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Ask Robin D. Your Own Question

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience:  15years with H & R Block. Divisional leader, Instructor
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I do drafting work for my brothers company and he pays me as

Resolved Question:

I do drafting work for my brothers company and he pays me as an independent contractor. I also have an LLC registered as an eccommerce company with the state of Texas (where I reside). Can I report these earnings under my LLC and, more importantly, is that a wiser choice than just reporting them myself? I assume I could write off the gas mileage back and forth and a few other things as business expenses.

Thanks,

Logan
Submitted: 9 months ago.
Category: Tax
Expert:  Robin D. replied 9 months ago.

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.

Robin D. :

These payments should be reported on a Schedule C on their own. Your expenses for the same will be also shown on the Schedule C.

Robin D. :

The other business you have should not (unless the same type of work) be merged.

Customer:

What is a schedule C exatly?

Robin D. :

If your LLC is a single member then you are most likely showing that on Schedule C (sole proprietor) too.

Robin D. :

The Schedule C is used for self employed and Single Member LLC.

Robin D. :

unless

Robin D. :

the LLC has requested to be taxed as S corp

Customer:

and if I wanted to do a diverse set of business practices under one LLC, is there a way to do that?

Customer:

no, it's a single member. Pretty new though

Robin D. :

Then you would simply have 2 Schedule Cs with your 1040 filing

Customer:

ok, so they'd really be taxed about the same then

Robin D. :

If these are not the same type of working businesses then separte is best

Robin D. :

Yes

Robin D. :

to the last statement

Customer:

ok, gotcha

Customer:

and since my taxes aren't being taken out ahead of time, is there a way to figure out how much I should be setting aside?

Robin D. :

You will be including your Gross income (net minus expenses) as regular income and the amount over (of Gross) $400 as Self Employment tax.

Robin D. :

You would want to calculate the Gross

Robin D. :

The SE tax is your SS and Medicare

Robin D. :

self-employed person pays 15.3% total.

Customer:

ok and expenses could include, say the gas it requires to go back and forth to the office?

Robin D. :

Gas (actual car expenses) or the mileage. Actual would include gas, depreciation, repairs....

Robin D. :

The mileage uses a set amount and is easier and takes into the calculation depreciation on a national level

Customer:

ha ok, so theres a lot of room for what's considered an expense

Robin D. :

It must be ordinary and needed to the business

Customer:

ok so they would then calculate that for me?

Robin D. :

They who?

Customer:

the mileage

Customer:

They being theres a box on the sched C?

Robin D. :

Oh, the mileage is a set amount per mile for business, yes the Schedule C has a place for that as well.


If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer toPublication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.

Robin D. :

Other Types of Business Expenses




  • Employees' Pay - You can generally deduct the pay you give your employees for the services they perform for your business.



  • Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.



  • Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.



  • Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.



  • Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.



  • Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.



This list is not all inclusive of the types of business expenses that you can deduct. For additional information, refer to Publication 535, Business Expenses.

Robin D. :

The employees listed above are not other independent contractors that you may need to pay. You would list those on the Schedule C too but not as employees.

Robin D. :

If you have an expense that is directly to the work then it is most likely allowed.

Robin D. :

It just needs to be substantiated with receipt or other paperwork.

Customer:

ok, so if I was running my eccommerce business from a home officein my house which I rent, I heard I would calculate the percentage of the office within the hous and deduct that percentage from my rent. Is that true?

Robin D. :

Yes, that is correct. Publication 587 has detailed information on rules for the business use of your home, including how to determine if your home office qualifies as your principal place of business.

Customer:

ok great, and one last question, is the sched C within the 1040 EZ?

Robin D. :

NO

Robin D. :

You will need to use the 1040

Customer:

ok the regular 1040

Robin D. :

Would you like a link

Customer:

ok thanks

Robin D. :

You can look at that to get a feel for what you will be using

Customer:

well thank you so much for your help

Robin D. :

You are most welcome.
Your positive rating is always thanks enough.

Robin D. :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.
You will find the request feature when you come back under your MY QUESTIONS section.


 

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7363
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 7 other Tax Specialists are ready to help you

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