Accounting for Sole Proprietors: Tax & Bookkeeping Tips

So, which K.

The PDMO form—you know, the one for voluntary pension data.

Can I just be old-school and carry this around on paper, or am I seriously expected to master some xmllmx nonsense?

Second thing—what am I supposed to put in the work description field for W-2 employees regarding hours worked and insurance basis...?

Olivia Cruz86 said:So, what’s the bottom line here? What are we actually looking at?
Are those passive interest payments getting rolled into income for 2015?

Interest on checking or savings accounts isn't treated as income. One would just explain that to the IRS in an attachment to the DOH.😁

casualorca5 said:Interest on checking or savings accounts isn't treated as income. One would just explain that to the IRS in an attachment to the DOH.😁

My mistake, I haven't actually read the new law yet. I suppose I should go look at it.
👎

I didn't include those interest charges for the business owners in my KPI either—even though a colleague mentioned just the other day that they actually *do* belong there. What a mess.
I was reviewing the recent updates to the payment reference numbers for the self-employed contributions today. Every single one of them has been changed.

amberbadger17 said:So, which K.

The PDMO form—you know, the one for voluntary pension data.

Can I just be old-school and carry this around on paper, or am I seriously expected to master some xmllmx nonsense?

Second thing—what am I supposed to put in the work description field for W-2 employees regarding hours worked and insurance basis...?

Of course you can.
I honestly couldn't wrap my head around xmllmx at all—it was just too much for me. 🤣

For the work area, you just list the business headquarters; at least that’s how I’ve always done it, since everyone works right where their office is located.🤣

And don't bother putting in actual working hours—just use the number of calendar days. So, 31 for January, 29 for February, and so on.

6.1 0041
6.2 5801 if you're dealing with sole proprietors under the Internal Revenue Code.😉

casualorca5 said:My mistake, I haven't actually read the new law yet. I suppose I should go look at it.
👎

Haha, yeah, I can tell you didn't...
Honestly, this forum is great for all the stuff I don't have time to actually read 🤣🤣
I basically just pretend I've kept up with everything 🎉🤣

My last post didn't go through, so I'm trying this again.
To reiterate: this whole payroll system is going to drive me insane.
Anyway, I finally figured out where everything goes in the portal, so I went ahead and tried to run a "test" entry today.

I filled out the header correctly, handled the 😳second filer signature, and moved on to Page A.

But then, on Page A, all those boxes meant for contribution amounts are grayed out... like they're locked, so you can't type anything in at all.
For example, VI1.7, VI2.6...

Basically, every box on Page A related to the contributions we calculate and pay ourselves is blocked.
The rest of the boxes seem fine.
Page B is working just fine too.
It occurred to me that maybe these specific fields were just rolled out today—like it's their first day in existence—so perhaps the IRS is just slow to unblock them.
If anyone could check if they're seeing this same lockout, it would give me some peace of mind... I just need to know if it's a system-wide thing and not just my mistake.
Thanks,

They aren't coming, they just aren't... ugh...😵
Does anyone actually have a solid conclusion regarding passive interest for 2015? Like, does it even count as income back then or what? I’m honestly just completely lost at this point 😢
It’s like they wrote the laws just to make us suffer... 🙂

ruggedlynx63 said:They aren't coming, they just aren't... ugh...😵
Does anyone actually have a solid conclusion regarding passive interest for 2015? Like, does it even count as income back then or what? I’m honestly just completely lost at this point 😢
It’s like they wrote the laws just to make us suffer... 🙂

If you sit there and read Article 20, Section 6, and then Article 21, Section 5—give or take the exact numbers—a few times🤣, and then try to jump over to Article 30, Section 15... then circle back to those first two articles again, you should eventually realize that yes, it really does go under business receipts🤣

I finally realized that when I'm digging through the IRS code, I have to actually write things out and formulate entirely new sentences as I go—just trying to bridge the gap between all these different sections and subsections. It's honestly the only way I can stitch everything together into something that actually makes sense 🙂

Brandon Jackson4 said:My last post didn't go through, so I'm trying this again.
To reiterate: this whole payroll system is going to drive me insane.
Anyway, I finally figured out where everything goes in the portal, so I went ahead and tried to run a "test" entry today.

I filled out the header correctly, handled the 😳second filer signature, and moved on to Page A.

But then, on Page A, all those boxes meant for contribution amounts are grayed out... like they're locked, so you can't type anything in at all.
For example, VI1.7, VI2.6...

Basically, every box on Page A related to the contributions we calculate and pay ourselves is blocked.
The rest of the boxes seem fine.
Page B is working just fine too.
It occurred to me that maybe these specific fields were just rolled out today—like it's their first day in existence—so perhaps the IRS is just slow to unblock them.
If anyone could check if they're seeing this same lockout, it would give me some peace of mind... I just need to know if it's a system-wide thing and not just my mistake.
Thanks,

It isn't you; it's definitely them. I sent them a screenshot showing that the system is glitching because before you run the validation, all the data on Page A is entered perfectly, but as soon as you hit submit to check it, an error pops up and all those business contribution fields on Page A just vanish. They told me to try submitting via Chrome to see if that worked, but it won't work in Chrome or even in Explorer. They haven't gotten back to me since; it looks like they're just tinkering with it. Of course, they never get things done on schedule—it's always nothing but complications with them. We'll have to see tomorrow, because their website stated that submissions would be open starting at 4:00 PM, so maybe they finally fixed it.

ruggedlynx63 said:They aren't coming, they just aren't... ugh...😵
Does anyone actually have a solid conclusion regarding passive interest for 2015? Like, does it even count as income back then or what? I’m honestly just completely lost at this point 😢
It’s like they wrote the laws just to make us suffer... 🙂

Look, I'm just gonna report it. It’s not like we're talking huge money here—let them deal with the headache and the legal jargon... damn, we shouldn't have to be lawyers too 😵 just to get through our actual jobs...

I'm not quite sure which section this belongs in.🤔
An employer running a small business wants to pay for additional training for an existing employee. Not a student, just a current staff member.
What kind of tax breaks are available, and what exactly can be filed as a deductible expense? Can they write off the full amount of the training costs? If so, how much? Also, how does this get recorded on the payroll forms, and what's the proper way to report it to the IRS?
Thanks for any help.

Nathan Peterson10 said:I'm not quite sure which section this belongs in.🤔
An employer running a small business wants to pay for additional training for an existing employee. Not a student, just a current staff member.
What kind of tax breaks are available, and what exactly can be filed as a deductible expense? Can they write off the full amount of the training costs? If so, how much? Also, how does this get recorded on the payroll forms, and what's the proper way to report it to the IRS?
Thanks for any help.

Look, if you want those training costs to be tax-free, you have to check all these specific boxes first:
- The payment absolutely has to be for the benefit of the company's own staff.
- The training needs to be directly relevant to what the business actually does.
- The money should be paid directly to the educational institution, not handed to the employee.
If the employer decides to foot the bill for an employee's continuing education, that expense ends up being doubly tax-advantaged... because the company can use it to lower its taxable income base via standard federal tax incentives when filing their annual return.

Carol Price4 said:Look, I'm just gonna report it. It’s not like we're talking huge money here—let them deal with the headache and the legal jargon... damn, we shouldn't have to be lawyers too 😵 just to get through our actual jobs...

Well, I guess I'll throw my two cents in too. Whatever happens, happens...😉

Carol Price4 said:Look, I'm just gonna report it. It’s not like we're talking huge money here—let them deal with the headache and the legal jargon... damn, we shouldn't have to be lawyers too 😵 just to get through our actual jobs...

But where exactly are you planning to list them?? I've been staring at this P-PPI form for two days straight trying to make sense of it, and I am totally stuck... Does the total cash revenue minus the cash expenses have to match the deposit into the checking account?? I’ve double-checked everything, but the numbers just won't balance out for me.🙂

Jessica Gonzalez30, thanks.

Regarding those interest rates everyone’s obsessing over—I’ll just throw that into my footnotes. Honestly, I’m not going to lose sleep over a few bucks here or there.

Anyway, quick lightning round question: if I want to list my husband as a dependent—assuming he meets all the criteria—do I need to submit both the standard HHS form and that other specific one, what's it called again?

He isn't on my insurance, and I have zero intention of adding him.

I was thinking about just attaching our marriage certificate and calling it a day.

What do you guys think?

Keith Martinez5 said:But where exactly are you planning to list them?? I've been staring at this P-PPI form for two days straight trying to make sense of it, and I am totally stuck... Does the total cash revenue minus the cash expenses have to match the deposit into the checking account?? I’ve double-checked everything, but the numbers just won't balance out for me.🙂

Right into the trash pile...

amberbadger17 said:Jessica Gonzalez30, thanks.

Regarding those interest rates everyone’s obsessing over—I’ll just throw that into my footnotes. Honestly, I’m not going to lose sleep over a few bucks here or there.

Anyway, quick lightning round question: if I want to list my husband as a dependent—assuming he meets all the criteria—do I need to submit both the standard HHS form and that other specific one, what's it called again?

He isn't on my insurance, and I have zero intention of adding him.

I was thinking about just attaching our marriage certificate and calling it a day.

What do you guys think?

Are you working a standard W-2 job or are you running your own small business?
If you're self-employed, you don't file the Higher Education Act version of the HHS form; you just submit the standard HHS form, list your husband as a dependent, and include a marriage certificate issued within the last six months.
If you're a regular employee, you just submit the Higher Education Act/HHS paperwork along with the marriage certificate as an attachment.

Nathan Peterson10 said:I'm not quite sure which section this belongs in.🤔
An employer running a small business wants to pay for additional training for an existing employee. Not a student, just a current staff member.
What kind of tax breaks are available, and what exactly can be filed as a deductible expense? Can they write off the full amount of the training costs? If so, how much? Also, how does this get recorded on the payroll forms, and what's the proper way to report it to the IRS?
Thanks for any help.

Just wanted to jump in and follow up on what ruggedlynx63 mentioned earlier.

Basically, you can claim up to 60% for general education and training expenses, or 25% if it falls under specialized training. This covers things like tuition at accredited institutions, seminar fees, professional literature, and—this is a good one—even travel and lodging costs if the training happens away from where the employee lives.

Regarding the paperwork, you'd enter those additional deductions into columns 4.2.1 and 4.2.5. 😉

It might be worth taking a closer look at the Higher Education Act for the specifics.

Jessica Gonzalez30 said:Just wanted to jump in and follow up on what ruggedlynx63 mentioned earlier.

Basically, you can claim up to 60% for general education and training expenses, or 25% if it falls under specialized training. This covers things like tuition at accredited institutions, seminar fees, professional literature, and—this is a good one—even travel and lodging costs if the training happens away from where the employee lives.

Regarding the paperwork, you'd enter those additional deductions into columns 4.2.1 and 4.2.5. 😉

It might be worth taking a closer look at the Higher Education Act for the specifics.

If I may interject for a moment;
would this mean that I first take the invoice for my training (specifically code 95—periodic driver retraining) and, say, a subscription to a professional journal, and record them as business expenses in my tax filings based on the cash accounting method at the moment I pay them? And then, am I allowed to use 80% of those base amounts (since we fall under the micro-enterprise category) a second time as a deduction through an HHS filing?