Estimate your income/expenses

diamondridge · December 14, 2013, 8:32am

bumblebee:

You are not going to get “actual numbers” from anyone. Primarily, it is none of your business what someone else’s numbers are to answer your question.

Everyone’s actual numbers are different depending on a multitude of factors, many of which have been mentioned here. I am an Enrolled Agent and I don’t know what a write off is. However, your ignorance about the topic would be a different thread.

The quick version for you;

What is your Filing Status and how many Exemptions can you claim? Write it down, it will be needed later.

Now we start with Income.

The 16th Amendment to the Constitution says, [COLOR=#000000][FONT=Tahoma]The Congress shall have power to lay and collect taxes on incomes, from whatever source derived,
This means all the money, or things of value you took in. Once you have listed everything, you can add it up to get Total Income.

From Total Income you get get to deduct certain expenses. There is a list of allowable deductions and the IRS will provide you with Publications that enumerate these deduction. When you deduct these expenses from Total Income, you get Adjusted gross income(AGI).

From Adjusted Gross Income, you deduct your Personal Exemption(s) based on the number of people living in your house or you support, and then enter either the Standard Deduction (based on Filing Status) or If you have enough, you can itemize deductions (based on the total of your personal Exemptions and Deductions). This calculation will give you your Taxable Income.

Once you have your taxable income, you can go to the tax table and find the Tax you owe, and if you owe any Alternative Minimum Tax (AMT)

Now we get to Credits. Credits reduce the tax you owe dollar for dollar. There are a list a credits you are allowed to deduct, such as Child, Education, retirement savings, residential energy…etc.

After the Credits, you get to deduct other taxes you have paid in like Self-employment tax, taxes paid on IRA’s or other retirement plans, foreign taxes…etc. There is also a list of these taxes. Once these have been deducted, you get the Total Tax you owe.

Somewhere during the year you have made tax payments to the government for various amounts. Withholding is one type of these payments. you total these payments with any EITC (earned income tax credit) you might receive and deduct these total payments from the tax you owe. If the payments are greater than the tax, you get a refund. If not, you owe.

Everyone fills out these items differently. Two people who made the exact same total income, may get different results. One could get a refund and one could owe.

This is why your question cannot be answered by using “actual numbers” from anyone. You can only get a range or estimate
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An LLC, filing as an S-corp, your business profits flow-through to your personal. So let’s say on your w2 you were paid $40k and your business profited $10k, your taxable income before all credits and deductions would be $50k. That’s the way it was explained to me, is the correct, [MENTION=171]bumblebee[/MENTION]?

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JCinNJ · December 14, 2013, 8:41am

I just noticed your 27 years old, my mistake for not noticing earlier.

JCinNJ · December 14, 2013, 8:47am

you are either an “LLC” or an “S-Corp”, not both.

What you describe above is for LLC.

S-Corp business taxes will be calculated from $10K and personal taxes will be calculated from $40k

JCinNJ · December 14, 2013, 8:50am

you guys really need to get your own accountants to answer YOUR questions related to working in YOUR state for however YOUR business is structured

diamondridge · December 14, 2013, 8:50am

An LLC can file as an S-corp

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JCinNJ · December 14, 2013, 9:04am

You can change your business status from LLC to SCorp anytime throughout the year and for THAT one year you will file under both structures. An accountant will advise to change at the end of your fiscal year to keep things simple but it is not necessary.

diamondridge · December 14, 2013, 9:09am

Combining the Benefits of an LLC with an S-Corp

There is always the possibility of requesting S-Corp status for your LLC. Your attorney will advise you on the pros and cons. You’ll have to make a special election with the IRS to have the LLC taxed as an S-Corp using Form 2553. And you must file it before the first two months and fifteen days of the beginning of the tax year in which the election is to take effect.

The LLC remains a limited liability company from a legal standpoint but for tax purposes it’s treated as an S-Corp. Be sure to contact the state’s income tax agency where the election form will be filed. Ask them whether or not they recognize the S-Corp election and what the tax requirements are.

From SBA.gov

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diamondridge · December 14, 2013, 9:11am

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JCinNJ · December 14, 2013, 10:06am

diamondridge:

Combining the Benefits of an LLC with an S-Corp

There is always the possibility of requesting S-Corp status for your LLC. Your attorney will advise you on the pros and cons. You’ll have to make a special election with the IRS to have the LLC taxed as an S-Corp using Form 2553. And you must file it before the first two months and fifteen days of the beginning of the tax year in which the election is to take effect.

The LLC remains a limited liability company from a legal standpoint but for tax purposes it’s treated as an S-Corp. Be sure to contact the state’s income tax agency where the election form will be filed. Ask them whether or not they recognize the S-Corp election and what the tax requirements are.

From SBA.gov

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Thats my point, you can not file S-Corp without proper paperwork and making the proper changes.

diamondridge · December 14, 2013, 10:16am

Nice try!

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JCinNJ · December 14, 2013, 10:24am

not a “try”! If your business is registered as “LLC” you CAN NOT file as S-Corp without the proper paperwork and legal changes.

Bottom line is get an accountant and dont trust the SBA for legal advise without contacting a lawyer or, as in this case, and accountant.

diamondridge · December 14, 2013, 10:27am

Lol, you’re backtracking… And I have a Cpa already. Just stating a fact.

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Garry · December 14, 2013, 11:38am

bumblebee:

You are not going to get “actual numbers” from anyone. Primarily, it is none of your business what someone else’s numbers are to answer your question.

Everyone’s actual numbers are different depending on a multitude of factors, many of which have been mentioned here. I am an Enrolled Agent and I don’t know what a write off is. However, your ignorance about the topic would be a different thread.

The quick version for you;

What is your Filing Status and how many Exemptions can you claim? Write it down, it will be needed later.

Now we start with Income.

The 16th Amendment to the Constitution says, [COLOR=#000000][FONT=Tahoma]The Congress shall have power to lay and collect taxes on incomes, from whatever source derived,
This means all the money, or things of value you took in. Once you have listed everything, you can add it up to get Total Income.

From Total Income you get get to deduct certain expenses. There is a list of allowable deductions and the IRS will provide you with Publications that enumerate these deduction. When you deduct these expenses from Total Income, you get Adjusted gross income(AGI).

From Adjusted Gross Income, you deduct your Personal Exemption(s) based on the number of people living in your house or you support, and then enter either the Standard Deduction (based on Filing Status) or If you have enough, you can itemize deductions (based on the total of your personal Exemptions and Deductions). This calculation will give you your Taxable Income.

Once you have your taxable income, you can go to the tax table and find the Tax you owe, and if you owe any Alternative Minimum Tax (AMT)

Now we get to Credits. Credits reduce the tax you owe dollar for dollar. There are a list a credits you are allowed to deduct, such as Child, Education, retirement savings, residential energy…etc.

After the Credits, you get to deduct other taxes you have paid in like Self-employment tax, taxes paid on IRA’s or other retirement plans, foreign taxes…etc. There is also a list of these taxes. Once these have been deducted, you get the Total Tax you owe.

Somewhere during the year you have made tax payments to the government for various amounts. Withholding is one type of these payments. you total these payments with any EITC (earned income tax credit) you might receive and deduct these total payments from the tax you owe. If the payments are greater than the tax, you get a refund. If not, you owe.

Everyone fills out these items differently. Two people who made the exact same total income, may get different results. One could get a refund and one could owe.

This is why your question cannot be answered by using “actual numbers” from anyone. You can only get a range or estimate
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Sentence #2.

JBeauty · December 14, 2013, 1:37pm

Yes you are right. I completely agree, sir yes sir sir sir.

JBeauty · December 14, 2013, 1:38pm

I forgot to mention I have 12 kids and four wives and I was temporarily mentally insane when I asked this question and now its permanent.

Garry · December 14, 2013, 1:42pm

Well, I guess what we have here is for me to not let a smart ass be - simple/to the point - kiss my ass.

JBeauty · December 14, 2013, 1:44pm

Sir yes sir.

diamondridge · December 14, 2013, 2:05pm

In that case you got nothing to worry about; you will be getting money back!

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JBeauty · December 14, 2013, 2:09pm

Oh yes I should have mentioned in the initial post I was posting this so you could all send me guestimates about your personal taxes so I can get an exact figure for my personal situation but this answer from you is the best. I now know I will be getting a refund approximately how much should I expect ? A.)$2k B.)$5k C.)$10k ? Just say a b or c

diamondridge · December 14, 2013, 2:12pm

C.

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