How should I file taxes for a cash only business?

Question

I work in a cash only business. I made about 43,000 in cash last year. How much taxes will I be expected to pay? I am single with no children. I figure I need to file because I put 20,000 in my savings account this year and bought a house.

I know I missed the deadline for filing taxes. Is it possible to get an extension without getting penalized?

Answer 1

You file the same way everyone else does who runs a business. File Schedule C or C-EZ to account for the income and business expenses. File Schedule SE to calculate the Self Employment tax.

Your Federal tax bill will depend upon any business expenses and personal deductions but could be over $11,000 if you have no expenses or deductions. Then there are your state taxes to contend with.

Unless you live in the northeast area affected by the storms last week, it's too late to file for an extension. You already owe penalties for late filing and interest and penalties for late payment of tax. If you're in the northeast, you have until tomorrow (April 26th) to get your Form 4868 extension in the mail and pay the tax due. The extension gives you extra time to file the return but not pay the taxes due.

If you didn't make quarterly estimated payments using Form 1040ES, you'll also have penalties for underpayment of estimated taxes. You can avoid that next year by getting on the ball with the estimated payments. The first payment is already overdue; it was due on April 17th.

You are required to file a tax return if you have more than $400 in Self Employment income. You're way past that, and way overdue. Get cracking!

Answer 2

You'll use your records to determine the amounts of income and associated expenses, and put these on a schedule C or C-EZ. You'll then fill out a schedule SE to calculate your self-employment tax. The numbers from the bottom of the two schedules will transfer to a form 1040.

Without knowing approximately what your business expenses are, it's impossible to tell how much tax you might owe.

It's too late now to get an extension. If you owe, you'll pay penalties.

Answer 3

If I were you I would declare the month you put on your house and savings and convieniently forget about the rest. The government takes too much in tax which it then squanders, If you have the opportunity to hold onto some of your hard earned cash I recommend you take it.