Posts by Brenda Chase3

Brenda Chase3 said:So, I’m looking at a situation involving a sole proprietor who essentially operates as their own corporation. Throughout the year, they were paying themselves distributions from those profits. Every cent of tax and surcharge was paid upfront at the moment of distribution, and everything was properly documented via the standard payroll reporting forms. Now, here is where I am getting stuck: when it comes time to file the annual tax return, am I actually required to report that capital gain income? The issue is that once I input it under section 4.4.1, it spikes the total annual taxable income. This, in turn, triggers an additional layer of tax and surcharges in the calculation. To me, this feels like a mathematical error because the taxes on that specific income have already been settled in full. Perhaps there is another field or a specific box in the filing where I need to indicate that these taxes were already withheld? I am feeling a bit lost here. Any guidance would be greatly appreciated.

I'll provide an answer here just in case anyone else runs into this situation. As a sole proprietor, you aren't required to report those profit distributions or dividends as separate income items. You are obligated to report your earnings from self-employment and any other professional activities, but these specific payouts don't fall into that mandatory category. You certainly *can* list them, but it isn't a requirement. To save everyone some time, there is a full breakdown explaining how this works in the link below.

http://www.accountingusa.com/tax-guides/sole-proprietor-distributions...6k/?section=34

So, I’m looking at a situation involving a sole proprietor who essentially operates as their own corporation. Throughout the year, they were paying themselves distributions from those profits. Every cent of tax and surcharge was paid upfront at the moment of distribution, and everything was properly documented via the standard payroll reporting forms. Now, here is where I am getting stuck: when it comes time to file the annual tax return, am I actually required to report that capital gain income? The issue is that once I input it under section 4.4.1, it spikes the total annual taxable income. This, in turn, triggers an additional layer of tax and surcharges in the calculation. To me, this feels like a mathematical error because the taxes on that specific income have already been settled in full. Perhaps there is another field or a specific box in the filing where I need to indicate that these taxes were already withheld? I am feeling a bit lost here. Any guidance would be greatly appreciated.

silvertrucker9 said:Hi everyone,

I have a quick question regarding tax calculations. In a situation where the total annual personal deduction actually exceeds the calculated annual income, how should the monthly withholdings be determined? Specifically, is there a particular way to report this under section 9.7.2. on the tax return?
Thanks.
Best regards,

Not at all. You don't need to enter anything there. If that happens, you won't have an obligation to make prepayments for 2017 because the IRS won't come looking for them. If you really want to, you can always choose to make voluntary payments if you suspect your income might jump higher later in 2017—just so you aren't hit with a massive tax bill at the end of the year—but based on your 2016 numbers, the IRS isn't going to demand any prepayments from you.

Betty Sanchez10 said:I was planning on heading down to the local Social Security office to pick up that hardware token for accessing my digital government accounts and the IRS, but I’ve been staring at this application form and I am completely lost on which boxes to check. I recognize the section regarding the crypto e-card/USB device—though I can't tell if they mean a physical card that plugs into a USB port or if I should be checking something else entirely 😵—but then there is this whole business with selecting a certificate. I honestly have no clue what the difference is between QCP+ and the Democratic Party+ options. Am I actually supposed to select one of those, or just leave it alone? Thanks!

When I went through this process about a year or so ago, I just walked into my bank, explained exactly what I needed, and the teller handled everything for me. They filled out the paperwork, handed me the form, and gave me an activation code to log into the system—it was incredibly straightforward.
If any of the rules have changed since then, maybe someone else on the forum can weigh in, as it's been a while.

Carol Price4 said:I’m not booking this through the IRA module—instead, I'm running it through the Sales module, which is why I hit a bit of a snag since there aren't any toggle switches available... but honestly, I think if I just categorize the non-depreciable portion of the DI under expenses, I’ll land on the same number anyway.

The DI purchase was handled under Section 22, so it didn't hit the expense line initially; depreciation will go into expenses later, and since the full invoice was logged under receipts, the non-depreciable part should also head straight to expenses.

Does that sound right to you guys? Come on, Brenda Chase3, Henry Edwards33, Carol Price4, Henry Edwards33—where are you hiding??

I was sitting there trying to input everything, but I honestly couldn't figure out how to log this through Sales. If it were up to me, I’d much rather just record it under expenses—simply add a link and manually organize it that way. As it stands, I really don't see any way to get this recorded within the current module.

graniterider10 said:Are there any updates regarding how we should be booking those hiring incentives? I mean, am I still supposed to record them as receipts for the full amount exactly as they were paid out? For example, if the money hit my bank account on November 15th, I’d just go ahead and book the receipt in the KPI on that same date.

Just book them as receipts; nothing has changed on that front.

Here’s my firsthand experience with this. We actually went through a name change due to marriage just two days ago. We handled the paperwork with the Social Security Administration first, following the standard procedure. Then, we logged into the Medicare & Medicaid Services portal, where you can update your last name directly. Just a heads-up: if you move, the address updates automatically once the DMV processes it, but you still have to manually hit save to make it stick. So, you simply enter the new surname, click "save changes," and your employee data will reflect correctly on the PDF forms. You don't even need to visit a physical office for anything.

Lisa Nelson4 said:Hey everyone, just popping in to say hi!

I'm currently buried under a mountain of personal errands—so much to do, right?—so I'll try to keep this quick. I really don't have the headspace to comb through the entire tax code regarding sales tax and income tax today. If I'm issuing an invoice that’s going to be paid in Euros, am I legally required to use the Federal Reserve's mid-market exchange rate for both the invoice date and the payment date? Or, I guess, is it okay if I just go with whatever rate my bank decides to use?

Thanks so much in advance!

You have to use the Federal Reserve mid-market rate; any discrepancy gets recorded as a foreign exchange gain or loss.

graniterider10 said:Lupita Nyong'o, thanks for clarifying the tax stuff.
Now I'm wondering about something else. I haven't actually dealt with this specific scenario yet, so I'm a bit lost on how to handle a tax liability transfer.
I just received an invoice because of some recent repairs, but there’s no sales tax calculated on it. Should I just record it exactly as it is, without any tax, and then just list the required sales tax separately on my tax return, or is there more to it than that?
Also, is the amount I actually paid considered the base for the sales tax? For example, if I paid $667, does that mean the sales tax is $167?!

You should record the invoice as an expense, and those $0.67 will go toward your expenditures. You'll need to report the $2,000 base amount and the sales tax of $167 on your tax return under sections II.4 and III.4.

Lisa Nelson4 said:Hey there,

I’ve got a quick question about depreciation—I’m honestly not 100% sure if my math is hitting the mark here.
So, I picked up a laptop for $1119 (pre-tax), and I'm planning to officially put it into service on October 1st (even though it actually arrived on September 8th). Does it matter at all if I'm paying for it in installments?

Assuming I calculate the depreciation regardless of how I'm paying it off, I was thinking of just using an accelerated rate of 100%, which would look like this:

3356.60 / 12 months = 279.72
for the final three months of this year $280
and then just taking the remaining full value next year.

Does that sound right to you guys? I haven't really had to deal with any long-term assets before, so I'm feeling a little unsure.

Thanks so much!

That's correct. 👍 (The installment plan doesn't matter; what counts is the date it was placed in service, which was 10/2016.)

cosmictinker24 said:Quick question? I’ve been paying for this fiscal software because we used to have maybe one or two cash transactions a year, but honestly, last year we didn't have a single one—everything went through our business checking account. What do I actually need to do to stop using this fiscal program? It feels like a total waste of money at this point...
Do I just need to officially decide that we won't be taking any cash payments anymore? Or is there something else required by the IRS?
Thanks for the help

You don't actually need to do anything special. You only need a fiscal register if you are processing cash transactions; if you stop doing that, you simply decommission it, return it, and you're done. If you ever decide to take cash again down the road, you'll just have to acquire a new one—it's really that straightforward. One of my clients handled this about a year ago; they just returned the device and that was the end of it. Even if you aren't using the hardware, you remain a subject of fiscalization requirements, so keep your internal documentation in order, but the physical register is only necessary if you're handling cash.

boldlynx13 said:I have some employees who are currently registered with the Social Security Administration under high school diploma qualifications, even though our internal restructuring has since upgraded those specific roles to require college degrees. I neglected to update their official records with the SSA, and quite a few years have slipped by since the change actually took place. I suppose I should wonder whether I am required to rectify this now, and if so, what effective date should I be using? Furthermore, I suspect there might be some sort of penalty from the IRS or the Department of Labor due to this delay. Has anyone here dealt with updating personnel data after such a significant lapse in time?

Your best course of action would be to reach out to them via phone or email first to explain the situation; they’ll tell you exactly how they want to handle it. We once had a similar oversight where we forgot to update an employee's status from "fixed-term" to "permanent" even though we had already amended their contract. It completely slipped our minds to notify Medicare and the SSA. Once we contacted them directly, they simply processed the update without any issues or penalties.

Thomas Diaz8 said:After submitting my sales tax return, I realized I made an error. How am I supposed to go about correcting a filing that has already been sent off? Is it sufficient to simply submit a revised version, or am I required to visit the local IRS office to provide a formal explanation regarding why this correction is necessary?

Just submit a new one. If the agent has already processed the incorrect filing, give them a quick call to let them know you've sent an updated version; they'll swap it out for you. However, if they haven't touched the original yet, there's no need to even pick up the phone—they'll simply process the most recent submission. You don't need to provide any formal written explanation.

Nicole Lee6 said:Well, looking at the amendments made to the regulations after December 31st, 2014, they completely failed to correct that specific article to align with the current law. It’s a mess. Honestly, I have no clue what the move is here, but the folks over at Sinesys dropped the R-2 entirely starting January 1st, 2015, and switched to just stating "calculation based on paid consideration."

So, basically, am I right to be pushing back? Am I correct in thinking that I don't actually need to clutter my invoices by citing which specific section of the VAT Act justifies the "calculation based on paid consideration" note I've included? 😠🙂

To be honest, I don't include a citation for which article applies, nor have I ever seen anyone else doing it among those who also calculate based on collected fees. Every time I've researched the mandatory requirements for invoice contents, I haven't found anything stating you have to cite the legal basis for this specific issue. And nobody is writing out "R2" either.

Nicole Lee6 said:I’ve been digging through RRIF 6-2016, and I am losing my mind here. According to Article 197, Paragraph 4 of the sales tax regulations, small business owners are supposed to include an "R-2" designation on their receipts?! Wait a second—wasn't that requirement scrapped back on January 1st, 2015? Why on earth is it still sitting there in the regulations? It makes zero sense. We have a total standoff where the Law says one thing, but the regulations say another! What are we even supposed to follow?! 🤔
Nicole Lee6, my Synesis software hasn't been printing the R-2 designation on my invoices for a while now...

And does it suffice if the invoice just states "Calculation based on collected fees"
or am I legally required to cite the specific statute—you know, explicitly stating something like "In accordance with the provisions of Section 125, Paragraph 5 of the Sales Tax Act, the tax is calculated based on collected fees."

Article 139, Paragraph 3 of the VAT Act states that you must include the phrase "calculation based on collected fees," but it doesn't explicitly mandate citing the specific article number. From what I understand, the R-2 requirement was phased out starting January 1, 2015, but that 2013 Regulation is still floating around everywhere claiming it's necessary. I can't seem to track down the updated VAT regulations to see if they changed anything.

Nancy Jones said:So, what’s the actual process here—do I really need to go back and file an amendment for 2015?
I used to book credit card payments as income on my general ledger too, so honestly, I’m just sitting here waiting for the IRS to give me a call.

I actually dealt with this exact situation for two different clients. In my experience, all you have to do is submit a formal statement explaining that the credit card transactions were incorrectly recorded as deposits into the operating account. That was more than enough to clear it up; I didn't even have to touch the sales tax summaries.

Nicole Lee6 said:Since when does it matter what leaves the business account? What matters is what comes in, because that's what determines your tax liability. If money goes out and you haven't booked it as a business expense, the government actually wins because you end up paying higher taxes. An entrepreneur can certainly pay for personal expenses out of the business account, and obviously, those won't be listed in the KPI.🤔

It’s exactly like Brenda Chase3 said. The IRS can ask for an explanation if something doesn't add up, even regarding the debit side of the business account (I had to handle that once about ten years ago for a client). We just explained it to them—clarifying how much was withdrawn as personal income versus how much went toward bills—and that was the end of it. I've only seen them request that kind of breakdown once in my entire career, but honestly, it wasn't a problem at all.

Jose Myers said:Does the IRS website and everything else actually work on Windows 10?

It works perfectly fine, everything runs just as it should.

Steven Anderson14 said:Does an LLC send the DI form along with the PD form? I was under the impression that only sole proprietors have to deal with that when filing with HHS.

It's just for sole proprietors.

Betty Morris11 said:Greetings, everyone.
I am seeking some guidance if anyone here is familiar with this specific situation.
An American company—which currently operates outside of the VAT system—is planning to launch an e-commerce platform. In this model, the postal service will act as the intermediary for all deliveries. The target customers are private individuals located in Germany. I need to understand the full scope of requirements: Is it mandatory to obtain a VAT identification number? What specific information must be detailed on the invoices? Furthermore, what is the standard procedure regarding the IRS, and are there any particular reports that must be filed?
Any assistance would be greatly appreciated..

My consultants laid it out for me like this:

If the company isn't registered for sales tax and they are handling the shipping, you just issue an invoice the same way you would domestically, including a clause stating that sales tax hasn't been charged based on the relevant tax code sections, and that's pretty much it. Basically, you don't need to apply for a sales tax ID; you just issue a standard invoice. The main thing is to stay mindful of the sales tax threshold in the country where you're shipping the goods. Every country has its own limit, and once you cross that threshold, you'd have to follow their specific registration procedures. As long as you stay under that limit, you just invoice normally and don't have to send anything to the IRS.