1099-MISC and Small Business Returns
1
What you need
• Download: http://www.irs.gov/pub/irs-pdf/p4012.pdf
• Email for hard copy: kandrews@enterprisecommunity.org
2
What to Expect
• Working part-time for an employer outside the
home.
o 1099-MISC, line 7
• Working Part-time for an employer in your own
home.
o
1099-MISC, line 7
• Small business owner: In-home daycare, Service
person, Home delivery newspaper carrier, etc.
o Cash receipts and/or1099-MISC, line7
3
1099-MISC
• Box 3 and 7
• Expenses
o Mileage
• Commuting vs. business travel
o Necessary tools or supplies
• Link to Schedules C and C-EZ
• Self employment tax
4
Out of Scope for VITA
•
•
•
•
•
•
Expenses exceeding $10,000
Business use of home
Vehicle expenses reported as actual expenses
Depreciation
Net losses
See Publication 4012 for full listing
5
Small Business Scenario 1
Advanced Topic
• Anna is employed as an editor, she works from
home and was paid on a 1099-MISC
• She kept a record of all expenses:
Expense Item
Cost
Printer Paper
$ 525.00
Printer Ink
$ 1,200.00
Business Cell Phone
$
350.00
Printer
$
300.00
Computer
$ 1,500.00
Total Dollars
$ 3,875.00
Miles while making deliveries
234 Miles
6
7
TaxWise
Tax Preparation Software
8
9
Linking to a Scratch Pad
10
11
12
Everything Transfers to
the 1040
13
14
15
Ohio Self-employment
Tax Credit
• 50% self-employment tax credit on the Ohio tax
return.
• Line 41 on page 3 of IT-1040
• 1099-MISC qualifies
• Complete Ohio IT SBD form by hand
• Enter the credit amount as a deduction to income
and on line 41 of page 3 OH IR-1040.
• Keep the IT SBD for your records
16
8,869
8,869
627
17
627
Ohio SBD Continued
8,242
1 0
8,242
8,242
250,000
4,121
18
Entering the Deduction
into TaxWise
19
Scenario 2
• Raoul is a plumber who has his own small business
and occasionally works for a plumber friend who
bills the client all charges and pays Raoul on a 1099MISC.
• In his own business he bills the customer for the
service call, labor and all the parts he uses to do the
job.
• He keeps good records on his mileage to and from
the customer, as well as all of his expenses.
• In general Raoul charges all his expenses for tools
and supplies to his business. However, if the part
time job requires a special tool he will charge it to
the 1099-MISC job.
• Raoul earned $27,500 in his business, and
received a1099-MISC from his plumber friend for
$6,800.
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Income and Expenses
•
Raoul earned $27,500 in his business, and received a1099-MISC from his
plumber friend for $6,800.
Billing Software
$
147
Paper, ink, other office supplies
$
222
Expendable supplies: sealer, solder, tape, etc.
$
207
Pipe threader
$
500
Pipe cutter
$
325
New socket set
$
175
Soldering equipment set
$
130
Heavy duty pipe wrench – 1099-MISC job
$
137
Miles to the business
Miles working with his friend
7,500
980
21
Publication 17
Figure 26-B
When are transportation
expenses deductible?
22
Small Business Scenario 3
• LaDonna is an unlicensed at home daycare
provider. She earned $8,900 last year.
• She opens her entire house and backyard to the
daycare children.
• Every Monday, she takes the children to the zoo
and has tracked her mileage and other expenses.
Food
$ 1,200
Games, Toys, Crafts
$
650
Cleaning Supplies
$
240
Tennis Shoes (Only worn while working)
$
90
Total Dollars
$ 2,180
Mileage
320 Miles
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