Owned by the 1099

[Juruense]

So I do IT consulting on the side but I only have one main customer right now.

Today they called me up and said; "Hey, we need your social security number so our accountant can issue you a 1099." :dw: :??:

Wow, talk about SUCK :cryying:

I guess its for the best though, dodging out of taxes is no way to start a business.

So now I am getting a 1099 which will increase my AGI by $2016.

I am pretty good with personal taxes, but I could use some advice on this situation. I do not have a tax id number, my business is not a formal one. What can I do to offset some of the additional tax liability I am facing here?

I am only interested in legal methods to reduce my taxes paid.

Any advice would be appreciated...

 

[ff500]

I'm in my 3rd year as a small business owner and I recently went from a DBA to an S-Corp, I've been learning as I'm going along ,so far so good.

If you work out of your home and have a home office you can deduct for the home office,including a percentage of your utilities, you can deduct milage and fuel for your vehicle, also a percentage of your vehicle ( 50% personal 50% business) depending on how much you use it for your small business, internet and cell/home phone for business purposes, any magazines/books/computer programs you use,also your laptop if its business related.

Best advice would be to find a good accountant, its really not that expensive,and also if you're going to pursue it further try incorporating as an s-corp or an LLC and get a EIN number so your not giving out your social security #.

 

[Juruense]

Can I do all that if I have an informal business and no tax id number?

 

[SNCBOOM]

You're best off speaking with a seasoned accountant. My dad works for the railroad and owns 2 businesses of his own. It is a hassle and can become expensive but it IS worth it.

 

[Juruense]

I dunno, I am already looking at unexpected tax liability not sure if I want to give an accountant some money also. I appreciate all the responses! :beer:

 

[ff500]

Yes you can and quite honestly you would probably show a loss depending on when you started your business, I am not an accountant though so I don't want to mislead you, but if its something you seriously want to do and plan on expanding or growing find yourself a good accountant, honestly there's nothing like owning your own business.

 

[JasonSnake]

it's usually best to keep your personal finances and your business as separate entities.

 

[capnkirk52]

Call them back and tell them to send you 1/2 or 1/3 now and then break the rest into payments. I forget what the limit is, $1199 I think. That way you don't have to give 25% to Uncle Sam.

Skirting around taxes is what every red blooded American does. That's why there are accountants.

 

[2veloce]

If you work out of your home and have a home office you can deduct for the home office,including a percentage of your utilities, you can deduct milage and fuel for your vehicle, also a percentage of your vehicle ( 50% personal 50% business) depending on how much you use it for your small business, internet and cell/home phone for business purposes, any magazines/books/computer programs you use,also your laptop if its business related.

File a schedule C and follow the advice from ff500

 

[FL-Orange]

You're best off speaking with a seasoned accountant. My dad works for the railroad and owns 2 businesses of his own. It is a hassle and can become expensive but it IS worth it.

I dunno, I am already looking at unexpected tax liability not sure if I want to give an accountant some money also. I appreciate all the responses! :beer:

I also do consulting on the side, not so much this year but $20-30K each of the previous two years. I do not have a tax ID, basically work under my Social. I deduct a percentage of the house, cable, cell phone, I think computers and also take something on the vehicle. Previous to my wife getting a job with the county I also carried my own health insurance and I think that was partially deductible (or maybe any co-pays ect was).

I'm sure you do your own taxes well enough but I'd still go to an accountant. Look around and ask for referals, you might be suprised on how reasonable a good on can be. My accountant only charges me $300/yr, she keeps me current in what I can and cannot deduct and takes care of any paperwork obviously. I just drop her a big folder in January when I get my yearly stuff together. On top of that I can call anytime throughout the year for advice without charge.

It's peace of mind to have a professional maximize my tax experience, keep me legal and is there to answer to the IRS if I ever get audited. My friends brother was unknowingly deducting wrong for 3 years and he got reamed.

 

[FL-Orange]

..you can deduct milage and fuel for your vehicle....

I you sure? I thought it was mileage or fuel, not both. Either way good advice. :thumbsup: