to owe money, but cannot pay it all, don’t lie on Form 4868. Enter the approximate balance you expect to owe. Pay at least $25 or $50 with the extension. (Never lie on the extension or it will be invalid.)

If you owe money, you need to pay it with the extension. You can use your credit card – and pay a fee.  Or you can pay online directly from your checking account with no fee using IRS’ Direct Pay. Make sure to select Form 4868 as the form and 2016 as the year you are paying.

If you absolutely cannot pay at this time because of a hardship, the IRS has a special form. Use Form 1127 to request an extension of time to pay for up to 18 months. There’s no guarantee they will accept it. But if they do accept this, you will avoid the late payment penalties. You will still owe the interest.

April 18th is also the last day to fund an IRA contribution for 2016.

And you need to make estimated tax payments for 2017, if you are self-employed or have investments. (Use the same payment links I gave you for the extension – just select Form 1040ES as the form – and use 2017 as the year.)

So you have a lot of demands on your money this week. What is the best strategy for allocating your dollars if your financial resources are limited? Read my 2012 Marketwatch column for guidance. The concepts and strategies are all still very valid. But use the links in today’s TaxQuip.

Please drop by MarketWatch.com and the TaxWatch columns for more tips.

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about tax payments and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the TaxQuips Forum.

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
The best Free Tax Podcast Online
TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments



:: next page >>

Google Custom Search



create & buy custom tax nerd products at Zazzle