Live chat transcript: CPAs answer personal and small-business tax questions
A Roth IRA conversion increases your taxable income for a year and, as a result, may temporarily disqualify you for some tax breaks. Credit: iStock
A panel of certified public accountants from the New York State Society of CPAs answered Newsday readers' questions about personal and small-business taxes in two separate live chats for the 2013 tax season.
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.
Jack Angel
http://www.tax.ny.gov/pit/credits/college_tuition_credit.htm
5:57
Moderator: Welcome to Part II of Newsday's live tax chat. We will focus today on small business tax questions, but please submit any of your tax questions and our CPAs will do their very best to get you the answers you need!
5:59
Ruth A. Sattig Betz, CPA: Hi, my name is Ruth A. Sattig Betz, CPA. My office is in Farmingdale, NY. I have over 25 years of experience and have a masters degree in taxation from LIU-CW Post.
6:00
GARY GOLDBEERG CPA: Hello, My name is Gary Goldberg. I am a CPA with offices in Bellmore and Great Neck. This is the second year that I am on the Newsday Tax Chat panel. I have been in practice for 30 years and have taught taxation at Queens College in the 2000's.
6:00
Lisa Haynie,CPA: Hi my name is Lisa Haynie. I am a CPA and work for Katz Bernstein and Katz, LLP in Syosset as a tax specialist. I am the President of the New York State Society of CPAs Nassau Chapter.
6:00
ELLIOTT LAVIETES CPA: Hi my name is Elliott Lavietes, CPA . I am a Tax Director at Sanders Thaler Viola & Katz
6:00
Scott Sanders,CPA: Hi, my name is Scott Sanders, CPA ,managing partner of Sanders Thaler Viola & Katz LLP, CPA's & Advisors and President-elect of New York State Society of CPA's-Nassau Chapter and started practicing in 1980
6:00
Simon Hector CPA: Hi, my name is Simon Hector. I am a CPA with WeiserMazars, LLP. I provide Audit and tax services to small and Medium size cients. I am a member of the NYSSCPA tax Committee.
6:06
Comment From Al: I own a rental property with someone else at 50% each. As of June 2012 I'm 100% owner since I bought the second 50% of the property. Where can I claim the cost and is it better to add it to the old depreciation cost or set up a new one? Thanks
6:06
Lisa Haynie,CPA: Al- You should set up a new asset on Form 4562 for the additional 50% purchase. This should be depreciated since it is rental property over 27.5 years. Remember to carve out the land. That is not depreciable.
6:07
Comment From Scott Welikey: If I visit clients on my way to (or coming home from) the office is it considered business or commuting mileage?
6:07
Scott Sanders,CPA: If you are "on your way home "that is considered commuting mileage and is not deductible.
6:08
Comment From John: There was an error made by my employer, overpayment to me in 2011. In 2012 I reimbursed my employer for the entire gross amount of the check per their request, not the net amount. They instructed me to file an amended return for 2011 however I have not received a corrected w-2 to file? Is my employer required to issue me a corrected w-2 or other some other documentation to allow me to file an amended return?
6:09
GARY GOLDBEERG CPA: If the company is telling you to file an amended return, then they should issue you an amended W-2 for 2011. When you file an amended return you have to attach documentation to substantiate the change in your return. That documentation is the corrected W-2. If the company isn't going to issue a corrected W-2 for 2011 then they should have adjusted your payroll for 2012.
Your options are really being controlled by your employer.
6:09
Pamela Diamond: Hi, my name is Pamela Diamond. I'm a CPA at Pamela Diamond ,CPA in West Hempstead and the founder of Creative Wealth Builders, LLC,
6:10
Comment From Guest; I'm a business owner and file a Schedule C. I paid my accountant more than $600 in year 2012. Do I have to issue him a 1099Misc?
6:10
Ruth A. Sattig Betz, CPA: Yes, you need to issue him a 1099-MISC. The 1099-MISC and 1096 must be mailed to the IRS no later than February 28, 2013.
6:11
Comment From Bob Cooper: I have a small S Corporation that had a line of credit for $50k. I declared personal bankruptcy this year, which wiped out the line of credit. Is this taxable to the S corporation?
6:11
Simon Hector CPA: Given that you have a S Corporation, the income from Discharge of indebtedness will flow through on form K-1. If this is your only source of income it may or may not taxable. It will excludable if you are deemed insolvent.
6:14
Comment From Guest: My parent owned a 2 family house they lived in (and rented out 1 apt.) for 30 years before they passed. My sibling and I inherited the property when they passed away a few years ago. We haven't been able to sell it yet so we've rented it to tenants to offset expenses. We file a Schedule E and split reporting of all income and expenses. We've had repairs and improvements done in 2012. Do the individual contractors who provided services need to be issued a 1099Misc.?
6:14
ELLIOTT LAVIETES CPA: yes the individual contractors need to be issued a 1099 misc provided dollar amount is at least $6oo per individual who performed the services
6:15
Comment From SB: I have received distributions from MLPs. After my full basis is received, how are are additional distributions taxed?
6:16
Comment From Guest: I am a retired federal employee (Civil Service Retirement System) receiving monthly distributions (Rmds) from the government Thrift Savings Plan. What portion if any is taxable by New York State?
6:16
GARY GOLDBEERG CPA: Your Federal Pension is exempt from NYS/NYC income taxes. However, if you are tataking distributions from a deferred compensation plan (403(b) or 401(k) or 457) the portion of the payment that exceeds $20,000 will be taxable to NYS/NYC
6:16
Comment From Guest: I'm the trustee of several trusts my parents established. Do I need to issue the accountant a 1099Misc.for services rendered in 2012?
6:16
Pamela Diamond: If you paid the accountant less than $600 for the year, then no Form 1099 Misc is required. If the accountant works for an LLC or a professional corporation, then you also won't have to issue a Form 1099 Misc, regardless of how much money they received. Finally, if the accountant is self- employed ( a sole proprietor) and also earned more than $600 during the year, then you are required to issue a Form 1099-Misc
6:19
Scott Sanders,CPA: I have received distributions from MLPs. After my full basis is received, how ar[...]e are additional distributions taxed?
All income from a MLP is taxed through a K-1 and the type of income that flows through depends on the source of income derived from the partnership--i.e cap gain, ordinary income, etc.
6:20
Moderator: The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.
6:23
Comment From Joanne: I file on 1040ez or 1040a. Â I earned less then $7,000 for the year but did receive an education scholarship of $2,500. Â This amount is from the college itself and comes right off the tuition costs. Does this count as income to me and get taxed? Â If not How do I show this without adding it to my income?
6:23
Pamela Diamond: Don't worry, scholarship money received from a college or university is not taxable income. If you received a Form 1098 T, then the scholarship proceeds should be indicated on the form. It is not necessary for you to show this amount on your tax return
6:25
Moderator: As a reminder, our CPAs will prioritize questions about small business taxes today, but please feel free to send in any questions you have, even that have to do with personal taxes, and we will try to get them answered!
6:25
Comment From ST900: As a small business owner who's thinking of moving, any particular other states I should be scoping out? Would it be advantageous to just move to NJ or CT?
6:25
ELLIOTT LAVIETES CPA: It depends on how you are structured for tax purposes-states have different rules for LLC's, S corporations. Also, lower income tax rates in Connecticut and N.J could be offset by other taxes that one must consider before moving. Ned much more information to properly answer your question.
6:26
Comment From SBLI: In your experience, what is the most common deductions people miss in their returns?
6:26
GARY GOLDBEERG CPA: Most common deductions missed are (1) Last year's state income taxes paid with the filing of their 2011 tax return (2) transportation to and from medical appointments - it is $.23/ mile plus parking and tolls. (3) fees for IRA's, brokerage fees and (4) charitable travel - $0.14./ mile.
6:27
Comment From ChocMousse: I car pool some evenings and sometimes I pay for part of the gas. Is that tax deductible?
6:27
Scott Sanders,CPA: It depends--if there is a busines purpose for this travel then it could be considered deductible,otherwise if this carpool is for a personal reason then it is not deductible.
6:30
Comment From EG: I'm self-employed. What is the deadline to send me form 1099-Misc? Is it Feb. 1st like the W-2 form?
6:30
Ruth A. Sattig Betz, CPA: If you are providing a service, you should have received form 1099-MISC by Feb. 1st from your customers. Your business is also be required to issue 1099's for services, such as your accountant or lawyer, that your business paid over $600 in 2012. In addition, if your landlord is not a corporation, your business is required to issue a 1099 for the rent paid in 2012. If your business is required to issue 1099's, you must mail the 1099's along with form 1096 to the IRS by February 28, 2013.
6:32
Comment From PaulieWalls: Hi. Sometimes I get my employees lunch or snacks, such as cannolis. We don't really meet for anything, but it's something nice to do for them. Is that tax deductible?
6:32
ELLIOTT LAVIETES CPA: No- has to be a business purpose for buying items such as lunch. You need to document business purpose, If you pay for things such as lunch, dinner, so they continue to work tand not leave the office, then such expense could possibly be deductible,
6:36
Comment From Sander: I have a frequent customer who always pays in cash. It's usually small amounts, but I know the IRS notification threshold is $10k, and yearly this person pays more than that. Am I obliged to report the person or does that just apply to single transactions over $10K?
6:36
Pamela Diamond: The obligation to report cash transactions over $10k relates to amounts paid in a single transaction.
6:38
Comment From Anders: Hello! Getting office supplies in my company is many times a hassle. So once in a while I buy office supplies on my own. Can I deduct those? I don't really need them and they're not that much money, but it's just the principle of the whole thing. Thanks!
6:38
Simon Hector CPA: If it is for the business, then it is a business deduction. You should take the deduction and keep the records.
6:40
Comment From 66skidoo: I heard somewheres that if you file early you stand a higher chance of getting a tax audit (all things being equal) than if you file your taxes by the April 15th deadline. Is this true?
6:40
Scott Sanders,CPA: IRS hires additional staff during the peak season--Feb 1 to April 15, which allows for IRS to choose from this tax return pool and audit these tax returns because they are staffed for this. If you go on extension chances drop down that you would be audited beause IRS is not sufficeintly staffed after April 15.
6:40
Comment From MMapes: I usually do turbotax, what's the advantage of paying money to one of you -- do you definitely get more money back for people than turbotax? also, what about independent CPAs vs. like an H&R Block, i assume it costs more, what benefits are there?
6:40
GARY GOLDBEERG CPA: As a former professor of taxation, I allowed my students to use Turbo tax. I found the computer only helped my students to make errors quicker. H & R Block usually employs non-accounting personnel who get 9-15 hours of training. As returns and tax laws get more complicated greater knowledge and expertise is necessary. It depends on the complexity of your return. My experience has also shown that H&R Block fees could be higher than a CPA.
Just like physicians, a general practice MD is ok for a cold or sore throat but I think you would want a cardiologist for chest pains and an orthopedist for a broken leg.
6:41
Comment From LarrySeaford: Are there some key changes from last year's taxes i need to be aware of, i'm planning to sit down this weekend to start mine.
6:41
ELLIOTT LAVIETES CPA: For 2012, individual tax return rules have not really changed much-there is an AMT patch. The major changes are effective beginning 1/1/13-for 2013 taxes under ATRA. Also, inaddition to ATRA, be aware for 2013 there are two additional surtaxes. One is a tax on net investment income at 3.8% if a taxpayer modified AGI is above certain thresholds. The second surtax is an additional medicare increase only at the employee level-it begins when an employee's income exceeds $200K and the additional medicare tax is .09% on the excess of $200K. However, there is a threshold for single and married individuals to consider when filing your 2013 return, even though .09% tax kicks in for all at $200K
6:41
Comment From Justin: Will NYS deduct foster pet care expenses? Are race registrations considered charitable donations?
6:41
Ruth A. Sattig Betz, CPA: Foster pet care expenses qualify for a charitable deduction if you itemize on your Federal income tax return. You must keep all of your receipts and documentation of the foster pets. NYS follows the Federal law, so it would also be deductible for NYS.
Race registrations are not a foster pet care expense, so cannot be deducted as charitable contributions. Also, the purchase of raffles do not qualify as charitable donations.
6:46
Comment From Melsideshow: Hey, there. Thanks for doing this. I have a family member who owns a small business and hasn't filed a return for the last 4 years. Other than getting a good accountant, what else should he do.
6:46
Pamela Diamond: Hi Mel, Your relative should try to reconstruct the operations of his/her business for the past 4 years, using bank statements, invoices and the like. Any notices received from taxing authorities should also be gathered, and given to the accountant. NYS currently has a voluntary disclosure program, whereby you would not be charged penalties on the late payment(s). The voluntary disclosure program is not available if NYS has already contacted. Finally, try to reduce your spending, in order to have sufficient funds available, which would minimize any future interest due.
6:47
Comment From Suzie: I have a question concerning completion of Form 4684, claiming a loss due to Hurricane Sandy. I had about $40,000 worth of damage for which I received about $15,000 from insurance and FEMA, leaving me with a net loss of $25,000. The form asks for the FMV prior to event and post event. My damage was for structure, walls and flooring, not contents. Should I just make up a pre-storm FMV for my home prior, such as $540,000 and a FMV for my home after the hurricane of $500,000, so that the net loss appears as $40,000? If not, how should the data be entered? Thanks!!
6:47
ELLIOTT LAVIETES CPA: your casualty loss is limited to the lesser of your cost basis(including improvements) or the difference of the FMV of the property before the casualty and after the casualty--less insurance reimbursement received. Based upon you example, The loss would be limited to $25K . Can't make up pre-storm FMV-need support.
6:49
Comment From Melsideshow: I want to start a photography business. But I'm really afraid that if make an investment in cmaeras and other equipment, and then don't get enough clientele, the IRS may want to know why it was, proportionately, such a money loser. In your experience, is it common for an upstart that has a business on the side that closely resembles a hobby to be treated with suspicion by the IRS if the business is, percentage-wise, a big loser?
6:50
Scott Sanders,CPA: under IRS guidelines you must have a true underlying business intent when setting up a new business. You must show that you have made all the necessary arrangements to conduct yourself as a business and hold yourself out by setting up a business checking a/c, marketing to the public, etc. If you show a loss for 3 out of 5 years the IRS will scrutinize you and may deem this as a hobby loss and disallow the deductions.
6:53
Comment From Fran: Hi! I have sold some personal items on Craigslist and on eBay, but I have also sold things like socks and shirts that I have made myself, like as a business. Do I need to file taxes as a business or how do I include that on my personal taxes?
6:53
Simon Hector CPA: If you are conducting a business and you generate self employed income then you would file a schedule C which is attached to your Form 1040.
6:54
Comment From Jeanine: I recently got laid off and have the option of rolling over my previous job's 401k but I am thinking it could make a good emergency fund just in case. Is this ok? I expect to pay taxes on it but I don't know if it will require extra payments.
6:54
Pamela Diamond: Hi Jeanine. If at all possible, do NOT take the money! You should rollover the 401K to an IRA, which would enable you to control the investments within your retirement account. Once the funds are in an IRA, you can always take a premature distribution, if you must, but there are costs involved. Any distribution you take would be considered taxable income in the year that the diistribution is made. In addition to the income tax owed, you would have to pay a 10% penalty on the amount taken if you are under age 59 1/2. In the future, if you must take a premature distribution from the IRA, try to minimize the amount.
6:56
Comment From JS: I didn't earn much on sch C. Does it matter whether the 179 deduction or the home office deduction is limited? Do I lose part of the deduction?
6:56
ELLIOTT LAVIETES CPA: no --either one is carried over . However , the 179 deduction is not carried over with regard to the investment limitation rather than the net income limitation. Investment limitation -you need to acquire more than $2million in assets eligible for 179. May want to consider Bonus depreciation since there is no income limitation and claim 50% of new assets placed in service on new property.
6:58
Moderator: REMINDER: The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.
6:58
Comment From Harvey K: My daughter took out a student loan at our local bank, which I co-signed. She received a 2012 1098-T indicating the tuition expenses and her schollarship amount. I claim her on my federal and NY state returns. Can I apply for the American opportunity credit on my 2012 Federal Taxes and the tuition credit on my NYS form? Thanks
6:58
GARY GOLDBERG CPA: The college education loan has nothing to do with the education credits available on the Federal and State tax returns. There are 3 education credits to choose from: the tuition and fees deduction, the Lifetime learning Credit and the American Opportunity Credit. They are elected and only one of the credits can be used per student. Your tax professional can tell you which is the best for you.
Additionally the expenses for college tuition is either a deduction or credit on NYS income taxes. Again, your tax professional will be able to tell you whether the credit or deduction is best for you.
7:01
Comment From JS: Thanks Elliot. With bonus depreciation, could I show a loss and apply against other income?
7:02
ELLIOTT LAVIETES CPA: Yes-with Bonus can generate a loss and offset other income, provided activity that generated loss is not passive
7:02
Comment From Greg: Do the current budget negotiations over the fiscal cliff have anything to do with my taxes? Should I wait to file until they figure these out?
7:02
GARY GOLDBERG CPA: On the plus side of the threat of sequestration due on Friday, there will cutbacks to all federal agencies. Therefore, it is quite likely there will be fewer IRS auditors to peruse our returns.
7:06
Comment From John: How can I get a copy of my past years tax returns. I lost my copies and have a new tax account asking me this question. is there a web site i can go and get them?
7:06
Scott Sanders,CPA: you will need to complete a Form 4506--and for 57.00 for each year you can get a copy of your tax return or call 1-800-829-1040 and request a copy of your transcript.
7:07
Comment From Will C.: My work provides me with an iPhone that they pay for (they pay for service and data plan), but I pay for the apps it uses, which are necessary for my job. I use my own apple account because they have it set up that way that it has to be linked to mine. Can I deduct what I spend on apps as a business expense? Some of them are very expensive (medical textbooks and medical apps) so I'd like to get credit for them.
7:07
Ruth A. Sattig Betz, CPA: If the apps are used entirely for your work, the cost is deductible as a miscellaneous deduction if you itemize on your 2012 income tax return. Only the miscellaneous deductions in excess of 2% of your adjusted gross income are deductible. Employee business expenses should be entered on Form 2106.
7:17
Comment From Michael Tumino: Is there a way to account for the retroactive transit tax deduction where the IRS has now stated that although $125 was withheld pre-tax, they are now allowing $240 per month for 2012? Would this not result in a $115 reduction in my taxable income per month? How do I account for this in my current year taxes if my company has decided not to correct my W2? Thank you.
7:17
Pamela Diamond: Hi Michael. The transit check allows you to use pre-tax income to purchase train tickets and parking fees. The amount withheld from your pay for this purpose is not included in your taxable income for that year. Since only $125 was deducted from your pay, your company isn't correcting your W-2. As an employee, your commuting expenses are not deductible, the transit check is just a nice "bonus" from your job
7:17
Moderator: REMINDER: The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.
7:19
Moderator: Folks, please submit your questions to our 7 CPAs, who will do their best to answer them. We are on schedule until 8pm, so please submit any questions you have!
7:21
Comment From Gina: During 2011 my husband exercised and sold some of his employee stock options (both in the same year), as we needed the cash right away to pay for household expenses. As a result we had to pay AMT for the first time because the sale of the stick options pushed us into a higher tax bracket. We don't need to pay AMT for 2012 because our combined income no longer meets the threshold for AMT. Is any of the AMT we paid for 2011 refundable for 2012?
7:21
ELLIOTT LAVIETES CPA: There is an AMT credit . Taxpayers are permitted a tax credit against their regular income tax liability for some or all of AMT paid in previous years. Form 8801 will need to be filled out in 2012 to see if part or any AMT credit can be utilized.
7:24
Comment From Guest: I lost my house to hurricane Sandy and had to spend a lot of money to move and buy new things for my house. I am still waiting for my reimbursement from FEMA, but I am sure that it won't be enough. I have 2 questions:
7:24
Comment From Guest: 1. Do I wait until I get my FEMA check to file my taxes?
2. Am I able to get a tax credit for everything I spent that FEMA doesn't reimburse?
7:24
Lisa Haynie,CPA: I would recommend that you file for an extension for 2012 tax return which will give your until October 15, 2013 to file your taxes. Hopefully by then you will have received your FEMA check. Regardless, you do not get a tax credit for unreimbursed expenses. You can however claim a casualty loss deduction for these expenses, if certain requirements are met.
7:27
Comment From ED: What is the deadline for electronically filing 1099-MISC?
7:27
Scott Sanders,CPA: April 1,2013
7:29
Comment From Guest: i recently received my 2012 ss statment on it they listed how much i received from workers comp and ss they added these together for a total. I was always told that workers comp is on taxable it this correct
7:29
Simon Hector CPA: Generally, if you receive compensation under a worker's compensation act for personal injury or sickness it is excludable from income. However, worker's compensation payments are usually not reported on form SS. Is the reported amount for disability? I would need to know in order to answer your question correctly.
7:36
Comment From ED: What is the most tax-advantageous way for a shareholder and employee of a c-corp to take a home office business deduction?
7:37
Lisa Haynie,CPA: As an employee of a C Corp you can only take the home office deduction on your tax return as a miscellaneous deduction on Schedule A. Make sure you designate what percentage of your house relates to the home office so you can properly apportion the expenses.
7:38
Moderator: We are getting some great questions here - keep them up! Our CPAs are flipping through their materials and putting their heads together to get you the best answers.
7:39
Comment From Guest: Are financial awards won in a court case considered taxable income?
7:39
GARY GOLDBERG CPA: Financial rewards awarded from a court case are fully taxable. Punitive damages are also fully taxable. The only rewards that are not taxable are for physical injuries.
7:43
Comment From eileen: i received my 2012 ss statement on it they added my amount from workers comp and ss together I was always told that workers comp is on taxable is this correct
7:43
Comment From eileen: it is form SSA-1099 it is listed under workers comp offset and yes it is for a work related injury and it is for a disability
7:43
Pamela Diamond, CPA/PFS: The taxable amount is determined by your "basis" in the annuity. The "basis" is your cost, minus any proceeds received in previous years that were not taxed to you.
7:43
Simon Hector CPA: That is interesting. I would recommend taking the tax document to a tax professional to look at. That professional may have some additional questions then do some research. I am reuctant to comment because I would like to see the document.
7:44
Comment From John: On my statement of Survivor Annuity Paid 1099-R, I have gross distribution (box 1) of $16,464, in the Taxable Amount (box 2A) it says unknown? Can anyone help me figure out what the taxable income is?
7:44
Moderator: John - your answer, from Pamela Diamond, CPA/PFS: The taxable amount is determined by your "basis" in the annuity. The "basis" is your cost, minus any proceeds received in previous years that were not taxed to you.
7:48
Comment From June: I am thinking of starting my own business, and am right now getting together all the documents I need to register myself as a small business. Is there anything I should make sure I do or don't do during the setup process to make sure my tax situation is not problematic? I will be working out of my home office, making backpacks, handbags, and tote bags and selling them online. I don't plan to make a million dollars but I hope I can make $20,000-$50,000 a year...
7:48
Ruth A. Sattig Betz, CPA: If you did not form a corporation or an LLC, you need to go to the County Clerk and register your business. You will need to get an employer ID# from the IRS before your business can open a bank account. Go towww.IRS.gov and look for Form SS-4. You will also need to register for NYS sales tax. The registration form is available on the NYS Tax Department website. (Other states may also require that you collect sales tax on the products shipped into their state.) If you hire an employee, you will also need to register for NYS payroll taxes. You should consult with your accountant. If you don't have an accountant, you should retain an accountant now instead of waiting until next year when you file your 2013 tax returns.
You need to set up a record keeping system for your business income and expenses. You should keep all your receipts for expenses, including those expenses you pay in cash.
Your home office must be used exclusively for your business in order to take the home office deduction.
You will be subject to income tax and self employment tax. The 2013 self employment tax rate is 15.3%. You are be required to make quarterly estimated tax payments.
7:50
Pamela Diamond, CPA/PFS: An update to John's question:
There is a worksheet that can help you determine the "basis" of the annuity. It is on page 27 of the Form 1040 instructions, which can be located on the IRS website, www.irs.gov
7:51
Comment From JS: In 2013, I plan to purchase a car and use part-time (probably less than 50%) for business. How does this affect the write-off?
7:51
GARY GOLDBERG CPA: If you use the vehicle for less than 50% of the time, you cannot depreciate the car or the expenses. You have to keep records of the mileage and at present you will be able to deduct $.565 per mile
8:00
Comment From eileen: i sent it to my professional and he said it was taxable I don't see how i collected ss disability and workers comp
8:00
Simon Hector CPA: I really would have to see the document and go through a series of questions then do some research in order to give you an informed answer. You may need a second opinion.
8:00
Comment From JS: Thanks Gary. What happens in subsequent years, if the business use is greater than 50% (i.e.70%)?
8:00
GARY GOLDBERG CPA: You are not allowed to switch from mileage method to any other method even if the business usage goes to more than 50%.
8:07
Moderator: Ladies and gentlemen, thank you for your questions - there are a few our CPAs couldn't get to, so check out Newsday's full tax tips page at http://bit.ly/newsdaytaxes
8:07
Moderator: As a reminder, the certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.
Out East Show: Westhampton Beach Brew & Grille, Hallockville Museum Farm Bees, North Fork Foodie Tour, Southampton Animal Shelter Foundation NewsdayTV's Doug Geed is heading 'Out East' to showcase the ultimate local spots you need to explore.
Out East Show: Westhampton Beach Brew & Grille, Hallockville Museum Farm Bees, North Fork Foodie Tour, Southampton Animal Shelter Foundation NewsdayTV's Doug Geed is heading 'Out East' to showcase the ultimate local spots you need to explore.
