Your Questions About How To Do Business Taxes Online
Robert asks…
What is the maximum profit a business owner can withhold until they are unable to be claimed as a dependent?
I was just given a business (online advertisment) from my grandfather. I am 16 years old, so I was wondering what the maximum profit is that the business can make befor my mom is unable to claim me. I live in Delaware.
Jere answers:
For the federal income tax, your income, per se, is not relevant in determining if you are your mother’s dependent. You would not be her dependent if you provided more than half of your own support. So you could earn any amount if you saved it all for college, rather than spending it on food, clothes, and music.
William asks…
Will my LLC in Nevada effect my tax return as a Michigan resident?
I am a Michigan resident but if I created a LLC in Nevada for my online business (everything is done online, no brick and motor store), does it effect my Michigan tax return? I know the fact that there is no business tax in Nevada, but do I have to pay any personal/business tax in Michigan because of the LLC?
If I still need to pay tax in MI, do I pay it as business tax or personal tax? If my LLC is filed in a state that has business tax, I will need to pay tax for my business in both states?
Jere answers:
For Federal purposes, the LLC is a “disregarded entity” which means the IRS does not formally recognize the type. It defaults to either a Schedule C (single member) or Partnership/1065 (multiple member) unless you elected to be treated as a corporation.
On the state level, some stats do recognize the type for tax purposes and al require at least an annual filing fee. In CA, the filing fee is something like $800.
Sandra asks…
Why is my American Opportunity Tax Credit only $1000 when I do pay taxes?
I am a 21+, full-time student in a degree program and am eligible for the AOTC. I had a traditional job with paychecks that total to about $700 (no taxes paid). On the side I do freelance work, and I reported that under Category C under self-employment/own business. I made ~$2500.
My Federal Refund is $714. This includes the AOTC of $1000 minus my business tax of $286.
I thought if you pay taxes, you get up to $2500 in refunds from the AOTC? Also, had I made $2500 from a traditional job and as a student, I would pay no taxes.
I am using H&R Block’s online forms.
PS My freelance work I do is web development related and I do everything from my computer at home.
Jere answers:
Okay, let’s start over. I think you made serious mistakes on your tax return.
At age 21, you are under 24 and your parents would be expected to claim you. Under IRS rules, you are living temporarily away from their home and unless you can show they are either dead or that you provided more than half of your total support yourself, you are still their dependent and they, not you, would claim the AOC credit.
If your parents aren’t dead, you aren’t married and your support was more than $6058, you CANNOT claim the $1000 refundable part of the AOC because you flunk the tests to claim it. And I’m hardpressed to believe that if your tuition *was* more than $4000 that you lived on less than $2058 for the rest of the year, especially the way housing is figured.
Nancy asks…
How do I file self employment income on my taxes?
I was a babysitter, getting paid cash by my older sister. I file my taxes online with Turbo Tax.
In total she paid me over $7,000. I babysat in my own home. Will I have to pay taxes to the IRS?
Jere answers:
Helen is the ONLY right answer.
Unless you ran a daycare center for a corporation and got paid by them, you won’t be getting a 1099-Misc since that is ONLY used in a trade or business.
If you babysat at your sister’s house, you were employed by her and SHE should be issuing you a W-2. If the total she paid you was less than $1700, she doesn’t have to–you just list the money as wages and enter HSH and the dollar amount next to it. (HSH stands for HouSeHold Help.)
If you babysat in your house, then you use form 1040 with the schedule C-EZ and SE.
Daniel asks…
Do I have to file West Virginia state business taxes?
I started a partnership in March of this year (2009) with no employees. Do I have to file this year and do I have to pay the business franchise tax? Also, I did not make any money so far at my business if this makes any difference.
Yes, people in West Virginia pay taxes. High ones.
Jere answers:
Well I am not an expert so I dont know the exact answer to your question lol but I do know that going to a tsax service is always a good idea because they can answer you with the correct answer and maybe even help you. Online phone books can give you all sorts of tax services even by their specialty such as business : > There are some in Charlestown, WV that can refer you to a place where you live!
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