Taxes/Confusion

[anng]

I use TaxAct, but my first year I did talk to an accountant. It's worth the money to understand what you can/can't deduct.

For any company that doesn't send you a 1099, you still have to declare the income. I can't remember exactly what the box is titled, but there is a box that says "Income not reported on..." you total it up and enter anything in that box. I have a number of foreign clients who don't send me tax forms. All of them pay via Paypal, so every month, I'll print out my Paypal earnings statement and total it up. It also makes it easy for me to keep track of Paypal fees so that I can declare them as a business expense.

[funmom91]

Im confused to. What if we worked a out of the home job the first part of the year and then started working from home. Will the software help with this? Also, for private clients do we only claim the ones that we made over $600 with? Last question, I had some private clients to tell me not to worry about paying taxes that they were going to claim my income. How does that work?

[charmed]

Don't read this if you don't want to read a RANT.

Please, please, please, please people, have some common sense. OBVIOUSLY, you have to claim every last penny you earn, minus legitimate deductions for expenses. It does NOT MATTER if someone sends you a 1099 or not. It does not matter what someone tells you. You must claim every last penny you earn. Period.

At the VERY LEAST each person who works for themselves should be recording in some manner, income and expenses. It can be a spreadsheet, it can be a notebook, it can be a program, but it should be recorded in some manner. Receipts should be saved for expenses in case you have to prove to the IRS that your deduction was legit.

If you're waiting until January to figure this out for last year you're in deep doo doo. If you were paid by paypal it will be a lot easier to figure out your income though, so start figuring it out, and start finding and locating expense receipts.

Don't even bother using tax cut, turbo tax or anything until you've figured out what your income and expenses are. Don't even bother hiring a bookkeeper or CPA until you know this information. They can't help you if you haven't done the most basic of record keeping.

Every single year I get these same questions in my email, on wahm.com, and in other groups of which I am part.... BUT, no one seems to worry about it until the last moment. TaxMama® – Free Tax Advice Where Taxes Are Fun | TaxMama® has some great advice and also some great books that if you read them and follow the information you won't have this worry tax time next year.

It takes me less than 20 minutes to do my taxes using TurboTax because I have my books in order all the time. Literally, any day of the year I can be asked to print out a profit and loss statement and I know what my financial situation is. As business owners, you should be in the same boat, it's not hard, I promise, but it is hard if you're keeping yourself in the dark and not learning and asking at the last minute on a message board that frankly, is often full of very bad advice.

[mitako]

2011 was my first year as a freelancer, and I am going to use a tax accountant to do my taxes this year so I can get advice on deductions, filing quarterly estimated taxes in the future, etc.

I am also in the process of a complicated divorce, so have a variety of financial issues that are very confusing to deal with. I expect that after dealing with taxes for 2011, I will file my own from then on.

I keep track of my freelance earnings with a simple Excel spreadsheet. I have a few regular clients, and I track every title I write, dates submitted and accepted, date paid.

I don't have any tax software yet, but will buy something soon so I can file myself next year.

[Sloane Rossi]

Originally Posted by funmom91

Im confused to. What if we worked a out of the home job the first part of the year and then started working from home. Will the software help with this? Also, for private clients do we only claim the ones that we made over $600 with? Last question, I had some private clients to tell me not to worry about paying taxes that they were going to claim my income. How does that work?

If you are using a step-by-step tax software. they will tell you when to enter stuff from your W-2, when to enter stuff from your 1099-MISC and when to enter income you made that you did not get a 1099 for.

You need to claim all of your income, even if you did not make $600 from that person. If you made $0.01, claim it.

I'm not even sure if what your clients are doing is legal, but I would claim the income to cover your own back. If they want to pay extra taxes on it and not claim deductions that they could claim, that is their business. Take care of you and make sure you are doing everything that you are legally supposed to do.

[ktjones]

Well! I just received a phone call from the H & R Block person I dealt with last year. I explained to her what 2011 was like for me and now I have an appointment with her tomorrow to look over everything! I'm happy to finally get some "straight" answers and I just hope that it won't cost too much LOL

[michelleknudsonwriter]

I use to work in accounting firm. My job back in the day wasn't very important but this is what nearly every new client did that was new to the firm. The CPA's had me do this with every single new client that had no idea what they were doing.


My job was to collect everything. Are you still with me? Great!

Here is what I had every newbie client that was totally lost bring in.

GATHER UP ALL 1099 TAX FORMS AND W's. BRING EM WITH YOU :-)

1) a SHOE BOX. Yes. I'm not joking! LOL

2 ) All receipts

3) Checks, Cash, Bank Accounts Statements

4) Merchant Credit Card Processer Info

5) Invoices to clients that were paid

6) PayPal Statements

7) Mile Log

8) We had a list of over 200 things that the irs allowed as long as they had a receipt. I use to have several copies of the list.Anything that costs you money to operate your business.

9) Employee Gifts Receipts

10) Conferences Receipts

11) Debt Forgiveness Forms

12) Home office space deduction (this can go two different ways)

13) Web hosting fees

14) Internet bills

15) Computer Receipt

16) Pen Receipt

17) Advertisements Receipts

18) Donation Receipts

There are a zillion other things as well. I'm not a expert. I was just the receptionist.

[funmom91]

Originally Posted by Sloane Rossi

If you are using a step-by-step tax software. they will tell you when to enter stuff from your W-2, when to enter stuff from your 1099-MISC and when to enter income you made that you did not get a 1099 for.

You need to claim all of your income, even if you did not make $600 from that person. If you made $0.01, claim it.

I'm not even sure if what your clients are doing is legal, but I would claim the income to cover your own back. If they want to pay extra taxes on it and not claim deductions that they could claim, that is their business. Take care of you and make sure you are doing everything that you are legally supposed to do.

Thanks. I am going to try to attempt to file myself hopefully I don't end up needing help.

[WorkingMom227]

Originally Posted by charmed

Don't read this if you don't want to read a RANT.

Please, please, please, please people, have some common sense. OBVIOUSLY, you have to claim every last penny you earn, minus legitimate deductions for expenses. It does NOT MATTER if someone sends you a 1099 or not. It does not matter what someone tells you. You must claim every last penny you earn. Period.

At the VERY LEAST each person who works for themselves should be recording in some manner, income and expenses. It can be a spreadsheet, it can be a notebook, it can be a program, but it should be recorded in some manner. Receipts should be saved for expenses in case you have to prove to the IRS that your deduction was legit.

If you're waiting until January to figure this out for last year you're in deep doo doo. If you were paid by paypal it will be a lot easier to figure out your income though, so start figuring it out, and start finding and locating expense receipts.

Don't even bother using tax cut, turbo tax or anything until you've figured out what your income and expenses are. Don't even bother hiring a bookkeeper or CPA until you know this information. They can't help you if you haven't done the most basic of record keeping.

Every single year I get these same questions in my email, on wahm.com, and in other groups of which I am part.... BUT, no one seems to worry about it until the last moment. TaxMama® – Free Tax Advice Where Taxes Are Fun | TaxMama® has some great advice and also some great books that if you read them and follow the information you won't have this worry tax time next year.

It takes me less than 20 minutes to do my taxes using TurboTax because I have my books in order all the time. Literally, any day of the year I can be asked to print out a profit and loss statement and I know what my financial situation is. As business owners, you should be in the same boat, it's not hard, I promise, but it is hard if you're keeping yourself in the dark and not learning and asking at the last minute on a message board that frankly, is often full of very bad advice.

Well, honestly, I have NEVER heard of TaxMama a day in my life until today and I frequent this forum. And, I was asking quite a few tax questions months ago so that I would be prepared when the time came. I do know how much I made from Merchant Circle, TextBroker, and The Content Authority.. and I have been paid via paypal from all private clients, so I know what I've earned through them as well. I guess this rant was for other people who are not sure what they earned throughout the year.

I am interested in TaxMama though but when I went to the site, it did not load properly. Not sure if it's a problem on my end.