Small Business
The most frequently asked tax questions related to Small Business
independent contractor - advantage
Asked Saturday, September 30, 2000 by an anonymous userCPA Answer:
The only tax advantage to being treated as an independent contractor is that your business expenses are not subject to a 2% limitation of your adjusted gross income. The self-employment taxes you pay are net of any business expenses. Independent Contractors who are sole proprietors must file Schedule C.
Independent contractor non-receipt of Form 1099
Asked Saturday, September 30, 2000 by an anonymous userCPA Answer:
Although you should have received a Form 1099, there is no excuse for not reporting income you earned during the year.
The burden of reporting is your responsibility, whether you receive a Form 1099 or not.
The penalties for failure to report income can be severe and can be deemed criminal in the worst of cases. Always report all income earned.
The burden of reporting is your responsibility, whether you receive a Form 1099 or not.
The penalties for failure to report income can be severe and can be deemed criminal in the worst of cases. Always report all income earned.
Safe Harbor rules for treating an employee as an independent
Asked Saturday, September 30, 2000 by an anonymous userCPA Answer:
There are three safe harbor provisions: judicial precedent, failure of the IRS to question the status in a prior audit, and industry practice.
To qualify for Safe Harbor protection, you must satisfy just three requirements: you must have filed all required 1099-MISC forms reporting to the IRS your payments to the workers in question you consistently treated the workers involved and others doing substantially similar work as ICs, and you had a reasonable basis--that is, a good reason--for treating the workers as Independent contractors.
To qualify for Safe Harbor protection, you must satisfy just three requirements: you must have filed all required 1099-MISC forms reporting to the IRS your payments to the workers in question you consistently treated the workers involved and others doing substantially similar work as ICs, and you had a reasonable basis--that is, a good reason--for treating the workers as Independent contractors.
Business trip - Additional costs
Asked Tuesday, September 26, 2000 by an anonymous userCPA Answer:
If the additional costs you incurred on your business trip were because your boss extended over a weekend to take advantage of a reduced airfare, they are deductible on either IRS Schedule C, Schedule 2106 or as a miscellaneous itemized deduction on Schedule A.
Business trip - Tips
Asked Monday, September 25, 2000 by an anonymous userCPA Answer:
The following unreimbursed business trip costs are deductible: tips, telephone, fax, airplane, railroad, taxi, other transportation fees, hotel and lodging, meal costs
(50% deductible),laundry and cleaning, and entertainment.
All business trip deductions should be listed in a diary stating the time, place and business purpose of the meetings.
All business trip deductions should be listed in a diary stating the time, place and business purpose of the meetings.
Safe Deposit Box
Asked Saturday, September 23, 2000 by an anonymous userCPA Answer:
If the Safe Deposit Box is used to store investment documents such as securities. It is a miscellaneous itemized deduction entered on IRS Schedule A, subject to the 2% limitation.
Subscriptions
Asked Saturday, September 23, 2000 by an anonymous userCPA Answer:
Expenses for magazines, books, newsletters, and investment services are deductible as a miscellaneous itemized deduction, subject to the 2% limitation on Schedule A.
Investment management or investment planner fees are also deductible.
Investment management or investment planner fees are also deductible.
Tax preparation fees
Asked Saturday, September 23, 2000 by an anonymous userCPA Answer:
Tax preparation and audit fees are deductible. A portion of these fees may be allocated to the individual's business tax forms (Schedule(s) C,E,F) or as an itemized deduction on Schedule A subject to the 2% limitation.
Commissions earned, but not yet paid
Asked Friday, September 22, 2000 by an anonymous userCPA Answer:
Generally, for cash basis taxpayers, Form 1099-Misc will be issued for the amount paid. Accrual basis entities will pay tax on commissions earned.
Commissions earned are taxable in the year earned and credited to your account and subject to your drawing, regardless if you actually drew that amount out of the account or not.
Commissions earned are taxable in the year earned and credited to your account and subject to your drawing, regardless if you actually drew that amount out of the account or not.