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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
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Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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My wife has a cafe in Boothwyn Pennsylvania. It is a sole ...

Customer Question

My wife has a cafe in Boothwyn Pennsylvania. It is a sole proprietorship. We live in Delaware and have a home office in the house where all of the finances for the restaurant are processed. The business was just started in August 2007. The business shows a loss for 2007 due to early business expenses. We file joint tax returns. The business has an ein#. Do we need to file a personal Pennsylvania state tax return for 2007? We should show a profit next year. Does this income get reported as Pennsylvania income or Delaware income?
Submitted: 6 years ago.
Category: Tax
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

The way this shoud be reported on the federal return is using schedule C.

For the state taxes, you will have to file a information return reporting any business losses. The income derived to the pennsulvani business has to be reported in PA.

Becasue you are delaware residents, delaware requires reporting of world wide income, so it is also reported to delaware; however, delaware will give credit for any taxes paid to pennsylvania.

 

Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience: GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
Ed Johnson and 8 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Just to clarify, an information return to pennsylvania is a regular pa tax return just showing the loss, or is it a special business tax form?
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

thanks for the feed back quesiton. It brings out another issue.

You mentioned business taxes. so let me inform you:

1. since you are not residents of PA, you will file a personal nonresident return. Using the regular form, based on your federal return. Remember, your federal return should be inlcuidng a schedule C. YOu use information off your federal return to complete the PA return.

2. Business taxes. Your business activities in PA may genereate public trust tax requiremens related to being an employer and conducting your business. such taxes inlcude

  • city wage tax (I need to know your city)
  • pennsylvania withholding on employees
  • federal wihtholding for employees
  • payment of ss and mc payments for any employees
  • tip reporting requirements.

 

Customer: replied 6 years ago.
Thanks, XXXXX XXXXX have schedule C filled out.
Expert:  Ed Johnson replied 6 years ago.

DearCustomer

In that case then you would file the reguarl non-resident income tax teturn for Pennsylvania. Personal income tax.

How are you fixed for the business taxes, do you know what to do with that?

did you have employees?

did your employees have tip income?

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