By: Revanche

Taxes: Peace of mind or save my pennies?

February 11, 2007

Last night, I went through and looked at last year’s tax return and figured out how to plug in this year’s numbers. That went ok, but I have a little more homework to do because I’m a little fuzzy on the Self Employment tax. I always get a 1099 for the amount of my bonus because the company just cuts me a check from the office and it’s up to me to do the tax figurin’. But what constitutes an expense when I figure my net profit and how would I prove those expenses? I’m sure he estimates the amount I have to spend on new business clothes each year because that’s mandatory for my job, and I sure don’t use that clothing for anything BUT business travel, etc. but what else qualifies as an expense to calculate net profit? I work from home so I would think that a portion of those expenses for internet and cell phone would qualify, but I’m not sure how that works exactly.

Eventually I came up with a modest number, but I haven’t gone through my state return yet. The question is, with all of the insanity swirling about trying to get flights and visas and coordinating travel schedules and work schedules and packing and all that business, do I really want to spend a few more precious hours working on my taxes and second guessing my numbers and decisions? Or should I ask the accountant to double check my numbers, let him do the state taxes and just plan to do them myself next year?

My family’s accountant usually does my taxes for about … 75% of his usual cost. He’ll have the normal charges-breakdown, per form, which add up to approximately $75 and then he’ll stick a sticky note on there saying “Just pay me half!” or “$50 is ok!”

3 Responses to “Taxes: Peace of mind or save my pennies?”

  1. Dimes says:

    If you’re getting a 1099 and are working from home, maybe you should do a Schedule C and an 8829 (business use of home). You can only take a proportion of utilities like internet and cell phone unless the cell phone is used exclusively for business (exclusively being a relative term of course, mainly at least that you were required to have the phone as a condition of employment and would not otherwise have it).
    I’d have your accountant take care of it, because that stuff can be a bear.

  2. I’m getting a 1099 just for my bonus money because .. I dunno, I guess Big Boss likes to sign those checks himself? But it’s good to know that I can take a portion of the cell phone and internet bills. I probably will let the accountant take care of it this year again.

  3. mOOm says:

    You can’t deduct clothing that isn’t a specific uniform – at least you can’t on schedule A – so unless that’s different on schedule C.

    Seems like a hassle to get the bonus as business income…. if the IRS ever checked they might be hard to convince that those expenses earned you the bonus rathe than your regular salary…

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