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Schedule C - What expenses go where for your business? (by Mary953)

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March 24, 2011 – Comments (11) | RELATED TICKERS: MA , RY

Mary wrote this blog almost 2 years ago but it is still relevant.  Since its tax time I figured I would repost it.  Please go back and rec the original blog.  Blogs like this should be in a "Best of" series.

Schedule C - What expenses go where for your business?

 

 Excerpt:

This is the promised list of where to put business expenses by category on a Schedule C for your taxes.  Hang on to it.  Print it out.  This doesn't change.  Also, lumping all of your expenses together and sticking them under misc. is possible, but it gives the IRS computer a case of heartburn.  Instead of Tums, the IRS computer could call for an auditor to chomp on the offending return.  Then you still have to break this stuff out anyway.  Comments from other tax preparers are welcomed (the 2006 tax code was the same word length as 10 king james Bibles, For one person to know all of that would be insane) - Oh, and if you are one of the ones that requested this, I hope it helps.  You know to use at your own risk (standard disclaimer, all cases different, etc, etc, blah, blah, blah, due diligence, and all that stuff)

First two special situations -

If this is the first year for your business, you have a box to mark on the form (or a question on the automated program to answer) BE SURE YOU MARK THIS.  A startup business has more expense than one that is underway.  That is taken into consideration. 

If you expected a W-2 and got a 1099-MISC with box 7 filed out, you are your own business - surprise!  You may have done landscaping, personal training, painting, office work, the list is endless.  By paying you this way, your employer didn't have to pay benefits, Social Security, or Medicare.  If you are not certain, look at your last pay stub.  If there are deductions for Social Security and Medicare, you are on a W-2, Otherwise, you are a contractor.

 

Click here for the rest of the blog: http://caps.fool.com/Blogs/schedule-c-what-expenses-go/171890

11 Comments – Post Your Own

#1) On March 24, 2011 at 10:01 AM, binve (< 20) wrote:

I agree, that is a classic and excellent (and very useful) post! Thanks for reminding us of it this time of year! (I agree, this definitely belongs in a 'best of' post series)

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#2) On March 25, 2011 at 11:53 PM, HarryCaraysGhost (99.61) wrote:

outoffocus, I have a tax question if you don't mind.

I have to declare capital gains for 2010 (quite a bit)

My broker listed eveything at the sale price. So should I just print out a list of my account history so the buy prices will be deducted from that. And there was no mention of losses. Do all brokers do the tax form like this seems somewhat messed up.

Before 2010 I only had to declare my divs so this is new to me.

Thanks.

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#3) On March 26, 2011 at 4:34 PM, Mary953 (78.85) wrote:

Thank you for pulling this up again.  Again I would warn you to use your own due diligence and remind you that the nice folks at the IRS are there to help you if you call with a question -- and I find them very nice and very, very helpful!  These are the pros at this stuff.  Use them and remember that they are trying to help.  Treat them accordingly.  (as in Play nice, kids!)  ;-)

Something wonderful has happened since I wrote this.  If you got the 1099-Misc with Box 7 as described above and it was a one time thing (example - you took a job cutting grass for a local business or doing construction over the summer), THE RULES MAY HAVE CHANGED!  Follow the instructions carefully.  Answer the questions truthfully.  If this was a one time or a summer job, it may be treated as a single instance with no Social Security or Medicare fees needed. 

I also need to point out that I no longer do taxes thanks to the new ruling that requires a fee for a professional license.  I have not had any advanced training in the last couple of years so I am no longer the right person to ask.

HarryCarysGhost  -   I had the same issue with my taxes.  I am assuming that you have bought and sold stock or just sold stock.  The broker's statement will show the amount of the sale as pure profit.  You need to find the date that you bought the stock and the amount you paid for it.  The amount you paid is called the cost basis and can be figured either as a per share price or as a total price.  There is a place on the form that you received from your broker that lists all your transactions for the year.  Check that and perhaps your statements from prior years if necessary.  You are looking for the matching dates and costs.  Put the date bought (or various if it is more than one date) and the amount paid which goes under cost basis.  Each entry will take your tax down.  It is a beautiful thing to watch. =D    I use FIFO - first in first out as my accounting method.  This means that if I bought Apple in amounts of 50, 100, 150, 100, 50 and sold in amounts of 100, 50, 150, 100, then for the first transaction, I need to use the cost of the first 50 and half of the 100 that I bought second.  The last two transactions match. I will need to put Various for my first date because I am selling stock bought on two different dates.  On all the rest, I have one date per transaction that I can use.  The dates just allow the software to sort long-term from short-term.  Each year, I wonder why I do this to myself and each year I decide it is worth it.  I hope this helps you some. 

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#4) On March 26, 2011 at 4:35 PM, Mary953 (78.85) wrote:

Thank you for pulling this up again.  Again I would warn you to use your own due diligence and remind you that the nice folks at the IRS are there to help you if you call with a question -- and I find them very nice and very, very helpful!  These are the pros at this stuff.  Use them and remember that they are trying to help.  Treat them accordingly.  (as in Play nice, kids!)  ;-)

Something wonderful has happened since I wrote this.  If you got the 1099-Misc with Box 7 as described above and it was a one time thing (example - you took a job cutting grass for a local business or doing construction over the summer), THE RULES MAY HAVE CHANGED!  Follow the instructions carefully.  Answer the questions truthfully.  If this was a one time or a summer job, it may be treated as a single instance with no Social Security or Medicare fees needed. 

I also need to point out that I no longer do taxes thanks to the new ruling that requires a fee for a professional license.  I have not had any advanced training in the last couple of years so I am no longer the right person to ask.

HarryCarysGhost  -   I had the same issue with my taxes.  I am assuming that you have bought and sold stock or just sold stock.  The broker's statement will show the amount of the sale as pure profit.  You need to find the date that you bought the stock and the amount you paid for it.  The amount you paid is called the cost basis and can be figured either as a per share price or as a total price.  There is a place on the form that you received from your broker that lists all your transactions for the year.  Check that and perhaps your statements from prior years if necessary.  You are looking for the matching dates and costs.  Put the date bought (or various if it is more than one date) and the amount paid which goes under cost basis.  Each entry will take your tax down.  It is a beautiful thing to watch. =D    I use FIFO - first in first out as my accounting method.  This means that if I bought Apple in amounts of 50, 100, 150, 100, 50 and sold in amounts of 100, 50, 150, 100, then for the first transaction, I need to use the cost of the first 50 and half of the 100 that I bought second.  The last two transactions match. I will need to put Various for my first date because I am selling stock bought on two different dates.  On all the rest, I have one date per transaction that I can use.  The dates just allow the software to sort long-term from short-term.  Each year, I wonder why I do this to myself and each year I decide it is worth it.  I hope this helps you some. 

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#5) On March 26, 2011 at 5:01 PM, Mary953 (78.85) wrote:

I just hate duplicate posts.  Sorry, guys

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#6) On March 26, 2011 at 9:57 PM, HarryCaraysGhost (99.61) wrote:

Thanks Mary,

My problem is more that I bought in the 08-09 lows and sold at the beginning of the year 2010 after holding for more then a year.

So it got complicated.

I don't see why a brokerage could'nt run the numbers wayyy! faster then I could.

Hope all is well with you,

Cheers.

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#7) On March 26, 2011 at 10:26 PM, dikgfdwstuegf (< 20) wrote:

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#8) On March 26, 2011 at 10:26 PM, dikgfdwstuegf (< 20) wrote:

ta.gg/4vj

we can supply series of sport jersey ,offer High Quality, Low Price,

we are sincerely looking forward to cooperating with partners from all

over

the world, establishing a mutual benefit and long term business

relationship

between us and moving ahead with all of my dear friends!

(ta.gg/4vj)

please add the dots then input the word on your web,you will find the

suprise,thanks!

Report this comment
#9) On March 28, 2011 at 11:50 AM, outoffocus (23.48) wrote:

HaryCarysGhost,

I thought there was some legislation out that would require brokers to give the buy date and basis on the 1099s but either it hasnt gone into effect yet or it never went through.  My broker statement is the same except they tell me the net proceeds rather than just the sales price.  So unfortunately, yes we have to print our our sales history to get the basis and date bought.  Hopefully this will improve in the future. 

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#10) On March 30, 2011 at 12:17 PM, lemoneater (71.92) wrote:

@ #9 At least Schwab included all the information on buy date, basis, sales price, and net proceeds. Whether the legislation went through or not our H&R tax software asked for complete information. My husband wondered if the information could have been imported directly in from Schwab, because it was a lot of typing!

At least our taxes are done now. We have been saving hard all year so I'm in the mood to spend some of our refund on something squandiferous like a weekend away, but we can't get away until May. When the basic necessities are supplied, my opinion is that time is more valuable than money.

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#11) On May 03, 2011 at 8:09 PM, outoffocus (23.48) wrote:

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