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Income Tax help please? [#permalink]
 24 Jan 2013, 05:17
I am unsure what i should do with my income taxes. I have been working for awhile and have made more then 4000, I am not in school yet and the only things i pay for are my cell bill, car insurance, gas, food, clothes, and help out around the house.
what should i do? i have been thinking about using turbo tax.
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Manager
Joined: 24 Nov 2012
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Re: Income Tax help please? [#permalink]
24 Jan 2013, 20:00
ajshco wrote: I am unsure what i should do with my income taxes. I have been working for awhile and have made more then 4000, I am not in school yet and the only things i pay for are my cell bill, car insurance, gas, food, clothes, and help out around the house.
what should i do? i have been thinking about using turbo tax. If you are going to use Turbo Tax, use the free online edition. Also, you might not have to file a federal income tax return, but you may have to file a state income tax return depending on where you live.
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Re: Income Tax help please? [#permalink]
25 Jan 2013, 08:46
I'm dubbing this the Tax thread...
I got married, the wife started a business (incorporated herself), and will be showing a loss. Should turbo tax still be fine, or will we be leaving too much money on the table? I've always used turbo tax, and it has been easy enough, but I haven't dealt with joint filing and a business(outside of being a 1099).
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Re: Income Tax help please? [#permalink]
25 Jan 2013, 10:45
I have done both and I feel Turbotax is just fine. Taking a loss on a business is pretty straightforward. I currently use a tax professional to do my taxes (which helps to know that they are correct, audit risk is minimized, and so on). However, I don't think it justifies the cost ($1K+ for business filing usually). The truth is, accountants use software as well to prepare your taxes (it is not like they do it by hand), they are just smarter about it (do I put this expense in this bucket or another). I think it would be hard to miss/come up with $1K worth of value. I only see value in asking him questions or structuring/planning ahead but again, I doubt he has saved me the money I am paying him compared to the turbotax. I keep wanting to buy turbotax and do my taxes with an accountant and with turbotax separately and compare the results but too lazy to do that  My suggestion is, unless you have 2 things that are in your way (business and rental income or depreciation or other touchy items, you are OK filing on your own); or if $1K is not a lot of money for you, then you should absolutely use a tax professional get a higher quality and peace of mind at the end.
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Re: Income Tax help please? [#permalink]
26 Jan 2013, 14:07
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bb wrote: I have done both and I feel Turbotax is just fine. Taking a loss on a business is pretty straightforward. I currently use a tax professional to do my taxes (which helps to know that they are correct, audit risk is minimized, and so on). However, I don't think it justifies the cost ($1K+ for business filing usually). The truth is, accountants use software as well to prepare your taxes (it is not like they do it by hand), they are just smarter about it (do I put this expense in this bucket or another). I think it would be hard to miss/come up with $1K worth of value. I only see value in asking him questions or structuring/planning ahead but again, I doubt he has saved me the money I am paying him compared to the turbotax. I keep wanting to buy turbotax and do my taxes with an accountant and with turbotax separately and compare the results but too lazy to do that My suggestion is, unless you have 2 things that are in your way (business and rental income or depreciation or other touchy items, you are OK filing on your own); or if $1K is not a lot of money for you, then you should absolutely use a tax professional get a higher quality and peace of mind at the end. As a tax professional, I thought that I would give you some advice. First, tax professionals typically won't tell you that you may be able to complete your return on your own. However, I would provide a little bit of caution. Incorporation is a legal action. The tax consequence of incorporation depends on how you elect to be taxed. For more information, see IRS Form 8832. Also, you may or may not need an employer identification number for your business. For more information, see IRS Form SS-4. There is also an option to elect S corporation status for an entity. For more information, see Form 2553. Even if you file a Schedule C (disregarded entity for federal tax purposes) there are certain items that require special attention (e.g. depreciation). Also, losses are not always as straightforward as one would think. The allowance of a loss depends on several factors and can be limited. Beyond filing a tax return, you might also be required to submit other reports and filings with federal and state agencies. Each state has requirements for incorporated entities. Some may require you to file an annual report and/or a franchise tax report. Other reports and filings that may be required are: 1096 (1099s), W-3 (W-2s), business personal property, sales tax, payroll, etc. The value of hiring a professional is really subjective. It depends on so many factors that are specific to your situation and preference. If you have any questions, please feel free to PM me.
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BSchool Forum Moderator
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Re: Income Tax help please? [#permalink]
26 Jan 2013, 14:55
Thanks bb, I'll go the turbo tax route unless I run into any issues I guess.
And UTMPA2011, thank you for reminding me why I did not become an accounting major even though the department at my undergrad school recruited me heavily. My eyes glazed over reading that, lol. I really appreciate it though, and have bookmarked this thread. I was thinking about going the schedule c route. Looks like I have some serious research to do. I will definitely take you up on the PM offer if I have any questions. Thank you both!
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Re: Income Tax help please? [#permalink]
26 Jan 2013, 22:39
UTMPA2011 wrote: bb wrote: I have done both and I feel Turbotax is just fine. Taking a loss on a business is pretty straightforward. I currently use a tax professional to do my taxes (which helps to know that they are correct, audit risk is minimized, and so on). However, I don't think it justifies the cost ($1K+ for business filing usually). The truth is, accountants use software as well to prepare your taxes (it is not like they do it by hand), they are just smarter about it (do I put this expense in this bucket or another). I think it would be hard to miss/come up with $1K worth of value. I only see value in asking him questions or structuring/planning ahead but again, I doubt he has saved me the money I am paying him compared to the turbotax. I keep wanting to buy turbotax and do my taxes with an accountant and with turbotax separately and compare the results but too lazy to do that My suggestion is, unless you have 2 things that are in your way (business and rental income or depreciation or other touchy items, you are OK filing on your own); or if $1K is not a lot of money for you, then you should absolutely use a tax professional get a higher quality and peace of mind at the end. As a tax professional, I thought that I would give you some advice. First, tax professionals typically won't tell you that you may be able to complete your return on your own. However, I would provide a little bit of caution. Incorporation is a legal action. The tax consequence of incorporation depends on how you elect to be taxed. For more information, see IRS Form 8832. Also, you may or may not need an employer identification number for your business. For more information, see IRS Form SS-4. There is also an option to elect S corporation status for an entity. For more information, see Form 2553. Even if you file a Schedule C (disregarded entity for federal tax purposes) there are certain items that require special attention (e.g. depreciation). Also, losses are not always as straightforward as one would think. The allowance of a loss depends on several factors and can be limited. Beyond filing a tax return, you might also be required to submit other reports and filings with federal and state agencies. Each state has requirements for incorporated entities. Some may require you to file an annual report and/or a franchise tax report. Other reports and filings that may be required are: 1096 (1099s), W-3 (W-2s), business personal property, sales tax, payroll, etc. The value of hiring a professional is really subjective. It depends on so many factors that are specific to your situation and preference. If you have any questions, please feel free to PM me. Thank you! You have pointed out very good items that can really screw one up and cost a lot of time/penalties/money. I have naively assumed all of that has been taken care of, which is a BIG assumption, and yes, you are absolutely correct in this respect. On the other hand, your bill will be quite a bit higher if you use a tax professional to do some of the routine work (which I try to avoid as much as i can).
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Re: Income Tax help please?
[#permalink]
26 Jan 2013, 22:39
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