Taxes

[Navarre]

I just got my taxes finished.

What I still owe the government for 2010 (even after paying $3220 in estimated taxes for last year):  $14,570

un   real   

[chrysalis]

 

I guess you won't be taking me out to dinner anytime soon?

... are you still breathing?

[Navarre]

Breathing is free. So, yep, breathing right along.

I have no expenses I can reduce unless you count my $9.53 a month for NetFlix. Everything else is necessary.

So there's no need to worry about things I can't change, right? Steve Rogers wouldn't let something like money get him down.

[Blackthunder01]

What?!  That's crazy man.  That's a full time, minimum wage job for a year's worth of salary!

You have to have had outstanding debt from previous years.

[chrysalis]

No, that's starting your own business. My parents owned their own business for 15 years in this state. 40% of what they made right off went to taxes.

[Navarre]

Yeah, Brian, Chrysalis is right. I had no outstanding debts.

I have a home-based business that has almost no deductions whatsoever. No mileage. No delivery trips. No advertising. No dedicated office space so no deductions there. No employees.

So it pushed me into a 31% tax bracket. A third of everything I make goes straight to the government.

Since I am single, with a house to pay for, and pay child support (which is not deductible) and have other non-deductible expenses that I cannot eliminate, I'm screwed.

I think I'll set up an online account and charge my play-by-post D&D players $75 a month to play my game. I wonder how that will go? 

[Slappy]

You can always dress purty, smell of lemon verbina and turn tricks at the local coal mine?

[Navarre]

Well, I do have all my teeth so they'd probably find me attractive. I'm more worried they'd have things in mind for me where they prefer I don't have teeth.

[schleicher12000]

It would probably be a good time to hire an aggressive accountant.  Regardless of what deductions you think you don't have, you in fact a crap ton of deductions you probably haven't applied.

For example - If you are using/paying for internet to do your business, that is a deduction.  If your business is run at home, and you have a dedicated office for that business, you can deduct that percentage of your rent/house payment as a business expense. 

A good aggressive accountant can find all of these things and probably more.

[Navarre]

I hope you're right.

I already deduct my internet as a business expense. It is one of the few things I have.

I do not have a dedicated office space, unfortunately.

I have wondered if I would fare better as a C-Corp instead of a Sole Proprietor but it seems a lot more complicated.

In a couple of years I have some non-deductible debts that will be finished and that will help some. I figured if I could at least break even until then I'd manage.

Sadly, I am not breaking even. Even if I was, that doesn't provide for much security in case of unexpected expenses. Heck, right now I can't even afford a retirement fund.

So I am basically working full time and losing money while doing it. It's a challenge, there's no doubt.

But I'm not going to let it beat me. I'll work something out.

After all, wouldn't you miss me if I were gone? ... Maybe? ... a little?

[schleicher12000]

Also, any equipment you buy is a direct deduction in full, don't go for that amortization bull... take the one time deduction and move forward.  On the plus side, when it comes to the end of the year, you'll have incentive to buy new gear and products to deduct at tax time.  November and December are my favorite part of the business cycle for Major Spoilers and my video work.  June is the best part of the year for the Real World Job when we have to empty accounts or lose the money.

[Navarre]

When I started my company sixteen months ago I had to buy a computer and a printer/fax. I itemized that as a full deduction, along with supplies such as ink and paper through the year.

My job is primarily technical support for physician offices using the software I sell and support. The phone rings, I answer, log onto their computer with a free connection software, and fix the issue.

I can't deduct phone costs as I am using a single phone line (ie, the same phone for business and personal). I deduct my internet costs. Other than the occasional replacement of an ink cartridge, I'm not sure what else I can deduct and my accountant doesn't seem to be sure either.

I sometimes have a lot of time in between calls. ... Hey, have you ever noticed I'm on the forum a lot? 

So it seems I either need to increase my deductions (somehow), increase the profitability of the time I work, or do something productive with the time in-between.

I am, right this second, watching The Social Network; watching a guy take an idea and make billions. I am apparently missing a brilliant idea for myself.

[schleicher12000]

While you are probably screwed all to hell this year (though you probably knew a big pay to the govt. was coming) as you move through this year, you need to start paying your taxes quarterly.

[Navarre]

I did pay my taxes quarterly. But I started my business in November 06, 2009 and didn't get any money from a customer until November 20, 2009.

So there wasn't much to base the estimates on and the figures were way low.

My Federal quarterly estimate was $680 in 2010.

After my first year of business, my Federal quarterly estimate in 2011 is $3500.   

[Navarre]

I have been forced to rent out rooms in my house to strangers for the past three years to make ends meet. I have two rooms I rent out.

Recently, one of my roommates moved out. I haven't found a suitable replacement nor do I by any means want other people living here.

My best thought so far is to forgo the rent and instead convert that room to my home office. Depending on the percentage of square footage the room is of my total home square footage, I can deduct that percentage from my mortgage and utility bills on this year's taxes.

It seems the rent money ($350/month) would add up to be better than the deductions but maybe not. I don't know.

Either way, if I can't find a renter then the deductions would be my best bet. I don't have any other ideas at the moment.