My husband started a sole propritor(sp?) painting business in October of last year.He obtained his Contractors License at that time. It is a "side" job that he just does himself in his spare time. Was he suposed to tell anyone (social security, irs)? Was he suposed to apply for an ID for either of those places for tax puropses? Do we have to report anything to them, or does it get reported when we file our taxes? We are planning on using Turbo Tax for our taxes this year.
2007-01-10 12:10:26 · 4 answers · asked by Jewell 1 in Business & Finance ➔ Taxes ➔ United States
Your husband does not need to apply for any id numbers as long as he does not have any employees, and pays sales tax on any materials he buys to use on the job. He will file a Schedule C, and deduct any expenses against the income from his side jobs. The profit is carried to the Sched 1040 and added to your other income, it is also used to calculate self employment tax,(the equivalent to social security). Be careful, because Self Employment tax is somewhere around 15%, and this can add a great deal to your tax liability.
2007-01-10 13:16:18 · answer #1 · answered by irongrama 6 · 0⤊ 0⤋
Unless there are some additional laws where you live, he's probably done all he needs to do when he got his Contractor's license.
For taxes, he'll file a schedule C with the 1040, showing the money he took in and his expenses, and a schedule SE to calculate self-employment tax. The numbers from both of these forms will transfer the the 1040. You can still file a joint return, it will just have a few more attachments.
Good luck with the business.
2007-01-10 20:20:46 · answer #2 · answered by Judy 7 · 2⤊ 0⤋
You have a complex tax case and you want to use a tax preparer in a box? My , my, how we let a few dollars get in the way of real tax savings advice. Spend the extra $200 to get good advice. You may save thousands in return!
Turbotax is good if you just have wages, IMHO.
No, since he didn't incorporate (should he have? ask the tax advisor), all earnings are reported on Sched C of the 1040 and all of it is subject to S/E tax.
WealthBuilder
2007-01-10 21:06:24 · answer #3 · answered by WealthBuilder 4 · 0⤊ 0⤋
Judy gives a good answer on income tax issues. Having a conteractor's license is good. Does your locality require you to have a privilege license in addition? You may want to look into that.
The only other area I can think of is sales tax. Although most states do not tax services, you may find that your state is different.
None of what I have mentioned affects your income tax return.
2007-01-10 20:26:29 · answer #4 · answered by skip 6 · 0⤊ 0⤋