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Taxes and the self-employed

 
 
littlek
 
Reply Wed 5 Feb, 2003 06:37 pm
I'll be needing to file taxes on income earned as a nanny. I have a few questions about filing - fewer than I thought I'd have. I checked out some forms and info and have come up with this.

I can us the 1040 form
I need to fill out schedule C (or C EZ)
I can deduct expenses directly related to the job

The last one is where I get fuzzy. Can I deduct health insurance? Somewhere I read the self-employed, earning under x amount of money can deduct 70% of the health insurance premiums. That's really the only major out-of-pocket expense I can think of deducting and it sure would help if I could. On schedule C it specifically says insurance that is NOT health insurance.

Are there any other tricks you could let me in on? Am I on the right course?
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quinn1
 
  1  
Reply Wed 5 Feb, 2003 06:48 pm
Turbo Tax has a great breakdown with all the seeminlgy important questions:

http://www.turbotax.com/articles/DeductingSelfEmployedHealthInsuranceCosts.html
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littlek
 
  1  
Reply Wed 5 Feb, 2003 07:18 pm
Thanks Q! I get nervous because the terminology. The IRS says health insurance for you THROUGH your company. I'm self-employed, but I'm not incorporated, ya know.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 07:30 pm
How is head of household defined?
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roger
 
  1  
Reply Wed 5 Feb, 2003 07:32 pm
You would have to have a qualifying child to be head of household. Wish I could deal with your insurance question, but my obsolete knowledge of personal taxes would be more dangerous than helpful.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 07:44 pm
Yeah, I just figured that out - thanks Roger, I think I'm working out the details.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 08:12 pm
A whole different approach

Can I do a 1040 without doing a schedule SE (for self-employed) and by just plugging in the numbers on the 1040 - straight? Or is that cheating?
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quinn1
 
  1  
Reply Wed 5 Feb, 2003 08:18 pm
Im guessing your trying to cheat? Laughing

Do you get 1099's from the nanny work? W2's? What?
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littlek
 
  1  
Reply Wed 5 Feb, 2003 08:28 pm
1099. But, I haven't gotten the official paperwork yet, just the total they've paid me over the last year.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 08:31 pm
The Schedule SE is for people who are self-employed, which I am, but they are people with businesses, which I don't have...... right?
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quinn1
 
  1  
Reply Wed 5 Feb, 2003 08:34 pm
Good...well, cuz I know you and your situations

I think you will need to look over all the possibilities here:
http://www.irs.gov/businesses/small/industries/content/0,,id=99878,00.html

It shows you both sides of the coin, theirs and yours but, most of the time you can gain much more in deductions by filing as SE <self-employed, independant contractor via 1099> than as simply as an individual, single non home owning etc etc.
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quinn1
 
  1  
Reply Wed 5 Feb, 2003 08:37 pm
Because you are paid via 1099 you are responsible for your taxes, however, you also are an independant contractor in which you can gain greater deductions than if they paid your taxes and you simply had income.

?ok
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littlek
 
  1  
Reply Wed 5 Feb, 2003 09:07 pm
I was just at the same spot in the irs data files.....

I can't deduct anything from the SE except my car usage which would be minimal. And, wouldn't the car ins go up if I declared it as a work vehicle?
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roger
 
  1  
Reply Wed 5 Feb, 2003 09:26 pm
Do schedule SE if your net (not gross) self employment income exceeds $400.00 (unless recently adjusted for inflation) regardless of whether you have a business or are just self employed. Car deductions? Not if only used to and from your place of employment. Are you running the little darlings around in your personal auto?

When you do the SE, you are paying payroll taxes for both employee and employer, which means you get to deduct the employer portion as a business tax on schedule A. Big whoopie!
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littlek
 
  1  
Reply Wed 5 Feb, 2003 09:31 pm
Roger, if that SE is the way to go I owe $1,664.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 09:32 pm
hmmmm....what's this schedule A?
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mikey
 
  1  
Reply Wed 5 Feb, 2003 09:39 pm
the car is just your means of transportation, not a commercial vehicle so your insurance would stay the same. if you had major repair bills figure out which is more, the standard mileage deduction or the maintence/repair costs and deduct the highest amount. part or all of your insurance bill, excise tax and other items like parking tickets etc you should be able to write off on the profit and loss form. there should be a clothing allowance that you can go for too. every business is treated a bit different. might be worth a call to an acountant that knows exactly what you can get away with. and you can deduct the cost of that next year.
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roger
 
  1  
Reply Wed 5 Feb, 2003 09:56 pm
Schedule A is Itemized Deductions.

My bad. Self employment tax goes direct to Form 1040. This deduction is a reduction to earnings so the reduction to taxes is quite small.
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maxsdadeo
 
  1  
Reply Wed 5 Feb, 2003 10:06 pm
It is far better to ask for forgiveness rather than permission where taxes are concerned.

My experience with law school and tax law, (my best class!) tells me that it is a citizens constitutional right to limit their taxes by as much as possible.
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littlek
 
  1  
Reply Wed 5 Feb, 2003 10:27 pm
Here's the major problem: I should have been declared as an employee of the family I work for. They should be withholding taxes all year. I work in their home, so I can't deduct any of my personal bills. I just ran a tax profile with H&R Block, I will oweabout 1800 to the feds and the state.

What kind of schedule should I be looking into if not the SE. I didn't see anything there for clothing deductions.... And, because they hemmed and hawed about whether they'd be doing this, I didn't keep any receipts for anything.
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