Thought I would give back a little bit. For the next week or so I will answer your US Tax questions in this forum. If it is a good question I might feature it on my blog. I have spent the last 20 years as a tax and business consultant. That doesn't mean I will always have the answers, but I usually do!
Very generous of you, thanks! If I own a website and pay someone over $600, what information do I need to get from them and how do I fill out the form / paperwork for a 1099?
Thanks for the free advice What are the proper procedures for claiming a room in a house as a business expense (+ utilities)?
You need to get their name, address, and tax ID number. Unless they are incorporated, in which case you do not need to file a 1099 for them. Fill out form 1099-misc (you can get for free from the IRS). One for each vendor. The red copies go to the IRS with a Form 1096. You send one or two copies to the vendor and keep one for yourself. The form is pretty self-explanatory. Put the amount you pay them in box 7 -non-employee compensation. You are supposed to send the 1099's to your vendors by Jan. 31. The IRS copies should be mailed by the end of February. You might get penalized for sending in the 1099's late, however, that is better than having an independent contractor reclassified as an employee. Good question! Remember...It's not tax advice unless you pay for it. I am just offering general information that may or may not apply to you. Consult your tax adviser for your particular tax situation.
Office in home is one of those tricky deductions that auditors love. It is a great deduction, but you must make sure you do it right. I have known professional tax preparers who wouldn't take the deduction because it was an "audit flag". That said I think it is one of the best deductions you can take because you get to write off a portion of normal living expenses. If you want to take this deduction you need to read the Free publication from the IRS. Publication 587, Business Use of Your Home But here are a few highlights. Your home office must be a place that you use regularly and exclusively for business. This is where most people get caught up. Exclusive means exclusive. It can't be where you play computer games or pay your bills, you can't let your kids do their homework in your office, you can't use it as a guest room once a year when your in-laws visit. Your home office does not need to be a room. My first "office" was a corner of the living room that had a desk, my computer used only for work, and a printer. The important thing is it was used exclusively for business. I owned another computer for non business activities. You file form 8829 Business Use of Home. Follow the steps line by line and you will then be able to deduct a portion of your rent or mortgage interest, utilities, and home repair. Remember...It's not tax advice unless you pay for it. I am just offering general information that may or may not apply to you. Consult your tax adviser for your particular tax situation.
I got one for you. I know about state level tax credits which is great, but is there anything like that for Federal tax? I would love to pay 63c on the dollar to the fed, especially on capital gains for 2008.
My question: Many years ago I joined a US startup and received some stock shares as partial compensation. At the time, I was strongly urged to fill out some form and send it to the IRS, which I did. Over the years I left the company, lost faith that the shares would ever be worth anything, and also moved back out of the US. However, I maintain my US PR and have some US-sourced income so I am required to file US taxes every year. Now, the startup has launched a buyback program which would actually give me some money for those shares. But I don't remember what that IRS form was, and I am unable to locate my copy of it. Based on this scenario, would you have any idea what the form was, and what its implications could be for my tax liability? How am I supposed to report the proceeds from the buyback? Income? Capital gains? I never paid anything for the shares, so I have no cost basis.
@SmallPotatoes, Congratulations on actually having your shares worth something! I am sorry I have no idea what form that had you fill out. It probably was either a a W-9 or a W-4, but there is no real way to tell for sure. Report the sale of the stock on schedule D with no basis. The income will be capital gains income. Which is a good deal this year because some of your capital gains will be tax free! @it career: I could get myself in trouble if I answered that one! Let's just say I don't know enough about Dubai to make an educated reply! Remember...It's not tax advice unless you pay for it. I am just offering general information that may or may not apply to you. Consult your tax adviser for your particular tax situation.
If someone in USA is paying me through paypal and product is getting shipped from India , is there any tax implications ?