Arthur Kamlet wrote:

(a bunch snipped here for brevity.)


- quote -

Okay, you win this one! (grin

HL

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In article <BAxgj.43102$Mu4.11720[at]bignews7.bellsouth.net> ,
Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -

But SE Income is not the net profit shown on Schedule C.

It is the Net SE Income line on Schedule SE, which is the
Schdule C Profit x 0.9235.


See the very first bullet item at the top of Schedule SE
http://www.irs.gov/pub/irs-pdf/f1040sse.pdf



Also see http://www.irs.gov/taxtopics/tc351.html

BEGIN QUOTE

You must file a tax return if you had net earnings from self
employment of $400 or more. This is your total self-employment
income less the expenses paid in operating your trade or
business, multiplied by 92.35%.

END QUOTE

Similar quote on http://www.irs.gov/taxtopics/tc554.html
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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Arthur Kamlet wrote:
- quote -

Of course i know all that, Art! But IRS instructions call for the form
if SE income is over 400 still.

ChEAr$,
Harlan

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In article <mbdgj.63823$K27.43227[at]bignews6.bellsouth.net> ,
Harlan Lunsford <hnslunsford[at]bellsouth.net> wrote:
- quote -


Harlan,


Schedule SE is required for net income from self employment of $400.


Net Income from Self Employment is on Schedule SE and is .9235 of
net schedule C profit.
--


ArtKamlet at a o l dot c o m Columbus OH K2PZH

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CallMeZoot wrote:
- quote -

Assuming you and wife have also in previous years generating 6 to 10 in
schedule c earnings; also assuming you haven't itemized before.

So then, your 18 k in mortgage interest is at least 8 k over your
standard deduction; maybe more, so that will save you about 2 k IF
you're in the 25% tax bracket.

However, when filling out your tax forms, be advised that schedule se is
required if either/both of your schedule c's generate income over 400$;
not 433$ as mentioned before.

ChEAr$,
Harlan Lunsford, EA n LA

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On Jan 6, 1:22�pm, CallMeZoot <CallMeZ...[at]gmail.com> wrote:
- quote -

In essence, you are correct, although the details of how this happens
is a bit more complicated than you think.

Your "independent contractor" income is reported on a Schedule C (one
for you, one for your wife), along with any "necessary and reasonable"
expenses of earning such income. If the net profit exceeds $433 on
either Schedule C, then a Schedule SE has to be prepared to calculate
the self employment taxes due. The figures from these forms transfer
to your 1040, as directed by the form instructions, and add to your
AGI.

Mortgage interest (and real estate taxes) are entered on Schedule A,
along with your medical expenses (over 7-1/2% of AGI), charitable
donations, and miscellaneous deductions over 2% of AGI to determine
your total Itemized Deductions. If that figure is greater than your
Standard Deduction (which it should be with that large a mortgage
interest figure), this is subtracted from your AGI. Then subtract your
personal exemptions ($3400 times exemptions and dependents) to arrive
at your TAXABLE INCOME figure.

Whether this results in less tax, or even a refund, depends on your
actual numbers (including withholding from your day job), which we
don't know. You will have to do the calculation yourself.



..
- quote -

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Hi,

My wife and I are school teachers and we work as independent
contractors during the summer months (and some nights and weekends),
making 6k-10k at this per year, reported on 1099-MISC. We usually owe
a couple thousand come April 15th.

This year, however, we''ve completed our first year of homeownership,
and have paid something like 18k in mortgage interest. All else being
equal, is this deduction likely to "cancel out" the untaxed
independent contractor wages, or perhaps tip us into refund-land for
the first time in years?

I'm not a tax expert by any means, but my impression is that the 1099-
misc income is added to gross income and then subjected to SE taxes.
And that the mortgage interest is deducted *in full* from taxable
income? So we're essentially adding approx 10k of 1099-misc income
and then deducting 18k.

Am I even remotely correct about this? Can anyone a bit more
knowledgeable walk me through how these two factors may interact with
one another, so I can be prepared for the results?

Thanks

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<< ------------------------------------------------------- > << 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 (2007) - All rights reserved. > << ------------------------------------------------------- >