Self-Employment Tax Question?

How do I treat expense related to a second income that is from self employment? What do you do with these if I have:

$200 Refunds on state income tax,

$800 in qualified dividend

State income tax of $4400,

Federal witholding of $4000,

$600 reimburse expense to employee that are the tax payer

$3200 real property tax

$3000 in home loan equity (that is used to pay for family vacation and a new car).

Please guide me on how and what form should I prepare this on my return? Thank you!!

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  • 7 years ago
    Favorite Answer

    $200 Refunds on state income tax,

    $800 in qualified dividend

    State income tax of $4400,

    Federal witholding of $4000,

    $3200 real property tax

    = these are all personal items = 1040

    Schedule B - for dividend

    Property Tax would go on = Schedule A but if this is all you have, you don't have enough to itemize

    $600 reimburse expense to employee that are the tax payer

    = this will go on a Schedule C, you will also need a Schedule SE

    $3000 in home loan equity (that is used to pay for family vacation and a new car).

    = the interest on mortgage and home equity lines can only be deducted if you spent the money on the property. Since you used it for a vacation and car, it's not related to your taxes. This changed a while back = 2005? maybe before....

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  • 7 years ago

    The other answers were really terrific, but it's hard for anyone to give you really good advice that you may have to stand in front of the IRS over seeing a few lines in your question.

    I own 3 companies, so I have some really good advice for you.

    It seems like you want to do your own taxes, and that's great. If that is the case, I recommend that you go to a TAX ATTORNEY for the first time. Now it should not cost too much, about 400 bucks (which is a deduction) but here is the advantage. The IRS will not usually challenge a Tax Attorney as opposed to someone who just does returns. Tax attorneys know the tax code inside and out and will fill out ALL the necessary forms. Then next year, you can just pull up the forms on any program and fill them in line by line from the blueprint the tax attorney gave you the year before. If you ever are audited, then you go back to the original forms the attorney gave you and explain that you just followed his lead. The IRS will respect this logic over you just stabbing at your own return.

    Good luck.

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  • 4 years ago

    You pay additional because when you have been a W-2 worker, you would have paid 7.Sixty five% of your pay everyweek by means of social safety/medicare withholdings, and your agency would have paid an equal amount. Because you are a 1099 worker, you pay the organization's share (since you might be self employed). One half of of the self-employment tax would had been paid by using you via payroll deduction if you happen to were a W-2 employee, so that is extra a case of pay the same however just pay it later. The one ways to diminish the self-employment tax are: 1. Make certain you're taking every business deduction which you can to scale down your net trade revenue. 2. Put cash into a self-employed 401k/IRA plan via vanguard, Sharebuilder, or other such investment website. That you may put up to 20% of your web earnings into the sort of plan and hinder paying self-employed ss and sales taxes on them (or at least defer them unless distribution whilst you retire). 3. Work for a organization with typical profits as a part job the place your mixed revenue from the aspect job and your small business is bigger than $106,800. The ss tax stops at $106,800 in gains. Medicare continues on after that amount. Four. In case you had a helper/subcontractor, provide them a 1099 for the money you upaid to them and take that as a industry expense deduction. The one advantage of self-employment is that it is regarded earned sales for functions of the earned sales credit score, so when you have a baby, you are going to more often than not qualify for the earned revenue credit to offset a few of this tax. In case you are still working as a 1099 worker this year, you must signal as much as pay quarterly estimated taxes of as a minimum $1,000 1 / 4 so that you're not caught with a huge bill next yr.

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  • Bobbie
    Lv 7
    7 years ago

    1040 FIT return page 1 lines through 22 to get total INCOME amounts using the required related forms for some of the lines that require them to used for that line.

    Schedule C and the SE for your self employment income received during the 2012 tax year.

    www.irs.gov and use the search box for Publication 17 for a start.

    Publication 17 (2012), Your Federal Income Tax

    www.irs.gov/publications/p17/index.html

    Self employed independent contractor schedule C or CEZ along with the SE to determine your NET PROFIT or LOSS from your business income during the tax year for this purpose.

    SE your social security medicare tax amounts that you would OWE on your NET profit amount that would end up the page 1 line 12 from the schedule C and any SE tax owed page 2 line 56 and page 1 line 27 Deductible part of self employment tax attach schedule SE line 27 $$$ amount.

    Starting, Operating, or Closing a Business

    Starting a Business

    Starting a business could be exciting. If you're considering starting a business, start here. This section provides information on everything from a checklist for a new business, to selecting a business structure, and more.

    www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Starting-a-Business

    www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Starting,-Operating,-or-Closing-a-Business

    Hope that you find the above enclosed information useful. 03/17/2013

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  • tro
    Lv 7
    7 years ago

    your self employment(2nd income) is reported on Sch C and if the 'net' amount is $400 or more you will also use Sch SE to calculate your self employment tax

    if you itemized the previous year, your state refund could be income on the current return

    the qualified dividend is reported on 9b

    the equity loan is not for the residence, is not eligible

    it would appear you don't have enough to use Sch A

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  • 7 years ago

    You do nothing with the home loan equity.

    You deduct expenses related to self-employment on Schedule C or Schedule C-EZ.

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  • Judy
    Lv 7
    7 years ago

    Most of those have nothing to do with self employment.

    If you're asking this type of question, you'd be wise to get professional help with your return and not try to do it yourself. An enrolled agent would be good. You do NOT need a tax attorney.

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  • Rob
    Lv 7
    7 years ago

    u visit library for books on how to file

    a schedule C with your 1040.

    Source(s): tax payer
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