Re: Filing Individual Income Tax Returns FAQ.
 

All income and expenses generated by the business are reflected on either Schedule C (Profit or Loss from Business) or Schedule C-EZ (Net Profit from Business). Whichever one you elect to use, it must be included as part of your regular 1040.

The IRS will tax you on any profit, regardless of how much money you actually withdraw from the business. In other words, even if you leave money in the company's bank account at the end of the year (for instance, to cover future expenses or expand the business), you must pay taxes on that money. As such, you can deduct any business expenses relating to that profit -- operating expenses, travel expenses, etc.

Another important aspect you have to understand is paying self employment taxes. Self-employment taxes are equivalent to the payroll tax for employees of a business. So while an employee pays into SS and Medicare through payroll tax cuts, sole props pay them during income tax season. Issue as hand here is that employees only pay half the contribution (since the other half is matched by the employer), while sole proprietors must pay the entire amount themselves (although you can deduct half of the cost). Use Schedule SE along with your Schedule C/C-EZ and 1040.

In addition, you need to make estimated tax payments. You make these payments to the IRS and your state agency (if applicable) periodically during the course of the calendar year prior to filing your tax return. This are your general withholdings -- FICA, etc.

You can find more information here. The first year doing so may seem daunting, but it's all rather simple once you get going on it.

EDIT: As for deducting expenses, keep a well documented paper trail of your expenses.

Re: Filing Individual Income Tax Returns FAQ.
 

Thanks, circa. Your brain is a hell of an information bank.

/offtopic. What does your investment portfolio look like? Or what do you invest in currently?

Re: Filing Individual Income Tax Returns FAQ.
 

My IRA is about 20% money market (cash), 50% blue chip equities (stocks), and about 30% of investment grade credits (bonds). That credit is about 10% government, 20% IG corporates.

My regular portfolio is overweight in financials (GS, BAC, AIG) and housing (HOV, HD, WMC (this one is an REIT)), though I've been unwinding a few housing bets. HOV especially has given back some of my 2012 gains. I'm out of energy completely for the time being as I lost quite a bit of money on OXY in 2012 (after being up nearly 20% on the stock alone) and after playing around with crude futures (Israel conflict made this appealing at first).

I also have a few trades that I'm hesitant to speak about. They're set to make good gains if EUR depreciates v. the USD. So basically, it's set to make money if interest rates here rise. It's a sort of pain-trade, but if you have the appropriate stop losses and are able to withstand short term losses, the trade is pretty great.

The trap here is that once the USD starts to appreciate v. the EUR (it will happen, US economy is much stronger than EZ economy) I think a lot of people think the BRIC nations' currencies will depreciate v. the USD too and spark some crises there. Thing is, in my firm's opinion at least, the fundamentals in the BRIC nations are a lot stronger than in the past. These economies are a lot more robust than the developed economies. Not sure that's a good play -- I'm talking about shorting the real, rupee, ruble or renminbi v. the dollar).

I definitely went off tangent here.

Re: Filing Individual Income Tax Returns FAQ.
 

Haven't touched forex in awhile. But had fun shorting the Euro in '10. I haven't heard anything too appalling from the euro side that would make me short it again.

Disagreed. There won't be any significant increases in US interest rates. The unemployment graph still not looking rosy enough for helicopter Ben.

Re: Filing Individual Income Tax Returns FAQ.
 

If the LFPR holds steady or gains, then the "new norm" for reported UE Rate will be more elevated than in the past. In addition, this truer look at unemployment is headed in the right direction. This is the U6 rate:
http://research.stlouisfed.org/fred2...ate=2013-02-06

EURUSD making lower highs since 08. caught in a long term bear trend:
http://research.stlouisfed.org/fred2...ate=2013-02-06

UST10y Yield:
http://research.stlouisfed.org/fred2...ate=2013-02-06


The Fed has expressed interest in winding down QE and migrating back to a more normal monetary policy. They've abandoned a calender-approach in dealing with QE and adopted a more fundamental approach that depends on the health of the economy.

Re: Filing Individual Income Tax Returns FAQ.
 

The LFPR will be fine, yeh. Wait are you in it for the long term? 6 months + ? Are your contracts expiring within a year?

Re: Filing Individual Income Tax Returns FAQ.
 

I am confused! I talked to a couple VITA volunteers regarding amending previous taxes. they told me it's not possible!!! I just got my ssn and wanted to check if I am entitle to claim credits from the last three years. Can I amend previous tax returns??? If so, what credits can I claim??? I am single, no dependents, college student.

Re: Filing Individual Income Tax Returns FAQ.
 

Whoe has amended their taxes and has gotten their return? How long did it take?

Re: Filing Individual Income Tax Returns FAQ.
 

Hi, again, msaccountant!

I wanted to say that your thread inspired me to tackle the filing of income taxes. Last week, I sat down at the computer, and filed my taxes! Both state and federal, using the free web interface provided by the IRS and CA government.

I did claim an education credit which, as msaccountant says, won't be processed until the end of the month.

Thanks!

Re: Filing Individual Income Tax Returns FAQ.
 

Hey, I have a couple questions. I just got my SSN do I have to wait till I rescind my ITIN? If so, how long shall I wait? Will I be able to amend my previous taxes? If so, then what do I have to do? Thank you for reading this.