Self-Employed Taxpayers

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Self-Employed Taxpayers
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Getting Started

• Obtain an employer identification number (EIN).
• Open a separate business checking account.
• Start-up expenses should be tracked separately.

3
Purchasing Equipment

• Depreciated over class life
• Most cases this is five to seven years.
• Keep accurate records.
• Maximum expense deduction
• For items purchased during 2007 - 112,000.
• Applies to new or used equipment.

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Paying Estimated Tax Payments

• Estimated tax payments are necessary if
• The tax shown on your return, less your
  withholding, is more than 1,000.
• Withholding and credits is less than the smaller
  of
• 90 of the tax on your current return, or
• 100 of the tax shown on your prior year return.

5
Hiring Employees

• For each employee you must have them
• Provide a SSN.
• Fill out at W-4.
• Fill out an I-9.
• You may hire your family to work for you.

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Home Office Calculations

• Direct and indirect expenses.
• Allocate indirect expenses between business and
  nonbusiness portions of the home.
• Multiply the indirect expenses by the business
  percentage to apply the limitations.

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Home Office Limitations

• Base the overall limitation on your net income.
• Losses do not qualify as a deduction.
• Deductions allowed in full
• Mortgage interest.
• Real estate taxes.
• Casualty or theft loss.
• If net income is zero, carry forward the balance
  of expenses.

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Starting a Retirement Plan

• You are the employer and employee
• Plans available
• SEP
• SIMPLE
• SIMPLE 401(k)
• Solo 401(k)

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Summary

• These are just some of the most commonly asked
  questions in reference self-employed taxpayers.
• Tax planning and tax return processing can be a
  confusing process. Im available to help you and
  to give you the best tax outcome possible.

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Thank you.