Posts: 161
Threads: 0
Joined: Jul 2016
Location: Garrett Co. MD. 21550
We pay the self employment tax sales tax and also have to pay estimated taxes.We have a CPA do our taxes. Turns out we work just to pay taxes and insurance cause thats where it all goes
Posts: 313
Threads: 5
Joined: Jul 2016
While I’ve never sold any of my pieces, I’ve been self employed over the past few decades and my CPA has always told me that anything I do that makes money requires payment of self employment tax. As he explained it, self employment tax is essentially the payment of both sides of the Social Security tax (and something else I’m not remembering), which would be paid half by you and half by your employer if you were an employee of a company.
Posts: 13,412
Threads: 0
Joined: Jun 2004
Location: Texas
I call my CPA anytime with questions with no extra charges for things they should already know- find yourself another CPA.
Posts: 40,076
Threads: 0
Joined: Apr 2007
(05-25-2018, 02:22 AM)EightFingers Wrote: i sell my turnings on commission to galleries, they pay me when items are sold.
Question is about taxes. I pay the usual income tax to the feds and the state as well as the 15.3% self employment tax (social security and Medicare). I’ve now been told I was not supposed to pay the self employment tax. I want to check with a CPA, but he wants to charge me $200 to discuss and do research.....
Before I pay him, what’s everyone’s experience here?
I would seriously look at what the cost of materials and other associated costs were before I would even consider what my hourly wage was as you might be working at a loss then check with a cpa with numbers he or she can work with
Phydeaux said "Loving your enemy and doing good for those that hurt you does not preclude killing them if they make that necessary."
Phil Thien
women have trouble understanding Trump's MAGA theme because they had so little involvement in making America great the first time around.
Posts: 5,653
Threads: 0
Joined: May 2005
Location: Centre County Pennsylvania
my mom ran a business where the tax rules she followed were all the way she thought it should be. What a mess. I don't think it's really that hard to do things right. As Bob10 says, you have to track your expenses properly.
Although it sounds like you probably mostly have materials costs and commission. Commission just comes off the top. So I suppose what you have been doing is ignoring the cost of materials and just paying social security and income taxes on that, which is more generous than I am. If you pocket the difference, then you have to pay self-employment and income taxes on that. A CPA would just help you factor in your expenses properly. Self-employed taxpayers can still deduct home office expenses and I'm pretty sure income taxes on self employed went down for 2018. But find a CPA that knows what they are doing. Someone that needs to charge you for research on this subject doesn't. Our CPA saved us some money on my self employment income.
Posts: 21,259
Threads: 2
Joined: Mar 2009
Location: IA
The Base legal office does ours every year and said since it is not a main money thing for us and a hobby that we do not need to pay self employment tax but we do pay the State and Federal along with the egg money my wife gets from selling the chicken eggs. I have now this year told her to save receipts of all the feed and upkeep on the chicken palace and a ton of other things that cost for chickens. This year we had to pay the State $35 since she has not ever kept records of anything bought for or maintenance of the chickens.
I have also kept track of money I spent for what I made and sold in turnings and I do make some but not enough to keep us in eating out once a month.
Last year since I did not make anything but just two things that I gave away and did not sell so only my wife had her things sold
As of this time I am not teaching vets to turn. Also please do not send any items to me without prior notification. Thank You Everyone.
It is always the right time, to do the right thing.
Posts: 14,711
Threads: 0
Joined: Mar 2004
I've never paid self employment tax. If your sales from any one gallery hit the 1099 threshold the gallery has to report it and you have to file a 1099. The 1099 is for contractors and if any business entity pays any individual over $600 you are considered a contractor to that entity. All the galleries that I'm in do it this way. Any material used in the turning, shipping, even mileage to the post office or to the gallery is deductible. It's very easy in my case to not show much of a profit if any. I've been doing it this way for 8 years now and haven't had any problems.
Posts: 27,910
Threads: 0
Joined: Jul 2002
Location: Pacific ocean now much further away!
Kind of what I thought. I do have some sizable deductions as we go to Maui, Kauai and Oahu every year and those expenses are deductible. This year started off great, but not sure about how the effects from the current eruption will be. Fortunately, we don’t really need the income anyway as this is mostly a hobby.
One thing that irritates me is people who aren’t paying taxes at all are coming in and undercutting me.
VH07V
