You are allowed up to $500K profit in a sale.
Above that is taxed.
You get no credit for taking a loss.
So it makes no difference if you make a $500K profit on the sale and lose $100K on the sale of house #2. You are still at $400K and not washing any profit from the first house.
If you have $600K profit from the first house; you have to pay taxes on the $100K overage.
Taking a loss of $100K on the second house does not eliminate the $100K taxable income from the first house.
What you are calling deductions will be listed by the IRS on the form 1040, Schedule A, Schedule C - E.What's the best way to find the deductions relevant to me? Is this even a valid question?
I don't know the in's and out's of different levels.Why do you need the premium version? Don't see anything in your situation that calls for it. We don't recommend any tax software over another, but there are cheaper versions. Remember, they all use the same tax code.
I have a separate question for my mother in law. In 2004 they sold a house for $350k, and used the money from that ($225k after loan payoff) to purchase another house for $525k. They used some form so they didn't have to pay taxes on the $350k. This year they sold the $525k house for $400k. She is thinking that since they sold the house at a "loss" that they don't have to pay taxes on this house, but that seems weird to me.
i did a contract job last year. some company subcontracted me to another company. i am not a business owner or anything. they did not send me a 1099. how do i file this in TurboTax? Schedule C?
It is best to use the Schedule C.
That way, you have the ability to write off expenses (direct and indirect) incurred in earning the income.
as stated to others; did through the previous tax threads for ideas/leads on what you could deduct as expenses.
Without using the Schedule C, you will have to declare the income on the 1040 and pay the full Federal&State tax plus SS*2 on that income.
most helpful post of yours evar.
i'm fvcked. i owe a lot in taxes lol. :'(
If you have a regular job and the proper taxes were withheld, some lube has been already applied. The Schedule C expensing tries to brings the extra pain to a manageable level
EagleKeeper (et al),
You're fantastic. I've looked through a lot of this thread, and it's really helpful. Thanks so much.
I have a specific question (which I'd love an answer to) and a general question (which'd be nice, but no pressure if it's outside the guidelines of the thread).
1. Specific Question:
My wife quit her job to write and try her hand at self-publishing (on Amazon and Barnes & Noble). She also does side work-- proofreading/editing-- on the side. We haven't registered as a business of any sort; everything she does is fully in her name. For tax purposes, how should I handle this? Even though we haven't registered as a sole proprietorship or anything, can we still use a schedule C? We've kept track of all the income, but aren't sure how to report it.
Yes - use the Schedule C to report the income and also write off direct and indirect expenses
2. General Question (no pressure if can't be answered):
In the past, we've used tax software and done our own taxes. This year, things are getting pretty complicated, and we're considering paying someone else (CPA or tax attorney). Is there a standard set of criteria you recommend to use to determine whether or not it's wise to seek outside help?
What is getting more complicated The wife having additional outside income? That in itself is not worth spending a couple hundred $$ for unless you are feeling generous
Oh, and side note: you joked about the beer fund, but I didn't see a link. Sarcasm aside, you should totally set up a "tip jar". Who knows, some grateful person might be inclined to toss in enough for a pint.
1. Specific Question:
My wife quit her job to write and try her hand at self-publishing (on Amazon and Barnes & Noble). She also does side work-- proofreading/editing-- on the side. We haven't registered as a business of any sort; everything she does is fully in her name. For tax purposes, how should I handle this? Even though we haven't registered as a sole proprietorship or anything, can we still use a schedule C? We've kept track of all the income, but aren't sure how to report it.
Yes - use the Schedule C to report the income and also write off direct and indirect expenses
2. General Question (no pressure if can't be answered):
In the past, we've used tax software and done our own taxes. This year, things are getting pretty complicated, and we're considering paying someone else (CPA or tax attorney). Is there a standard set of criteria you recommend to use to determine whether or not it's wise to seek outside help?
What is getting more complicated The wife having additional outside income? That in itself is not worth spending a couple hundred $$ for unless you are feeling generous
Oh, and side note: you joked about the beer fund, but I didn't see a link. Sarcasm aside, you should totally set up a "tip jar". Who knows, some grateful person might be inclined to toss in enough for a pint.
I have a Paypal account setup to handle the beer fund.
Up to this point, only Mods have donated enough to get a six pack over the past 6 years.
Thanks, Eagle!
We'll use the Schedule C for my wife.
In terms of complicated... well, this year my wife has the income coming in and out for her writing/contract work, and I've been getting more heavily involved in microlending (via Prosper). The paperwork they give isn't very helpful, and I have a hunch that I could be handling it better-- trying to figure out when people default, how much they paid before they defaulted, et cetera is a lot of work. In all truthfulness, though, it's probably better for me to handle it myself than pay for someone else to do it.
I guess I was imagining that the situation with my wife would be more complicated than it is. Since we've kept good records, if we only need to use the Schedule C (and, I'm guessing, Schedule SE) for her, that's not bad. Maybe I should give it a shot. Thanks again!
Tax S/W will take care of the Schedule SE for you. The Schedule C should have one for each of your income streams. When you work on indirect expenses, be careful not to double dip.
Tax pros can only work with what info you provide to them. That is the same way software works.
Big difference is a dumb pro does not understand your business and does not ask the pertinent questions.
So when using software, the output is as good as your input to yourself :biggrin:
my wife was self employed for the first six months of last year, and we were making quarterly tax payments to the IRS through the online eftps system - does anyone know if they send any kind of form back to me, not sure where I include those payments when I start doing my taxes this year. Will we have to create our own W2 to capture those payments?
Those payments need to get added into any W2 amounts when you put in the total taxes paid.my wife was self employed for the first six months of last year, and we were making quarterly tax payments to the IRS through the online eftps system - does anyone know if they send any kind of form back to me, not sure where I include those payments when I start doing my taxes this year. Will we have to create our own W2 to capture those payments?
I work full time, but also do consulting (so I send in quarterly estimated payments for those).
Last year I paid someone to do my taxes for me since it was the first time I had to deal with self-employment, and wanted to get the most deductions I could. The cost was $750.
My question is, can I deduct the cost to prepare LAST YEARS (2011) taxes on my 2012 taxes? i.e., can I write off the cost to prepare last years taxes (the actual expense to prepare them occurred in 2012), as a business expense on my 2012 taxes? If so, what category does it get deducted in? Misc expenses?
Payments made in 2012 for 2011 taxes are expensed off when doing 2012 taxes.
Misc expenses - Schedule A 2% AGI overhead
I thought I heard somewhere that if you are self-employed you can write off the tax preparation in schedule C in "Other expenses" and not worry about the 2% AGI thing?
Your are correct.
When using the Schedule C, tax preparation costs should be classified under services. Purchase of tax software can go under office supplies/expenses
Ok. Do I just deduct the whole thing in schedule C, or can I only deduct a portion of it as a business expense since I also have a full time job?
The whole thing is needed to handle the Schedule C.
Just like cell phone usage - does not get proportioned
A taxpayer may not deduct all of the tax preparation fees on Schedules C, E, and F of Form 1040. The tax preparer should provide a statement to the taxpayer that indicates how much of the tax preparation fee was related to the taxpayer's business, farm, and/or rental and/or royalty income. The taxpayer may deduct the remainder of the tax preparation fee only on Schedule A.
If the tax preparer does not provide the taxpayer with a detailed statement showing how much of the tax preparation fee was for the taxpayer's business, farm, and/or rental and/or royalty income, the taxpayer shoud ask the tax preparer for an itemized statement. If the tax preparer will not provide an itemized statement, the taxpayer should use a reasonable allocation. In that case, the taxpayer should seriously consider using a different tax preparer next year.