Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

I am self employed, an ISO and I receive residual income from

another company that I am...
I am self employed, an ISO and I receive residual income from another company that I am a reseller for (not an employee of that company). Right now I file as a 1099 and I am deducting my business expenses such as supplies, phone, mileage ...etc. I just filed my income taxes and just though of this question: What if I change careers and not do any more sales, I will still have residual income from sales I done months - years ago and wont have any deductions. What suggestion(s) do you have for me?
Show More
Show Less
Ask Your Own Tax Question
Answered in 1 hour by:
4/12/2013
Jesse Handel
Jesse Handel, Tax Preparer
Category: Tax
Satisfied Customers: 309
Experience: 10 years tax preparation. IRS Registered Tax Preparer.
Verified
Hello and thank you for coming to our website. We appreciate the opportunity to help you with your questions. During the time that you are working in your current job, you will have deductions while you are making sales. If you deduct the expenses as they occur and add income as you receive it, the income and expenses will be the same regardless of the timing of the income and expenses. If you make the sales in 2012, then you will deduct all of the employment-related expenses on your Schedule C in 2012; but if you don't get paid until 2013, then you will deduct the income on your 2013 Schedule C. You will still get credit for the expenses in 2012, you will just have lower net earnings in 2012 and higher net earnings in 2013. You don't actually lose credit for any expenses; but you have to expect higher taxes in 2013 since the expenses have already been deducted. If you have expenses in January 2013 but don't get paid until May 2013, the timing won't affect your Schedule C. You just have to keep track of the expenses you have while you're making the sales and then the income will come in later in the year.

If I have misunderstood your question, just let me know and I will be happy to continue to help you with this question until you are satisfied.
Ask Your Own Tax Question
Customer reply replied 4 years ago

I think I need to clarify this a bit. If I made a sale in january, I would incur costs like travel gas food tolls...etc just that one time. My first residual from that sale will come in feb and also in march, april and will go on and on until the buyer ceases to continue the service i sold him. It could be a few months or a few years i would be recieving residual sales I did years ago. So lets say I retire. I will get residual income from all the sales I have done from years past without incurring any new expenses. Now I have just about the same income (residual or commision) and zero expense. I wont have the deductions thus the amount I pay in taxes would be higher. What can I do?

Unfortunately, there isn't anything that you can do about this situation. Even if you changed from a cash accounting method to an accrual accounting method, it wouldn't affect this situation of the income coming long after the expenses. You have to claim expenses when the expenses are paid and you can't claim income until it is paid. All that you can do is claim the expenses at the time you incur them and save money to pay the taxes on the income in future years when you don't have expenses. You can reduce your income in future years by putting money into an IRA or SEP retirement plan and that will defer the taxes on the income you put away until you take the money out of the retirement plan after you reach age 59.5. But, there isn't any way that you can wait to claim expenses until you receive the income. I'm sorry about this situation, but that is the way the rules work. If there is any other help that I can give you, I'll be happy to help you further.
Jesse Handel
Jesse Handel, Tax Preparer
Category: Tax
Satisfied Customers: 309
Experience: 10 years tax preparation. IRS Registered Tax Preparer.
Verified
Jesse Handel and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Jesse Handel Your Own Question
Jesse Handel
Jesse Handel
Jesse Handel, Tax Preparer
Category: Tax
Satisfied Customers: 309
309 Satisfied Customers
Experience: 10 years tax preparation. IRS Registered Tax Preparer.

Jesse Handel is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
If my husband and I file our income taxes married, filing
If my husband and I file our income taxes married, filing separately, can we alternate who gets to claim things like property tax deduction? We live together in the same home.… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
Under the new Tax Cuts and Jobs Act, does a Schedule C sole
Under the new Tax Cuts and Jobs Act, does a Schedule C sole proprietor qualify for the 20% deduction of qualified business income or is this only available to S Corp shareholders & LLC's?… read more
Patrick Mullis
Patrick Mullis
Masters
3 satisfied customers
I am widow,do not file income tax because income is low and
I am widow,do not file income tax because income is low and no taxes withheld. I do own a home which my adult daughter shares with me. She pays all house expenses inlue of rent, these equal half of mo… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
Lev we spoke on the phone regarding the amended schedule c
Lev we spoke on the phone regarding the amended schedule c questionnaire. When I do my schedule c business again, will I use the schedule C form 2017?I am assuming that is correct, the C4 questionnair… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
A law firm (which is a Schedule C filer) has gross income of
A law firm (which is a Schedule C filer) has gross income of 1,000,000 & Net Income 0f 280,000. In the tax reform just passed, there is a 20% deduction for law firms that have income less than 315,000… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
This is an income tax question. I am thinking of Deducting
This is an income tax question. I am thinking of Deducting next years giving to church this year with pending changes to tax law. As I recall, higher income levels reduce schedule allowable deductions… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Chad, I have a Schedule C realtor that turn 70 August of
Chad,I have a Schedule C realtor that turn 70 August of 2017. She will have earned income from her Schedule C. Is she allowed to contribute to a Traditional IRA and/or SEP IRA for 2017? If she has sel… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
FOR GUILLERMO: What line on the 1040 income tax return is
FOR GUILLERMO: What line on the 1040 income tax return is used to determine the sponsor's income for Form I-864? Is it line 22: TOTAL INCOME? Or, line 37, ADJUSTED GROSS INCOME?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Under the new tax plan, can a Schedule C proprietor still
Under the new tax plan, can a Schedule C proprietor still deduct her health insurance premiums on page 1 of Form 1040 & are there any medical expenses she can still deduct on Schedule A (if they excee… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
On a schedule c who do you put as the proprietor if it is a
on a schedule c who do you put as the proprietor if it is a newspaper route and you are given a 1099-misc … read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
101 satisfied customers
This is a question on a UK resident's personal income tax on
This is a question on a UK resident's personal income tax on lump withdrawals of funds in a Canadian RRSP using an example with funds expressed in $CAN. Value of lump sum payment from the RRSP is $100… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,791 satisfied customers
Are you familiar with income tax laws on business and
Are you familiar with income tax laws on business and personal returns? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Dose mean can not deduct state income taxes only or dose it
dose mean can not deduct state income taxes only or dose it includes property taxes too … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Is real estate income taxed only in the state they are
Hi. Is real estate income taxed only in the state they are generated in? For example, if someone owned investment real estate in Texas that has a 0% state income tax and lives in Pennsylvania, would t… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I have a question regarding the ordinary income tax. If the
Hello, I have a question regarding the ordinary income tax. If the ordinary income tax due is negative does that apply anywhere? This pertains to the sale of an S corp .business. … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
Small schedule c business donates fully depreciated
small schedule c business donates fully depreciated furniture to charity. They've been told that the FMV is $1,000. What is the deduction for contributed property? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can franking credit on an Australian income tax return be
Can franking credit on an Australian income tax return be used on Form 1116 as tax paid on the franked distributions? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
I filed my income taxes this year as usual with a schedule C
I filed my income taxes this year as usual with a schedule C and as a sole proprietor, which I have been for years. In August of 2016, my husband and daughter and I formed an LLC but didn't do ANYTHIN… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x