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Tax advice for self employment

Discussion in 'Business & Tax Advice' started by toon4u, Mar 15, 2011.

  1. toon4u

    toon4u Newbie

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    Hey Guys, Quick question

    Basically I have made a good chunk of change from online e-commerce, I work for a site, where we buy and sell virtual goods

    I made like $42-45k this year, most of payments done via paypal or Western Union, the problem is, the same self employment tax I owe like $11-12k,

    I have like no write off's because I don't even own the website, I just work side by side with the guy who does, I have a few write-offs, but not much in the big picture

    I"m kind of pissed I get screwed so badly with the 15.3% SE tax, I'm trying to figure out any way to lower what I owe.

    Worth it to claim slightly less income, because there is no way for anyone outside of myself to know how much i made via the site?
     
  2. virgiltu

    virgiltu Newbie

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    Wow good thing you only made $19k. The bad economy seem to have also affected the only business. Good luck bud. :)
     
  3. BassTrackerBoats

    BassTrackerBoats Moderator Staff Member Moderator Jr. VIP

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    Paypal is reporting income in the US to the IRS if you generate over 20K per year starting this year so you'll need to keep an eye on that.

    Getting paid by WU is pretty much not something that the IRS would trace but if you have the money going to a bank account at some point that could be traced if you are ever audited.

    One thing I should add... you made 50 grand... spend 250.00 of it on an hour consultation with a decent CPA.. that will be worth thousands to you.
     
    Last edited: Mar 15, 2011
  4. toon4u

    toon4u Newbie

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    yea, I went to H&R Block massive waste of time, paypal doesnt report to the IRS untill 2011, they didn't for 2010
     
  5. 2011nfl

    2011nfl Supreme Member

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    So, basically what you are saying, is you were unemployed the whole year, but managed to earn about $15,000 doing side jobs, and you have 3 kids that you are claiming..... Looks like your getting a few thousand back from uncle sam ;)
     
  6. toon4u

    toon4u Newbie

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    ^^^ bad and no
     
  7. kelli123

    kelli123 Newbie

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    Really, it's important to just file your earnings honestly. If you're running an online business you should be registered as an LLC or other form of business entity, that way if you get sued you're not totally screwed. When you're registered, the IRS will expect stuff from you, and even if you're an individual, an audit will make your life a pain in the ass for awhile.
     
  8. supamanjon

    supamanjon Power Member

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    money can't just magically appear in your bank acct =)
     
  9. OfftoOnline

    OfftoOnline Newbie

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    Hire a good young account to do some fancy book work for you, it's not illegitimate but things like your computer(s), desk, printing supplies, etc etc add up quickly. You can honestly knock a lot of money off just like that, among other things an accountant will show you, the amount you pay him will be lower than what you pay so even if you pay him 1k and he saves you 2k you still saved $1000 without doing anything.
     
  10. ooodaveb

    ooodaveb Junior Member

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    You should at least deduct for a home office. Even if you rent you can deduct the part you use for "office" lets say 1/5th of the total area of your place. If you use your car for any meetings you can deduct miles. Business meals can also be deducted, some have 50% deduction.

    If you went anywhere out of the state to do any type of business or meet someone potentially for business you can pretty much count that as business trip and deduct. You should not be paying 11k taxes if you only made 40k.

    Any tax person could have figured this out. I'm not sure how H&R block missed something like this.

    Cell phone, internet, computers, when you add up with your home office you could easily get to 50% deductions. Put some money in IRA. Gift your wife, sons, etc like $599 each or whatever the threshold for reporting is, just under it.

    Find a decent tax preparer and pay them like $200 or whatever they charge and you'll save at least 5k from your 11k if not more.
     
  11. toon4u

    toon4u Newbie

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    you don't get it, all I do is buy and sell virtual goods online, there is no traveling, nothing like that, i sit at my computer buy game accounts from people, list them, and resell it. Outside of office / computer expense I have jack squat

    so the taxes on $40kish for self employment is right around $11-12k
     
  12. teeniegenie

    teeniegenie Supreme Member

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    Do this ^^^ and don't believe anything else you read on this thread! You get what you pay for with tax advice but you won't believe how cheap a good accountant can be!