1099-misc and small business returns 1. what you need download: // email
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1099-MISC and Small Business Returns
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What you need
• Download: http://www.irs.gov/pub/irs-pdf/p4012.pdf• Email for hard copy: kandrews@enterprisecommunity.org
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What to Expect• Working part-time for an employer outside the
home.o 1099-MISC, line 7
• Working Part-time for an employer in your own home.o 1099-MISC, line 7
• Small business owner: In-home daycare, Service person, Home delivery newspaper carrier, etc.o Cash receipts and/or1099-MISC, line7
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1099-MISC• Box 3 and 7• Expenses
o Mileage• Commuting vs. business travel
o Necessary tools or supplies
• Link to Schedules C and C-EZ• Self employment tax
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Out of Scope for VITA• Expenses exceeding $10,000• Business use of home• Vehicle expenses reported as actual expenses• Depreciation• Net losses• See Publication 4012 for full listing
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Small Business Scenario 1
Advanced Topic• Anna is employed as an editor, she works from
home and was paid on a 1099-MISC• She kept a record of all expenses:
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Expense Item Cost
Printer Paper $ 525.00
Printer Ink $ 1,200.00
Business Cell Phone $ 350.00
Printer $ 300.00
Computer $ 1,500.00
Total Dollars $ 3,875.00
Miles while making deliveries
234 Miles
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TaxWise
Tax Preparation Software
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Linking to a Scratch Pad
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Everything Transfers to the 1040
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Ohio Self-employment Tax Credit
• 50% self-employment tax credit on the Ohio tax return.
• Line 41 on page 3 of IT-1040• 1099-MISC qualifies• Complete Ohio IT SBD form by hand• Enter the credit amount as a deduction to income
and on line 41 of page 3 OH IR-1040.• Keep the IT SBD for your records
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8,869
8,869
627
627
Ohio SBD Continued
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8,242
8,2421 0
8,242250,000
4,121
Entering the Deduction into
TaxWise
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Scenario 2• Raoul is a plumber who has his own small business and
occasionally works for a plumber friend who bills the client all charges and pays Raoul on a 1099-MISC.
• In his own business he bills the customer for the service call, labor and all the parts he uses to do the job.
• He keeps good records on his mileage to and from the customer, as well as all of his expenses.
• In general Raoul charges all his expenses for tools and supplies to his business. However, if the part time job requires a special tool he will charge it to the 1099-MISC job.
• Raoul earned $27,500 in his business, and received a1099-MISC from his plumber friend for $6,800.
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Income and Expenses• Raoul earned $27,500 in his business, and received a1099-MISC from his
plumber friend for $6,800.
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Billing Software $ 147
Paper, ink, other office supplies $ 222
Expendable supplies: sealer, solder, tape, etc.
$ 207
Pipe threader $ 500
Pipe cutter $ 325
New socket set $ 175
Soldering equipment set $ 130
Heavy duty pipe wrench – 1099-MISC job $ 137
Miles to the business 7,500
Miles working with his friend 980
Publication 17Figure 26-B
When are transportation expenses deductible?
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Small Business Scenario 3
• LaDonna is an unlicensed at home daycare provider. She earned $8,900 last year.
• She opens her entire house and backyard to the daycare children.
• Every Monday, she takes the children to the zoo and has tracked her mileage and other expenses.
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Food $ 1,200
Games, Toys, Crafts $ 650
Cleaning Supplies $ 240
Tennis Shoes (Only worn while working)
$ 90
Total Dollars $ 2,180
Mileage 320 Miles
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