I spent this weekend at my mom’s house doing her and my brother’s income taxes. My brother’s was easy because he just had income from two jobs allowing me to use the 1040-EZ. It took less than ten minutes to finish his return. My mom’s taxes were a little more complicated. She no longer pays enough mortgage interest to itemize her deductions or her taxes would have been even more complicated. Since she works and draws Social Security I had to figure how much- if any – of her SS was taxable. I also had to fill forms for the Saver’s credit and the Making Work Pay credit. It wasn’t anything I couldn’t figure out from the instructions but it was time-consuming. The Missouri state income tax is perhaps more complicated than the federal return. It would seem to be easy since you are mostly transferring information from your federal return to your state return. Missouri makes you do some extra forms though to keep things from being too easy.
I was going to do my own taxes as well this weekend but I was taxed out by the time it came to do my taxes. With my self employment income my tax return will be the most complicated of all. I may not have even made enough to have to pay federal taxes but I will have to pay the self-employment taxes no matter what. I’m hoping that I will have some federal income tax credit that I can apply towards my self-employment taxes.
2 thoughts on “Taxes”
I’m sure you know this, but you only pay self-employment taxes on your net earnings. “Net” is after all your expenses. Are you tracking every expense you incur in making the income?
The two self-employment endeavors I have are mystery shopping and rental properties. Eventually I expect both to show “income” rather than losses but right now depreciation on my houses wipes out my income so that I show a loss. For mystery shopping, I put on a lot of miles to do the shops, and have even stayed in hotels when I’ve gone out of state. The hotel stay, mileage, and other expenses such as Internet access are all deductible.
None of this may apply to your earnings, but I was curious how much you are able to net out for expenses.
Miser – I do have expenses that I can deduct from my self-employment income and am planning to do so. The expenses for running websites aren’t that much though. I can probably get creative and find some more expenses but I don’t want to get too creative. And even if I get creative I won’t have enough expenses to come close to eliminating my self-employment income. I should have overpayment on my federal income tax that I can apply to my self-employment taxes though.