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#4
12-24-2008, 09:25 PM
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 Re: income correction from previous year. Seth wrote: - quote - > In article <hxv4l.12000$YU6.7708[at]bignews8.bellsouth.net> ,
expense, pure and simple.> Harlan Lunsford <lunstax[at]bellsouth.net> wrote: > > removeps-groups[at]yahoo.com wrote: > > > On Dec 21, 7:23 pm, jhhtexas <jhhte...[at]ieee.org> wrote: > > > > On Dec 21, 6:07 pm, Mario...[at]comcast.net wrote I received some income for my consulting work last year. This year the > > > > > company was audited and some of the income that was paid to me I had > > > > > to pay back. Do I just adjust my income this year to reflect the money > > > > > I had to pay back, I use QuickBooks. Thanks for any help. > > > > > Marion > > > > If you report your income on a cash basis (most sole proprietors do), > > > > then the money you give back should be reported as a business expense > > > > on your Schedule C, thus reducing your 2008 income accordingly. > > > Does he have the option to use repayment of income (otherwise called > > > claim of right)? If he was in a larger tax bracket last year, then > > > this method might yield a bigger savings. > > > > > http://www.irs.gov/publications/p17/...blink100033071 > > > ] > > The link just above bears out what my Texas colleague just said, to > > wit: "The type of deduction you are allowed in the year of repayment > > depends on the type of income you included in the earlier year. You > > generally deduct the repayment on the same form or schedule on which you > > previously reported it as income." > > > Anyway, why would a proprietor want to treat it any different than on > > schedule c? The deduction on schedule c also reduces se tax. It's a > > no brainer. > Suppose he earned $1 million last year, and has to give back > $100,000. This year, business sucked, and he earned $30,000. Isn't > he a lot better off if he can amend last year's return? > Seth If permitted, yes. But repayment of business income is a business -- << ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- > |
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#3
12-24-2008, 09:11 PM
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| Re: income correction from previous year. In article <hxv4l.12000$YU6.7708[at]bignews8.bellsouth.net> , Harlan Lunsford <lunstax[at]bellsouth.net> wrote: - quote - > removeps-groups[at]yahoo.com wrote:
Suppose he earned $1 million last year, and has to give back> > On Dec 21, 7:23 pm, jhhtexas <jhhte...[at]ieee.org> wrote: > > > On Dec 21, 6:07 pm, Mario...[at]comcast.net wrote I received some income for my consulting work last year. This year the > > > > company was audited and some of the income that was paid to me I had > > > > to pay back. Do I just adjust my income this year to reflect the money > > > > I had to pay back, I use QuickBooks. Thanks for any help. > > > > Marion > > > If you report your income on a cash basis (most sole proprietors do), > > > then the money you give back should be reported as a business expense > > > on your Schedule C, thus reducing your 2008 income accordingly. > > > Does he have the option to use repayment of income (otherwise called > > claim of right)? If he was in a larger tax bracket last year, then > > this method might yield a bigger savings. > > > http://www.irs.gov/publications/p17/...blink100033071 > > ] > The link just above bears out what my Texas colleague just said, to > wit: "The type of deduction you are allowed in the year of repayment > depends on the type of income you included in the earlier year. You > generally deduct the repayment on the same form or schedule on which you > previously reported it as income." > Anyway, why would a proprietor want to treat it any different than on > schedule c? The deduction on schedule c also reduces se tax. It's a > no brainer. $100,000. This year, business sucked, and he earned $30,000. Isn't he a lot better off if he can amend last year's return? Seth -- << ------------------------------------------------------- > << 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. > << ------------------------------------------------------- > |
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#2
12-24-2008, 05:55 PM
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| Re: income correction from previous year. removeps-groups[at]yahoo.com wrote: - quote - > On Dec 21, 7:23 pm, jhhtexas <jhhte...[at]ieee.org> wrote:
wit: "The type of deduction you are allowed in the year of repayment> > On Dec 21, 6:07 pm, Mario...[at]comcast.net wrote I received some income for my consulting work last year. This year the > > > company was audited and some of the income that was paid to me I had > > > to pay back. Do I just adjust my income this year to reflect the money > > > I had to pay back, I use QuickBooks. Thanks for any help. > > > Marion > > If you report your income on a cash basis (most sole proprietors do), > > then the money you give back should be reported as a business expense > > on your Schedule C, thus reducing your 2008 income accordingly. > Does he have the option to use repayment of income (otherwise called > claim of right)? If he was in a larger tax bracket last year, then > this method might yield a bigger savings. > http://www.irs.gov/publications/p17/...blink100033071 > ] The link just above bears out what my Texas colleague just said, to depends on the type of income you included in the earlier year. You generally deduct the repayment on the same form or schedule on which you previously reported it as income." Anyway, why would a proprietor want to treat it any different than on schedule c? The deduction on schedule c also reduces se tax. It's a no brainer. ChEAr$, Harlan Lunsford, EA n LA -- << ------------------------------------------------------- > << 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. > << ------------------------------------------------------- > |
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#1
12-24-2008, 01:51 PM
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| Re: income correction from previous year. On Dec 21, 7:23 pm, jhhtexas <jhhte...[at]ieee.org> wrote: - quote - > On Dec 21, 6:07 pm, Mario...[at]comcast.net wrote I received some income for my consulting work last year. This year the
Does he have the option to use repayment of income (otherwise called> > company was audited and some of the income that was paid to me I had > > to pay back. Do I just adjust my income this year to reflect the money > > I had to pay back, I use QuickBooks. Thanks for any help. > > Marion > If you report your income on a cash basis (most sole proprietors do), > then the money you give back should be reported as a business expense > on your Schedule C, thus reducing your 2008 income accordingly. claim of right)? If he was in a larger tax bracket last year, then this method might yield a bigger savings. http://www.irs.gov/publications/p17/...blink100033071 -- << ------------------------------------------------------- > << 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. > << ------------------------------------------------------- > |
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12-22-2008, 02:23 AM
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| Re: income correction from previous year. On Dec 21, 6:07*pm, Mario...[at]comcast.net wrote: - quote - > I received some income for my consulting work last year. This year the
then the money you give back should be reported as a business expense> company was audited and some of the income that was paid to me I had > to pay back. Do I just adjust my income this year to reflect the money > I had to pay back, I use QuickBooks. Thanks for any help. > Marion If you report your income on a cash basis (most sole proprietors do), on your Schedule C, thus reducing your 2008 income accordingly. Jim Hammond, EA -- << ------------------------------------------------------- > << 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. > << ------------------------------------------------------- > |
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#-1
12-21-2008, 11:07 PM
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| income correction from previous year. I received some income for my consulting work last year. This year the company was audited and some of the income that was paid to me I had to pay back. Do I just adjust my income this year to reflect the money I had to pay back, I use QuickBooks. Thanks for any help. Marion -- << ------------------------------------------------------- > << 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. > << ------------------------------------------------------- > |
| Tags |
| correction, income, previous, year |
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