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Last minute tax question that I forgot about. I live in state of Illinois where majority of my income comes from (W-2). Income Sources Illinois (W-2 - primary job) Indiana (W-2G from poker tournament ~$25k) - state taxes withheld (3.4%) Missouri (1099-MISC from poker bad beat jackpot ~$3.5k) - no state taxes withheld. This is what I had done on my tax return and I'm hoping this is the correct/best way to do it. Want to avoid double taxation but also want to do it correctly. Do Federal normally Illinois - pay the difference from the Indiana W-2G since IL state tax > IN state tax. I would put income tax paid to other state and fill out the form that I did. Indiana - file nonresident state tax form This is the one where I'm not sure exactly how to do it since I didn't have state taxes withheld Missouri - file nonresident state tax form. Would I pay state tax to Missouri and apply that credit to Illinois similar to the Indiana w-2g income? That is what I was thinking but didn't want to complicate things. I'm assuming Missouri wants their share since they didn't get any of it when I received the money from the casino.
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Apr 13, 2013 23:09
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This seems like a dumb question but I'm confused . . . I'm doing my taxes via TaxACT and I'm getting that I owe the feds about $400 and the state of Oregon about $300. In the past I've always gotten a refund. The only things that have changed are that I now make more money (almost twice what I made last year, first full year of my big-adult-person job) and I made contributions to my HSA this year. Is this normal? Why didn't my workplace take enough out of my pay during the year to cover my taxes? I feel like I screwed something up but I can't find any mistakes. Edit: I think my job didn't withhold as much as it should have and somehow I didn't notice until now. Any advice on how to set up tax withholding properly, especially if you're already working there (vs. setting it up when you take the job which is when it's normally done)? HondaCivet fucked around with this message at 10:48 on Apr 14, 2013 |
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Apr 14, 2013 09:33
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HondaCivet posted:This seems like a dumb question but I'm confused . . . I'm doing my taxes via TaxACT and I'm getting that I owe the feds about $400 and the state of Oregon about $300. In the past I've always gotten a refund. The only things that have changed are that I now make more money (almost twice what I made last year, first full year of my big-adult-person job) and I made contributions to my HSA this year. Is this normal? Why didn't my workplace take enough out of my pay during the year to cover my taxes? I feel like I screwed something up but I can't find any mistakes. Talk to HR, say you want to fill out a new W-4 to change your withholding. You can do it anytime. If you want to be sure you have enough withheld this year, the IRS has a withholding calculator that is WAY more accurate than the worksheet on the top of the W-4. Find it at http://www.irs.gov/Individuals/IRS-Withholding-Calculator
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Apr 14, 2013 13:33
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Like a scrub I managed to owe about $800 this year. However, playing around with IRA contributions, I learned that if I contribute a cool $1000 into a Traditional IRA than I can lower my tax balance to about $150, which is kickin' rad! However, I don't have an IRA set up. I would have to make a new account and fund it before the close of business on April 15th, correct? But if I were to apply online then I'm not sure if the $1000 contribution would hit my new IRA fast enough to make it count for 2012. Of course, hindsight being what it is, I now know I should have sorted this out during the last business week. I tried calling Vanguard to get some info but their office is closed on Sunday. Can any of you shed some light on my question? tl;dr: Want to make deductible IRA contribution, have no IRA yet, can I set up all that jazz Monday afternoon (April 15th) and still be kosher? p.s. the retirement contribution tax credit is amazing...
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Apr 14, 2013 15:11
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I use Vanguard for my IRA, and they will let you make a 2012 contribution until 11:59 PM Monday. Apparently the time stamp is based on when you click the button, not when they get the money. Even for a new account. https://personal.vanguard.com/us/insights/article/last-chance-ira-042013
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Apr 14, 2013 15:31
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Guy Axlerod posted:I use Vanguard for my IRA, and they will let you make a 2012 contribution until 11:59 PM Monday. Apparently the time stamp is based on when you click the button, not when they get the money. Even for a new account. Sweet! Thank you so much for the reassurance!
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Apr 14, 2013 17:02
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Looks like we're getting 750 back from the federal and 300 back from NC, we owe SC 350 because my wife works in SC but lives in NC. SC looks like they need the help so I don't mind. I'm hoping to narrow all that down close to 0 next year. Sephiroth_IRA fucked around with this message at 13:25 on Apr 15, 2013 |
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Apr 15, 2013 13:20
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I've been self employed for about 6 months, and am set up as an S Corp for tax reasons, as the business is making more than my projected salary currently. According to my accountant I can lend money too and from the company during the fiscal year, but as long as I pay back any money lent from the company before the end of the year, it won't be taxed as additional profits. So, my question is, if I were to take $20K from the S Corp and paid off the equity line on my house today, and then at the end of the year use the equity line to pay back the S Corp, and then right as the new year started borrowed from the S Corp again to pay off the equity line, would I get in trouble? I don't want to do anything shady, but I want to use the S Corp to best advantage, and it seems like this would save me a lot of interest(7.25%) as I paid off the equity line for real more gradually with the money from my salary. My accountant is very adamant about not giving "financial advice" versus tax advice, so I figured I'd test the waters here first, as I'm not sure if this would qualify.
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Apr 15, 2013 17:53
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The Adama posted:I've been self employed for about 6 months, and am set up as an S Corp for tax reasons, as the business is making more than my projected salary currently. According to my accountant I can lend money too and from the company during the fiscal year, but as long as I pay back any money lent from the company before the end of the year, it won't be taxed as additional profits. So, my question is, if I were to take $20K from the S Corp and paid off the equity line on my house today, and then at the end of the year use the equity line to pay back the S Corp, and then right as the new year started borrowed from the S Corp again to pay off the equity line, would I get in trouble? I don't want to do anything shady, but I want to use the S Corp to best advantage, and it seems like this would save me a lot of interest(7.25%) as I paid off the equity line for real more gradually with the money from my salary. My accountant is very adamant about not giving "financial advice" versus tax advice, so I figured I'd test the waters here first, as I'm not sure if this would qualify. Why not just take a $20K distribution from retained earnings (assuming you have sufficient basis to do so) and be done with it? Never really got the point of 100% shareholders borrowing from/lending to an S-corp.
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Apr 15, 2013 20:38
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My cousin and his roommates help out their landlord with various things and in return they receive a discount on their rent. This year, according to their 1099-misc, they received $1050. My cousin doesn't have any other income and it looks like he will owe $11.00 on his federal return. I was wondering if you guys know of any tax deduction so that he doesn't end up owing anything. The state (California) part should be easy since rent expense is deductible. Thanks. edit: he was claimed as a dependent on his parents' returns. hypersober fucked around with this message at 21:29 on Apr 15, 2013 |
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Apr 15, 2013 21:26
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hypersober posted:My cousin and his roommates help out their landlord with various things and in return they receive a discount on their rent. This year, according to their 1099-misc, they received $1050. Traditional IRA maybe?
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Apr 15, 2013 21:59
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furushotakeru posted:Why not just take a $20K distribution from retained earnings (assuming you have sufficient basis to do so) and be done with it? Yah, that's sort of why I was inquiring. I wasn't sure that there would be any real benefit, but I didn't know if I was simply ignorant, and didn't want to miss a good opportunity/step in poo poo with the IRS.
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Apr 15, 2013 22:17
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Oh boy, I need some last minute help with TurboTax. I am trying to deduct two home offices - we moved last year - and I don't understand how this "allocation" thing works. It gets the totals for rent, utilities and other expenses I had for each office - but then it wants me to "allocate" the expenses I had in each apartment. I worked in one for 6 months and the other for 3. But the totals that I entered in for each home office are separate, so...what exactly am I allocating? Help anyone?
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Apr 15, 2013 23:29
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Doghouse posted:Oh boy, I need some last minute help with TurboTax. I am trying to deduct two home offices - we moved last year - and I don't understand how this "allocation" thing works. It gets the totals for rent, utilities and other expenses I had for each office - but then it wants me to "allocate" the expenses I had in each apartment. I worked in one for 6 months and the other for 3. But the totals that I entered in for each home office are separate, so...what exactly am I allocating? Well, one is 2/3 and one is 1/3, isn't it? I have no idea what impact it has on any of the calculations but my software makes me allocate too.
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Apr 16, 2013 03:25
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So, my wife and I owed on taxes again this year and cannot figure out why. The only thing we put on our W4's is a 1 on line A since nobody can claim us as a dependent. is there anything I can do to get a bigger refund besides giving them an amount to take out of every paycheck? Which is what I did this year to see if that would give us a refund next year. We have nothing else we can claim like kids or or any other deductions as far as I am aware of.
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Apr 16, 2013 21:37
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Den of Lies posted:So, my wife and I owed on taxes again this year and cannot figure out why. The only thing we put on our W4's is a 1 on line A since nobody can claim us as a dependent. is there anything I can do to get a bigger refund besides giving them an amount to take out of every paycheck? Which is what I did this year to see if that would give us a refund next year. We have nothing else we can claim like kids or or any other deductions as far as I am aware of.  You can still put zero exemptions on the W4. Use http://apps.irs.gov/app/withholdingcalculator/ with your current paystubs to verify your W4 numbers.
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Apr 16, 2013 22:31
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Den of Lies posted:So, my wife and I owed on taxes again this year and cannot figure out why. The only thing we put on our W4's is a 1 on line A since nobody can claim us as a dependent. is there anything I can do to get a bigger refund besides giving them an amount to take out of every paycheck? Which is what I did this year to see if that would give us a refund next year. We have nothing else we can claim like kids or or any other deductions as far as I am aware of. Claim 0 on your W4's. My husband and I do this (and gave them extra money on top of that) but we still had to pay in this year. Two (decent) incomes and no real deductions will do that to ya.
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Apr 16, 2013 22:37
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If you really want a refund you could mail a check to the IRS (google 1040-ES) and then they will refund back the amount after April 15 2014!
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Apr 17, 2013 00:57
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I looked over the OP and the last few pages in the thread but didn't see too much about what I'm looking for. In fact "rear end tude" is in about the same boat as I am on page 74 because we are in the same business. I filed my taxes for 2012 and received a refund even though I had self-employment income of about $800. I did my taxes myself but I quit my day job and am now making the entirety of my money through 1099s so I'll owe at the end of this year. Not only that but I intend to expand my business significantly so I'd like to not be an individual filing taxes next year. I saw a bunch of webpages about "LLCs and S corps, which is right for you?" and scribe jones said something about S corps on page 72 but I don't know what it is I'll need. Definitely not looking for reams of free advice from you guys and scribe jones also said to "ask a professional", and that's exactly what I'm going to do. I'd like to be able to ask a professional about a wide range of topics. For instance, if I'm a fiction writer and I take a vacation and then write a story about that vacation, can the company (LLC or S corp) pay for it and claim it as an expense? Those kinds of questions. Would the professional I'm looking for be a CPA or would I be better off just making an appointment at H&R Block or something? If not H&R Block, what's a good resource for finding the kind of professional I'm looking for? Thanks in advance for the answers.
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Apr 17, 2013 10:19
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EngineerSean posted:I looked over the OP and the last few pages in the thread but didn't see too much about what I'm looking for. In fact "rear end tude" is in about the same boat as I am on page 74 because we are in the same business. I filed my taxes for 2012 and received a refund even though I had self-employment income of about $800. I did my taxes myself but I quit my day job and am now making the entirety of my money through 1099s so I'll owe at the end of this year. Not only that but I intend to expand my business significantly so I'd like to not be an individual filing taxes next year. I saw a bunch of webpages about "LLCs and S corps, which is right for you?" and scribe jones said something about S corps on page 72 but I don't know what it is I'll need. Definitely not looking for reams of free advice from you guys and scribe jones also said to "ask a professional", and that's exactly what I'm going to do. I'd like to be able to ask a professional about a wide range of topics. For instance, if I'm a fiction writer and I take a vacation and then write a story about that vacation, can the company (LLC or S corp) pay for it and claim it as an expense? Those kinds of questions. Would the professional I'm looking for be a CPA or would I be better off just making an appointment at H&R Block or something? If not H&R Block, what's a good resource for finding the kind of professional I'm looking for? Thanks in advance for the answers. Keep in mind that the only things an LLC or S corp offers you is (1) ability to split profits and losses with another person, and (2) a liability shield that you can largely replicate with an umbrella liability policy. The policy won't be free, but neither is an LLC or S corp, which have ongoing state fees and added paperwork for taxes. If you are working alone and in a field that doesn't generally expose you to much liability, e.g., you're selling crafts on Etsy, a separate company is probably overkill. No you can't deduct your vacation under those circumstances. Go find a CPA or an Enrolled Agent. Ask for references and ask if they have ever been penalized or investigated by the IRS. Also keep in mind that this field has a TON of unscrupulous people who will tell their clients what they want to hear because ultimately the client is the one that gets audited and stuck with the bill.
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Apr 17, 2013 12:58
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quote:Go find a CPA or an Enrolled Agent. Ask for references and ask if they have ever been penalized or investigated by the IRS. Also keep in mind that this field has a TON of unscrupulous people who will tell their clients what they want to hear because ultimately the client is the one that gets audited and stuck with the bill. This is exactly what I was afraid of. Basically I should find someone in Colorado who has a similar line of work as I do and ask them who their CPA or Enrolled Agent is? quote:Keep in mind that the only things an LLC or S corp offers you is (1) ability to split profits and losses with another person, and (2) a liability shield that you can largely replicate with an umbrella liability policy. The policy won't be free, but neither is an LLC or S corp, which have ongoing state fees and added paperwork for taxes. If you are working alone and in a field that doesn't generally expose you to much liability, e.g., you're selling crafts on Etsy, a separate company is probably overkill. One thing that I read up on was that I can at least avoid the 2.9% Medicare tax above $120k of income by paying myself a "reasonable wage" via W-2 and giving myself the rest via disbursement. You're right that I don't have any reasonable expectation of getting hit with a liability, but who knows. I mean (and here's the goon in me popping its head up), the episode of Family Guy where the fat dad does the exact same thing I'm doing has Betty White reading an audiobook and causing a car accident, bankrupting the rich guy who bankrolled the operation. I'm not exactly worried about that kind of thing happening but I do know that my tax preparation and filing expenses are business expenses that can be counted against profit. quote:No you can't deduct your vacation under those circumstances. I know I said I wouldn't be asking for a ton of free advice and I'll obviously be asking the professional about this too, but surely a company like CNN counts travel, food, and lodging costs against profit when it does one of their lovely "14 reasons you should go visit Myanmar now!" articles. If EngineerSean, Inc. commissions me to go to Jamaica and write a book about crazy Jamaican sex, then EngineerSean, Inc. should be able to write the cost of the trip off as an expense, right? At first I thought that if I wrote a book about it that I could only count the expenses against the profit from that book, but then I thought about CNN probably wouldn't be able to derive the true amount of profit that such an article would bring to their site. If this is beyond the scope of your expertise then I apologize, and I thank you for your other advice too.
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Apr 17, 2013 20:49
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EngineerSean posted:I know I said I wouldn't be asking for a ton of free advice and I'll obviously be asking the professional about this too, but surely a company like CNN counts travel, food, and lodging costs against profit when it does one of their lovely "14 reasons you should go visit Myanmar now!" articles. If EngineerSean, Inc. commissions me to go to Jamaica and write a book about crazy Jamaican sex, then EngineerSean, Inc. should be able to write the cost of the trip off as an expense, right? At first I thought that if I wrote a book about it that I could only count the expenses against the profit from that book, but then I thought about CNN probably wouldn't be able to derive the true amount of profit that such an article would bring to their site. If this is beyond the scope of your expertise then I apologize, and I thank you for your other advice too. Pigs get fat. Hogs get slaughtered.
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Apr 17, 2013 22:05
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AbbiTheDog posted:Pigs get fat. Hogs get slaughtered. My job is literally writing escapist fiction in faraway locales, and I do work at it, so I'm not sure the quote is quite accurate in my case.
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Apr 17, 2013 22:10
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AbbiTheDog posted:Pigs get fat. Hogs get slaughtered. Sure but the worst that Jamaican Sex Novelist Sean could get slaughtered here for basically is the amount of his Jamaican Sex Research Escapade anyway, right? Assuming that Jamaican Sex Novelist Sean isn't pulling a huge Wesley Snipesian anti-tax scheme and he gets audited and can't justify his write-off properly he'll just have to pay the difference, plus some relatively minor late fees/fines?
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Apr 17, 2013 22:11
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EngineerSean posted:I know I said I wouldn't be asking for a ton of free advice and I'll obviously be asking the professional about this too, but surely a company like CNN counts travel, food, and lodging costs against profit when it does one of their lovely "14 reasons you should go visit Myanmar now!" articles. If EngineerSean, Inc. commissions me to go to Jamaica and write a book about crazy Jamaican sex, then EngineerSean, Inc. should be able to write the cost of the trip off as an expense, right? At first I thought that if I wrote a book about it that I could only count the expenses against the profit from that book, but then I thought about CNN probably wouldn't be able to derive the true amount of profit that such an article would bring to their site. If this is beyond the scope of your expertise then I apologize, and I thank you for your other advice too. You aren't CNN. CNN is a corporation and unable to personally take vacations. CNN isn't buying vacations for its shareholders and attempting to write them off as business expenses. Sending employees to conferences in places like Las Vegas is a common practice yes (emphasis on employees, and not shareholders), but when CNN does this they aren't telling these employees "here's a ticket to vegas, have fun!" There's a specific itinerary with actual goals. No, you really can't write off your vacations as a tax deduction. Don't read articles titled "Top 10 tax deductions you've never thought about!" That's seriously almost as bad as the dude asked about forming a church and donating money to it. EngineerSean posted:One thing that I read up on was that I can at least avoid the 2.9% Medicare tax above $120k of income by paying myself a "reasonable wage" via W-2 and giving myself the rest via disbursement. You're right that I don't have any reasonable expectation of getting hit with a liability, but who knows. I mean (and here's the goon in me popping its head up), the episode of Family Guy where the fat dad does the exact same thing I'm doing has Betty White reading an audiobook and causing a car accident, bankrupting the rich guy who bankrolled the operation. I'm not exactly worried about that kind of thing happening but I do know that my tax preparation and filing expenses are business expenses that can be counted against profit. Yes, you'll save on payroll taxes as an S-Corporation. Keep in mind that there are higher filing and record keeping requirements for S-Corporations, and not all of that is exactly free. The IRS can also take various positions about what constitutes a "reasonable wage" - especially when you're a sole shareholder with no employees. Admiral101 fucked around with this message at 22:24 on Apr 17, 2013 |
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Apr 17, 2013 22:17
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Admiral101 posted:You aren't CNN. CNN is a corporation and unable to personally take vacations. CNN isn't buying vacations for its shareholders and attempting to write them off as business expenses. Sending employees to conferences in places like Las Vegas is a common practice yes (emphasis on employees, and not shareholders), but when CNN does this they aren't telling these employees "here's a ticket to vegas, have fun!" There's a specific itinerary with actual goals. Well this isn't something I read on some "This one weird tip for doing your taxes" website, just something I thought about while reading CNN travel. I'd like to start over and not use the term vacation. If CNN is a corporation and unable to take vacations, then I would like to make EngineerSean Publishing, Corp. a corporation unable to take vacations. Then, if CNN is able to send one of its employees to Aruba to write a quick travel guide, I would like EngineerSean Publishing, Corp. to be able to send one of its employees to Aruba and pay that employee to also write a fictional account of the trip. To me, this sounds perfectly reasonable. Is it reasonable? edit: The reason I'm asking these questions is not because I want you guys to assure me "Oh yeah that's on the up and up" but rather the reason why I'm wrong so I can have a better idea of what I can and cannot deduct as a business expense, because even though that's an extreme example, I have no idea what the line is for business expense. I have a laptop that I bought in January that I use 100% for business. I have an "office" which is just a bedroom in my house that I use for nothing else but I only actually utilize a quarter of. I don't want to bog this thread down with questions about every individual situation that applies to me, but I would like to have an idea of what I can and can't deduct that's not just a 200 page .pdf file. EngineerSean fucked around with this message at 22:47 on Apr 17, 2013 |
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Apr 17, 2013 22:31
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EngineerSean posted:Well this isn't something I read on some "This one weird tip for doing your taxes" website, just something I thought about while reading CNN travel. Except the employee in this situation is you, who is the sole shareholder/officer of the corporation. If you had a second employee (who wasn't in any way related to you) and you sent that employee to Jamaica for 3 days to attend the Jamaican Sex Conference to learn all about crazy Jamaican sex by speaker Dr. Shawn (doctorate in Jamaican sex culture), you'd be on safe ground. But sending yourself on a trip to Jamaica with a nebulous "I'll write a book about it when I get back" isn't nearly at that standard. You also need to understand there's a world of difference between sending an employee somewhere versus sending an employee-shareholder somewhere.
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Apr 17, 2013 22:45
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Admiral101 posted:Except the employee in this situation is you, who is the sole shareholder/officer of the corporation. If you had a second employee (who wasn't in any way related to you) and you sent that employee to Jamaica for 3 days to attend the Jamaican Sex Conference to learn all about crazy Jamaican sex by speaker Dr. Shawn (doctorate in Jamaican sex culture), you'd be on safe ground. Thanks for the response. I guess my only question is: If I own a company (and yes my wife and I are the only shareholders and employees of this company), then no travel expenses can be deducted. Even if, in this case, it pertains to the one and only product of the business, fictional works about places you would travel to. I mean I feel like it's not quite nebulous when it's the one and only thing that the company produces.
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Apr 17, 2013 22:51
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Well, it depends. Is there a profit motive to your travel? I can write off my travel if I am going to a convention to sell my artwork, because that is a legitimate business expense. I cannot attend the convention to sell artwork to make money without spending that money on hotel, travel, the cost of attending the convention, etc. If I make the trip too long (e.g. the convention is on a weekend but I go for a whole week), then it ceases to be business unless I spent that whole week doing business, which is very, very hard to justify. Hence minimizing my travel time during those events. I run into this same scenario with my photography. I may travel to some airport to take photos of airplanes, but it is very difficult for me to legitimize that as "expense" because if I never sell those photos, then there isn't much that can be done. HOWEVER, if I am paid by a company to go somewhere to take photos for them (e.g. when I shoot private jets), then I can confidently write off the expenses related to that. There's a lot of people that try to do "photography businesses" to write off vacations and the IRS does not take too kindly to people using that stuff as a tax shelter. (I am not a tax attorney, just giving an example as a fellow artist/creative person who has to file a schedule C as a sole proprietor).
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Apr 17, 2013 23:04
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EngineerSean posted:Thanks for the response. I guess my only question is: If I own a company (and yes my wife and I are the only shareholders and employees of this company), then no travel expenses can be deducted. Even if, in this case, it pertains to the one and only product of the business, fictional works about places you would travel to. I mean I feel like it's not quite nebulous when it's the one and only thing that the company produces. Travel expenses can be deducted but what you're describing are trips that are enormously personal in nature. Mainly because the only argument you have for making this a business trip is that you're going to write a book about your vacation/experiences. Do you do some kind of writing that is specific to foreign affairs or foreign travel? What will you be doing while in Jamaica? It would be one thing if you were traveling to the depths of Africa to live with some tribe for a month, but I'm going to venture to say that's not going to be on the itinerary for what you're doing. You should read publication 463, specifically the part about traveling outside the United States: http://www.irs.gov/publications/p463/ch01.html
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Apr 17, 2013 23:10
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^^ thanks for the link, Table 5-1 was really helpful.kefkafloyd posted:There's a lot of people that try to do "photography businesses" to write off vacations and the IRS does not take too kindly to people using that stuff as a tax shelter. This was all fantastic, thanks a lot. About the part I just quoted, I understand that if you're running a lawn care company and want to write losses off of your photography company, they wouldn't take too kindly to that. However, what if your entire business was photography, like you just took pictures of trees all day long and sold them. Doing market research, you realize that there exists demand for pictures of trees only available in warmer climates than yours, and you can easily show backup for this. You travel to Antigua, take the pictures of the trees for four hours every day that you're there, and do four hours of photo manipulation when you get home for every day that you were there. However, the photos you sell from that trip only make you $500 and the trip cost $5000. Would you feel comfortable writing $5000 off the profit of your photography business (which makes well over $5000 in aggregate) or would you only write off the $500 of profit you made from those pictures? It's not really a tax shelter if your entire business is taking pictures of exotic trees. This will be the last question I ask, thanks for letting me clutter up your thread, tax gurus! EngineerSean fucked around with this message at 23:24 on Apr 17, 2013 |
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Apr 17, 2013 23:17
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EngineerSean posted:^^ thanks for the link, Table 5-1 was really helpful. Businesses like photography and fiction writing and art have to be especially careful because in many cases the people running these "businesses" are really just hobbyists that don't have a real profit motive. In your example, if a client in the photography business came to me and told me he spent $5,000 on a trip to make $500 off photos - I would ask stuff like "why would you spend $5,000 to only earn $500?" "Did you have someone contract you to make this trip who just didn't pay?" It would also depend if the client has a history of taking these foreign trips to exotic locations for photography, and making profit off these trips. I would also ask what kind of accommodations the client had during these trips, and if he took anyone with him (like a spouse or significant other). Basically: facts and circumstances. Admiral101 fucked around with this message at 00:29 on Apr 18, 2013 |
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Apr 18, 2013 00:26
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EngineerSean posted:^^ thanks for the link, Table 5-1 was really helpful. No legitimate business would incur $5,000 of expenses to generate $500 of revenue unless the business could articulate specifically why it thought that the short-term loss would lead to a long-term gain. What you keep describing is a hobby loss, and the IRS is really strict on these. Whether you do it through an S corp or a Schedule C, if you start reporting losses like what you're describing, I give it good odds that you're audited within five years. And once you're audited and they suspect you of a hobby loss issue, they'll go back and open up audits on all the other years that they can (usually the two additional years preceding the year already under audit). Seriously, I know you think this is a super clever idea but thousands of other people have walked this path and ended up regretting it. For instance, this guy: Wilmot v. Commissioner of Internal Revenue posted:In 2004, Wilmot made three trips to Europe to take photos. He used these trips to build a portfolio—a set of sample photos that photographers use to seek work. The first trip took place from December 17, 2003 to January 21, 2004, the second trip from March 9 to 22, 2004, and the third trip from July 1 to August 11, 2004. On the first and second trips, Wilmot took photos exclusively in the Czech Republic. On the third trip, he again took photos in the Czech Republic, but also brought one model, Hana Strangfeldova, to Sweden for seaside photos. That's a description of facts from a court case where the taxpayer claimed his photography was a business. As you can see, the taxpayer was putting a lot of effort into his work, staging full-day shoots, etc. So what did the court decide? quote:Wilmot did not engage in his photography activity for profit. He earned no income from the activity and incurred increasing losses that he was unlikely to recoup. He did not conduct the activity in a businesslike manner or in a manner similar to a profitable business. He did not keep records that helped him make business decisions, nor did he significantly attempt to improve profitability. He had no genuine expectation that his photos would appreciate in value. His previous success in oceanography did not increase his odds of success in photography. And lastly, he used photography losses to offset income from other sources and derived substantial pleasure from traveling and taking photos. His expertise in photographic techniques and his large time expenditure are insufficient to outweigh these factors. Because we find that Wilmot did not conduct his photography activity for profit, he cannot deduct any of his photography expenses under section 162 or section 183. Here's the full opinion if you're interested: http://www.scribd.com/doc/136619938/Wilmot-v-Commissioner-of-Internal-Revenue?secret_password=7cx9r2bjwoxf8tpbm3d 10-8 fucked around with this message at 04:14 on Apr 18, 2013 |
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Apr 18, 2013 04:09
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I guess I really have a lot to talk about with a professional. Thank you everyone for being so helpful.
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Apr 18, 2013 04:14
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10-8 posted:Here's the full opinion if you're interested: http://www.scribd.com/doc/136619938/Wilmot-v-Commissioner-of-Internal-Revenue?secret_password=7cx9r2bjwoxf8tpbm3d This report is great at listing all of the pitfalls. This guy really was a huge tax cheat. Only an idiot would try to claim half of their salaried income in schedule C losses, especially with no schedule C income. That flag is so red it's bleeding.
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Apr 18, 2013 06:05
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Now you guys have got me worried about my own hypothetical that I asked about several pages ago. I am a US citizen but I live in Europe at the moment. I have a very small rental income real estate portfolio in the US. Can I deduct all of my travel expenses to evaluate potential additions to my portfolio in the states? What if I end up not buying anything during a particular trip? What if I'm looking in an area where I have friends/family and part of the trip is to visit them? Do I need to come up with some percentage of time I was spending on business vs. personal and use that against the total expenses? I have not done anything like this yet and I've never been in this position before and I don't want to mess up. edit: There are also situations I can imagine where I'd want to be there in person to deal with things such as tenant interviews or whatever. sleepy gary fucked around with this message at 10:45 on Apr 18, 2013 |
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Apr 18, 2013 10:43
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DNova posted:Now you guys have got me worried about my own hypothetical that I asked about several pages ago. I am a US citizen but I live in Europe at the moment. I have a very small rental income real estate portfolio in the US. Can I deduct all of my travel expenses to evaluate potential additions to my portfolio in the states? What if I end up not buying anything during a particular trip? What if I'm looking in an area where I have friends/family and part of the trip is to visit them? Do I need to come up with some percentage of time I was spending on business vs. personal and use that against the total expenses? What do you mean by "portfolio"? Do you own rental properties in the US and have some rental management company manage it? Or do you own a slice of some rental real estate partnership? Regarding mixed personal versus business travel, you will want to get familiar with Publication 463. Here's a decent example: quote:Trip Primarily for Business
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Apr 18, 2013 13:53
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Admiral101 posted:What do you mean by "portfolio"? Do you own rental properties in the US and have some rental management company manage it? Or do you own a slice of some rental real estate partnership? The former. According to the example you posted, I can deduct nearly all of my trip expenses. I think.
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Apr 18, 2013 17:39
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Are you supposed to indicate anywhere on the 1040 that you're a nonresident alien living in the US on a work visa? I didn't see any check boxes.
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Apr 18, 2013 18:43
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Mandalay posted:Are you supposed to indicate anywhere on the 1040 that you're a nonresident alien living in the US on a work visa? I didn't see any check boxes. No, they don't care what your status is. If you don't have an SSN assigned to you, you need to get an ITIN.
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Apr 18, 2013 21:20
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