Posts by cosmictinker24

Hey there. Quick question regarding shipping costs when invoicing a client overseas—do I need to charge sales tax on the postage itself, or is that exempt?
thanks for the help!

Nicole Lee6 said:And listen, make sure you grab a copy of that statement showing the donation payment immediately. You’re going to need to attach it to your Form 1040—if you don't, the IRS will just ignore it entirely. It won't fly without proof.😬

Of course I have the court order and the bank statement. 🙂

amberbadger17 said:So, even though I logged the donation as an expense on my P&L, my accountant basically told me, "Nope, don't do that." Turns out, you're actually supposed to use that amount—up to 2% of last year's gross receipts—as a personal deduction when you file your tax return instead...

I went ahead and asked about it, and I think I read somewhere else too...
I'm probably not going to book it as an expense. I'll just include it as a deduction on my tax return at the end of the year.

placidlynx92 said:If the landlord isn't registered for sales tax and the commercial space isn't tied to a business entity, they can just pay the flat tax on income from the property—calculated as 70% of the rent times a 12% tax rate—right? Or has the tax code shifted on me recently?

So, we're talking about someone operating as a freelancer under a sales tax ID, but the property itself isn't tied to their business...
they bought an apartment as a private individual and are renting it out just like that...
now I'm reading that they should be issuing invoices with sales tax regardless of whether they lease it as a private citizen or through a business, as long as they're registered for sales tax? It's all about whether they're in the system or not?
It doesn't really make sense to me!

cosmictinker24 said:Hey there.

I’m looking for some insight regarding renting out a portion of a commercial space. Here’s the setup: an individual owns an apartment and uses part of it to run their own business (so, they're generating income from it), but they want to lease a section of that space to someone else who is self-employed. Technically, the property isn't held as a business asset; it's just owned by them as a private individual. I’ve come across a few different interpretations of how the IRS handles this, so I’m curious to hear what you all think about it.
Thanks, everyone!

So... does absolutely nobody know anything about this?

Jack Young said:Just draft a formal resolution and book it under 4860 - Donations for Public Interest(This covers cash or in-kind gifts up to 2% of last year's total revenue for things like culture, science, education, healthcare, humanitarian aid, sports, religious causes, environmental stuff—think local nonprofits, independent artists, or community groups—per IRS guidelines)

I suppose that applies to an LLC, but what about freelancers? Is the rule the same for them as it is for small business owners?

How exactly am I supposed to book a donation?
Is this being handled as a direct wire transfer from a checking account?

Nicole Lee6 said:Well, look, anything you log through "Receipts" doesn't actually feed into the Sales Tax Form; it just goes straight into the KPI ledger. The Sales Tax Form pulls its data specifically from the URA and IRA ledgers.

Up until about a year ago, I was just logging receipts and expenses in my software—an old version, mind you—and everything was recorded that way. We didn't even use URA or IRA back then; we just kept a manual spreadsheet in Word for all our incoming and outgoing invoices. So, honestly, this whole thing is throwing me for a loop. I'm still trying to wrap my head around whether non-taxable receipts should be included on the Sales Tax Form or not. I'm still learning the ropes, I guess, and there’s just so much I don't know yet...
Because, for instance, I'm closing out an invoice from 2007 right now, and if I book it through receipts with tax, I have to include it in the Sales Tax Form because the IRA doesn't even have an option for a 22% tax rate... so it has to go there.
And look, interest from lawsuits? My predecessor never even recorded that anywhere. Now, I'm just left wondering who I can actually trust...

Nicole Lee6 said:Basically, when they draft an execution order, the notaries don't bother checking whether the creditor is registered for sales tax or not. They really should, but they just don't care; they act as if everyone is outside the sales tax system, and that’s exactly where our headache starts....

Look, if you issue an outgoing invoice—meaning you rebill those notary costs to your debtor and send them that bill—then they can use it as an input credit in their own books, and that’s that. Simple enough. 🤷

Or, there's Option 2. You don't issue an invoice. Instead, once the funds hit the ZARA account—assuming the full amount for the notary fee (including sales tax) has landed—you just wire the sales tax portion back to the debtor's account. I couldn't do it that way myself because I was dealing with absolute chaos involving FINRA; they just wouldn't lift the freeze on an account, and they ended up collecting the same execution fee three times over! We were stuck in this endless loop of returning money to the debtor and then dealing with FINRA, so eventually, I just gave up and issued an invoice.

But, unless you're absolutely livid with your debtor, 😬 it would actually be easiest and most straightforward to just refund the sales tax portion (which you've already recovered for yourself via input credits) back to the debtor's account. Then, you just list it on your receipt log as a non-business receipt with a note saying it was an erroneous payment returned to the payer. The rest you just book as non-taxable income. 😁

My boss won't let me refund the sales tax amount because he's "absolutely furious" with this debtor (he's just an individual). So, I'm going to invoice for the actual costs that belong to us (since my boss is an attorney, he’s entitled to those fees), and I'll just record what we paid the notary as a non-taxable receipt along with the sales tax. One more thing, please—I'm booking the notary costs as receipts (using Synesis software), but when it generates the Sales Tax Form, that receipt doesn't show up on it?? I have no idea where that's supposed to go under Section I of the Sales Tax Form, or if it even belongs there... thanks.

Nicole Lee6 said:What I was told is that when we paid the notary bill, we used the input tax credit, which essentially meant we were reimbursed for that portion of the cost (the Sales Tax amount). Therefore, when the collection comes through, the amount we should actually be looking to recover from the debtor is just the base amount of the notary's invoice—because that's what truly remains uncollected. So, when the forced payment hits our business checking account, you would record that base amount from the original notary invoice as non-taxable income in your KPI.

The issue is that the Treasury Department and the notaries are both wrong; they insist on collecting the full amount of the notary's invoice. This leaves us in a bind: what do we do with that Sales Tax portion from your original invoice? You already got that money back via the input tax credit, and now it looks like you're getting refunded for it a second time.

In light of that, one person suggested that we should "re-invoice" the notary fees to the debtor—basically issuing an outgoing invoice that gets cleared by the funds arriving in our checking account from the forced collection. That way, the portion of the payment that covers the Sales Tax (which you already reclaimed once) is automatically sent back to the government. It balances everything out so that your inputs equal your outputs, and when you look at the KPI, it all nets out to zero.

On the other hand, another consultant told me straight up that I can't and shouldn't re-invoice it, because I didn't provide the service to the debtor; the notary provided it to me. But then again, I find myself wondering: how am I allowed to re-invoice a utility bill or highway tolls? In those cases, I am the consumer of the service, yet I still demand reimbursement from my debtor for those expenses because they are directly tied to the service I performed for them.🤷

Yeah, Nicole Lee6, we've talked about this before! I had one way of handling it where we did exactly what you suggested in the third paragraph—billing the notary costs directly to the debtor...
But honestly, I've read three different opinions on this now, and I'm just lost on which one is actually correct..
I recently read in a trade journal that if we collect notary fees including sales tax from a debtor, the debtor actually has the right to demand that sales tax back, because the creditor collected more than they were entitled to..
So, how are you actually handling this in the end?

Jack Young said:cosmictinker24, think of those JB costs as an expense on your books, and once you bill them out, they turn into revenue. Just a heads-up though, Sales Tax doesn't apply to interest payments.

I think I get it, but I'd still book both the interest and that amount as non-taxable income...
Since interest doesn't go on the Sales Tax form, if this income from those costs is non-taxable, which specific line on the Sales Tax return am I supposed to put it under? Under Section I, maybe?

Hey everyone.

We finally closed out a debt collection against an individual from back in 2007, and now we're seeing the principal, costs, and interest being processed through the Treasury Department. I’ve already tried bouncing ideas off a few people, but honestly, everyone just has their own little theory. Since this dates all the way back to 2007, I went ahead and booked the invoice under Miscellaneous Income (accounting for the 22% Sales Tax), but I'm stuck on how to handle the costs and interest. We already paid the notary fees and recorded them in our accounts to claim the input tax credit. Now, my instinct is to book those costs and the interest as non-taxable miscellaneous income, but I have no clue where that would actually sit on a Sales Tax return to make it look right. We messed up a similar situation once before... so, if you don't mind me asking, how are you guys handling this??

Hey there.

I’m looking for some insight regarding renting out a portion of a commercial space. Here’s the setup: an individual owns an apartment and uses part of it to run their own business (so, they're generating income from it), but they want to lease a section of that space to someone else who is self-employed. Technically, the property isn't held as a business asset; it's just owned by them as a private individual. I’ve come across a few different interpretations of how the IRS handles this, so I’m curious to hear what you all think about it.
Thanks, everyone!

amberdrifter14 said:By what logic is she receiving $83 every single month?
That would imply $3.75 per day, multiplied by four days... which doesn't seem quite right, does it?

so, basically 250/22=11.36 per day.
11.36 x 4 = $15 which is less, so I guess $68 she should actually be paid

Can someone please confirm this? She really needs that payment today since payroll is being processed
thanks

So, how exactly does one calculate payout for unused vacation time? We have an employee who’s entitled to a prorated amount for the year since she’ll be working through the end of May... (so, 20 days per year / 12 months x 5 months = 8 days total). Her lawyer is pushing for this, though I guess we don't have a definitive final date yet. She's on a fixed salary ($1583 every month).
I haven't actually had to deal with this myself before, and I'd really rather not screw it up. Thanks.

cosmictinker24 said:That's just how my boss laid it out... she lives five minutes from work, but there isn't a single city bus that covers that route... so I suppose she's just walking in those $83... How do you all think this should actually be calculated?

Actually, we have documentation from back in 2009 via the Associated Press stating that local transit rides are $83..

amberdrifter14 said:By what logic is she receiving $83 every single month?
That would imply $3.75 per day, multiplied by four days... which doesn't seem quite right, does it?

That's just how my boss laid it out... she lives five minutes from work, but there isn't a single city bus that covers that route... so I suppose she's just walking in those $83... How do you all think this should actually be calculated?

So, here’s the deal. An employee took four days of vacation back in April, so I assume we need to scale back her travel reimbursement accordingly... she usually pulls in $83 every month... how do you all typically run those numbers?

David Green642 said:If you’re asking which account we're talking about—you’ve got four different ones sitting there with those nasty interest rates from the commercial contracts. But if you mean the position in the URI, then forget it; those aren't subject to sales tax. 😉

Thanks, Stela27!

If I have penalty interest hitting my phone bill account from $0.04, where am I supposed to categorize that in the general ledger? Which line item does that actually fall under?