heres yet anoher tax question tax season is here?

Question

If someone is single no spouse and started a small buisness self employment no employees,and you spend more on equipment and materials for the buisness then you make which causes you to claim a loss that year.Then why dont i get some kind of refund?I was told not 1 cent and ive paid alot of taxes this year buying a house no mortgage,buisness equipment,insurance but no utility bills (not in my name)How is that that i dont quilify for a refund? I went to liberty taxes and they told me that and they wanted 300 to file my taxes with no refund,i'm confused can anyone give me any feed back?

Answer 1

You paid all kinds of taxes, but did you make Estimated Federal Tax / Self Employment tax payments through the year? If not then there is nothing to refund to you..

Answer 2

First off, you have to capitalize start-up costs. You can expense them once you start making money.

You only get an income tax refund if you've paid in more than your tax liability. If you didn't pay anything in, you can't get a refund and will normally have a tax balance due when you file. If you didn't make quarterly estimated payments on Form 1040ES, there may be penalties and interest added on for underpayment of taxes.

You're NOT paying a tax return preparer to get you a refund; you're paying them to prepare your tax return. It doesn't matter whether you get a refund or have a balance to pay, they are still entitled to their money.

A business tax return is more complex than a simple return for an ordinary wage-earner. For that reason, it will cost quite a bit more for preparation services than if you just had a single W2 and no state tax.

Answer 3

You can only get a refund if you have overpaid "income taxes" through withholding or estimated payments. If you have had any withholding or haven't made any estimates, there is nothing to refund.

If the business is legimate and generates a loss, that loss can be used going forward to offset future taxes. This is called a "Net Operating Loss".

Net Operating Losses are too complex to expain in this format and too complex to for a preparer at Liberty but the return needs to be filed to establish the loss.