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Tax Tips For Small Folks?
An anonymous "The tax deadline is fast approaching (here in the USofA). Like some of you, I have a small business on the side. Since I haven't figured out the 'step 2' yet (the one before 'step 3: profit!!!'), my revenues were zero for all of last year, and the expenses were just about zero too. What is the quickest and least painful way for a person in my situation to do his taxes? I don't want to spend 100s of dollars going to a paid professional, just to have him put all zeroes in the form. If you have done your taxes and are a small business (C-corp, don't ask why...), do you have any tips?" This is also your chance to offer all the heretofore unsolicited tax advice you've been bottling up all year.
My advice (and I, too, am the President of a very small C-Corp not quite yet generating a great deal of revenue) would have to be to get an accountant. There isn't just one form to put zeros on. There are a lot. And all kinds of other things. And penalties for messing it up.
Skip the lawyers if you have to, but don't skip the accountant.
Sell drugs. Its risky, but supposedly the profits are great. The best thing is you don't have to worry about taxes, just skip them altogether. You'll be out of luck if they decide to legalize and tax it though. Jail time, risk of getting shot, etc. are all bad things as well. Then again, stick to whatever your doing. Sorry I can't help with your taxes.
Question everything.
Looking at the headline, my first though was "Wow, what special tax needs do midgets have?"
Waring!!! Parent URL contains goatse link...
I have no revenue
The question, Alex Trebek, is:
"Who is RedHat?"
Use a very small pen.
"Orthodoxy means not thinking--not needing to think. Orthodoxy is unconsciousness." --Eric Blair
Why is this marked troll? It's a good point... if you have zero income, you don't really have to pay any taxes now do you? :)
Zero expenses is besides the point, but at least we know you can't write anything off from your zero income.
Weird!
.. the pros at Enron.. negative earnings!
I must say I've never been able to understand how the American public can put up with the convoluted US tax system. I'm not talking of people with small businesses on the side, but of ordinary folks who have a salary, some investments, maybe rent a room from their house, and have to pay a professional tax account to fill in their tax return!
Also, doesn't the IRS provide information on how to fill the forms? (For instance, the French tax services have email addresses you can send tax queries to, and they do answer.)
Works for me. I didn't pay taxes until I was over 25. 'Course, I didn't have a job, either. The tricky part is finding a girlfriend with an apartment, car, and job. Jobs are for people who aren't very good at sex.
When the IRS sends you the forms, they come inside a large book which explains line by line how to do your taxes. I suggest reading the pages explaining the Schedule C, which covers a personally owned business. If you made zero dollars, that could be good news because any business expenses become tax deductible. Unfortunately, if you don't turn a profit in three years, the IRS considers your business a hobby and will make you pay back taxes on your deductions... Also, the Publication 17 is a great tax reference. All available online or at your local library...
You don't need to incorporate. I know, I did it, once. You can easily get a checking account as a DBA (doing business as) to keep things seperate from your "regular" account. If you have a corporation, then you have to start dealing with things like paying unemployment insurance, and filling out forms saying you're an equal oppurtunity employer, etc... it's a pain the ass, and not worth it.
So again, dump the corporation and use a Sched C. Put 0's on it, it's pretty easy to do.
If you CAN'T close the corp, then you're either going to have to learn a lot, or hire an accountant.
You know you're a geek if you've ever replied to a tagline.
There is a level of activity below which the IRS will classify your attempt at a business as a "hobby". Having negative income is a prerequisite for this classification. See the IRS publication 535 for details.
Once this has been answered, howsabout some tax tips for us taller folks????
Burma?
I know that many don't like HR Block, because it is expensive, the people are ill-informed, etc. I went there one year out of desparation and was pleasently surprised. ~120 bucks for all of my taxes, completely prepared by the accountant, took about 45 minutes, and they dealt with things that, frankly, I can't like consulting income, deducting home business expenses, student loan interest, etc. Might be a nice middle of the road solution for those who don't need to overpay an accountant, but even the online tools seem daunting.
Be careful, though. They try to get you to sign off on giving away your data to companies that try to sell you things. They don't tell you those forms aren't required, but they really aren't, I didn't sign and they didn't have a problem with it.
-Sean
Libertarianism is rich wolves and poor sheep playing gambler's ruin for dinner.
Arrrg, what a dillema. Make a wisecrack about Mini Me filing a Mini "Return"(can he deduct the very non-mini 17" Powerbook?), or make a wisecrack along the lines of 'leave the size of my banana out of it'?
Oh wait, problem solved :-)
Please help metamoderate.
IM not kidding. REporters have called up the irs with the exact same question and gotten completely opposite answers. THis way, if the governemt want to get you nailed for taxes, they can always do it. YEah, im paranoid, but im also not making this up.
All Troll + "offtopic" mods are meta moderated as "Unfair", because you abused the system.
I don't bother to file even though they send out notices. They used to send them out every three months now they send it out once a year. If your business isn't doing any economic activity it's not going to owe anything. Think of if just like when you where in school. You didn't have an income large enough to tax. If no employer used your social security number to pay you wages they have no record. That Tax ID is the same thing.
So don't sweat it. If you do however what to start using it to better effect, ask you boss if you can switch to 1099 and have your company (the one you own) pay you much less so you can keep more. That's what you where intending wasn't it?
Sorry about the writing. Robot fingers, you know? Cliff Steele in DOOM PATROL #23
And I thought the people that sought legal advice on Slashdot were nuts...
Asking for tax advice on here is taking it to another level...
Just follow one simple rule this year: don't take more money as distributions than as salary.
It sounds like you didn't have much revenue, and you had net income of around zero, so don't worry about it. They won't spend half a second on your return. And in the highly unlikely chance they do, any penalties are a percent of what you should have paid. n% of ~$0 = ~$0.
I'm sure this was intended as funny, but I really think it deserves a +1 insightful
Famous Last Words: "hmm...wikipedia says it's edible"
Find a good tax preparer -- someone you trust who knows what they are doing. Such a person is worth the money.
I work with a guy who loves to prepare taxes, he's saved me lots of $$$ and has been an excellent source of financial advice. I get my hundred dollars worth, that's for sure.
-kgj
Ummm.... Even if you make near zero dollars, you may want to file anyway. If you work and support children, it means you may be eligible for the earned income credit...I emphasize credit meaning the government gives you money! I worked in a a volunteer tax office for a while and a lady came in who hadn't filed for two years because she hadn't had a job. Turns out her husband's disability income counted for the EIC and she was able to claim >3K in tax credits for the two years (again, having children is a credit multiplier)... even though her income was negligible.
This is why you go to an accountant -- because it's never jut a bunch of zeroes. If your business didn't make much money and you didn't either, you're entitled to a refund. Spend the $50 or so to talk to a real person about your business, and take the time to document gas mileage, computer purchases, and monthly bills you can write off. In fact, if you have a room in your house that serves as an office (and only as an office), you can write off a percentage of your rent or mortgage every single month.
If you didn't know this stuff, it's certainly time to take your money and go straight to a tax preparer. My dad's assistant does tax returns for a living, so I always get her to do mine... but if you don't have a relative who can do them, go find someone who can! A good accountant is invaluable and will teach you the tricks of tax deductions (some of which I have outlined above.) Never underestimate how much money a professional can save you in the long run.
Simpli - Your source for San Jose dedicated servers and colocation!
There is a reason why accountants are highly paid professionals. Find one that is trustworthy (family/friends are helpful here) and then use them.
------- "From bored to fanboy in 3.8 asian girls" ----------
Get the 1040, and if you have capital gains a Schedule D, from the IRS web site, print it out, follow the easy-to-use directions, and mail it off. Should take less than an hour to do the whole thing.
Firstly, if you gruesomely eviscerate your victims for religious purposes (instead of just on a whim) you can be a religion. You need at least three accomplices, if I recall correctly, to serve as treasurer and suchnot. If they complain on "principled" grounds about your savage murders of children, point out the tax benefits this accrues for them. This tactic works best on MBAs.
Secondly, remember to keep the children alive in cages for months in your basement. This way, you can claim them as dependents. ALSO, your house becomes a business expense.
Finally, you'll want to sell a few "insurance policies" to small farmers*. I recommend collaborating with your local Mafia Don in this, since farmers generally don't want to buy insurance from serial killers, and since the Mafia can help with the fundamentally cash-poor nature of ritually murdering children lured over the internet, which is of course a fine and laudible goal but still lacks an effective "business model."
* This is an actual tax loophole. If your primary business is selling insurance policies to farmers, and you meet some other requirements, you don't have to pay federal taxes. Recently this loophole has been heavily abused, but I can't find the reference. Anyone?
The good and new comes from no quarter where it is looked for, and is always something different from what is expected.
government gives you money
Whoa.. what a novel concept? How come you didn't include a link where I can sign up for this "free" money ????
I don't know much about the tax system, but I do know many things in life aren't free. What's the catch here?
I am over here... now I am back over here!
A friend of mine is a lawyer who also attended post-law school tax school (grad school for lawyers?).
He swears by tax programs for ordinary people's taxes and says they generally do a good job, although there are places where hand-tuning can help.
The analogy he made was programming -- tax software is like a high level language. It's great for most stuff, although there are places where hand-tuned assembly can help, and some places where its necessary.
I would suggest visiting the National Society of Enrolled Agents which has references to local society's in all fifty states and tax professionals there in. Alot of these society's have professionals who almost strictly deal with small business returns and would probably be willing to give you a free consultation. The Colorado society of Enrolled Agents site may also be useful, which on the left hand bar has a couple of other useful tax site links.
If you are even slightly serious about your business invest in some cost management and tracking software and tax software such as QuickBooks and TurboTax.
Or you could try filing online with TurboTax.
-1 Overrated (Too many big words for me to comprehend)
First, Federal Corporate taxes are due on March 15th, not April 15th. I can't vouch for other states, but PA Corporate Taxes are due 30 days thereafter.
e
F YE 12/31/2002
Regardless, do the following:
Go get form 1120-A from the IRS. Fill out the block with your corporate name and address. Fill out Box B and C. Assuming your started out with nothing last year and had a net loss, put "0" on D.
Put your revenue in 1c and 11. Put your expenses in 22. Subtract 22 from 11 and put in 24. If you had a net loss, 25c will be 0 and 26 will be the same as 24. 28, 29, 30 should be 0.
Fill out Part II.
On a separate sheet, type the following:
-----------------
Your_Corporate_Nam
EIN: Your_EIN_Number
Form 1120A, Part II, Question 2
Your_Name Your_SSN
-----------------
On another separate sheet:
-------------
Your_Corporate_Name
EIN
Internet Service 5,000
Equipment Lease 4,000
Travel and Entertain 500
.
.
.
Total Other Deductions 14,500
(THIS IS AN EXAMPLE IS MADE UP NUMBERS, PUT YOUR OWN STUFF IN)
Other Information:
Your_Name 100% Ownership of Voting Stock
----------
Sign, copy, and submit these forms. Given that you don't owe anything, they'll probably leave you alone.
Next year, get these forms done in time and get an accountant.
- Tony
"Little people" (let's be politically correct, why don't we we) are subject to the same tax trails and tribulations as the rest of us. No more -- no less. Let's not act as though they are any less human.
blakespot
-- Heisenberg may have slept here.
iPod Hacks.com
It's possible to file a 'zero return' with both the state and feds (check with your state tax laws). Depending on your state it's possible to file both online. You can file a zero return when there is no profit made, or when your expenses exceed your income. It should be fairly inexpensive to have a CPA prepare a zero return. It's still possible to do it on your own though. It usully requires filling out only one or two forms, sticking zeros in just about every line. My state's web site has a great section for small businesses that describe federal and state tax requirements. You might want to start looking on your state's web site.
Nothing better than reading with a Japanese accent!
Works for me. I didn't pay taxes until I was over 25. 'Course, I didn't have a job, either. The tricky part is finding a girlfriend with an apartment, car, and job. Jobs are for people who aren't very good at sex.
Dude, last I checked, your girlfriend wasn't that bad.
The deadline for C-Corps was March 31. IANAA but I am the IT guy at a CPA firm and I must say they do know their stuff and are worth every penny. You should get an accountant for at least the first few years... later on when you understand what has to be filed and how they should look you might be ok doing it yourself. Same with sales tax payroll etc... none of it is all that difficult unless you've got bookoo bucks and need to find the loopholes.
There aren't many loopholes (probably none) that will be able to be used for the common person or small business. H&R Block, your bank etc. are not the way to go, BTW. Go to a CPA firm, heck you'd have a better chance getting decent work done at Fred's Accounting than at any of the fly-by we do taxes only places. Your bank and regular tax places have one lowly person sitting in the office for 9 months out of the year... when tax season hits they get temps, college kids studying accounting and anyone else they can find to crank out taxes. Most accounting firms are fully staffed all year with competent people and they might hire a temp or two to help out with the phones or do filing etc.
Not filing and not filing on time will get you massive penalties so don't screw around, call a CPA right after April 15. Ask the CPA if any penalties you might have already incurred will outweigh the value of your corp. You may be able to abandon the corp and just start over.
While I'm on the subject.... the urban myth says if you have an inc., you're personal stuff is protected, Incorporating doesn't do squat for your personal risk until it is able to establish it's own credit rating, many years down the road. No bank will lend a newly formed, poor corp. any money without a personal guarantee the loan will be paid off.... i.e. your house as collateral. There are other disadvantages like paying tax on your inventory etc that make a C-corp less attractive, especially at the start.
Of course I could be wrong about everything.
G
Your income has to be low (extremely low if you don't have children), but you must have income from working. That really is about it. The Earned Income Tax Credit is really more of a welfare program than a part of the tax system; it just happens to be claimed on the same forms as other people use to pay taxes.
I Can't Believe It's A Law Firm, LLP does not necessarily endorse the contents of this message.
There is a level of activity below which the IRS will classify your attempt at a business as a "hobby".
Sorry but I thought that it doesn't matter on the profit, but it does matter on how much money you turn.
This SIG pulled due to lack of funding. (This damn war is costing too much!)
Every year there are people who try this... or variations of this. They are the first people that the IRS goes after because the case law is so clearly on the IRS's side.
Unless I'm missing some huge loophole, it's not a hobby if he told the IRS (and countless other local and state agencies) that he wanted to create a C-Corp, regardless of revenue, which is what should have happened when he created the corporation (all kinds of paper work needs to be filed like articles of incorporation, etc...).
There are all kinds of fees, dues and taxes that get paid out to multiple groups (IRS, state department of labor, city government, etc....) at various times during the year just by having a corporation, regardless of revenue. Having employees, etc... obviously complicates this, and often the officers of the company are also employees and there are legal guidelines for this as well.
It's actually a pretty good reason not to start a corporation when another business entity would have been far more appropriate. The IRS is not the only agency one has to deal with and there are very specific rules, guidelines and laws surrounding the operation of a corporation.
Unfortunately, having a corporation that makes no money is not free.
Plus, you don't spend a penny unless you print or file.
TurboTax isn't a good substitute for a real tax person, but it's probably way better than you trying to fillout the paper forms yourself.
Give a hand, not a hand-out.
That you are asking for tax advice on Slashdot because you are too cheap to get a decent accountant? If I found out the business I was working for or doing business with was getting its advice from the chowderheads here, I would be out the door so fast Einstein would spin in his grave.
The only good advice you'll see on this board is to fork over the money and do it right: get an accountant.
Yeah, I know this is a snarky comment, but please, this question begged for it.
1. Don't say "don't ask" re: the c-corp decision - it has a big impact. Filing as an LLC (in some states) pushes all the tax burden to your normal personal taxes.
2. Dude, go to the accountant. Spend the $200 or whatever - you'll breathe easier. It's not worth the stress in the low-dollar situation you describe.
3. As others have pointed out, if you really took in less than say 5k and spent the same, the IRS doesn't care, explicitly and literally.
If you have a legimate business (i.e. you are intending to make a profit at some point and you put in a significant amount of hours (>100) a year) there is a whole raft of stuff you can take off the tax bill. Phone calls, internet usage, depreciation on your computer, mileage, etc. Spend the money and find an accountant who will take the time to educate you on the basics of what you need to know. Don't skimp but you should get be able to get the information you need for about $500. (which by the way can be deducted.) My wife is an accountant and she is really the one to answer this -but you should get the idea.
Actually, studies have long shown that the best time to submit your taxes to avoid audits is right on the cusp of the deadline. Your return has a larger chance of getting 'lost in the shuffle' this way.
;), the accountant is unlikely to have enough time to know your business well enough to 'find' more deductions, other than the 'obvious' ones.
On the other hand, there *is* a ~2% random audit process which can still result in your return being looked at in more detail - sometimes months or years after it is filed.
As for best tax filing tips -- and despite the piss poor attempts at DRM in this year's version -- skip the accountant and use TurboTax.
The other tax programs may be on a par with TT - I started using TT with its first release and have never looked back - but TT *is* a first-rate accountant - and one that never gets sleepy, overworked or makes mistakes.
Unless you're completely clueless about taxes, and can not understand the govt instructions (which are no worse than, say, the average dot-matrix printer user's manual from 1983
If you have a corporate accountant on-staff / on-call, then absolutely let them handle the taxes. You DO trust them, right?
Finally, a comment regarding filing in general: If you are owed a refund, you do NOT have to file by the deadline. If you consistently refuse to file, after a few years the IRS will file on your behalf, using stock #s from your employer-submitted W2s. At that time you can file 1040-X forms showing the real numbers and claim your refund. (Refunds expire after 5 years!)
I don't recommend this practice, but I have used and have known others who have used it.
If you're not living on the edge, you're just taking up space!
I have never worked a job in my life (all the way back to 14 yrs old) that I didn't have at least some income tax deducted from my paycheck. My first filings were to get that money back. Unless you work off the books your whole life then this would never work.
And if you believe that, you deserve what you get.
Consider: Anyone who is withholding taxes on your behalf (which is *mandantory* and has been since WWII) is required to report that information to the IRS.
Voila! They have just 'filed' on your behalf, whether you do anything or not.
If you're not living on the edge, you're just taking up space!
actualkly, you are obligated, by law, to pay taxes on all income.
The IRS does not report how you got that money.
According to a former top official of the IRS, it would be both against reulations, and quite frankly, not practical to turn that info over to the Feds.
The IRS want to collect your money, they do not care how you get it.
If they can't [rove you got 1,000,000 dollars through an illegal axctivity,even if they know it, the feds will report that info to the IRS. Then you go to jail for tax evasion.
The Kruger Dunning explains most post on
Just write a note on the side, I made no money.
I did that for 5 years and it was cool.
God spoke to me
This may be of interest to those of you who have an open mind and are willing to come to an informed opinion based on a clear understanding of the IRS's own regulations and tax codes.
http://www.taxableincome.net/
If you are unwilling to read through the information there and instead would like to dismiss it offhand, please don't even bother to respond.
It is not really a welfare program in itself, but is supposed to further annother welfare program Social security. I.E. it is supposed to be a deferment on the payroll tax. It isn't that bad of an idea. The payroll tax can eat you alive if you are not earning a lot. EIC just softens the blow, and makes the *very* regresive payroll tax slightly less so.
More info:
http://www.irs.gov/pub/irs-pdf/p596.pdf
I'd do something interesting, but my server can't handle a slashdotting.
You said you were in the USA, so this is of no help to you, but could be for others in the UK.
p l.htm within around three months of starting being self employed.
Over here, as just about everybody knows, the official tax-collecting body are the Inland Revenue. As it happens, they have an official web site: http://www.inlandrevenue.gov.uk.
If you go to the site, click on 'Individuals' (left panel), scroll down and click 'Self Assessment' (under features), and then scroll down again and click 'Self Employed'.
A few key points (No warranty - I'm an amateur - check these for yourself rather than relying on a random slashdotter if you're going to use any of this):
- You need to fill in the form which can be accessed at http://www.inlandrevenue.gov.uk/startingup/selfem
- You'll have to keep records of all your income and expenses, including all receipts of expenses wherever possible.
- Anything you declare as expenses isn't taxable. So if you bring in £20,000 and justify £5,000 on expenses, you'll be taxed on the remaining £15,000.
- You'll probably have to pay two lots of National Insurance: one currently at £2/week, and the other at 7% of everything you earn between around £5,000pa and £29,000pa.
- Tax rates are roughly:
10% of your first £2,000pa. ("Starting Rate")
22% of your next £27,000pa. ("Basic Rate")
40% of anything above that ("Higher Rate")
- You'll have to fill in a self assessment form for every tax year, after the year is complete. Tax years run from April to April. For the tax year ending in April 2003, you can expect to receive your tax return for that year in April 2003, and you'll have until 30th September 2003 or 31st January 2004 to return it, filled in. If you send it in for the first deadline, the IR will calculate your tax for you.
- Once the tax return is processed, you'll be sent a bill for the amount of tax to pay.
- Tax returns can be filled in online at the Inland Revenue site.
Well, you're already late. For Corps the due date is March 15th, not April 15th. For the Feds, go to the IRS website and get the fill-in PDF for the taxes. It's fairly simple and only takes a couple of hours to do. Basically you enter zeroes for most stuff. If you're in CA, you have to pay the Alternative Minimum Tax, which is an $800.00 kickback you pay to the state for having a corp. You pay AMT if you have less than $800.00 in taxes, otherwise you just pay your tax amount.
The federal form is 1120, the state form in 940 IIRC.
I too have a corp (S-corp) that made 0 income last year. You also had to file a tax return with the State board of equalization by 1/31 if you had a reseller's permit. If you have inventory in stock, it defers to the year you sell those goods.
You'll also get a query from the IRS on wages that were paid, and how much taxes you paid on that. You'll also get a query about principal stock interest in the company, if it changed from the prior filing year.
There's no good way around it. Get all of your stuff done right now, because surely, you don't plan on being a zero-revenue company forever. And when the time comes for employees, you might as well have a good working relationship with an accountant so he/she can be sure to get your things in line... payroll taxes, estimated taxes, etc.
For a simple company having your books and taxes done should be around a few hundred bucks.
And as for skipping the lawyers.. here here.
My wife has done taxes for H&R Block seasonally for the past eight years, so I know something of what I say here. If your tax situation is at all funky, when you go to H&R Block, ask to see an experienced preparer.
The vast majority of Block workers only work for them during tax season (January 1 - April 15), and the vast majority of them have been with the company two years or less. The tax code isn't like programming - it's internally inconsistent, because of the patch-it-and-try-again way it gets built. The only way to know what the IRS will accept is to have seen it before, and that takes experience.
BTW, this is also a reason to go to a tax wizard rather than an accountant. Accountants know a lot about designing systems that reflect financial reality - unfortunately this knowledge is a liability when doing taxes because you try to make the regulations make sense, and they don't
To a Lisp hacker, XML is S-expressions in drag.
Send it certified mail.
I mailed in my forms in late February and haven't gotten my Federal refund back yet. I'm biting my nails wondering if my forms even got there at all.
taken! (by Davidleeroth) Thanks Bingo Foo!
Minor correction. You can probably get away with never filing a tax return, but you won't get away with never paying taxes. File a zero return all day long. Don't file any return. As long as your employer keeps witholding taxes from your paycheck you are paying taxes. Witholding is structured such that if you don't have a bunch of other income you should get a refund every year, in which case the only purpose of filing is to get your money back. Even if the IRS did eventually come knocking they'd proabably wind up owing you money after the audit.
Si vis pacem, para bellum
The only thing more annoying than a Libertarian is an (un|mis)informed Libertarian
As deleriously easy and fantastic as that sounds, and also while that idea is semi-valid depending on what taxes you are looking to avoid or what your business is - it should be noted that Bermuda isn't the place to do that.
I am moving to Bermuda next month, have family (in-law) there, I know people that own a variety of small and large corporations there, and I will be president of a company there upon moving.
I assure you that unless your corporation is an insurance company or a reinsurance company, there isn't much tax haven to be had my "moving it there."
(for starters, unless you are either of those types of companies, at this point for the most part, they won't let you move there)
Bermuda has gotten a bad rap these days because of misinterpretation of Enron and Global Crossing going under and them having offices in Bermuda.
There are close to 2000 companies that have offices in Bermuda and there are well over 100 entirely based there - but the only ones that would see it as a "tax haven" in any signifncant part are the insurance companies. If you are a multinational company, then having some offices in Bermuda that take in foreing revenues will save you some taxes - but unless you have a large amount of foreign revenue, it isn't going to help much incroprating there (not to mention that they very likely will not let you).
When you say "tax haven" - what you really mean are the Camen Islands. There are *many* companies (esp hedge funds) that are based in Bermuda, but that is just for where they have employees - even they incorporate in the Camen Islands.
So if you really want to avoid the taxes, you would want to incorporate in the Camens, have your employees based in Bermuda, and then somehow get citizenship outside of the states and lose your US citizenship... noting that with that you will lose all of the positive civil liberties and open doors that having US citizenship nearly automatically allows you when travelling in friendly countries.
There are some odd things afoot now, in the Villa Straylight.
1. File an extension, so you can legally postpone your tax return filing beyond April 15th. You can download one in PDF form from the IRS and you can even telephone it in. The extension form takes less than 2 minutes to complete.
2. Talk to a tax accountant. It will cost you anywhere from $100-$500 and it can save you upwards of $1000. The first year I used one I saved myself $1400 over what I had computed for myself. The next year, benefitting from the free advice he had given me the first year, I saved over $5k. After that $11k, and so on.
3. They are not just there to fill in the form for you. They will also tell you what to do to save money, both on your current return and your future ones. In my experience, and the experience of people I know in our situation, it is very rare that the accountant costs you more than they save you. Think of them as a free money, that should be incentive enough to get you moving.
4. Don't use the corporate chain accountants. Talk with the old greybeard who has been an independant his whole life. This is very important. Get a referral, use the yellow pages, but do not go to H&R Block. Granted, the solo tax guy is swamped at this time of year, and you are too late to see him now before April 15th, but that is what step #1 is all about. He has plenty of time to help you out between 4/15 and 7/15.
yes, get an accountant. You have a c-corp, and you really, REALLY need to use an accountant. Your c-corp, and probably (IANAA) write off the cost on the next tax cycle.
Steve's Computer Service, Hobbs, NM
Look, if you had practically zero revenues offset by practically zero expenses, don't even file schedule C and schedule SE.
I make my living completely by estimated tax payments through the year along with schedule C, forms 4562 and 8829, and schedule SE. But if all you did was on the side and resulted in no profit, the IRS won't give a flying fuck.
Unless a client of yours sends you a 1099.
And I hate to sound like a character from Gilliam's Brazil, but a 1099 establishes a paper trail, and then the IRS will want to know why you didn't make an estimated tax payment on that income.
That leads to all sorts of ugly things like the annualized installement method on form 2210 which is complex but approachable with a spreadsheet program.
The upshot is, don't bother if you're not on even IRS's radar (which is like under $600 for most contractor/client relatioships). If you are on the radar, then do all the section 179 deductions you can for your tangible property (computers, etc.) on form 4562, do business expense of your home on form 8829, and, of course, do schedule C for profit/loss and schedule SE for self-employment tax.
And this year, start doing esitmated tax payments using form 1040-ES . Remember they're due four times a year (4.15, 6.15, 9.15, and 1.15 of the next year). The IRS likes to see the amount of each payment be the same and if they're not (because your income through self-employement throughout the year is not the same) then file form 2210 (underpayment) even if you didn't underpay. It's basically where you get to explain why your payments aren't the same throughout the year.
Finally, don't give H&R Block the time-of-day. If you can follow instructions, add, subtract, multiply, and divide, and, most importantly, be patient, you can file your own taxes. I used to pay a professional to fill out mime. Problem was, I filled them out ahead of time to see if we got the same answers. We did. After that, I said "Fuck you H, fuck you R, and most certainly fuck your Block!" It really is not that hard to file income tax.
And never forget: IRS sucks.
If you're concerned about it getting there, send it UPS or FedEx. Both offer guaranteed service. There is no service offered by the USPS which carries the same guarantee on all of UPS's services (both air and ground) and all of FedEx's air services.
I don't make the rules. I just make fun of them.
Don't wait til now to do taxes. If you run your own business you should have everything you need to do your taxes without having to wait for anything to be mailed to you.
I've been using TaxCut for the last few years for my personal taxes and this year was the first time I used it for my business. It made it real easy. I just needed to know how much I made (zero) and how much my expenses were (~400). Next year I'll have earnings and expenses to put in.
The rest was handled by the program. Just keep good records of what's comming in and what's going out and you should be fine. I tend to have all my taxes done the day the last W2 comes in.
Ben
Work Safe Porn
As a small business owner, and son of accountants, I must agree that you need an accountant. In fact, I was discussing this the other with a few local businessmen the other day. Accounts are vital not only because they know where to put the zero's on your forms, but they also know things like the filing date (not April 15) for businesses. They also know how to approach write-offs and tax credits so that you can not only avoid paying excess taxes now, but in the future (you knew you could write off past tax losses right?). And if you find a good one, they won't charge you too much, especially if your form is as easy as you claim. Some tips (at least from my experience): 1.) don't get an accountant that has television or radio ads, they charge too much. 2.) Don't use H and R Block (they don't help you with write offs so that when you get your refund it looks bigger). 3.) If your taxes aren't a lot of work, find a small one or two person shop, make sure they've been licensed and around for a while. There are several good, cheap accountants in any city. Go to the Chamber of Commerce, look some up, ask them about their rates. If they quote an hourly figure for "consultation" they're probably too expensive. Finally, if you provide a valuable product or service, some small accountants are willing to barter. I know this sounds crazy, but I know several, good and experienced accountants that trade their services for things like computer repair and help, construction work, dental care, etc. So if you can help them, they can certainly help you.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Lost Sheep to Shepard, you got your ears on?
Ok, Assnozzle, here is the answer to your question- Do your taxes yourself! Wow, since you state they are pretty much all zeroes, lots of people tend to pick up a pen and write them zeroes in -all on their own-!!!!
Doing something for yourself, what an amazing concept. And also, if you are all into using computer assistance, there are all kinds of Tax Software!!! Wow, what an amazing world we live in!!
Manipulate the moderator system! Mod someone as "overrated" today.
My only peice of advise on taxes:
1) Pay them.
2) Use tax software
Doing #1 avoids lots of expensive and time consuming issues like jail and fines. Using #2 saves lots of time.
$G
-- $G
Post twice
hope both get modded to +5 funny
Karma Profit!!!
The Kruger Dunning explains most post on
actually, it depends on how the companies year is set up. first of the year for a company does not have to be Jan 1st.
Second, taxes should be done quarterly. If you are self employed, it makes sense to satart on a quarter that coiniside on april 15th. that way you only pay taxes 4 time instead of 5. it works out the same, its just easier.
The Kruger Dunning explains most post on
I happen to have a friend that's an accountant and also a complete idiot about computers, so I offer him tech support, which he rarely needs/uses, and in exchange he does my taxes for me every year. their very complicated, but I don't have to worry about them any more.
Creationists are a lot like zombies. Slow, but powerful and numerous. And they all want to eat our brains.
The local office will assist you through the forms, why pay for it, especially if you have the time. My local office wasn't terribly busy when I went by there last. ;-)
Actually it was March 17th (15th fell on a saturday). This assumes your fiscal year is a calendar year. If it isn't, you need to file 45 days after the end of your fiscal year.
This a link to the IRS Calendar for March, 2003.
http://www.irs.gov/businesses/small/articl
Plus, you if you owe money, you need to submit payment to a certified depositary bank. You usually need to be a customer of the bank for them to accept.
Even you didn't have any revenue for the year, you still might have to pay mininum taxes. For example in NYC, you need to pay like 300 dollars for NYC, MTA(beiing in or around NYC) - 55 and another 100 to the state.
You can lose your shirt every year for as many years as your money holds out.
You must just meet several requirements to be considered an ongoing concern:
1. Keep the business funds separate from personal funds. (Separate bank accounts)
2. Advertise
Can't rememer the rest cause I'm not a CPA.
Get an accountant!!!! Consult with them regularily!!!!!
always hire a professional.. not one of these H&R block creeps either.
-- I am. Therefore, I think!
What's the question?
Friends don't help friends install M$ junk.
The result came to be known as the IRS Free File Alliance and went live just this year. It lets you choose from about a dozen different online tax preparation products that normally cost about $20-$30 each.
Note that not everyone qualifies for the Free File Alliance because each company sets its own eligibility requirements. H&R Block's program, for instance, is free only if you earned less than $28,000 last year. Also, beware of hidden charges: Many of these companies offer the federal return preparation for free, but the state return costs extra.
Every year, my accountant does my taxes, and he gets one free maintenance visit from me for his computer in exchange.
I prefer to let him handle my taxes, because he knows all the tips and tricks to minimize my payment/maximize my refund, and I don't have to dick around with forms and receipts other than throwing them all in a folder to give to him. He prefers to let me service his computer, because I know all the tips and tricks to keep it humming along, and he doesn't have to dick around with Windows/driver/application/virus definition updates and whatnot other than to make a short list of any problems he's having.
~Philly
Personally I am in the same boat. It is possible to have no revenue hence no profit when you are first starting a business. The one thing I do have is debt and capital expenses. I have dropped nearly $3000 into my photography business, buying equipment, getting a website, and extra training. Before the year is up I'll most likely drop another $2000 on software and computer hardware upgrades. Can't keep using the stuff I "borrowed" from a friend.
Most of the work I've been doing has been for nothing more than the experience which is typically how small businesses go for the first year or two. If you break even in the first year you are doing really good. Someone who shows a big profit in the first year most likely doesn't have a long term viable concept. Usually they're riding a trend or a fad and will be out of buisness by year number two. Which brings us back to what the original guy wanted to know about and what the troll showed his ignorance of.
You can claim your start up expenses against your taxes. Office supplies, hardware, software, utilities, rent, and transportation costs. The catch is you cannot claim 100% on the first year's taxes. It must be divided up over the number of years of use. This is usually spread out over the first four years, but it depends on the equipment. A digital camera may be spread over just a couple of years, but a bulldozer may have to be claimed over ten years. After the initial start up, all the yearly costs can be deducted and only the higher dollar durable items having to be spread out over several years.
The flip side to this is you have to show a profit, I believe, by the third year or the IRS will consider you business a hobby and will no longer be able claim anymore deductions. Goto www.irs.gov. They have good information on the do's and don'ts of small business, but it'll take some digging to find. Hit Amazon.com and hunt around for small business books that have alot of good reviews from previous customers if you want something that is more geared to the layman.
RTFP: "(C-corp, don't ask why...)"
That says that he is incorporated as a C-corporation, and everything your parent said was relevant. Unlike your post, which should be modded down for failure to RTFP.
One reason Bermuda is "nice" is that their laws on corporate governance favor management over shareholders much more strongly than American laws do. It's virtually impossible for a shareholder lawsuit to succeed against a Bermuda corporation.
On the other hand, IANA corporate lawyer or tax attorney. BTW, it's the Cayman Islands.
Our nation has existed longer without income tax than with it. Why can't we revert back to just use-tax (i.e., sales taxes, tolls, etc.)? Wouldn't that be the most fair -- you pay for what you use and don't pay for what you don't?
Granted, this would significantly shrink our Federal Gov'ts budget, which would drastically reduce the military complex, social programs, things like government watchdog groups, etc., and would move us back closer to laissez-faire capitalism. This has both its advantages and disadvantages, as I'm sure you know.
Perhaps the best solution would be to have a small flat income tax rate (say 8% for everyone making over a minimum), and then just using use taxes. The income tax could pay for what military presence is needed and watchdog groups (FDA, FCC, EPA, etc.). Granted, we would have fewer bombers, and we'd be less likely to "shock and awe" folks, but maybe that'd be for the better.
I could not justify my existence if I were a turkey farmer. Would I terminate myself? Undoubtably, yes.
http://biz.yahoo.com/fin/l/r/rhat.html [yahoo.com] is not a bad financial for a new millenial tech firm. In fact, looking at the bottom line, I see a profit.
Sure they made a profit. They have cut costs dramatically and they still have several hundred million dollars sitting in the bank accruing interest.
The dirty little secret is that Red Hat is still losing money on an operating basis. That $200 thou they made last quarter is peanuts compared to the $3 million in investment income.
So yes, Red Hat is a (barely) successful financial services company, but they still aren't making money selling software and support.
-a
Also, if you don't want to pay a professional, just browse through the lists of forms (it's all online at irs.gov) and see if any of them ring some bells for you. If they do, download the form and instructions and throw it in there. And once you've done this, you'll know what to do next year.
IAAL
Have your mom do them. Seriously, they can do everything!
I deleted my sig years ago.
I am also the President of a Delwware C-corp with no revenues for teh tax year 2002. Here's what you need to do:
1. File and pay your state franchise tax. In my case, it's Deleware and $50. Easy to do, but if you haven't already you will have to pay a $50 fine plus 1.5% interest per month. See ecorp.state.de.us for details.
2. For U.S taxes, file form 1120-A. With zarro revenue, you skip filling out Parts III and IV. See www.irs.gov for details and accompanying instructions.
2a. You may need to fill out some accompanying schedules (4797 for sale of business property, Other Deductions schedule, etc).
2b. YOU WILL NOT HAVE TO PAY A PENALTY. Yes you are late; however, because you have zarro revenue you will have zarro US tax to pay. Hence, you will not be penalized or fined. See the instructions for Form 1120 and look in the payment submission fine print to get the exact quote.
2c. You can deduct business startup expenses.
2d. Amortizing depreciable assets is a pain - get an accountant if you want/need to do this (have a lot of business computers?)
2e. If you paid yourself anything that does not constitute business expense reimbursement, get an accountant to sort out the details. My rule of thumb is to self-file and do all the accounting UNTIL I begin paying wages to myself. Then it is time to bring in a professional CPA (especially if you hire anyone other than yourself to work for the corp).
3. Send EVERYTHING to the state and federal authorities via CERTIFIED, RETURN-RECEIPT REQUIRED, mail. Trust me - they've lost mine before and you will want proof that the IRS received the package.
I guess what I'm trying to say is that you are not entitled to any of the rights granted to you under the Constitution or Bill of Rights if you're not willing to pay for them in the form of keeping our government alive to actually enforce this wonderful document that you keep on referring to. If we went by your logic, we would be covering the Ethiopians under our law documents! But we don't, because they don't pay taxes...of any kind.
As an expat moving to Berumda, I do hope you have a work permit lined up. Solicitation for work is illegal without a "right to seek employement" letter from Immigration, or in resonse to a published ad in the back of the Royal Gazette or Sun.
As for taxes, I agree. Bermuda is mostly based on a use-tax, but there are some personal taxes too. Income tax in BDA is 12%, of which the company pays 8% and the employee 4%. There is also a mandatory pension plan all employees (bermudian and expats) must contribute too. Good news is when you leave the isles, you get it back.
Also remember that Bermuda has tax treaties signed with Canada, the US, and UK. They also are very concerned about any action that the OECD considers "tax haven" status.
Word of advice, don't use the word haven in Bermuda. That, and say "good morning/day/night" to everyone you run into. Else, you'll be considered rude.
Enjoy Bermy, I spent 6+ years there, and due to the foreign income exemptions, your US tax burden should be close to zero (considering that housing will cost upwards of $1,800-$3,000/month for a decent 2 bedroom house).
Startups presently making no money still have a number of advantages in filing as a C Corporation. If you're serious about an eventual multi-million dollar company, you should spend a few hundred and talk to a wise corporate lawyer soon.
First and foremost: If you obtain stock (not options) in a C corp (NOT an S corp or LLC) that is worth less than something like $30M when you get the stock (mine was worth near-zero), and if you hold it for at least 5 years, you can take advantage of a 50% discount on your capital gains taxes.
Remember: a 50% discount can be worth millions of dollars. Even if it's worth only $100,000, it would be worth it. It cut my capital gains from 28% to 14%. This is a reward from the US Govt for having the insight and fortitude to create a company from next-to-nothing. It is called an "83(b) Election", and it requires your shareholders (aka employees, maybe just you) to file an "83(b) Election form" when they file their personal tax forms.
Second: If you have employees, you can deduct taxes on health insurance from the company's expenses. You didn't used to be able to do this with an S corp, but maybe things have changed. This isn't a huge advantage. The big one is the first.
When I formed our C corporation, it really did seem silly to file these 83(b) Election forms, but we did what our lawyers told us to do. I can tell you that the 5 founders of our company are incredibly grateful.
I think we probably spewed $15,000 on legal fees in our first year of no-revenue operation. It took about 3 years before we made anything reasonable in revenue (like more than $100,000). We never made a profit. But we were acquired for a respectable amount of money. And our software is still in wide use.
It took about 5 years for our company to reach liquidity, through 3 mergers. Even after all that rigamarole, that 83(b) Election came through.
It's disappointing to see so many people talking about stuff here that they don't understand, and worse putting you down for not making any money yet. As you can see, the road to success is lined with naysayers. That's always the case with innovators, so don't let it get you down.
I do think that advice to get an accountant is probably reasonable (although I only use accountants for advice, not to do the actual filings).
However, if you are serious about creating a self-sustaining company with lots of revenue, I highly recommend a corporate lawyer. Because I am cheap, I use our corporate lawyers sparingly, asking for contract reviews only on the first contracts of a particular type, asking for patent reviews but writing patents myself (do follow suggestions about Nolo's Patent It Yourself and other Nolo books--very good resources).
Good luck.
You must have me confused with the original parent poster; I never mentioned anything about taxes. That having been said, yes, taxes are a necessary evil so that the government can stay solvent. Who gets taxed, how much they get taxed, and by what means is another issue altogether. I don't know what "logic" of mine you are referring to; again, I assume that you are talking about the parent poster.
About the land-rights issue: this seems to be a basic point of yours, so I'll bite. Assuming, for the sake of argument, that you are correct, if I don't have a right to the land I live on, who does?
Awaiting your answer....
In Soviet Russia, Chuck Norris will still kick your ass.
In terms of "rights," rights are an abstract concept which are being given by governments. In terms of our Constitution you have a right to be on the land, but if somebody takes a gun and forces you out of your home, it doesn't matter what "right" is granted to you under the Constitution, because you don't have the house and no piece of paper is going to bring that back.
I am not surprised. The same kind of phenomenon goes here (France), and I suspect everywhere in the developed world.
Yet there seems to be an urge to keep things manageable here:
* Some saving accounts with moderate interest rates, under a fixed ceiling, are tax-free.
* You can choose between declaring real professional expenses or say nothing, in which case you get a flat 10% rebate. For most people, this is more than their professional expenses, so few people declare real expenses.
* Sometimes, cruft is cleaned out of the tax code. For instance, there used to be deductions from income tax if you had some work done on your main domicile; they are now gone.
Generally speaking, the system is designed so that most people just have to copy a single number.
My case was more complex (several employers with salaries; consulting fees; deductible pension plans), but it just amounted to downloading another form and filling two numbers, following the instruction the tax people gave me by email.
Is it possible to file taxes online in the US, free of charge? I saw some sites doing e-filing, but apparently they charge for it.
(I didn't use it, but the French state income taxes can now be filed online.)
According to the Declaration of Independence, rights are not given by government, but by the "Creator", however you choose to define it. So, your argument is pretty much at odds with the tenets of that document. Fair enough.
Now, in your scenario, who is doing the forcing at gunpoint?
In Soviet Russia, Chuck Norris will still kick your ass.
yes, I already have a job heading over there - head of a tech company.
I won't be taxed by the US for anything up to $80K - anything over that I will then be taxed on.
I'm aware of the cultural side of it - my fiancee is from Bermuda and I've been there a lot - her dad owns a few companies there and her mother is high up at one of (if not the) largest insurance companies based there.
and yeah, our apartment is going to be $2050 - but that is actually not too bad - I live in Boston/Cambridge now and the prices are too different between the two.
I'm looking forward to training year round there for triathlons.
There are some odd things afoot now, in the Villa Straylight.
lol - thanks. :)
I obviously can't spell
There are some odd things afoot now, in the Villa Straylight.
You know what's funny? Retards who think that the president makes the economy turn on a dime. You know what causes the economy to dive-bomb? THINGS THAT WERE PUT IN PLACE OVER THE PAST SEVERAL YEARS. Ya dumbass, sheesh. The economy was dive-bombing JUST AS Bush was getting into the office. You think he can get into office, make a few phone calls, and then cause the economy to change? Well, he can't. And anyone who thinks otherwise needs to pull their head of their ass. The reason the economy dive-bombed was because of the Tech bubble and fiscal policy put into place during Clinton's presidency. Now, Clinton may have not made enough changes to cause the dive-bomb alone, but along with whatever changes all the other offices wanted and the bursting Tech bubble, the economy would have dive-bombed whether Gore or Bush became president.
Has no one mentioned Intuit Tax Freedom Project?
Anyone with adjusted gross income of under $27,000 qualifies for free on-line state and federal tax self-preparation using state of the art software. I have used it for the three years since starting my profitless business. It allows you most of the schedules, including C, and you can get the refund due you for your business losses.
The best part is you can actually earn $30,500 adjusted gross. Put $3500 into a 401k by Tuesday Apr 15th (your max per year), and it gets deducted, and taken off AGI. These income levels change every year.
Go to http://www.taxfreedom.com
newHercules
The tax code isn't like programming - it's internally inconsistent, because of the patch-it-and-try-again way it gets built.
So in other words, the tax code is Microsoft Windows, right?
Will I retire or break 10K?
The Patriot Act is NULL AND VOID
Not until revokethetrust_yahoo_com foots the bill to pay lawyers to have it overturned.
Will I retire or break 10K?
The guy bigger than you, holding a bigger club. (Think caveman times). Sure cavemen paid no taxes, but you never know when someone comes and bashes your brains in because they liked your cave better, or wanted to get at your store of food.
Good luck on the job. What company are you joining? Having worked the IT and cosulting idustry in Bermy, I might be able to provide some info. Same holds true for the reinsurance biz. Glad to say you aren't going to work for the telephone company!
If you want, drop a message at bermuda@cruxsecurity.com.....
actually I originally was trying to get a job at the two top reinsurance companies, but then this other (better) opportunity came up (vaguely hedge fund related). In the process I got to learn a lot about the reinsurance industry.
I'll send you an email about it - always good to hear about it from another angle.
There are some odd things afoot now, in the Villa Straylight.
err, maybe I won't send you an email - "no such user"
There are some odd things afoot now, in the Villa Straylight.
IANATA, or I am not a tax accountant.
Give me my freedom, and I'll take care of my own security, thank you.
One must remember to run postmap after editing the virtual files.....
updated....
As an H&R horror story, I went to H&R Block when I was an independent software consultant. I specifically asked them to calculate my estimated quarterly tax forms for the next year.
The preparer created federal estimated forms but not the State ones, telling me that it wasn't necessary to file estimated quarterlies for the state. Cost me several thousands of dollars in penalties, and HR Block claimed they weren't responsible because they hadn't filled out those forms (which was the whole reason I had to pay penalties.)
So I got an accountant, and I'm much happier.
In short, that you don't have to file if you made no money is technically correct, but complete bullsh*t at the same time.
In long, if you do not file, the IRS and (where applicable) your local tax agencies will make gratuitous assumptions and file for you. Filing a zero return (you send a 1040/940/941/1120/insert form here that says to all intents "I made nothing"), while it is technically not required, is the Right Thing if you want to keep out of trouble with the IRS and company. That, and if you're in the midst of an offer in compromise orr a payment arrangement with them, if you don't file even a zero return, you will find your offer or PA rejected or defaulted.
To wit, though, if you had ANY REVENUE FLOW WHATSOEVER, whether or not it balances out to zero in the end, file. No, do it. Fill out the bloody forms and send them in. Not filing is spectacularly stupid and will get you into serious trouble, and anyone who tells you otherwise is probably not an accountant.
This sig no verb.
Yes, it's not *totally* necessary per my other post, but not filing is a Very Bad Idea. If you really made absolutely nothing doing business or paid nothing doing business, you're left with nothing naturally. It's like that song that Eric Idle sang at the end of Life Of Brian. Nonetheless, send in that Sched C, and do the long form. It's just a good idea.
This sig no verb.