Schedule C, also known as “Form 1040, Profit and Loss,” is a year-end tax form used to report income or loss from a sole proprietorship or single-member LLC. You must file a schedule C if the primary purpose of your business is to generate revenue/profit and if you’re regularly involved in your business’s activities. Schedule…
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IRS Business Expense Categories List [+Free Worksheet]
Due to the vast number of industries that exist, it is impossible to list every single business expense. However, there is a comprehensive list of common IRS business expense categories applicable to most businesses. In addition, streamlining the process of tracking your business expenses will ensure that you don’t miss out on any tax deductions….
Standard Mileage Rate for 2019 and 2020
If you use your vehicle for business, medical, or charitable purposes, you may qualify for a tax deduction. The deduction is calculated based on a mileage rate times the number of miles you drive. You must keep accurate records of your miles to qualify for the standard mileage rate deduction. Mileage Rate for 2019 The…
Small Business LLC Taxes & LLC Tax Returns (+ Free Checklist)
LLC taxes are generally reported as a sole proprietor (one owner) or a partnership (multiple owners). Sole proprietors and partnerships are flow-through entities, so the income is taxed on the owner’s tax return. However, it may benefit you to elect for your LLC to be taxed as a C corporation or S corporation. Limited liability…
Self-employment Tax Rates 2020 & Step-by-Step Instructions
Self-employment tax rates have remained constant for many years, but the amount of income subject to the tax increases slightly every year for inflation. Self-employment tax is the equivalent of payroll taxes paid by employees and is due on income earned by sole proprietors, freelancers, and independent contractors. Self-employment tax is due regardless of whether…
Form 1065 Instructions in 8 Steps (+ Free Checklist)
Partnerships and certain LLCs must file Form 1065 every year to report their income and expenses. Income and expenses reported on Form 1065 flow through to partners and are taxed on their tax return. While Form 1065 does not generate a tax liability, it is very important to complete it on time and accurately. The…
How Do S Corporation Taxes Work? (+Free Checklist)
S corporations (S-corps) are corporations and limited liability companies (LLCs) that have elected to pass through their income, deductions, and credits to be taxed on the owner’s tax return. S-corp tax rates are the same as the personal income tax rates because the owners pay S corporation taxes on their share of the company’s income….
IRS Form 8832 Instructions & FAQs
IRS Form 8832 is filed by limited liability companies (LLCs) to be taxed as C corporations (C-corps). LLCs also file Form 8832 to revert to being taxed as a sole proprietor or partnership if C corporation status was previously elected. An LLC that doesn’t file Form 8832 is taxed as a sole proprietor or partnership….
IRS Form 720 Instructions: How to Complete in 8 Steps
IRS Form 720 is used to report and pay your federal excise tax liability for certain products that are manufactured, produced, or imported like fuel as well as services like airline travel. It is not used for alcohol, tobacco, and firearms, which use Form 5000.24. We will discuss IRS Form 720 instructions. The completion of…
16 Tax Write Offs for Self-employed Professionals
Running a business can be expensive, especially when taxes decrease your bottom line. Luckily, there are numerous tax write offs that self-employed professionals can claim to save thousands of dollars. Use IRS Form 1040 to deduct home office, insurance, travel, internet, phone, and other qualifying expenses that you incur operating your business. Here is a…
Independent Contractor Taxes: How Much to Pay & When to File
Independent contractor taxes include federal income tax, self-employment tax, state and municipal taxes. Independent contractors who are sole proprietors report taxes on Form 1040 and Schedule C. Taxes are due on April 15 or October 15, if filed on extension. Independent contractors are required to make estimated tax payments or with the tax return. This…
TaxAct vs TurboTax: Price, Features, & What’s Best
TaxAct and TurboTax are tax preparation software products that are good options for people to prepare their own tax returns. TurboTax has more features and provides the option for review by a licensed tax professional. TaxAct is less expensive and provides a good set of features for most people who prepare returns. When to Use…