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Ask the CPA 2016

2,143 Views | 21 Replies | Last: 7 yr ago by gigemhilo
Burdizzo
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AG
In addition to my normal job, I did some freelance consulting on the side in 2016. I billed my time and mileage to my client at the 2016 IRS rate. However, he has not yet paid my invoice. Can I deduct the mileage as a business expense?
gigemhilo
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AG
Do you have other freelance consulting income?

I would wait and deduct it against that income (mainly to avoid SE Tax) unless you had other consulting income you were reporting in this year. Also, taking an expense like that without any income to offset it will raise some eyebrows.
Burdizzo
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AG
No other consulting income. This client has not paid any invoice yet (mainly because this venture is highly speculative and i understood the risk when I agreed to help him). I was just wondering if I should try to deduct the mileage now or defer it until I actually got paid (if ever).
combat wombat™
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AG
As a cash basis taxpayer, you can deduct the expense when incurred... IMO. The IRS could disallow it in a future year if you choose to wait to deduct it when you have income. However, I would consider the amount of the deduction because, as previously stated, a schedule C with a loss may open you up to additional scrutiny. I'm not saying that you wouldn't Prevail, but do you want to deal with the hassle for a small deduction?
tedinorbit
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I was insured through my employer on a high deductible healthcare plan in 2016 and maxed out an HSA, $3350. I then found out in January my parents were covering me on their health insurance without my knowledge. I am now in in the process of having the contributions by both me and my employer removed from the HSA. In addition, I invested the funds while they were in an HSA and they grew another ~$300 over the year. How should I mark these investment gains on my taxes? What IRS forms do I need to fill out to resolve this? Thanks in advance.
histag10
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AG
Someone mailed a 1099 REALLY late. I have already filed my taxes. Do I need to amend them, or can I just claim this next year as unreported income from the previous year?

BigPuma
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Or you just check the accrual method of accounting on the Schedule C and go about your merry way. It is a thought.
BigPuma
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Assuming it is greater than $100, you will receive a matching notice if you do not show on the year in which earned. IF this is non employee compensation, this is a perfect reason why you should keep track of your earnings and report them regardless if you receive a 1099 or not.

histag10
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BigPuma said:

Assuming it is greater than $100, you will receive a matching notice if you do not show on the year in which earned. IF this is non employee compensation, this is a perfect reason why you should keep track of your earnings and report them regardless if you receive a 1099 or not.




Greater than $100. I guess I will just go ahead and amend and send a check. Thanks.

Typically keep track of it, this was just one we forgot about.
gigemhilo
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Agree with BigPuma on the extra 1099.

The HSA one is a tough one. I am not sure what to do about that as there are about 12 ways it could go. It all depends on how it was reported to you in the end.
combat wombat™
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AG
The notice you get from the IRS will include a "bill" for the additional tax owed. You can wait for that and pay then. Amending is better, but don't pay your CPA $500 to do it.
combat wombat™
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BigPuma said:

Or you just check the accrual method of accounting on the Schedule C and go about your merry way. It is a thought.
Get out of here with your logic.

histag10
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combat wombat said:

The notice you get from the IRS will include a "bill" for the additional tax owed. You can wait for that and pay then. Amending is better, but don't pay your CPA $500 to do it.


I'll likely amend while I'm expecting it/before I forget and get surprised with the bill. We have simple enough taxes that we dont pay for a CPA, we typically just use TurboTax I think. Nothing too extravagant with our finances.
combat wombat™
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AG
You'll save money on interest and penalty by paying now.
dubi
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Son #1 is a Houston cop. He received two w-2's (HPD and Army for national guard).

Also received $1,800 on a 1099-misc for side security job and they marked box 7 "nonemployee compensation". Should that small amount go on Schedule C?
combat wombat™
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AG
It can go on a schedule C. However on page one there is a line for miscellaneous income and you can mark that as subject to self-employment tax. If he has no expenses related to the 1099, that might be easier.
combat wombat™
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BigPuma said:

Or you just check the accrual method of accounting on the Schedule C and go about your merry way. It is a thought.



In retrospect, under the accrual method of accounting he would need to accrue and pay taxes on the income he hasn't collected yet.
dubi
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AG
combat wombat said:

It can go on a schedule C. However on page one there is a line for miscellaneous income and you can mark that as subject to self-employment tax. If he has no expenses related to the 1099, that might be easier.

So I would check the box that says "Wages subject to social security and medicare"? If i do that it wants a reason:
A, C, G, or H
Leander - Ag
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AG
what software do you guys use to do your taxes?

Is credit karma legit?
dubi
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Leander - Ag said:

what software do you guys use to do your taxes?

Is credit karma legit?
I use Turbotax Deluxe (obviously not successfully)

credit karma sounds like a scam.....
combat wombat™
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I am a CPA and use UltaTax to prepare my clients' returns.
BigPuma
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I am a CPA and use CCH ProSystems Tax to prepare my clients' returns.
gigemhilo
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CPA - Ultratax

dubi - just do the schedule C. Its not difficult, and I am sure he has some expenses to deduct (mileage at the least, as well as "supplies" (you know - guns, ammo, kevlar, etc)
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