"Missy" <m...[at]yahoo.com> wrote:

- quote -

Missy, thanks

Konstantin.

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Rich Carreiro wrote:

- quote -

(balance snipped for brevity.)

You know Rich, I think if I were you, I'd have to send him
a bill because your analysis was outstanding.

Compliments.

ChEAr$,
Harlan Lunsford, EA n LA

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Rich Carreiro <rlc...[at]animato.arlington.ma.us> wrote:
- quote -

Dear Rich,

thanks for your explanations. I understand much better now.

She used additionally to Form 1040, a Form Schedule
SE 1040 - but no schedule C.

Konstantin.

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Other than I do not know what a schedule 10 is, everything
else is correct. The business tax form for self employed is
schedule C.

This is your tax and self employment tax (social security).

Missy Doyle

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KonstantinSolomon[at]moscowmail.com writes:

- quote -

$12114 x 0.9235 x 0.153 = $1712 SE tax.
Half that is $856. So either either she
made a $10 mistake or you typoed the amount.

- quote -

$12114 - $856 = $11258, so that's correct.

- quote -

Assuming you're under 65, that's correct.

- quote -

That's correct.

- quote -

Because you get one exemption for yourself. Again,
she's correct.

- quote -

Because $6108 - $3300 = $2808. Adjusted gross income
minus deductions minus personal exemptions is taxable
income. She's still correct.


- quote -

Your taxable income is NOT $11258. Your taxable income
is $2808.

- quote -

That's the income tax on $2808 of taxable income.

- quote -

That's correct.

- quote -

That's correct.

- quote -

Since you apparently made no estimated tax payments, that's
correct.

- quote -

Because form 1040 is designed badly and it's not obvious that
line 76 includes the penalty computed on Form 2210 and reported
on line 77. She computed you owed a $94 penalty and
$94 + $1993 = $2087. So assuming she computed the penalty
correctly, line 76 is also correct.

- quote -

As previously stated, it's your income tax.

- quote -

Which it is.

- quote -

There's no such thing as a "Schedule 10". Presumably
you mean "Schedule C".

- quote -

I believe computers are actually 5-year property, according
to the IRS depreciation rules. Also, you very likely could
have elected to write off the whole $1119 this year by making
what's called a "Section 179 election".

- quote -

Well, what business expenses did you have? Unless you
tell us, we can't evaluate whether she did it correctly
or not.

- quote -

Assuming you use that large room *exclusively* (and that
term is taken literally by the IRS) you can indeed
deduct a fraction of your rent as a business expense. One
way to get that fraction is what percentage of total
apartment square footage the business space is. If the
large room is a large fraction of the size of the apartment,
the $4419 may be correct. However, if you do not literally
use the room exclusively for business, you can't take this
business deduction.

- quote -

That's incorrect (assuming you understood what she said).
However, it very likely doesn't matter, since you either
take the standard deduction or your itemize. Unless your
itemized deductions (which do NOT include business expenses)
is more than your $5150 standard deduction, there's no point
in itemizing. Which does mean you get no tax benefit from
the donation.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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I was at H & R block today, had my tax returns prepared and
now I am more confused than ever.

My taxes were prepared by a young girl, she seemed rather
moody to me. She did not talk much and explained as good as
nothing. I gave her the truthful data concerning my income
and expenditures but I have no what she really used as
deduction and what not. I just noticed that she did not
spell the name of my business right and my name was also
misspelled on one form. How can I trust her? She did not
staple the print out that she gave me together. It really is
a confusion. Nobody at H & R checked her work. She wanted me
to sign the papers without giving me time to read them. I
did not sign them yet, except their internal H & R papers,
e.g. saying that they are pro privacy but pass info
nevertheless to other places than IRS. (Does not feel good
either.) She asked me also personal matters, which had
nothing to do with taxes. I would have not mind told her
from human being to human being some private matters but she
seemed to me rather hostile. It sure was no pleasant
experience.

I am a single guy, no kids, do dependents.

The H & R girl used form 1040 and wrote following in the
form:

My business income and total income is $12,114.

She deducted $865 one half or self employment tax.
Is that right?

She reported that as my adjusted gross income $ 11,258.

She wrote as standard deduction $ 5,150.

She subtracted line 40 from line 38, and wrote $ 6.108 in
that line.

Under line 42 it says: Otherwise, multiply $ 3,300 by the
total number of exemptions claimed on line 6d. She wrote $
3,300 in line 42, and I have no clue why.

Under line 44, she wrote that 2,808 is my taxable income.
Why? I checked the tax table and taxable income of $ 11,258
for a single guy is $ 1,306 not $ 2,808.

Under line 46, it says: Tax. Check if tax is from a [ ]
form(s) 8814 b [ ] form 4972. She did check any of these
boxes but wrote $281 which she added to my taxes. What is
that for?

On line 58, she wrote that my self employment tax would be $
1,712.

She added the $ 281 and wrote in the form that I owe $ 1,993
taxes.

In line 72, she wrote 0.

In line 76, it says, that line 72 should be subtracted from
line 63, and wrote as amount that I owe $2,087.

I don't understand it how she got to his amount.

--- Then the H & R girl filled in form 2210.
She wrote under
1. Enter your 2006 tax after credits from form 1040,
line 59. She wrote $ 281.
(I have no clue what this is)
2. Self employment taxes, she wrote in $ 1,712.
9. Under required annual payment, she wrote $ 1794.
17. Under penalty, she wrote $ 94. (Because nobody told me
that I have to make estimated payments but I also had no
clue how to make estimated payments as I just started and
have no clue how much I could earn.)

---------------
She gave me a form 1040, Scedule 10
She wrote in as income $16,794. This number is correct as
that is the amount of money that my customers paid me and my
only income. I had start up expenses of approx. 900 Dollars
in Dec. 2005. I bought a computer for 1119 $ this year for
my business. She just deducted that computer with $ 40. She
wrote that it is a 7 years property. (I never had a computer
that lasted 7 years, they usually make troubles after 1-2
years. You might be able to deal with it privately but when
your business depends on it, you need a really reliable
computer, not one that freezes up all few minutes.)

And she calculated my total expenses, all business expenses
just with $ 261? How is that possible? On line 29, she
claims that my tentative profit is 16,533.

She deducted $ 4,419 expenses for business of use of my
home. (I use the large room as business office, as I just
have a one bedroom apartment and can't work in my tiny
bedroom or can't tell people to visit me in my bedroom, as I
do not run this kind of establishment.)

She also added $ 10 for other computations, total tax
preferences and adjustment, and I have no clue why and for
what that was added.

She said I should mail the IRS a check with $ 2,087 and to
my State Tax Commission another check with $153.

-----------------
Otherwise, somebody in my family died and I brought her
(good) stuff to a non profit organization like Salvation
Army. They gave me signed receipts and they amount to
approx. $1000. That H & R girls said that I can't deduct
anything as a private person because I deducted already so
much as a business.

Really? Is that true? I can't believe it.

Could you look over that and tell me what you think of this?

You advice is greatly appreciated.

Konstantin.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >