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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12572
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I filed an extension prior to 04/15/13, but I will need to

Resolved Question:

I filed an extension prior to 04/15/13, but I will need to file in a few weeks. I have been getting paid under the table, as I don't have a conventional job. I work part-time in my friend's store, I give guitar lessons, I wash cars, clean houses, run errands, whatever I can to generate some income. I usually make about $1200-$1400 a month. It is a struggle to make ends meet, and I have no money left over to pay taxes. What should I do?
Submitted: 10 months ago.
Category: Tax
Expert:  Megan C replied 10 months ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you today?

Customer:

I'm fine, thanks.

Customer:

Did you see my question?

Megan C :

Unfortunately, you would need to file your tax return. However, you should not be scared if you cannot pay the entire amount due when you file

Megan C :

The IRS will allow you to set up payment plans

Customer:

What about the State Of California?

Megan C :

They will allow you to make payment plans as well

Customer:

How can I best document my income?

Megan C :

Do you keep a bank account?

Customer:

Yes

Megan C :

The deposits in your bank account would be one way to count up your income

Megan C :

But don't include gifts, loan proceeds, and other non taxable sources

Customer:

So you're suggesting that I provide a number based on my deposits, but I would not actually submit copies of my statements?

Megan C :

No you would not submit your actual bank statements to the IRS, you would just keep them in the event you are audited

Customer:

I guess my main concern now is that my margin is so slim, I have nothing left over to give to the State or Feds after I pay my bills

Megan C :

You know you can deduct all your business expenses

Megan C :

So like the soap you use to wash cars, the mileage you put on your car when you run errands, etc

Customer:

I guess so. I don't really consider myself as being in business, I'm just scuffling, doing whatever

Customer:

Again, I would need back-up if I get audited

Megan C :

Yes, you would need backup - but it's good to start keeping that documentation for future years

Megan C :

Any time you aren't employed by someone else, and you perform services, you are self employed

Customer:

legally & technically self-employed. How likely do you think it is that they might go after someone in my situation? Wouldn't setting up a payment schedule pique their interest?

Megan C :

No, they don't "go after" you if you are making payment arrangements

Megan C :

they "go after" you if they realize you've been making money and not been paying taxes

Customer:

I guess that's what scared me most, that if I agreed to payments, they'd want me to support my income & expenses with hard copy.

Megan C :

You will have your bank statements to back you up.

Customer:

Which would reflect money coming in, but not so much money going out, as a lot of my out of pocket expenses are cash payments

Megan C :

You will have to have a log book or some sort of backup for that, or else you can't deduct it.

Customer:

Yes. Okay, so I'm filing a 1040 with no 1099's...is there any other tax form/extensio i should be considering given the dearth of info I have ?

Megan C :

The 1099 is just where people who pay you report that they have paid you to the IRS. Without any 1099s according to the IRS you haven't earned anything. They won't know what you've earned until you file your tax return

Customer:

I'm clear on that. I guess I'm wondering if there are any forms regarding self-employment that would be appropriate and/or useful?

Megan C :

You will fill out 1040 schedule C and schedule SE to calculate your tax

Customer:

Got it. I guess that does it for me. Thanks very much, you have eased my concerns quite a bit. This is VERY STRESSFUL for me!

Megan C :

Yes, I realize it is very stressful...and I'm glad I could make you feel better

Megan C :

If you are completed with your question, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12572
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you
Expert:  Megan C replied 10 months ago.
Thanks, Brian for your positive rating. Please come back and visit me any time you have a question that needs answered. It was a pleasure working with you today.

In the future you may receive a short survey. Your positive feedback on that survey will assist me with my rankings on the site. Thanks.

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