Freelance & Taxes
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- CincodeMayo
So I probably should've asked this BEFORE I paid taxes, but I just got a letter from the city of LA saying that I owe taxes because I had to claim a 1099 on my taxes.
How do you guys go about taking care of this? They say I have to register to become a business and I may owe more taxes.
I'm employed full-time but the 1099 was from my parents company (thanks Mom & Dad!). I won't be doing my freelance any more...a little here and there.
What to do?
- e-pill0
RUN BACK TO MEXICO!!!
:)
- Momentum20
oh man ... for sure get it squared away.. you don't want the gov't after you... cause if it has to do with dinero they aint gonna stop heh
- CincodeMayo0
But I'm not mexican!
Maybe I can illegally sneak into Mexico...but I fear being trampled by 100,000 people trying to come the opposite way!
- CincodeMayo0
I know! I know!
The only way I see around it is that this is strictly for doing business in LA. I live in LA and I probably claimed my apartment as my business, althought my parents company is in Burbank, so maybe I can get around it.
- e-pill0
it depends on how much money you earned in the time that you were claiming 1099.
you will want to deduct 40% from your earnings to claim your taxes.
this is a very high percentage but its also to make sure you are covered by your claim.
also any and all reciepts for the time you are claiming will definitely be needed, so you can write off.
if you were working out of your home youcan claim 1/3 of your rent and half your bills for phone and electricity.
you can write off any supplies and transportation as well.
make sure you have a receipt for everything you are claiming as the Govt is already showing you that you didnt claim anything for those time periods that they are already posibbly auditing you as it is.
make sure you get an accountant to help you will all the loop holes in paying your taxes as there are sooooo many that can help you in your favour.
good luck and if all elsse fails RUN TO MEXICO!!!!
:)
- CincodeMayo0
I didn't earn all that much...I think like $2500 or so.
And when I did pay Federal Taxes I claimed only things I had receipts for. This seems to strictly be a state issue, I think I'm fine by the gov't standards.
I think all the state wants is for me to file myself as a business and then pay the taxes.
Do any of you guys in CA get 1099s? Do you claim yourself as a business if you're only doing a bit of freelance?
- joyride0
no you don't need to become a business. Your just filing everything under schedule C. If you did everything correct for the state then you should have been ok. If the city you live in has a city tax, do you have to file seperate forms for the city? I thought the state dispersed the money?
- Neuarmy0
You shouldn't have to claim yourself as a business, that seems like bs to me...
- CincodeMayo0
Me too...to my knowledge and with the help of TurboTax, I did everything right.
Schedule C sounds right...I'm pretty sure that's where I filed everything under.
I don't think LA has a city tax...when I filed my options were State and Federal, so that's what I did.
And I'm pretty sure the deductions I made weren't home office deductions (ie., bills, sq. ft.) it was mainly gas (driving from Hollywood to Burbank) and a few other supplies.
- CincodeMayo0
BS sounds right. And it doesn't make sense if I already paid state taxes.
Unless I royally screwed up my taxes, which doesn't seem likely using TurboTax and filing all the forms I had, it should be taken care of.
They have a number I can call and talk to someone, but being a city employee and trying to get money from me, I can't think they'd be of any help.
- joyride0
I would call an accountant. AS nt isn't exactly a legal forum... but i'll give it a shot
- Point50
also, a good idea when you deduct those taxes, put them into a savings account (or play the market with it if you feel lucky/smart enough to do so) so a the end of the year when uncle sam asks for $XXX.xx in tax money, you have made some money on it. Shit, that's what the banks do with your money, why not do that with your own money that uncle sam is claiming as his?
- Momentum20
i did research on it before i got my business liscense... pretty much for LA if your making any money from a skill you have to get that license... sucks i know, but ya....
you should as a tax guy
- CincodeMayo0
Grrr...any idea how much it costs?
- Momentum20
first year business is free.. but usuall its 80 bucks... then to file a ficticious name i think its around 15-40 bucks i forgot... but i think you can just keep your name and you don't have to file for a DBA (ficticious name)
- barbtastic0
accountant. accountant. accountant.
- Rand0
what barb said
- CincodeMayo0
Are accountants a lot of money? I think that business license might be the way to go. I don't think I need a DBA either, and I trying to cut back on freelance (especially on 1099 forms) so hopefully this won't happen again.
- Jaline0
My dad my entire family's taxes for the past two years. He took courses with HR Block (which are available to the public) and then actually was offered a job to do some tax work every once in a while. He has a job though, so he just does the taxes for the family. Extremely useful.
- Jaline0
*My dad DID my entire family's taxes