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Side Jobs and taxes

1,844 Views | 8 Replies | Last: 7 yr ago by lotsofhp
lotsofhp
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AG
I've started doing some small home repairs on the side for extra money. Lately there has been quiet a bit of work.

I am very tax dumb. I am used to just taking my W2 along with all my charitable giving statements, mortgage interest statement and what not to the tax guy my family uses and he takes care of everything.

What do I need to be doing to make sure I'm square when it comes to taxes?

Do I just need to keep up with how much I've charged and how much I've spent on materials and give that all to my tax guy? Or is there more to it than that?
aggiesq
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if you already have a tax guy, talk to him. he'll be able to walk you through additional deductions you may be able to take beyond the materials, and that'll help determine records to keep.
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combat wombat™
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Definitely talk to your accountant. However, you might want to look into the QuickBooks self-employed app. You can use it to invoice your customers. You can also use it to track your expenses, including your mileage.

For 2016, you will need:

1. Cash receipts from your customers, your gross income.

2. Expenses related to the production of that income. This would include materials, any contract labor, and business miles you put on your vehicle. You might also have business insurance that you would want to deduct.

As someone previously mentioned, you may have sales tax reporting obligations.

If your tax guy doesn't help you with tracking that sort of thing and you need help, send me a PM or leave a message on this thread and I'll get in touch with you. I can help with that sort of thing.
Aggiehunter34
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S
Side job? What side job?
62strat
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'I have a tax guy, and I have some tax questions about my side business'

Goes to Texags.

What is the thought process here?!?!?
lotsofhp
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62strat said:

'I have a tax guy, and I have some tax questions about my side business'

Goes to Texags.

What is the thought process here?!?!?



Yeah, I know it sounds dumb and I'm going to make an appointment with him. He's just a really busy guy and I thought I'd get yalls take.
combat wombat™
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You should have been talking to him about this in December or January. He's really busy now because he's working on everyone's tax returns. He doesn't like that he's going to have to figure out accounting for your schedule C.
BadAzzBohemian
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Hmmm.

You should keep very accurate records on income generated, material and mileage and any other expenses. Any expense over $75 needs a receipt. Mileage expenses require a detailed mileage log. This will enable your business profits to be calculated and reported on a Schedule C.

You may want to file for a dba (doing business as) at the county you live in and open a separate bank acct for your business to separate it from personal accounts. I would recommend some think like Xero or another light online bookkeeping app to keep track of invoices and expenses... otherwise, just keep up with it in a spreadsheet.

Depending on what you are doing and assuming state of Texas... materials, services, mileage reimbursement could fall under one of the state labor sales tax categories if you charge separately for materials. These are likely due monthly, quarterly or annually on the 20th of the month following the close of the period. If you pay sales tax at retail, that covers the material.

You likely need to file for a sales tax ID if you have not already done so. I would recommend getting a number asap if you continue to do business. How to handle sales tax owed for last year is between you, your accountant and the state of Texas.

Unless you maxed out your social security at your primary job, you would likely owe 15.3% self employment tax (social securiry and and medicare) on your profits.

You would also owe federal income taxes on profits at approx 20% rate.

Yes giving all this info to your tax accountant is all you need to do.

If you paid at least 90% of the federal income tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller, you do not get penalized for underpayment provided you file on time.

Don't sweat it. Not that big a deal as long as you know how much you were paid and how much your expenses were.
lotsofhp
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I would like to nominate that as most helpful TexAgs post ever. Thank you for your time sir, I really appreciate the advice.
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