Can someone explain write offs and what this all means?

amother

Fri, Mar 31 2023, 4:54 pm

Started off from september until january as a 1099 and then my company switched me to a w2.
I know tax season is around the corner. What exactly do I need to provide my accountant with?

My friends told me tons of stuff can be "written off"- how does the govt know people arent lying?

is there a document I need to give the accountant of how much I was paid from my company when I was a 1099? When I first spoke to him a few months ago he told me to make a separate tax account and put aside 35% of my paycheck which I did.

Do I know go through my debit card for those 5 months and see what business expenses were? like gas and purchases I made for work?

Yeah Im clueless and I cant bother my accountant again im too embarassed

Amarante

Fri, Mar 31 2023, 6:11 pm

Anything bought for work or travel expenses for business are deducted from your income and so lowers yiur tax bill. These are business expenses.

Yiur accountant should be providing you with this information. For example, a good accountant will question you on typical things you might have forgotten to include. That is what you are paying for in part as many people don’t know all the kinds of deductions that are available.

You would need to provide receipts in the event the IRS audits you.

amother

Sun, Apr 02 2023, 9:56 am

amother Clear wrote:

Yes go through your cc and see what was used for work. Make a simple categorized excel profit and loss sheet.

do u have a template of an excel spreadsheet I could fill in?
What do u mean by excel profit and loss sheet?

amother

Mon, Apr 03 2023, 11:08 pm

Amarante wrote:

my husband started his business last year and we really really struggled.
we went through jan- december and he made $26,000, but his expenses like gas, tools, a van for work, parts etc cost $13,000. So his net profit was $13,000.
Is the accountant going to be confused with how low that number is?

amother

Goldenrod

Mon, Apr 03 2023, 11:10 pm

amother OP wrote:

Definitely not. Most new businesses lose money in the beginning, it’s impressive that he didn’t.

amother

Mon, Apr 03 2023, 11:12 pm

amother Goldenrod wrote:

Definitely not. Most new businesses lose money in the beginning, it’s impressive that he didn’t.

thanks for being kind. were embarassed at how little we both made last year. iyh this year will be better for everyone in klal yisroel

the accountant told me to send him an email with 3 numbers: income, expenses (roughly), and net income. And then he'll need a breakdown of our expenses after pesach

Moonlight

Mon, Apr 03 2023, 11:14 pm

If your company paid you, they should be reporting it on a 1099
On your schedule C, you report that income and the related expenses.
Ex. Advertising
Dues and subscriptions
Office expense
Supplies
Travel
Business meals
Telephone
Internet
Repair and maintenance
Etc etc, depending on your type of business
Literally go through cc statements and categorize everything business related.

Re auto, you can either take the mileage reimbursement rate ( calculate how many business miles you drove) OR auto expenses. A vehicle purchased for the business gets depreciated

Doesn't matter if you have an overall loss.
If u want to pm me, I work in accounting and happy to help you

amother

Gold

Mon, Apr 03 2023, 11:16 pm

amother OP wrote:

You need a new accountant.
He should be telling your what type of charges can be counted as expenses

amother

Mon, Apr 03 2023, 11:17 pm

Moonlight wrote:

ill pm u! thanks!

Moonlight

Mon, Apr 03 2023, 11:19 pm

Found this example list
Advertising
Car and truck
Commissions and fees
Contract labor
Home office expenses
Insurance
Interest paid
Legal fees and professional services
Meals
Office expenses
Rent and lease
Repairs and maintenance
Supplies
Taxes and licenses
Travel expenses
Utilities

amother

Mon, Apr 03 2023, 11:20 pm

amother Gold wrote:

You need a new accountant.
He should be telling your what type of charges can be counted as expenses

he told my husband but my husband isnt american and doesnt really understand him so I called the accountant today and he seemed frustrated... maybe since tax season is soon and my husband waited until now... idk :/
but he told us gas mileage, a percentage of rent, car maintenace, parts, stuff for the business can be counted as expenses etc. he just wanted a rough estimate for us to know what numbers to give him and he wants a detailed excel spreadsheet after pesach. hes going to do an extension he told me

amother

Mon, Apr 03 2023, 11:22 pm

Moonlight wrote:

thanks so much!
so the year before we had a terrible accountant who didnt tel us anything and we were newly married. dh was in a diff field at the time. last year we had to pay for 4 quarterly payments to the IRS it was 14000 for the year. can we get some of that money back? we had to borrow money from a relative to pay it back it was a hard year

amother

Lime

Mon, Apr 03 2023, 11:28 pm

amother OP wrote:

Does your current accountant know how much you paid in (estimates) for 2022? When he calculates your extension, he should have rough idea what your refund will be (if applicable),

amother

Mon, Apr 03 2023, 11:30 pm

amother Lime wrote:

Does your current accountant know how much you paid in (estimates) for 2022? When he calculates your extension, he should have rough idea what your refund will be (if applicable),

Yes I believe so.
I will mention that in the email to him too.
Being an adult is hard and Im just an idiot

amother

Blush

Mon, Apr 03 2023, 11:31 pm

amother OP wrote:

We didn’t start making money from our business until year 2 or 3. We first had to pay back the loan we took out to start up.

Wishing you (and me!) and all of klal yisroel parnosah benachas uverevach

amother

Mon, Apr 03 2023, 11:32 pm

amother Blush wrote:

We didn’t start making money from our business until year 2 or 3. We first had to pay back the loan we took out to start up.

thanks for the chizuk
I felt like we were doing something really wrong

eta: amen to ur bracha! amen x 100000

amother

Lime

Mon, Apr 03 2023, 11:35 pm

amother OP wrote:

Yes I believe so.
I will mention that in the email to him too.
Being an adult is hard and Im just an idiot

When you run a business, it’s a good idea to meet with the accountant during the year, so he can help guide you, during a less stressful time. You’ll get the hang of it!

amother

Crocus

Mon, Apr 03 2023, 11:48 pm

amother OP wrote:

You will get some of the money back when you actually file, but not now when your accountant is filing an extension.

He's likely not going to know yet how much money you're getting back.

amother

Mon, Apr 03 2023, 11:51 pm

amother Crocus wrote:

You will get some of the money back when you actually file, but not now when your accountant is filing an extension.

He's likely not going to know yet how much money you're getting back.

DH left yeshiva 2 years ago, first year he was getting his feet wet learning a trade similar to what he does now, and that year we used the accountant who never mentioned the sales tax so we didnt pay anything I dont think. then 2022 we switched to a new accountant and he had us pay the $14000. but in 2022 my dh only made $26,000 and after expenses like tools, parts, gas we had $13, 000. I dont know how that makes sense since our rent is 2000 so how did we pay rent all of last year. I know a few months I paid for rent, and a relative lent us some money to pay the IRS back the $13,000.

my numbers dont add up when Im seeing them on paper