General Discussions

**3rdShiftStudios** · 10-08-2006, 11:03 PM

i work a day job and do freelance at night. I'm so naive as to think that "freelance" also meant "don't claim for taxes" but I have a feeling my current client and some future clients are gonna ask me for a tax ID and i really don't know what i'm gonna tell them.

Sooooo what do i do? how do i obtain a tax I.D. and how do i keep G.W. from lopin' off a big lump of my hard-earn'd cash?

I really REALLY planned on not going legit until this january so i wouldn't have to claim anything from this past year. I have a feeling that'll be out of the question considering who i'm doing the work for right now.

**colbyt** · 10-09-2006, 08:49 AM

As a sole proprietor your fica number is all the tax id you need.

If they ask you for your tax id # you just fill out the TIN form and hand it to them.

**3rdShiftStudios** · 10-09-2006, 10:51 AM

would you be so kind as to repeat that, just without the acronyms....thanks! [i'm a noob to this ****]

**ultra** · 10-09-2006, 12:08 PM

in india we have pin number not any tax id as far as i know

**3rdShiftStudios** · 10-09-2006, 01:34 PM

you have a personal identification number number? lol.

ya well, americans are strickly told never to release a PIN

**Munky** · 10-09-2006, 05:39 PM

I'm not sure if this is the same general concept as being an independent contractor or just working in general, but like in the state of Indiana, if you don't make more than $600 with that employer than you don't have to claim them on your taxes. I don't know if that's a state thing or a federal, but check into it. The way I'm looking at this, you're an independent contractor and they as a client are your employer because they're giving you work to do. So if you don't make more than $600 with them in the entire year then you don't have to claim it on your taxes.

I could be wrong about this entire thing, but that's the way I'm thinking it works. If I'm wrong I apoligize as I don't know a whole lot about this either. But definately check into it and if anyone else knows more, I'd like to know about this as well for future refrences.

**colbyt** · 10-09-2006, 10:00 PM

Quote:

Originally Posted by 3rdShiftStudios

would you be so kind as to repeat that, just without the acronyms....thanks! [i'm a noob to this ****]

Fica = your social security number.

Tin = taxpayer identification number.

You can download a pdf version of the tin form from the IRS.

All you need to fill in is name, address, social number and check the not subject to back-up with holding box. Sign and hand it to whomever you do business with.

Then the ball is in their court. They have until Jan 31 to mail you a 1099 form which will state the gross payments to you. They are not required by law to send you a 1099 if your earnings are less than $600 but many companies do!

You may then claim that gross amount as income or fill out a schedule C when you file your taxes. A schedule C form allows you to deduct all "necessary and reasonable" expenses spent in the pursuit of said income.

Home office deductions are a big "red flag" item. Real expenses should always be claimed.

For total gross earning amounts less than $400 just claim it as misc income and forget the extra forms. No social security tax will be owed on amounts of less than $400.

Feel free to PM me with questions if I miss your post in the thread.

I am not an accountant, just a self employed person some 20 years now who files my own taxes.

**3rdShiftStudios** · 10-09-2006, 10:46 PM

DAYUM! you definatly have yer **** straight, hoss! thanks for the heads up, i'm copy/pasting that into my computer for later reference.

so only if i make more than 600 per client, then i should turn it in? but if i make 400 per client, and have 40 clients i'm safe? just making sure. thanks.

**ultra** · 12:58 AM

ok a dumb question are these rules for every one who work on internet with clients all over world or only for americans ????

**Munky** · 10-10-2006, 07:03 AM

Quote:

Originally Posted by 3rdShiftStudios

DAYUM! you definatly have yer **** straight, hoss! thanks for the heads up, i'm copy/pasting that into my computer for later reference.

so only if i make more than 600 per client, then i should turn it in? but if i make 400 per client, and have 40 clients i'm safe? just making sure. thanks.

I talked to my Mom about it more last night since she knows a lot more about the tax laws than I do. She said that if the client claims it on their taxes that they paid you for this work, then you too must claim it on yours. Which then opens the government up to taking more of your money.

So even if Client A pays you $200 for work the entire year and they claim it on their taxes, you must do the same. But there's where the problem can be, there's no way of knowing if they claim it unless you want to ask them if they did or not. So you may not know if it's been cliamed and if they do and you don't, you can get in trouble.

Again, I would try and find someone a little more in the know about this than I am.

**3rdShiftStudios** · 10-10-2006, 11:36 AM

i think i'll just send my clients a quick question:

"hello, will you be claiming the services rendered on your taxes this year? If so i will need to send you a few forms, if not, disregard this message"

**Munky** · 10-10-2006, 05:54 PM

Wouldn't be too bad of an idea. But if you do written contracts make sure it states in there that if they said they weren't going to claim the work on their taxes, that they can't go back on it at a later date. Or something to that regard.

**colbyt** · 10-10-2006, 07:56 PM

Quote:

Originally Posted by 3rdShiftStudios

DAYUM! you definatly have yer **** straight, hoss! thanks for the heads up, i'm copy/pasting that into my computer for later reference.

so only if i make more than 600 per client, then i should turn it in? but if i make 400 per client, and have 40 clients i'm safe? just making sure. thanks.

I just want the record to reflect that is not what I said. The law states that you should report all income from self employment. I have a 100 or more clients per year that pay me less than $100 and I report it all. I get enough legal breaks with the business deductions that I don't feel the need to under report income.

What I did say is that the purchaser/client has no legal obligation to mail you a 1099 form if your earnings are less than $600. Clients with sharp accountants will mail you 1099 for $10 or more because that is defacto proof they made the payment.

If you are inclined to cheat on your taxes you should make no more than $599.00 per client. I think that may be mute point since you posted this thread here and would no longer be able to claim ignorance as a defense.

Ignorance; they smack your hand and take your money. Willful intention to commit fraud they let you serve a little time. Ask Martha or Leona about that.

For the other poster, these are US tax law discussions. I can't say how they might relate to your situation.

**3rdShiftStudios** · 10-10-2006, 11:58 PM

last thing i wanna do starting a business is do something stupid. I am happy to report as needed and would be glad to. I just needed to know how b/c i'm a noob and really didn't wanna pay an accountant or HR block or read through greuling literature to find an answer.

**Munky** · 10-11-2006, 07:18 AM

Definately better to be safe than sorry when it comes to Uncle Sam and the IRS.

**colbyt** · 10-11-2006, 01:30 PM

Quote:

Originally Posted by 3rdShiftStudios

last thing i wanna do starting a business is do something stupid. I am happy to report as needed and would be glad to. I just needed to know how b/c i'm a noob and really didn't wanna pay an accountant or HR block or read through greuling literature to find an answer.

Most likely you don't have a lot of expenses. You may have some milage if you do anything onsite. I would be happy to discuss the type of expenses you might have.

Most small businesses can get away with doing a simple schedule C. The simple C is about as easy as the 1040A. The social security form can be confusing.

For $30 you can buy Taxcut and do about any form you will ever need using a simple question and answer type format. I started using it in 1994 and buy the new version each year. It prints out ready to file forms for you.

The big trick it to track the income and expenses as you go along. A simple notebook is good enough.

**3rdShiftStudios** · 10-11-2006, 04:15 PM

tracking expenses....notebook...yeah....gotta start doing that....

**Kane Hill** · 10-14-2006, 11:13 PM

I promised myself I would go legit at the begining of the new year. But I said that last year and the year before that. But this year is different. The profits keep getting higher and if I want to show that I have a legit business it has to be done. But it was fun while it lasted.

**Fanboy** · 11-09-2006, 01:37 PM

Quote:

Originally Posted by Kane Hill

I promised myself I would go legit at the begining of the new year. But I said that last year and the year before that. But this year is different. The profits keep getting higher and if I want to show that I have a legit business it has to be done. But it was fun while it lasted.

Kane...you were able to get away with it this entire time? I was wondering if there's a way to go ahead and claim it, but AVOID all that Occupational Liscense bullcrap.

I'd be willing to pay the taxes, but avoid paying the county fees and such just to have a stupid little piece of paper up on the wall.

**Saleen765** · 04-06-2007, 08:53 PM

Quote:

Originally Posted by 3rdShiftStudios

tracking expenses....notebook...yeah....gotta start doing that....

Jaison,
I don't know that it would be very advantageous for you to post your REAL NAME...your BUSINESS NAME...your BUSINESS WEBSITE (showing you address/phone)...and using the same Username on www.youtube.com to link to your personal website for your vehicle.
The tax man has PERMANENT evidence to explore/audit your A**! Be careful and make sure you apply for the proper licenses for your business. If you pay H&R Block or some CPA to manage your taxes...it is a COMPLETE business write-off anyway. You will not be able to apply for a mortgage or business loan unless your INCOME that your report (and pay taxes on) is sufficient. Shortcuts rarely lead to any measurable advantage. Just my two cents. The previous post regarding the LAW...is 100% accurate. Now you know...you need to adjust your situation. I know MANY business owners in Fort Thomas, KY...Fort Thomas is an easy city to set up your licenses. Don't take any chances that will affect your customers' perceptions of your ethics/integrity. Good luck.