The IRS Deductions Blog

Archive for November, 2010

Question: Estimated tax, do I have to base it on net profit or income? If I itemize for profit …?

(i.e. my income minus rent, food and travel because I stay and work in a city more than 50 miles from my hometown, for 6 months in 2010) then can I still use standard deduction when I file my 1040 for 2011 with my wife ‘married filing jointly’ ? IN that case, will my portion of the income in the 1040 be the net profit? I am on a 1099 and my wife is on a W2. Thank you to everyone who answered my last question…

Answer: Yes your net profit from the schedule C will end up on the 1040 tax form page 1 line 12 and will be added to all of you and your wife’s worldwide gross income and be subject to income taxes at your marginal tax rates after the income tax return is completed correctly.
If you are a self employed taxpayer then you are responsible for all of your own FICA self employment taxes of 15.3% plus any income taxes on your net profit from your business operation at your marginal tax rate.
You will need to report that income, and any related expenses, on Form 1040, Schedule C, Profit or Loss from the Business operation, or you may qualify to use Form 1040, Schedule C-EZ, TO determine your Net Profit from the Business operation. You will also need to use the Form 1040, Schedule SE, Self Employment Tax form to compute and report your social security and Medicare tax on the net profit from the business operation.
For instructions and forms go to the IRS gov web site and use the search box for publication 334 Tax Guide for Small Business a very good place to start with examples
Publication 463 Travel, Entertainment, Gift, and Car Expenses
Use the search box at the IRS gov web site for Small Business and Self-Employed Tax Center
Filing Season Central is your one stop assistance center for filing your business returns. This includes Highlights of Tax Law Changes, Tax Tips, and more.

Items on Amazon Right Now for Standard Deduction For 2010:

Premier Renewable – Recommended Winding Up and Reconstruction

Premier Renewable – Recommended Winding Up and Reconstruction

Davos Annual Meeting 2010 – Rethinking Compensation Models

Items on Amazon Right Now for Sir Versus Deductible:

6/23/09: White House Press Briefing with President Obama

Question: Is a capital loss carry over applied to deduct income when filing taxes considered a tax credit?

Reason I ask is I’m planning on not itemizing for 2008 next year and I have capital loss carry over to apply however. I want to take the standard deduction and also use the carry over. Can I still do that even though I’m not itemizing?

Answer: A capital loss carryover is NOT an itemized deduction. It’s an above the line adjustment and applies whether you itemize or not. You do need to file Form 1040 to take it but itemizing or not itemizing isn’t a factor.

And no, it is NOT a credit, just an adjustment that reduces your AGI and therefore your taxable income.

Items on Amazon Right Now for Standard Deduction 2008:

Matrix Alt.Inv.Strat – Feeder Fund Structure

Matrix Alt.Inv.Strat – Feeder Fund Structure

Mario Diaz-Balart offers Property Tax Relief

Items on Amazon Right Now for Irs Deductible Mileage Rate:

IRS announces 2011 standard mileage rates

The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Tax Tips & Advice : How to Deduct the Cost of a Vehicle Used in Business

Question: When it comes to health insurance, should you go with the lowest deductible?

My husband and I are both in school and he works part time, I work full time. Im setting up my benefits, but I dont know what to do about the medical stuff. We are trying to save money (school expenses) so what would be the best to go with? We dont visit the doctors often, however its nice to have the insurance if an accident happens or sicknesses. What do you think? How can we get good coverage but not pay a fortune?

Answer: I am like you, I rarely (if ever) go to the doctor, however I also do not want to be liable for the rest of my life financially should something happen and land me in the hospital. I actually risked it and couldn’t afford insurance for quite some time, then I found Ameriplan which isn’t insurance but actually a discount health plan organization which I have been with for 2 years now.
You can take a look at the plans, etc. at http://www.mybenefitsplus.com/cberney

I have since also enrolled with a high deductible insurance plan which keeps my monthly fees lower and yet is in place should something major come along. You can find plans with deductibles around $5000-10,000 and granted it won’t really come into play except for something huge, but I use the Ameriplan discounts along side with it all throughout the year for any doctors appointments I may need or even dental cleanings, etc.

Hopefully this will help you out a bit and let me know if there is anything else you would like to know and I will see if I can help at all.

Good Luck!

Items on Amazon Right Now for Deductible Benefits:

Insurance change for St. John schools

L’Observateur RESERVE – Faced with a 17-percent increase in employee health insurance rates from former provider Blue Cross/Blue Shield, the St. John the Baptist Parish School Board was forced to choose between the option of reducing benefits or increasing spending.

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