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I made 15k With Adsense Last Year. What's the best way to do my taxes? (United States)

Discussion in 'BlackHat Lounge' started by pickmeup, Apr 11, 2015.

  1. pickmeup

    pickmeup Registered Member

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    So for last year's taxes, i barely had any self income to report (i still don't, i know 15 isn't shit), but enough to set up a sole proprietorship for myself using turbo tax.

    This year I made some more (15k) and things aren't looking too good for me. At the moment I have no money saved up and I am wondering what to do. Last year I used turbo tax, but this year I think it would be better to go to a professional who can help me claim stuff. Can someone tell me how this works when I have no money to actually pay at the moment? Can I set up a payment plan or something?

    I know I have some stuff that I should be able to claim as business expenses (for example $$ spent on fiverr)

    Can someone give me an idea as to what I'm getting myself into? I'm going to call H&R Block and ask them what I can expect, but I'd like to ask the opinions of people here too.


    Am i fcked?? I have no money saved, mostly because of a couple of bad events plus the money I was bringing in slowing down.
     
    Last edited: Apr 11, 2015
  2. King_James

    King_James Regular Member

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    Dude, just hire a book keeper if you don't know how to do it yourself, don't mess with taxes.
     
  3. reoman

    reoman Junior Member

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    Are your taxes all paid up for last years taxes?

    Do not go to HR block! They are the worst, check yelp, city-data or ask someone for a recommendation to a good accountant.

    If you made $15k (I'll assume all profit) this year, you only need to make a quarterly payment which is due in a few days. It's a 1040 estimated payment, google it, print out the form, and mail it in with a check. I sometimes don't pay what I should in 1 quarter and make up the next quarter by paying a lot more.

    Now if by this year, you mean 2014 taxes, file an extension with the IRS (I do it every year since due to my complex taxes) and that will give you 6 months to get some money together. Though if $15k is all you made... you will barely have to pay much at that income bracket. You will also get to fill out a 1040 (profit & loss) where you can write off all your costs, hosting, contractors, ads, fiverr, etc.
     
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    Last edited: Apr 11, 2015
  4. natedogg

    natedogg Regular Member

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    Great advice! I have a full-time job and I do IM on the side. Would you file your full-time job separate then IM or combine both incomes if you were in my shoes? Also, could I file an extension just for my IM money I made last year. Thanks
     
  5. archon10

    archon10 BANNED BANNED

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    I use turbo tax and I'm a sole proprietor. I own my home though and those expenses (mortgage, PMI, association fees) can all be written off.

    Turbo Tax is easy and guides you through the process. The hard part is remembering your expenses. You can write off for a home office, any repairs you made, any equipment you bought related to work (computers, tablets, phones for me), your phone bill, your internet bill, mileage on your car, car registration and if you paid your own health insurance.

    So many things you can write off. Was $15k all you made that year? You will pay barely any taxes.

    Also, my first couple of years in freelancing, I made crap money so I had to keep what I made and got behind in taxes like a lot of freelancers do. Calling the IRS sucks because of the wait time, but all you need to do is set up payments with them. It's actually pretty easy. As long as you don't owe more than $10k, they will work with you on payments. At one point, I owed them $8k in backtaxes and I had to pay them $120/month. Thank god I paid that debt off but I'm smarter about taxes now and pay them estimated taxes throughout the year. Any w2 income also helps, because the overture you pay through regular employee taxes get applied to your 1099 payments.

    This year, I got $300 back and it felt good.

    One thing about turbo tax that sucks is now they charge you $35 to automatically deduct their fees and send you a payment to your bank account. That sucked hard cocks, so my $300 payment turned into $160.
     
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  6. natedogg

    natedogg Regular Member

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    When you write off lets say office space... do you write off the whole rent in my situation or just part of it? Also, with my regular 9-5 I would just add 1099 to that and write off expenses that I paid in 2014? Thanks
     
  7. reoman

    reoman Junior Member

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    You would file them together, so if you made $50k at your regular job and $50k online, you would pay the tax rate at $100k. You can also file an extension, it's really easy to do, there are no penalties or anything. You would just file all of your taxes together, both your regular job and the IM income. I don't know if you can file your regular jobs taxes and other income at a separate date, I'm pretty sure you can't. You should probably start making quarterly taxes on your IM income if you expect to owe more than $1,000 a year in taxes. You can either mail in a 1040 estimated form, or sign up at https://www.eftps.gov.
     
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  8. archon10

    archon10 BANNED BANNED

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    You enter the size of your work space and then turbo tax calculates the amount you can deduct.

    If you worked a 9-5, I think you won't owe anything. What were you claiming on your w2? Yourself or 0?

    Just as an example, one year I had $40k in regular w2 income and then $45k in freelancing income. I paid the IRS $800 in estimated taxes that year and cut even that year based on all my deductions. If you worked a 9-5 all year and only made $15k side income, I think you will be fine. But do your taxes on time! I made the mistake of not doing them one year (was scared like you) and had $1000 in penalties on a $4000 payment.
     
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  9. natedogg

    natedogg Regular Member

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    On my 9-5 I claim 3 for my kid, wife and myself. Great example by the way. If I paid 1200 in SEO services can I claim the whole thing or part of it? Thanks
     
  10. archon10

    archon10 BANNED BANNED

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    Well, you're supposed to 1099 the contractor, but I would claim the $1200 as work expenses. Whether this is right or not, I dont know, but they aren't going to bother you over a $1200 expense that is really an expense...you just should 1099 contractors when you pay them for your business. I suppose if they are out of the country, then you can't. That is for a tax person to answer, but yes, you can write it off. What would be the proper way to do it is something I don't know.

    You can write off fees. For instance, I work on Elance. The monthly fees and percent for escrow I pay are written off. I like Turbo Tax because they walk you through. I did need an accountant one year with an issue I had, but that was because I was involved with someone else that year and he got his identity stolen. It was a big mess.

    Claiming 3 people I'm not sure. I still think you'll be OK over just $15k, but I was in your shoes a long time ago and tried to avoid it. They will send you a letter in a few months if you don't file at all, so take it from someone who has gone through the exact same thing -- just face the music and file now. Even an extension doesn't save you from the fees if you file/pay late.

    But, I can tell you that it's not so bad if you do owe. If you have to pay them a small amount each month, it's not so bad. I owed $8k, which is a hell of a lot more than you'll owe and I only had to pay $120. You'll probably get away with like $20/month, so really not all that bad and you won't get the nasty letters. It really is better just to set up payments and learn and pay some estimated taxes during this year. I know exactly what you're going through because I've been there.
     
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  11. pickmeup

    pickmeup Registered Member

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    Thanks everybody, I can only semi read now, but I'm feeling better. Hopefully I don't owe 5k
     
  12. Bestindabiz

    Bestindabiz Regular Member

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    Well I made 25k in the U.S and 15k in Canada but didn't bother filing the Canada income because I didn't receive a 1099 and I didn't owe anything back, actually I got back like $150
     
  13. archon10

    archon10 BANNED BANNED

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    On $15k? No way. That's a third of the income. lol Unless you live in England where they tax the fuck out of people to pay for some snobby worthless queen. If you get back $1500 from the IRS normally at the end of the year, this year your return will just be $1500 less.

    If you itemize and write off everything that you can, you'll probably get a refund even with the $15k hit.


    Yep, don't have to claim good ol' Canadian income. ;) God bless Canada.
     
  14. natedogg

    natedogg Regular Member

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    Nice! I got checks from Canada with maxbounty so I don't have to claim? I just put some numbers in turbo tax and claimed half my rent for office space, seo, internet, advertising and looks like I'm getting money back. Thanks
     
  15. pickmeup

    pickmeup Registered Member

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    by this year i mean all of 2014. Jan-Dec I haven't made any payments.

    Is getting an extension a simple process, or do only certain people qualify?
     
  16. archon10

    archon10 BANNED BANNED

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    Yep, it's all a write off. And it's legit. I've been claiming a home office for 8 years now and they have never bothered me. As long as you aren't making any wild claims like "I made $15k but I had $30k in expenses." lol Just be honest (OK, I did say I donated some clothes but didn't go crazy lol).

    Canadians don't 1099 to the IRS, so the IRS doesn't know you made that money. Just like everything though, it's all in moderation. I wouldn't go make $500k from Canada and then not claim it. I don't make a whole lot from Canada, so it's not a huge deal. I made probably about $8k last year from them. I claimed $85k and live that lifestyle so it's not like I claim that and then have a million dollar home and a sports car, ya know? Just common sense.
     
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  17. BassTrackerBoats

    BassTrackerBoats Super Moderator Staff Member Moderator Jr. VIP

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    Some interesting advice you have been given above.

    If you are in the USA:

    First off, filing an extension does not mean you do not have to pay your taxes on time. They are due on April 15th; the extension, form 4868, is just to file the actual form but the taxes are due on the 15th of April.

    During the calender year in which you generate the revenue, you are required to pay estimated taxes, typically using form 1040-ES for individuals and form 940, 941 or 944.

    Not paying your taxes quarterly absolutely will cause you to incur a penalty.

    15K, not a huge $ amount but nothing to sneeze at either as there are many people that earn that for a year from their regular occupation and the $ amount is usually not something that the IRS is going to concern themselves with but screwing with the IRS on any level, and getting nailed, can haunt you for years as they will be looking at you under a microscope for a long time.

    Your only smart move would be to go to a bookkkeeper or accountant (does not need to be a CPA at this level) that specializes in small business and have them set you up. If that costs you any more than around $200.00, I would be surprised.

    Do the smart thing and spend the 2 bills.
     
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  18. archon10

    archon10 BANNED BANNED

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    I've heard this same advice a million times. But, he has w2 income like I do. He won't incur a penalty for not doing estimated taxes unless he makes a crazy amount outside of his w2 income. Yes, you need to pay estimated taxes if you do full time freelancing but if you do it on the side, your w2 taxes will very likely cover the taxes you don't spend on the side money.

    I've heard about the incorporating thing. Lots of hassle for little rewards IMO. But, I don't do much where someone will sue me either.

    As for scaring people about the IRS, like I said, he isn't the guy on their radar. Someone making $100k a year isn't on their radar. We are small potatoes compared to the big businesses that owe millions. As long as you don't make any crazy claims that throw up red flags.

    Also, writing off everything is perfectly legit. There isn't anything wrong with writing off every honest expense that you have. I've been doing it for 8 years. It's totally legit to take back every expense you can think of.

    I always see these posts trying to scare the shit out of people who claim everything. I know someone who deliberately got caught defrauding them. They got a letter for the money owed, they paid it, and they never had a problem since then (also never defrauded them either). So, no, they don't harass you or audit you every year. That is very old school rumors that used to happen decades ago. It's not like that anymore. Even when I owed them, I called, set up payments and that was it. They never harassed me or gave me a hard time.
     
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  19. BassTrackerBoats

    BassTrackerBoats Super Moderator Staff Member Moderator Jr. VIP

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    I'm not trying to scare, just give the real scoop.

    If you pay less than 90% of the taxes due in the calender year it is due, there is a penalty whether you have a W-2 job or not. There are some variables like if it was your first time or the actual dollar amount owed but that is the law.

    Like I said above, the $ amount is usually not something that the IRS is going to concern themselves, but I would not screw with the IRS and would never recommend anyone else do it.

    As to them not auditing you after an offense, usually they will not audit you, but they will look at your returns differently and in a much closer manner. That is a sure fire fact coming from someone that has family that works in the Federal Building at 400 W. Bay St.

    They will almost always allow you to make payments but you'll be paying interest and penalties... the smart thing is to pay the couple of dollars to a bookkeeper/accountant, get set up and not have to deal with any of that.
     
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  20. archon10

    archon10 BANNED BANNED

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    Right, you need to pay a majority of your taxes by the end of the quarter. That is true, but when you have w2 income, the overture you pay and normally get back at the end of the year is basically paying that majority by the end of the quarter. He will not incur a penalty as long as he keeps his freelancing income at the same amount as his w2 income. The w2 income will compensate for the taxes he didn't pay on the freelancing income.

    Your family will tell you that some dude making barely any money isn't really what the IRS wants to target. It's not worth their time to hassle some poor shmuck over some low cost back taxes. Obviously, you don't want to defraud them and send red flags.

    And yes, I did mention that I paid $1000 on a $4000 bill because my first year freelancing I wasn't making anything and I did it full time. But, I will also say that it's not the huge hassle people make it out to be. The hardest part was the wait time on the phone call. That part sucked because I sat in the queue for an hour. After that, I explained that I couldn't pay, they asked me what I could pay, and they let me pay that amount. It's not really a huge hassle.