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Tax write off
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<blockquote data-quote="WayneF" data-source="post: 344157" data-attributes="member: 12496"><p>There you go, the accountant is another deduction for you. <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /> I agree preparing the tax form is not much issue, but creating the income seems an unknown until you actually work out a plan that is doing it.</p><p></p><p>I don't know about a corporation, but your lawyers can explain it, and they will be more deductions. <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /></p><p></p><p>Otherwise, to deduct expenses, you need a tax form. Unless a specific business like farming or rental property, that form is generally Schedule C. And Schedule C means sole proprietor (which is just a simple declaration, but you need a DBA filed with your state). </p><p></p><p>There are downsides. You probably have to collect and report state sales tax, or may have state income taxes too, more stuff to keep up with. Income probably will increase the income taxes on Social Security income too, which can be like double tax on some of that extra income. And the SS rate you pay doubles.</p><p></p><p>I've done sole proprietor for nearly 20 years (home based business, but not as photography) and had good income, and doing the tax was not a big deal. I just bought the H&R Block tax software (named At Home now), the Basic version for $20 each year. Then you just plug in the actual numbers. IRS has never asked a question. Gathering the data is the harder part, filling out the forms is only a couple of hours.</p><p></p><p>My point is, if you have tax software (Turbo Tax or At Home, etc), just explore in it by preparing a fake (throw away) return as if you had a business. Start with your normal tax year data, and then add to that by just entering some business income and expenses. You will know a lot more about it in a short time. Valid expenses have to relate to the business of course, but anything reasonable and valid seems accepted. The IRS does not require that you manage your business well, just that you show a taxable profit.</p></blockquote><p></p>
[QUOTE="WayneF, post: 344157, member: 12496"] There you go, the accountant is another deduction for you. :) I agree preparing the tax form is not much issue, but creating the income seems an unknown until you actually work out a plan that is doing it. I don't know about a corporation, but your lawyers can explain it, and they will be more deductions. :) Otherwise, to deduct expenses, you need a tax form. Unless a specific business like farming or rental property, that form is generally Schedule C. And Schedule C means sole proprietor (which is just a simple declaration, but you need a DBA filed with your state). There are downsides. You probably have to collect and report state sales tax, or may have state income taxes too, more stuff to keep up with. Income probably will increase the income taxes on Social Security income too, which can be like double tax on some of that extra income. And the SS rate you pay doubles. I've done sole proprietor for nearly 20 years (home based business, but not as photography) and had good income, and doing the tax was not a big deal. I just bought the H&R Block tax software (named At Home now), the Basic version for $20 each year. Then you just plug in the actual numbers. IRS has never asked a question. Gathering the data is the harder part, filling out the forms is only a couple of hours. My point is, if you have tax software (Turbo Tax or At Home, etc), just explore in it by preparing a fake (throw away) return as if you had a business. Start with your normal tax year data, and then add to that by just entering some business income and expenses. You will know a lot more about it in a short time. Valid expenses have to relate to the business of course, but anything reasonable and valid seems accepted. The IRS does not require that you manage your business well, just that you show a taxable profit. [/QUOTE]
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