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[Bullhonkie]

Originally posted by: EagleKeeper

Originally posted by: Bullhonkie
Relatively noobish question here:

When itemizing, you include state/local taxes paid/withheld in that tax year (2003 in this case). I've also read this applies to back-taxes that you may have paid that year also. My girlfriend had back-taxes owed for the year 2000, but they were paid in 2003. The amounts paid last year for the back-taxes can be included as well - correct?

If the back-taxes that were paid in 2003 were for a state/local income tax adjustment, it is deductible on the Schedule A.

Penalties and interest are not.

Yes, they were paid in 2003 for state back-taxes that were due for tax year 2000.

Part of the back-taxes that were paid came from an offset of the state refund she would've received. That counts the same as if we had paid it normally and can be used, right? If I go to the CA state tax site and log in to show recent tax payments - the state refund offset amount shows up as one of the payments that were made. I'm assuming I can just go down the list and add up all the payments made in 2003 and I'll be ok using that amount?

Just looking for clarification here. Thanks a lot! 🙂

 

[EagleKeeper]

Your assumptions are correct.

 

[LukFilm]

If I buy something for business purpose and have a $30 coupon, do I expense the item BEFORE the coupon or do I expense it after coupon?

 

[alkemyst]

I am not sure of the legalities of the following, these are just my opinions on this.

If you use a coupon at the time of purchase it will reflect what you paid....that is the bottom line. This reduced price also factors into depreciation. You can't pay a dollar for something and say well it was worth $100 actually and write that off. If anything it would count as a gain and additional profit for the business at that point....

Now rebates don't show on the purchase, but technically I believe they should be reported if used for a business purchase being deducted. Of course I am sure processing fees and handling of rebate like most other parts of tax preparation may be written off. I doubt they could ever discover it though...it's just a matter of honesty versus adding more to business costs to offset more tax liability.

It's also probably like most of the IRS mumbo jumbo, if less than $500 yadda yadda yadda...they aren't going to care even if they see it.

I can't find the website now, but there was a whole discussion somewhere out there on businesses buying large amounts of free after rebates or majorly reduced items and reporting only the full purchase price.

Å

 

[Dissipate]

I just got my W2 from my work. I only have $200 coming back to me and I don't want to file it using an expensive online efile service that costs like $30. Is there an online efile service that is free?

 

[EagleKeeper]

Originally posted by: Dissipate
I just got my W2 from my work. I only have $200 coming back to me and I don't want to file it using an expensive online efile service that costs like $30. Is there an online efile service that is free?

Have you already figured out your tax bill and the $200 is the refund.

Depending on you income level, you may be able to file for free. search for posts made concerning the Tax Freedom project.

The IRS E- File web site has additional information that will be available next week.

If you have already done your taxes, you can mail the forms in with a direct deposit request.
At this time of year, it will only add 1-2 weeks delay in getting your funds vs. E-File.

 

[BD2003]

Ok heres my situation:

From Jan-May I was living in a dorm, paying for tution either out of pocket or from a loan.
From June-September I lived at home with my mom.
From Sept-Dec I moved out and got an apt with two roomates.

All the while Ive been supporting myself selling on ebay and doing odd jobs. My problem is, my records arent perfect. I didnt save a single receipt. I used debit and credit cards for most of my expenses, and received and sent tons of money using paypal. I can estimate my revenue, expenses and income, but aside from the CC and Debit card logs, I dont have a single receipt to prove any of it.

Either way, its somewhere between 10-15k. I fully support myself but lived with my mom for a couple months.

So basically, what should I do? Should my mom claim me as a dependent? Should I file using the best estimates I can make for everything?

 

[EagleKeeper]

Originally posted by: BD2003
Ok heres my situation:

From Jan-May I was living in a dorm, paying for tution either out of pocket or from a loan.
From June-September I lived at home with my mom.
From Sept-Dec I moved out and got an apt with two roomates.

All the while Ive been supporting myself selling on ebay and doing odd jobs. My problem is, my records arent perfect. I didnt save a single receipt. I used debit and credit cards for most of my expenses, and received and sent tons of money using paypal. I can estimate my revenue, expenses and income, but aside from the CC and Debit card logs, I dont have a single receipt to prove any of it.

Either way, its somewhere between 10-15k. I fully support myself but lived with my mom for a couple months.

So basically, what should I do? Should my mom claim me as a dependent? Should I file using the best estimates I can make for everything?

0) Age?

1) The IRS frowns on bad record keeping. If you get audited by some-one who got out of bed on the wrong side, you are screwed royally. 🙁

2) Think of yourself as self employed and as a business. 🙂

3) Is the 10-15K gross or net? - If gross - you need to estimate your net profit.
As a business, you may have other expenses beyond material costs. See above posts on this subject.

4) Are the odd jobs under the table? (Cash only - no paperwork and/or employer)

5) Determine what the tax advantage would be for your mother w/ respect to tuition & dependant.
See some of the posts above on recommendations.


Once you have "created" the necessary records, then determine what your tax liability is.

If you choose to file you will need to collect all the created records and start cranking out numbers.

 

[BD2003]

Im 23. My records arent that terrible, I kept track of how much expense, revenue and therefore net I made every month. As far as expenses go, itd be a massive job, but I could go back and find out exactly how much I spent on shipping, ebay fees etc, because most everything I do isnt done via cash, but with a CC or DC. The 10-15k is net. I could get a very, very good estimate, but it might be off by 1-2K. Not sure how to deal with trollings and the like.

What I didnt really keep track of is how much I spent on shipping and the like. I could go back and do my best, but itd be a fairly rough estimate.

The odd jobs are completely under the table.

To be honest, Im pretty much a total tax newbie. Ive always had a job during every year but this, and Ive just filed using the W2. I didnt think that the ebaying would turn into a full time thing, it just started out as spare cash so I didnt really think to keep records of every single little thing and all my receipts.

What happens if I just plain dont file?

 

[alkemyst]

Originally posted by: BD2003
Im 23. My records arent that terrible, I kept track of how much expense, revenue and therefore net I made every month. As far as expenses go, itd be a massive job, but I could go back and find out exactly how much I spent on shipping, ebay fees etc, because most everything I do isnt done via cash, but with a CC or DC. The 10-15k is net. I could get a very, very good estimate, but it might be off by 1-2K. Not sure how to deal with trollings and the like.

What I didnt really keep track of is how much I spent on shipping and the like. I could go back and do my best, but itd be a fairly rough estimate.

The odd jobs are completely under the table.

To be honest, Im pretty much a total tax newbie. Ive always had a job during every year but this, and Ive just filed using the W2. I didnt think that the ebaying would turn into a full time thing, it just started out as spare cash so I didnt really think to keep records of every single little thing and all my receipts.

What happens if I just plain dont file?

Well you last question first is more than likely nothing for a while and then eventually you get contacted with why didn't you file 5 years ago, they compute your taxes and penalties and set you up on a payment plan for what will probably amount to multiple of what you even made that year gross.

If you don't plan on filing I'd never put that in writing...especially when someone can get a cut of your tax liability for reporting it.

Expenses being a massive job or not need to be figured out if not what are you going to estimate for them? Also if you don't count shipping payment as income don't deduct it. You should do both....it was a received and then used to offset the costs.

Fees and whatnot can be totalled as well as any losses due to trolls. If you didn't lose you can't write it off. This write offs are usually only applicable to the profits....by reducing them you reduce you liability....some people think once you figure out what you owe you start subtracting debts and damages 🙂

Å

 

[BD2003]

Well you last question first is more than likely nothing for a while and then eventually you get contacted with why didn't you file 5 years ago, they compute your taxes and penalties and set you up on a payment plan for what will probably amount to multiple of what you even made that year gross.

If you don't plan on filing I'd never put that in writing...especially when someone can get a cut of your tax liability for reporting it.

Expenses being a massive job or not need to be figured out if not what are you going to estimate for them? Also if you don't count shipping payment as income don't deduct it. You should do both....it was a received and then used to offset the costs.

Fees and whatnot can be totalled as well as any losses due to trolls. If you didn't lose you can't write it off. This write offs are usually only applicable to the profits....by reducing them you reduce you liability....some people think once you figure out what you owe you start subtracting debts and damages 🙂

Å

Figured something along those lines.

I never counted shipping payment as income. I have absolutely no record of exactly how much it cost to ship each item, although I could get to a fairly good estimate by assuming $7 an item. Some were less, some were more, but itll average out very close to that. I could easily figure out exactly how much I paid in paypal fees, and exactly how much I paid in ebay fees. Also wont be a problem to calculate exactly how much I paid in tuition and the like.

My real question is, how rigorously are they going to check everything? Using my best estimates and records theres no way I can be off by more than 1K either way. Will the IRS just take it on my word that I say I made what I made, and paid what I paid? Basically is the tax system working on a certain amount of trust for those who are self employed?

 

[EagleKeeper]

Originally posted by: BD2003

Well you last question first is more than likely nothing for a while and then eventually you get contacted with why didn't you file 5 years ago, they compute your taxes and penalties and set you up on a payment plan for what will probably amount to multiple of what you even made that year gross.

If you don't plan on filing I'd never put that in writing...especially when someone can get a cut of your tax liability for reporting it.

Expenses being a massive job or not need to be figured out if not what are you going to estimate for them? Also if you don't count shipping payment as income don't deduct it. You should do both....it was a received and then used to offset the costs.

Fees and whatnot can be totalled as well as any losses due to trolls. If you didn't lose you can't write it off. This write offs are usually only applicable to the profits....by reducing them you reduce you liability....some people think once you figure out what you owe you start subtracting debts and damages 🙂

Å

Figured something along those lines.

I never counted shipping payment as income. I have absolutely no record of exactly how much it cost to ship each item, although I could get to a fairly good estimate by assuming $7 an item. Some were less, some were more, but itll average out very close to that. I could easily figure out exactly how much I paid in paypal fees, and exactly how much I paid in ebay fees. Also wont be a problem to calculate exactly how much I paid in tuition and the like.

My real question is, how rigorously are they going to check everything? Using my best estimates and records theres no way I can be off by more than 1K either way. Will the IRS just take it on my word that I say I made what I made, and paid what I paid? Basically is the tax system working on a certain amount of trust for those who are self employed?

Depends on what type of person that comes looking for you if they do. IRS does not operate on trust, they operate on receipts.

Best thing that you can do is to work with a reasonable ballpark for your shipping expenses. If $7 is reasonable then $7*n items.

IRS checking works on 3 relative levels.

1) Does everything seem proper based on the numbers. Done by a computer. No problem if within norms.

2) If a Random Pull is done by the computer and/or flagged, then a human intervenes.
Providing an explanation and reasonable numbers to the person and the personis reasonable, worst case would be a small
adjustment and warning to keep better records. If the person is unreasonable, the see Item 3 🙁

3) If a Flagged Pull - This indicates that something is seriously incorrect.
Explanations wil have to be provided, with backup numbers and paperwork.
Possible fine and/or interest - you may have pissed of somebody.
Potential for investigation of previous years returns.

 

[Eli]

I wasn't even planning on filing, but maybe I should if there is some way I could get money back? 😀

I made 515$ working for an employer. Soc. Sec. and medicare was taken out, but Fed. and State taxes weren't for some reason.. it was automatic, had something to do with the way it was setup in quickbooks.. anyway..

I've also been selling things here and there on eBay. I don't think I've made more than like 2500$ profit.. (probably something like 10k gross).. I could probably figure it all out if I needed to.

Should I bother filing?

 

[BD2003]

Depends on what type of person that comes looking for you if they do. IRS does not operate on trust, they operate on receipts.

Best thing that you can do is to work with a reasonable ballpark for your shipping expenses. If $7 is reasonable then $7*n items.

IRS checking works on 3 relative levels.

1) Does everything seem proper based on the numbers. Done by a computer. No problem if within norms.

2) If a Random Pull is done by the computer and/or flagged, then a human intervenes.
Providing an explanation and reasonable numbers to the person and the personis reasonable, worst case would be a small
adjustment and warning to keep better records. If the person is unreasonable, the see Item 3 🙁

3) If a Flagged Pull - This indicates that something is seriously incorrect.
Explanations wil have to be provided, with backup numbers and paperwork.
Possible fine and/or interest - you may have pissed of somebody.
Potential for investigation of previous years returns.

Ok so what "numbers" is this being based on other than what I tell them I made for the year?

I didnt keep track of how much I charged for shipping, nor did I keep track of how much it actually cost to ship it. They cancel each other out extremely closely, so is it safe to just ignore it?

My main concern is, how can they tell accurate records from fabricated records? Theres a solid record on ebay of exactly how much I pulled in. But some was in money orders, some was in paypal, and some was in cash. Theres also no solid record of exactly how much I paid for something, other than my own record, and whatever I could dig up for each particular payment. If I get audited, will I basically be forced to dig through every single little thing? Basically, are my personal records useless as far as theyre concerned?

 

[EagleKeeper]

Originally posted by: Eli
I wasn't even planning on filing, but maybe I should if there is some way I could get money back? 😀

I made 515$ working for an employer. Soc. Sec. and medicare was taken out, but Fed. and State taxes weren't for some reason.. it was automatic, had something to do with the way it was setup in quickbooks.. anyway..

I've also been selling things here and there on eBay. I don't think I've made more than like 2500$.. I could probably figure it out if I needed to.

Should I bother filing?

Your income level is below the threshold for Fed & state taxes to be withheld.

Since nothing was withheld and you overall income is beloew the filing requirements, you are home free. :beer:

 

[alkemyst]

Originally posted by: BD2003
Basically is the tax system working on a certain amount of trust for those who are self employed?

Not at all...if anything the self-employed need to keep diehard records if they do get audited.

My brother owns a large company now, plus has a 6 figure job....he misfigured his taxes the first two years of operation as he made some common mistakes applying the numbers. He refigured it out because he realized some mistakes he made early on and let the IRS know (big mistake probably) but he wanted to do the right thing.

His additional tax liability was in the mid-4 figure range for those two years....not a large amount of money compared to the income and what he already paid, but still it was owed....the 'caseworker' was a bitch from the start, accused him of cheating the system and all this nonsense...spoke of jail time, seized assets and the like...he called my father and I to try to start working out a defense and he hired a tax pro.

My brother stated to the IRS goon HE was CONTACTING them to pay what he owes, it's not like he was hiding it and hoping no one finds out...he realized he made a mistake and not wanted to fix it. A big clusterf*&K started and she could never tell him an honest 'this is what you pay and you are done', it was always pay low 5-figures and we will determine if you owe more. This happened after he wrote them a check for $6,000 or something and told that was that....she contacted him a week or so later and needed to speak to him again.

The problematic part was he really didn't have a problem paying the $XX,xxx if that was it, however the owe more thing could be a problem...she could never tell him a set figure and he needed one to be able to determine how to pay....

When everything was finallized he paid over double what he grossed those two years and the next...there was fees, penalties, interest, additional taxes...certain liabilities they dismissed and he didn't have the proof anymore and certain income they said was too low or customary (something like that) and since he didn't have all those receipts they basically computed he made a lot more money than he did. He now has an iron-clad booking system going....nothing goes in or out without being recorded, every petty cash for a couple light bulbs if they burn out before a scheduled shopping day.

Å

 

[EagleKeeper]

Originally posted by: BD2003

Depends on what type of person that comes looking for you if they do. IRS does not operate on trust, they operate on receipts.

Best thing that you can do is to work with a reasonable ballpark for your shipping expenses. If $7 is reasonable then $7*n items.

IRS checking works on 3 relative levels.

1) Does everything seem proper based on the numbers. Done by a computer. No problem if within norms.

2) If a Random Pull is done by the computer and/or flagged, then a human intervenes.
Providing an explanation and reasonable numbers to the person and the personis reasonable, worst case would be a small
adjustment and warning to keep better records. If the person is unreasonable, the see Item 3 🙁

3) If a Flagged Pull - This indicates that something is seriously incorrect.
Explanations wil have to be provided, with backup numbers and paperwork.
Possible fine and/or interest - you may have pissed of somebody.
Potential for investigation of previous years returns.

Ok so what "numbers" is this being based on other than what I tell them I made for the year?

I didnt keep track of how much I charged for shipping, nor did I keep track of how much it actually cost to ship it. They cancel each other out extremely closely, so is it safe to just ignore it?

My main concern is, how can they tell accurate records from fabricated records? Theres a solid record on ebay of exactly how much I pulled in. But some was in money orders, some was in paypal, and some was in cash. Theres also no solid record of exactly how much I paid for something, other than my own record, and whatever I could dig up for each particular payment. If I get audited, will I basically be forced to dig through every single little thing? Basically, are my personal records useless as far as theyre concerned?

The numbers are what you tell them.

Best thing you can do at this point (and you need to do some of this anyhow) is:
Make a log of who you shipped something to:
The log can be electronic and/or paper.

In the log, show the date / shipping method/person shipped to/shipping & cost/item cost / Overhead fees (E-Bay, Paypal, mileage, packing, etc)
EBay references numbers for item sold & purchased should be included.

This will cover all your bases and act as documentation for a preliminary audit (if it happens - my gut would say not).

A detailed audit will be a different animal - would not expect it to happen - you are a very miniscule fish - not worth their effort.
If they want to, then they can ask for justification of the expenses,

 

[BD2003]

The numbers are what you tell them.

Best thing you can do at this point (and you need to do some of this anyhow) is:
Make a log of who you shipped something to:
The log can be electronic and/or paper.

In the log, show the date / shipping method/person shipped to/shipping & cost/item cost / Overhead fees (E-Bay, Paypal, mileage, packing, etc)
EBay references numbers for item sold & purchased should be included.

This will cover all your bases and act as documentation for a preliminary audit (if it happens - my gut would say not).

A detailed audit will be a different animal - would not expect it to happen - you are a very miniscule fish - not worth their effort.
If they want to, then they can ask for justification of the expenses,

I have a excellent log of who I shipped everything to, and where I bought it from, exactly how much it cost and exactly how much I received (minus shipping). As it got more serious throughout the months, I started keeping track of the day I bought it, and the day I shipped it, as well as item and tracking numbers. Just went and calculated ebay fees (based on invoices) and paypal fees (based on their formula and my revenue). What I never kept track of was shipping.

Aside from the shipping, in case of an audit, I suppose my saving grace would be the fact that the vast vast majority of my transactions are well kept record by ebay and paypal, and itd just be a matter of sorting it out? Just what are the chances of an audit anyway?

 

[EagleKeeper]

Originally posted by: BD2003
I have a excellent log of who I shipped everything to, and where I bought it from, exactly how much it cost and exactly how much I received (minus shipping). As it got more serious throughout the months, I started keeping track of the day I bought it, and the day I shipped it, as well as item and tracking numbers. Just went and calculated ebay fees (based on invoices) and paypal fees (based on their formula and my revenue). What I never kept track of was shipping.

Aside from the shipping, in case of an audit, I suppose my saving grace would be the fact that the vast vast majority of my transactions are well kept record by ebay and paypal, and itd just be a matter of sorting it out? Just what are the chances of an audit anyway?

How did you pay for shipping - cash? - If so, as stared above, provide a reasonable estimate based on shipper. Add to the log (in the same color ink😛) but put an indicator mark for you reference only so you know that it was an estimate. Those items that you shipped with tracking numbers, may be able to determine the shipping costs.
Also, try to determine other related costs as indicated above; those eat into your profits.

Chances of an audit are very slim to none based on the info that you have provided.

 

[BD2003]

Originally posted by: EagleKeeper

Originally posted by: BD2003[/i
I have a excellent log of who I shipped everything to, and where I bought it from, exactly how much it cost and exactly how much I received (minus shipping). As it got more serious throughout the months, I started keeping track of the day I bought it, and the day I shipped it, as well as item and tracking numbers. Just went and calculated ebay fees (based on invoices) and paypal fees (based on their formula and my revenue). What I never kept track of was shipping.

Aside from the shipping, in case of an audit, I suppose my saving grace would be the fact that the vast vast majority of my transactions are well kept record by ebay and paypal, and itd just be a matter of sorting it out? Just what are the chances of an audit anyway?

How did you pay for shipping - cash? - If so, as stared above, provide a reasonable estimate based on shipper. Add to the log (in the same color ink😛) but put an indicator mark for you reference only so you know that it was an estimate. Those items that you shipped with tracking numbers, may be able to determine the shipping costs.
Also, try to determine other related costs as indicated above; those eat into your profits.

Chances of an audit are very slim to none based on the info that you have provided.

Well I calculated everything cutting shipping totally out of the picture. If its not in my revenue, wouldnt it be majorly wrong to add it to the expenses now? Using a ballpark figure on other expenses, I threw everything in the turbotax tax estimator, including education expenses, and my actual income tax comes to near nothing, and I get my ass kicked on self-employment taxes.

Im not a registered business or anything, and until maybe july, I wouldnt have considered it my primary form of employment, more like a side thing to keep the beer flowing. Could I perhaps file half the year under other income, while I was in school etc, and file the other half under self employment?

 

[EagleKeeper]

Originally posted by: BD2003

Originally posted by: EagleKeeper

Originally posted by: BD2003
I have a excellent log of who I shipped everything to, and where I bought it from, exactly how much it cost and exactly how much I received (minus shipping). As it got more serious throughout the months, I started keeping track of the day I bought it, and the day I shipped it, as well as item and tracking numbers. Just went and calculated ebay fees (based on invoices) and paypal fees (based on their formula and my revenue). What I never kept track of was shipping.

Aside from the shipping, in case of an audit, I suppose my saving grace would be the fact that the vast vast majority of my transactions are well kept record by ebay and paypal, and itd just be a matter of sorting it out? Just what are the chances of an audit anyway?

How did you pay for shipping - cash? - If so, as stared above, provide a reasonable estimate based on shipper. Add to the log (in the same color ink😛) but put an indicator mark for you reference only so you know that it was an estimate. Those items that you shipped with tracking numbers, may be able to determine the shipping costs.
Also, try to determine other related costs as indicated above; those eat into your profits.

Chances of an audit are very slim to none based on the info that you have provided.

Well I calculated everything cutting shipping totally out of the picture. If its not in my revenue, wouldnt it be majorly wrong to add it to the expenses now? Using a ballpark figure on other expenses, I threw everything in the turbotax tax estimator, including education expenses, and my actual income tax comes to near nothing, and I get my ass kicked on self-employment taxes.

Im not a registered business or anything, and until maybe july, I wouldnt have considered it my primary form of employment, more like a side thing to keep the beer flowing. Could I perhaps file half the year under other income, while I was in school etc, and file the other half under self employment?

I believe that the self-employment taxes are based on the net income from the business.

Best bet would be to start looking at the overhead related to the business to reduce the income level.
Internet access, transportation, shipping & packaging costs, phone access, computer costs, etc. These add up quickly.

Could I perhaps file half the year under other income, while I was in school etc, and file the other half under self employment?

You are you - no way around it - one filing only.

 

[xospec1alk]

ok. heres the deal with my friend

he just secured a 3 month job for which at the end he'll get a 1099...

how much will he expect to get taken from him if he has no dependents, is single, and lives at home?

 

[EagleKeeper]

Originally posted by: xospec1alk
ok. heres the deal with my friend

he just secured a 3 month job for which at the end he'll get a 1099...

how much will he expect to get taken from him if he has no dependents, is single, and lives at home?

Nothing - 1099 has no taxes removed.

He is equivalent self-employed.
He should plan on paying a quarterly tax bill for Federal and SS taxes.
SS taxes (Self Employment will be about 16% of the Gross).

Best thing for him to do would be to take the estimated income, multiply it by 4 (yearly) and plug those numbers into the 2003 tax forms.
Income and expenses.
That will give him an good estimate for 2004.
Then take the total tax estimate and send in 1/4 every quarter.

It does not have to be done this way, but it makes it easier at the end of the year.

 

[BD2003]

Originally posted by: EagleKeeper

Originally posted by: BD2003

Originally posted by: EagleKeeper

Originally posted by: BD2003
I have a excellent log of who I shipped everything to, and where I bought it from, exactly how much it cost and exactly how much I received (minus shipping). As it got more serious throughout the months, I started keeping track of the day I bought it, and the day I shipped it, as well as item and tracking numbers. Just went and calculated ebay fees (based on invoices) and paypal fees (based on their formula and my revenue). What I never kept track of was shipping.

Aside from the shipping, in case of an audit, I suppose my saving grace would be the fact that the vast vast majority of my transactions are well kept record by ebay and paypal, and itd just be a matter of sorting it out? Just what are the chances of an audit anyway?

How did you pay for shipping - cash? - If so, as stared above, provide a reasonable estimate based on shipper. Add to the log (in the same color ink😛) but put an indicator mark for you reference only so you know that it was an estimate. Those items that you shipped with tracking numbers, may be able to determine the shipping costs.
Also, try to determine other related costs as indicated above; those eat into your profits.

Chances of an audit are very slim to none based on the info that you have provided.

Well I calculated everything cutting shipping totally out of the picture. If its not in my revenue, wouldnt it be majorly wrong to add it to the expenses now? Using a ballpark figure on other expenses, I threw everything in the turbotax tax estimator, including education expenses, and my actual income tax comes to near nothing, and I get my ass kicked on self-employment taxes.

Im not a registered business or anything, and until maybe july, I wouldnt have considered it my primary form of employment, more like a side thing to keep the beer flowing. Could I perhaps file half the year under other income, while I was in school etc, and file the other half under self employment?

I believe that the self-employment taxes are based on the net income from the business.

Best bet would be to start looking at the overhead related to the business to reduce the income level.
Internet access, transportation, shipping & packaging costs, phone access, computer costs, etc. These add up quickly.

Could I perhaps file half the year under other income, while I was in school etc, and file the other half under self employment?

You are you - no way around it - one filing only.

Well, I understand that there would be only one filing. But on that one form, theres a section for where I put my rev and expenses, and a totally different section for "other income". I couldnt put half in one, and the self employment for when I got serious? If not, basically just add as much expenses as possible to try to lower the income?

And just out of curiosity, if I blatantly lied, and didnt get audited, would that be that?

 

[EagleKeeper]

Originally posted by: BD2003

Originally posted by: EagleKeeper

You are you - no way around it - one filing only.

Well, I understand that there would be only one filing. But on that one form, theres a section for where I put my rev and expenses, and a totally different section for "other income". I couldnt put half in one, and the self employment for when I got serious? If not, basically just add as much expenses as possible to try to lower the income?

And just out of curiosity, if I blatantly lied, and didnt get audited, would that be that?

There is a form for Self Employment as a business - Schedule C
that is where you would list you gross income from sales;
deduct your cost of materials
deduct all of your overhead/expenses - as must as possible - dig deep 🙂
The final number gets transfered to the 1040 form and is used as a taxable income basis for the self-employment tax.
The other income entry on the 1040 form is for some minor misc 1099 (not elsewhere) and/or cash that your concience will not let your forget.

And just out of curiosity, if I blatantly lied, and didnt get audited, would that be that?

No comment - roll the dice if you choose.
In pro-sports, if the ref does not see the foul, there is no foul. If you get caught for a flagrant foul, the penalty is severe.