I know, I know. I should have asked this months ago. The problem is I started using my TT for Business software in January, ran into some confusion and started looking for an accountant in February. I have yet to find one that seemed to know the ins and outs of a small business, esp. one as complicated as photography. So today, I decided to just use my TT software, ask you guys some questions, and hope for the best. If any of you have some great federal links for some of this stuff, please let me know. I'm not looking for the "I think so" answer, I will research to find the right one, so send any resources you have my way! Thanks in advance...
ASSETS: When I got to the section about depreciating my assests, I became a little confused. I know that you can take the full deduction for your equipment in your first year of business, but is that the first calendar/tax year, or the first full year. For example, we actually purchased our business liscense in Oct. 2005, so can we take the full deduction for equipment until the end of 2005, until Oct. 2006, or until the end of the first full tax year (2006)? Also, know that whether or not you realized a profit is also taken into consideration.
SALES TAX: We didn't charge sales tax on some of our weddings (major oversight) but we still paid sales tax for all those weddings. So, can we somehow count that as a business loss, or is that just our ignorance and loss?
HOME OFFICE: We have a room that we have FULLY DEDICATED to a home office. However, it seems as though you ca't get a home office deduction if you are scheduled to get a tax refund...you cna only get it if you experience a loss. Is this correct? TT just says that you "may not" receive the deduction, but it doesn't say how to track that, and it says that we could possibly take the deduction in another year.
Ahhhhhh!!!!! That's just a smapling of my many questions, and it'ss why I was trying sooooooo hard to find a good accountant. I guess I now have 9 months to find one, so if you know any reliable ones in the Seattle area, please let me know for next time. Thanks for any help you can offer!
Airika
Full Version: Taxes!
Based on the repsonses I've received to this post (0), I decided that I might not be the only confused photographer. 
So, as I find good links/helps online, I will post them herefor you to reference as well.
http://www.wedpix.com/articles/007/wedding...apher-tax-tips/
So, as I find good links/helps online, I will post them herefor you to reference as well.http://www.wedpix.com/articles/007/wedding...apher-tax-tips/
(nate here)
Arika, I can answer the asset question for you. It doesn't matter when you started your business, the asset starts depreciation the year you purchase it. I assume you are a calendar year, correct? If so, anything you bought in 06 starts depreciating in 06. The IRS has a special rule that helps small businesses depreciate some assets faster. It is called Section 179. It basically says a computer that would normally take 5 years to depreciate (stupid, I know, like any computer is useful in this bix for 5 years) can be depreciatied all at once the year it was purchased. There is a limit to how many assets you can use this special rule on. For 06 it is 108,000. I assume you won't go over that
So in TT, you will add an asset for you business, and then it will ask you if you want it to be depreciated under Sec 179. Hopefully that helps.
For sales tax, it is not deductable because you are only acting as a collecting point for your state. For the brides you didn't charge sales on, think of it this way.... You actually did charge it but had to take it off the amount of your package and send it into the state. Think of it as just money ppassing through your hands on the way to the state. It doesn't affect you Federal taxes because it is just a pass-through. Your state tax return may handle this a different way - I can't help you much with that.
Nate
This pdf has a lot of helps....
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
This one should help you with the home office question....
http://www.irs.gov/pub/irs-pdf/p587.pdf
Arika, I can answer the asset question for you. It doesn't matter when you started your business, the asset starts depreciation the year you purchase it. I assume you are a calendar year, correct? If so, anything you bought in 06 starts depreciating in 06. The IRS has a special rule that helps small businesses depreciate some assets faster. It is called Section 179. It basically says a computer that would normally take 5 years to depreciate (stupid, I know, like any computer is useful in this bix for 5 years) can be depreciatied all at once the year it was purchased. There is a limit to how many assets you can use this special rule on. For 06 it is 108,000. I assume you won't go over that
So in TT, you will add an asset for you business, and then it will ask you if you want it to be depreciated under Sec 179. Hopefully that helps.For sales tax, it is not deductable because you are only acting as a collecting point for your state. For the brides you didn't charge sales on, think of it this way.... You actually did charge it but had to take it off the amount of your package and send it into the state. Think of it as just money ppassing through your hands on the way to the state. It doesn't affect you Federal taxes because it is just a pass-through. Your state tax return may handle this a different way - I can't help you much with that.
Nate
This pdf has a lot of helps....
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
This one should help you with the home office question....
http://www.irs.gov/pub/irs-pdf/p587.pdf
QUOTE(Amanda @ March 31 2007, 04:07 PM) [snapback]107843[/snapback]
(nate here)
Arika, I can answer the asset question for you. It doesn't matter when you started your business, the asset starts depreciation the year you purchase it. I assume you are a calendar year, correct? If so, anything you bought in 06 starts depreciating in 06. The IRS has a special rule that helps small businesses depreciate some assets faster. It is called Section 179. It basically says a computer that would normally take 5 years to depreciate (stupid, I know, like any computer is useful in this bix for 5 years) can be depreciatied all at once the year it was purchased. There is a limit to how many assets you can use this special rule on. For 06 it is 108,000. I assume you won't go over that So in TT, you will add an asset for you business, and then it will ask you if you want it to be depreciated under Sec 179. Hopefully that helps.
For sales tax, it is not deductable because you are only acting as a collecting point for your state. For the brides you didn't charge sales on, think of it this way.... You actually did charge it but had to take it off the amount of your package and send it into the state. Think of it as just money ppassing through your hands on the way to the state. It doesn't affect you Federal taxes because it is just a pass-through. Your state tax return may handle this a different way - I can't help you much with that.
Nate
This pdf has a lot of helps....
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
This one should help you with the home office question....
http://www.irs.gov/pub/irs-pdf/p587.pdf
Arika, I can answer the asset question for you. It doesn't matter when you started your business, the asset starts depreciation the year you purchase it. I assume you are a calendar year, correct? If so, anything you bought in 06 starts depreciating in 06. The IRS has a special rule that helps small businesses depreciate some assets faster. It is called Section 179. It basically says a computer that would normally take 5 years to depreciate (stupid, I know, like any computer is useful in this bix for 5 years) can be depreciatied all at once the year it was purchased. There is a limit to how many assets you can use this special rule on. For 06 it is 108,000. I assume you won't go over that
So in TT, you will add an asset for you business, and then it will ask you if you want it to be depreciated under Sec 179. Hopefully that helps.For sales tax, it is not deductable because you are only acting as a collecting point for your state. For the brides you didn't charge sales on, think of it this way.... You actually did charge it but had to take it off the amount of your package and send it into the state. Think of it as just money ppassing through your hands on the way to the state. It doesn't affect you Federal taxes because it is just a pass-through. Your state tax return may handle this a different way - I can't help you much with that.
Nate
This pdf has a lot of helps....
http://www.irs.gov/pub/irs-pdf/i1040sc.pdf
This one should help you with the home office question....
http://www.irs.gov/pub/irs-pdf/p587.pdf
Thanks, Amanda!
That is helpful...I also make my husband do some research for me and he printed off a bunch of stuff, so hopefully we're on the right track now. Thanks!
QUOTE(Airika @ March 31 2007, 04:34 PM) [snapback]107852[/snapback]
Thanks, Nate!
That is helpful...I also make my husband do some research for me and he printed off a bunch of stuff, so hopefully we're on the right track now. Thanks!
That is helpful...I also make my husband do some research for me and he printed off a bunch of stuff, so hopefully we're on the right track now. Thanks!
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