Taxes w/ part-time job

[toldey]

Hi all,

I am young, naive and a bit new to this wonderful world of freelance. I am currently an employee at an two art galleries as a part-time employee for both. I receive paychecks every month for that, however, only one of the galleries has in the books. My other income comes from doing occasional freelance. My question is: where do I begin in terms of filing for this? I do have an EIN number now since November so I am technically a sole proprietor. I have kept receipts since getting the EIN, have invoices all filed away and will have tax forms from both of my jobs shortly. What are the necessary steps to claiming camera gear and deducting what I owe to IRS and also potentially getting a refund?

Thanks so much,
Tony

[funlovincamera]

Tony, you really need to talk to an accountant. Everyone has a different situation so any comments you get on here are very unlikely to be relevant to you. Aside from your EIN (which is federal), you may or may not need tax IDs for CT and MA. You may or may not need to declare your income and/or file returns with both CT and MA depending on where your place of business is located, where you reside, and where you earned the income. Good luck.

[huntersdad]

Tony, If I am reading this correctly, you work part time for 2 different galleries, one who has you listed as a paid employee and the other who does not. I will assume this means your tax paperwrok wil consist of a W-2 from the employer who has you on the books and a 1099-MISC from the other.

The W-2 is pretty standard, nothing you can do there. However, for the other, here's what you can do. By receiving a 1099-MISC, you are considered self employed, meaning you owe income tax AND self employment tax, which you likely didn't pay. You should be able to claim depreciation of your equipment (likely over 3-5 years) againist your 1099 earnings but no more (more likely, much less). You can also deduct any costs of doing business, such as advertising, developing film, travel expense and so on, provided they are not paid by your employer.

I am a CPA. However, not being familiar with your area and their laws, you should consult someone in your area that does taxes PROFESSIONALLY. J. Smith who happens to have a tax program is not who I'm talking about. Talk to someone knowledgeable.

[toldey]

huntersdad - You are reading it correctly. W-2 has been submitted for taxes, I will receive a 1099-MISC like you said. That's good to hear that I can claim my expenses to make up for the income tax I didn't pay from the other gallery job. My only question is: how should I go about submitting all of my invoices? I don't make that much off freelancing but decent enough I suppose. I have been told that some of the jobs are low enough where I shouldn't worry about it but that's from people who are trying to avoid things. I don't want to go that route so I would like to know the best road to go down. I apologize for my bad questions.

Thank you though, I will definitely talk to someone about it. I usually send all of my tax forms to my parents who in-turn go to their accountant who takes care of it all.

[pitrow]

Take this with a grain of salt because I'm certainly no tax expert, but you don't "submit" your invoices. Your income and deductions from your freelancing gets reported on Form 1040, Schedule C (Profit or Loss from Business [Sole Proprietorship] ) which then gets carried over to your personal 1040 return.

Also, you should look into tax laws, because depending on what the second gallery is having you do, it may be illegal for them to treat you as independent contractor (which the 1099-MISC implies) if certain working conditions aren't met.

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

[Fernando]

7 years ago I made the same mistake you're making right now. Do not ask photographers a tax question.

My mistake is costing me $4K this year.

-F

[doubledragon]

I've asked this before, and people always say: "ask an accountant"

ok, new question:
how did y'all find a good accountant? I've got one but am not happy with her, she doesn't offer any good advice when I ask questions about what I can write off and how much is acceptable.

The reason I keep going back there is because she does my taxes for $50 which seems like a deal.

[huntersdad]

Double, you have mail.

Now for a public answer: There is a differnce between an accountant and a CPA.

Most "accountants" have some tax knowledge, buy Turbo Tax, do some tax returns and maybe keep up with accounting changes. Typically, fees for an accountant to do you taxes is in the $50-100 range.

CPAs, on the other hand, are required to take CPE every year to maintain their knowledge level, use very high end software programs and do very detailed and intricate tax returns. YOUR personal tax return probably does not fall into this category. CPAs will cost considerably more.

Now here's the difference: A CPA, in most instances, can look at your financials and make recommendations of improving, reducing or growing your business. The street corner accountant can not because they don't know what to look for. You get audited (Sch. C filers get audited moe than any other filer) and that CPA just became very valuable, as they will represent you to the IRS. The accountant - not so much.

If you own a business, you need a CPA. If you want to grow your business, or find other areas to market to, or prepare financially, you need a CPA. If all you want is someone to do the family taxes, including your Schedule C (please reread the above paragraph), then by all means find yourself a cheap accountant. BUT CYA in case the IRS comes calling.

[shomat]

I'm independent and draw income from a wide variety of sources. Here is my tried-and-true method of getting my taxes done:

1. Gather all my income-related documentation and receipts.
2. Give it all to an account.
3. Write checks to the government.

$50 is nothing for an accountant, especially if your taxes are more complicated that the run-of-the-mill 1040. Spend a little more money if you want better service.

[tgara]

The reason I keep going back there is because she does my taxes for $50 which seems like a deal.

LOL! $50? You've got to be kidding! The adage that you get what you pay for applies here. I pay ten times that to my CPA and it is worth every penny. And keep this in mind:

https://www.fbo.gov/index?s=opportunity&mode=form&id=8d3b076bd4de14bbda5aba699e80621d&tab=core&_cview=1&cck=1&au=&ck=

With this situation, I suggest using something more than TurboTax.

As for referrals, ask one of your friends with a few bucks or your parents who they use.

[Fernando]

Double, you have mail.

Now for a public answer: There is a differnce between an accountant and a CPA.

Most "accountants" have some tax knowledge, buy Turbo Tax, do some tax returns and maybe keep up with accounting changes. Typically, fees for an accountant to do you taxes is in the $50-100 range.

CPAs, on the other hand, are required to take CPE every year to maintain their knowledge level, use very high end software programs and do very detailed and intricate tax returns. YOUR personal tax return probably does not fall into this category. CPAs will cost considerably more.

Now here's the difference: A CPA, in most instances, can look at your financials and make recommendations of improving, reducing or growing your business. The street corner accountant can not because they don't know what to look for. You get audited (Sch. C filers get audited moe than any other filer) and that CPA just became very valuable, as they will represent you to the IRS. The accountant - not so much.

If you own a business, you need a CPA. If you want to grow your business, or find other areas to market to, or prepare financially, you need a CPA. If all you want is someone to do the family taxes, including your Schedule C (please reread the above paragraph), then by all means find yourself a cheap accountant. BUT CYA in case the IRS comes calling.

Dead on.

When I said accountant in my response I really did mean CPA.

My wife and I have two things that cause us to never even look at TurboTax or those $59.95 tax services.

1. Her income. The bad that comes with being in her percentile is that you need every bit of help you can find while still being 100% audit resistant.
2. My rental property. It was known as my house when I bought it and now is a rental.

We love Amanda the CPA. At only $300 this year her services are truly a steal.

Back to the second question. Get referrals. Got a buddy who's a high net worth type? Know someone who's already running a business? WIth these types of services you'll get some honest feedback from folks.

-F