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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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I am trying to file 2015 tax return, I am a self-employed

Customer Question

Hi, I am trying to file 2015 tax return, I am a self-employed and very least income last year and I don't bring these to CPA because I don't have to pay and I can not trust them if doing right way, because I never got refund at all. When I review myself, I found some difference and I can get refund for last year as head of household. I have expenses that have to figure out AGI(I included all expense as self-employed), but I am not sure if I deduct my home office whole- moved very small place) and I need advise to prepare documents and in deduction before start e-file. thank you
Submitted: 6 months ago.
Category: Tax
Expert:  Lev replied 6 months ago.
Hi Sophie and welcome to our site!You will report your income and may deduct qualified expenses.- you may report all business income and expenses -Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit.To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business.on the schedule C - net income (after deductions) will be reported on the form 1040 line 12 - the business has net income over $400, it may be required to file Schedule SE, Self-Employment Tax net self-employment income is subject to 15.3% self-employment tax.Self-employment taxes from schedule SE will go to the form 1040 line 57 - - you will deduct half of self-employment taxes on the line 27.Generally - that all you needs tax purposes..Regarding deducting home office expenses.As you are using the home for business purposes - you may deduct corresponding expenses.These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation allocated to the part of your home used for business.The standard method has some calculation, allocation, and substantiation requirements that are complex and burdensome for small business owners. This new simplified option can significantly reduce recordkeeping burden by allowing a qualified taxpayer to multiply a prescribed rate by the allowable square footage of the office in lieu of determining actual expenses.For a full explanation of tax deductions for your home office refer to Publication 587, Business Use of Your Home.If you are choose a simplified method - the maximum we are allowed to deduct $5 per 300 sq f = $1500.Let me know if you need any help with reporting.

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