Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 11-12-2007, 11:46 PM   #21
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Quote:
Originally Posted by Helena View Post
How does the IRS know what those unclaimed deductions are ?
There are certain deductions that come with any business, and the IRS knows which expenses each type of business should have and sometimes they even have an idea, within a range, how much each expense should be as a percentage of sales.

The bottom line is this: Most people, especially most people who have enough brains to start their own business, are not stupid enough not to deduct legitimate business expenses to keep their taxes as low as possible. You know this and the IRS knows this.

So if the IRS sees a situation where someone intentionally omits legal deductions, they will look into the alternative motives for doing so.

If you did it to defraud the government in any way, they will adjust your tax return to correct your deception. You cannot manipulate your net income to benefit from some of the items you mentioned in your earlier post, such as funding your IRA, or trying to cheat the system to get the EIC. There are also a number of non-tax reasons it will be considered fraud. For example, if you need to provide your tax return to a bank for purposes of securing a loan or if you need to show you have enough income to support a child in a custody battle.
__________________

__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-12-2007, 11:48 PM   #22
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 616
Quote:
Originally Posted by RetireeRobert View Post

Are you advocating filing a false tax return misstating actual income in order to gain social security or retirement contribution advantages because the IRS "may" not catch you?

I am not advocating anything... I am asking questions... is that allowed ?

I retired mid-year and have been self-employed for a few months...
I'm in the process of learning.

Many thanks to those who gave me informative responses... that does not include you, Robert
__________________

__________________
Helena is offline   Reply With Quote
Old 11-12-2007, 11:54 PM   #23
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Quote:
Originally Posted by Helena View Post
No, I don't use a business checking account. I don't have an office. I make no product... I do no buying or selling... I render a personal service via contract and my income is reported to the IRS via a 1099-Misc.
Well, if you have no business expenses to deduct, what expenses are you worried about not reporting?

Are you sure you are an independent contractor and not an employee?
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Old 11-12-2007, 11:56 PM   #24
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 616
Quote:
Originally Posted by retire@40 View Post

There are certain deductions that come with any business, and the IRS knows which expenses each type of business should have and sometimes they even have an idea, within a range, how much each expense should be as a percentage of sales.

As I said, I don't make or sell a product.

But I would be interested in having a copy of what the IRS
thinks I should deduct as expenses for my specific service...
it would really help a newbie like me.... I wonder if the IRS
will share that info ?
__________________
Helena is offline   Reply With Quote
Old 11-12-2007, 11:58 PM   #25
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 831
Quote:
Originally Posted by Helena View Post
I am not advocating anything... I am asking questions... is that allowed ?

I retired mid-year and have been self-employed for a few months...
I'm in the process of learning.

Many thanks to those who gave me informative responses... that does not include you, Robert

Questions are allowed on my part. But you take offense at my question to you?:confused:

Just wondered why you wondered "well, how would the IRS know?" If filing an accurate tax return is a foregone conclusion, then wondering "how would the IRS know" seems kind of irrelevent. That's all.

Sorry you find questions to you unhelpful.
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Old 11-13-2007, 12:03 AM   #26
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 616
Quote:
Originally Posted by retire@40 View Post

Well, if you have no business expenses to deduct, what expenses are you worried about not reporting?

Are you sure you are an independent contractor and not an employee?

I am not an employee. I am an independent service provider.
I may not have any business expenses to deduct... but from
what I've been told here... heaven help me if I miss one !


What ? Me worry ? Seems to me there is more than enough
of that here... but I am not worried... I am just asking questions.
__________________
Helena is offline   Reply With Quote
Old 11-13-2007, 12:10 AM   #27
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 831
Quote:
Originally Posted by Helena View Post
I am not an employee. I am an independent service provider.
I may not have any business expenses to deduct... but from
what I've been told here... heaven help me if I miss one !


What ? Me worry ? Seems to me there is more than enough
of that here... but I am not worried... I am just asking questions.
PS---I ran a part-time tax practice for many years, and I prided myself on preparing the most accurate tax returns possible for my clients. Much of my success was due to my "questioning" style. I am now a happily retired CPA.

I can tell you would not have enjoyed being a client of mine.
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Old 11-13-2007, 12:10 AM   #28
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Quote:
Originally Posted by Helena View Post
I am not an employee. I am an independent service provider.
I may not have any business expenses to deduct... but from
what I've been told here... heaven help me if I miss one !
What cash expenditures would you not have if you didn't do any independent work?

If they are ordinary and necessary in the course of your work, they are probably deductible and should be reported on your tax return.

One other thing to consider is "materiality." The IRS won't be too concerned if you don't deduct your 35-cent pencil and your 75-cent notepad.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Old 11-13-2007, 12:17 AM   #29
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 616
Quote:
Originally Posted by RetireeRobert View Post

PS---I ran a part-time tax practice for many years, and I prided myself on preparing the most accurate tax returns possible for my clients. Much of my success was due to my "questioning" style. I am now a happily retired CPA.

I can tell you would not have enjoyed being a client of mine.

My family escaped the bolsheviks...
not much scares me.
__________________
Helena is offline   Reply With Quote
Old 11-13-2007, 12:21 AM   #30
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 831
Quote:
Originally Posted by Helena View Post
My family escaped the bolsheviks...
Really. Interesting times those. Care to tell more of that bit of history?
__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Old 11-13-2007, 12:35 AM   #31
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 616
Quote:
Originally Posted by RetireeRobert View Post

Really. Interesting times those. Care to tell more of that bit of history?
Only this:

Since my family had migrated to Russia from Germany during the
reign of Tsar Peter [the Great], many of them left for Germany...
some then went on to the USA... many of those who remained in
Germany found themselves back under bolshevik rule after WW 2 !

I was born in Texas... Texans are very much like Cossacks...
fierce and independent... at least, they used to be that way.
__________________
Helena is offline   Reply With Quote
Old 11-13-2007, 12:42 AM   #32
Full time employment: Posting here.
 
Join Date: Oct 2007
Location: Willamette Valley, Oregon
Posts: 831
Quote:
Originally Posted by Helena View Post
Only this:

Since my family had migrated to Russia from Germany during the
reign of Tsar Peter [the Great], many of them left for Germany...
some then went on to the USA... many of those who remained in
Germany found themselves back under bolshevik rule after WW 2 !

I was born in Texas... Texans are very much like Cossacks...
fierce and independent... at least, they used to be that way.
Interesting. My wife's grandmother was also a German who moved to Russia, and eventually to the US. I am not sure of the timeframe, but since my wife's mom was born in the US in 1915, then the German grandma could have been in Russia perhaps in the 1890's-1910 timeframe. I'll have to ask about that.
__________________

__________________
Dreams Worth Dreaming are Dreams Worth Planning For. I Spent a Career Planning for Early Retirement.
RetireeRobert is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tax Question, Losing Business of Jazz TromboneAl FIRE and Money 36 12-27-2007 09:27 AM
full-time employment & business on the side SingleMomDreamer FIRE and Money 8 11-04-2007 08:29 AM
Tax Re: Sell of a business flpanhandle FIRE and Money 10 05-11-2007 06:58 PM
question about fund expenses simple girl FIRE and Money 2 01-03-2007 04:38 PM
SE tax self-employment vic FIRE and Money 8 07-09-2005 04:44 PM

 

 
All times are GMT -6. The time now is 08:54 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.