Accounting for Sole Proprietors: Tax & Bookkeeping Tips

Richard Howard55 said:I think the issue lies elsewhere... maybe the FBI hasn't set up the e-filing intake yet.
Basically, for the 2015 tax year, Column 11—which shows the DI write-off date—couldn't appear because you can't enter a write-off date until January 1, 2016.
The version I'm looking at on the FBI site doesn't even have Column 11 yet.

Thanks, so that's definitely where the glitch is.

Man, I was planning on filing the digital form now before submitting my final return, but clearly
that's a dead end. I'll just mail in the hard copies for now, then try the electronic filing again once they actually fix their broken system.

I have a couple of quick questions regarding the membership dues:
1. If I already paid my dues back in 2015—think of it like an early deposit—can I apply that amount toward the down payment required on the 2016 membership form?
2. Does the reduced rate for 2016 apply here? Specifically, I noticed the top tier isn't sitting at 0.20 anymore, but has dropped down to 0.17.

Thanks so much for the help!

Carol Price4 said:December follows the old way—January kicks off the new system.

Are we calculating these things in pennies now? 🙂

Just double-checking here, because honestly, I don't trust anyone anymore 🙂
If a "fresh" small business owner (not on a flat tax setup) gets some self-employment grants from the IRS ($8.25) like they did back in 2016, does that money count as taxable income? Like, does it actually get factored into their income tax calculation?

Kate Adams7 said:Just double-checking here, because honestly, I don't trust anyone anymore 🙂
If a "fresh" small business owner (not on a flat tax setup) gets some self-employment grants from the IRS ($8.25) like they did back in 2016, does that money count as taxable income? Like, does it actually get factored into their income tax calculation?

It doesn't—just make sure you attach the contract from the IRS and the statements. Best,

Awesome, thanks!

How do I file my DI when I keep getting this error

1.2200.2.0.3.28 - Informational message: The write-off amount must equal the purchase value multiplied by the write-off rate divided by 100, per Section 35.2, Item 8 of the Internal Revenue Code. Line 3.

I bought the asset back in May 2012, so for 2016 we're only looking at 5 months of depreciation... what are they even on about here...

Patrick Peterson49 said:How do I file my DI when I keep getting this error

1.2200.2.0.3.28 - Informational message: The write-off amount must equal the purchase value multiplied by the write-off rate divided by 100, per Section 35.2, Item 8 of the Internal Revenue Code. Line 3.

I bought the asset back in May 2012, so for 2016 we're only looking at 5 months of depreciation... what are they even on about here...

Don't sweat it. Just send it over. 🙂
It says it's just an informational notice. They’re looking to see the relationship between the rate and the base over a 12-month period, which, I guess, isn't exactly what you have going on.

Richard Howard55 said:Don't sweat it. Just send it over. 🙂
It says it's just an informational notice. They’re looking to see the relationship between the rate and the base over a 12-month period, which, I guess, isn't exactly what you have going on.

Wait, is this that same old headache where depreciation is calculated for less than a full year, so the actual amount doesn't line up with the annual rate? I haven't actually started working on tax forms yet, and honestly, I'm already dreading those notifications.

honestly, I don't even know what else to say about all that... 🤦

I have a couple of quick questions regarding my City Hall membership fees:
1. If I already paid my dues back in 2015—say, like an early investment—can I count that toward the down payment required on my 2016 City Hall filing?
2. Does the discounted rate apply for 2016? Specifically, I noticed the top tier isn't sitting at 0.20 anymore, but has dropped down to 0.17.

Thanks so much for the help!

Rachel Allen21 said:I have a couple of quick questions regarding my City Hall membership fees:
1. If I already paid my dues back in 2015—say, like an early investment—can I count that toward the down payment required on my 2016 City Hall filing?
2. Does the discounted rate apply for 2016? Specifically, I noticed the top tier isn't sitting at 0.20 anymore, but has dropped down to 0.17.

Thanks so much for the help!

1. Yes—provided you haven't already used that specific overpayment to offset your 2016 obligations.
2. Correct. You use the reduced rate compared to 2015, but when calculating those down payments, you’ll need to account for the 2017 rates—which, as of January 1, 2017, have been slashed by another 5% relative to the 2016 numbers.

What’s the income limit for a dependent for 2016? I need to know right now for my tax return—which number am I supposed to use, $13,000.00 or $5000?

Just need you guys to double-check these self-employment tax amounts for 2017.

First tier: 754.55
Second tier: 251.52
Health Insurance: 754.55
Health Protection: 25.15
Unemployment: 85.52

Are these numbers right? I don't want to mess up the math and get screwed over. One of our small business owners is paying this in tomorrow.

Thanks.🙂

Arthur Bishop6 said:Just need you guys to double-check these self-employment tax amounts for 2017.

First tier: 754.55
Second tier: 251.52
Health Insurance: 754.55
Health Protection: 25.15
Unemployment: 85.52

Are these numbers right? I don't want to mess up the math and get screwed over. One of our small business owners is paying this in tomorrow.

Thanks.🙂

Yeah, yeah, those look fine (based on a $1,350.00 income base)😉

How on earth are we supposed to accurately report subsidies received for purchasing depreciable assets? Here is the situation: a client received USDA funding to build a vacation home. The property is classified as a depreciable asset with a 10% depreciation rate (or double declining balance at 5%). The annual depreciation amount comes out to roughly $22,000. Now, should the subsidy be recognized at 10% of the total grant received, or should it match the calculated depreciation amount? Because according to the tax code, the subsidy in the tax period is recognized in the amount of the calculated depreciation (Section 20, Subsection 7), yet my colleague insists—quite stubbornly, I might add—that it should be recognized at the same percentage used for profitable entities.

Good evening, everyone!
I’ve run into a bit of a situation. I realized I missed recording an invoice from December, which means the sales tax amount wasn't included in our VAT return for the last quarter. Now I'm feeling a little foolish, but I'm trying to figure out the best way to fix this. Can I simply record the invoice backdated to December and then file an amended return for the final quarter? I need to make sure both the tax credit and the actual expense are properly accounted for.
Thanks for any help.

silvertrucker9 said:Good evening, everyone!
I’ve run into a bit of a situation. I realized I missed recording an invoice from December, which means the sales tax amount wasn't included in our VAT return for the last quarter. Now I'm feeling a little foolish, but I'm trying to figure out the best way to fix this. Can I simply record the invoice backdated to December and then file an amended return for the final quarter? I need to make sure both the tax credit and the actual expense are properly accounted for.
Thanks for any help.

Honestly, just book it in the new year and call it a day.
Unless we're talking about a massive expense, that is.
If it's a big one, I usually handle it through a journal entry like this:
/2200
1408/
4xxx/
And then, in January, I'll run it through the subledger and just record it as:
/1408
140/

Jessica Gonzalez30 said:Honestly, just book it in the new year and call it a day.
Unless we're talking about a massive expense, that is.
If it's a big one, I usually handle it through a journal entry like this:
/2200
1408/
4xxx/
And then, in January, I'll run it through the subledger and just record it as:
/1408
140/

I appreciate the response, but my business isn't subject to corporate income tax, so the standard entry on these accounts doesn't quite work for me... the total amount on the invoice is $2500, which means I really need the expense to fall within the 2016 fiscal year. Plus, I'd have to figure out if an amended sales tax return is even possible in this situation...

silvertrucker9 said:I appreciate the response, but my business isn't subject to corporate income tax, so the standard entry on these accounts doesn't quite work for me... the total amount on the invoice is $2500, which means I really need the expense to fall within the 2016 fiscal year. Plus, I'd have to figure out if an amended sales tax return is even possible in this situation...

I guess you answered your own question. 🙂
The bill was paid back in 2016, so just resubmit the calculation for 12/2016 to the PU.
The new filing will basically override the old one. The only catch might be some lady from the PU reaching out to ask why you're amending a form after the fact.