Tax question re combining multiple sched and ques re: 8829
Category: Business and Money > Accounting
Asked by: margi-ga
List Price: $5.00
14 Nov 2004 13:54 PST
Expires: 14 Dec 2004 13:54 PST
Question ID: 428881
PART 1: We file joint returns. I and my spouse were self employed. One has a corporation and 1099 income. One has W2 and 1099 income. I created 3 separate schedule Cs and 2 schedule SEs: 1 C for Sub S chapter corp for me (after IRS approval to combine with personal return) 1 C for my 1099 income as a sole proprieter 1 C for spouse's 1099 income as a sole proprieter 1 schedule SE for my income including both corporate profits and 1099 profits 1 schedule SE for my spouse for 1099 profits The 1040 form assumes one entry for each line item that crosses over to those schedules. The question is: Do I simply add them up with a calculator for the line in the 1040 form, and then supply the individual documents with the return - OR - Do I create a summary document (the problem is there's room for only one SSN or EIN) ...Or do I do something else entirely??? PART 2: We used form 8829 for business use of home. We lease. The beginning of the form has us apply a percentage of space for the business use (12%). I used line 20 for "other expenses" (being our lease payment) Line 22 has me apply the percentage to the total. Let's say the resulting number is $1K for ease of math. So, I'm thinking that the allowable expenses for business use of my home would be $1K... but as I fill out the rest of the lines, it has me add the $1K to my total annual expense (let's pretend that's $10K + $1K, or $11K), then pick the lesser of that or my line 29 from schedule c, which (let's pretend $15K). So I'm finding that the maximum allowable expense is $11K (or more than I pay in rent for the year versus the percentage). That seems wrong. I'm freaked out enough, I'm thinking about not claiming it at all. What did I do wrong? An answer from TaxMamma or someone similar in caliber would be appreciated. Thanks!
Re: Tax question re combining multiple sched and ques re: 8829
Answered By: taxmama-ga on 14 Nov 2004 21:09 PST
Dear Marg How interesting. You're filling out the forms manually. I can see why that might be confusing. OK, let me clear something up for you. When you have income from an S-Corporation, you don't need to pay self-employment tax on it. So, only report the S-corporation profits on your Schedule E, page 2. Forget the Schedule SE altogether. Let's go back to the Schedule SE, though. If you each have more than one business that qualifies for self-employment tax, you could just attach a summary list of the businesses and profits from each. Then just enter the total on each of your respective Schedule SE's. I am really proud of you for tackling it manually. Most people don't. It's kind of fun, isn't it? I try to do one or two returns that way each year just to make sure that the tax software is getting it right - AND that _I_ understand the flow of the numbers. Good for you. Best wishes, Your TaxMama-ga P.S. On the Form 8829, I'm glad you figured it out. Basically, you may deduct your home office expenses up to the amount of your business profit. If your business(es) have a loss, you'll need to carry the expenses to the next year, when you might have a profit.
rated this answer:
and gave an additional tip of:
Of course, 5 stars for my taxmamma :-) As you can see from prior posts, she has helped me tremendously in the past. Tonight's no exception. We shouldn't get kudos for doing it manually. Sounds like we should've used software. But, I do like to understand where everything is going and how much we should pay and why. Must be the analyst in me...
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