If you are a sole proprietor that wants to operate under a separate legal name and avoid the cost of incorporating or setting up a seperate legal entity, you will need to register the name of your business. In NC that means contacting the county Register of Deeds where you will be operating.
This page will give more guidance on who must register and how it can be done.
This page lists the forms available for you to use.
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So maybe you read this post about home offices and you are hoping you can write off your S Corporation's home office since it is based out of your home. If done correctly then you should be able to take advantage of this deduction.
The way to handle this is to have the S Corporation reimburse the shareholder directly for the actual home office expenses (calculated the same way a sole proprietor would, allocated by square footage). The S Corp. shows the office expense on it's income statement. This expense then flows through to the shareholder through the corporation's K-1. This needs to be done under an accountable plan, so you can't just give yourself a set amount each month. It needs to be based on and supported by documented actual numbers.
Don't be tempted to have the corporation rent the office space from you either. This is an area of the tax law where the IRS will allow the rental deduction on the corporate books, and the shareholder reports the rental income on Schedule E. The deductions allowed on Sch. E are limited because of the employee/employer relationship. Only mortgage interest, real estate taxes, and casualty losses are allowed as deductions under section 280 A (c) (6) of the code. These expenses were already deductible, so the IRS has limited all other operating expenses like depreciation, utilities, HOA dues, repairs, etc. Because of this limitation I do not recommend this scenario. You are just creating extra headache for yourself with no real benefit.
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The way to handle this is to have the S Corporation reimburse the shareholder directly for the actual home office expenses (calculated the same way a sole proprietor would, allocated by square footage). The S Corp. shows the office expense on it's income statement. This expense then flows through to the shareholder through the corporation's K-1. This needs to be done under an accountable plan, so you can't just give yourself a set amount each month. It needs to be based on and supported by documented actual numbers.
Don't be tempted to have the corporation rent the office space from you either. This is an area of the tax law where the IRS will allow the rental deduction on the corporate books, and the shareholder reports the rental income on Schedule E. The deductions allowed on Sch. E are limited because of the employee/employer relationship. Only mortgage interest, real estate taxes, and casualty losses are allowed as deductions under section 280 A (c) (6) of the code. These expenses were already deductible, so the IRS has limited all other operating expenses like depreciation, utilities, HOA dues, repairs, etc. Because of this limitation I do not recommend this scenario. You are just creating extra headache for yourself with no real benefit.
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Congress Repealed the New 1099 Law that was going to put such a burden on small business.
It is sad when you are praised like a hero for cleaning up your own mess, but I am very thankful that this was taken care of.
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It is sad when you are praised like a hero for cleaning up your own mess, but I am very thankful that this was taken care of.
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The IRS has always offered transcipts by mail by completing form 4506, but now you can request the transcripts online. Some notes about the process:
-A transcript is a computer printout that shows most of the line items found on your tax return when you filed it, including any accompanying forms and schedules. When it comes to verifying income, a transcript often is an acceptable substitute for a copy of your original tax return.However, any changes made after the return was filed will not be reflected on a basic transcript. For that you need a tax account transcript.
-A transcript is a computer printout that shows most of the line items found on your tax return when you filed it, including any accompanying forms and schedules. When it comes to verifying income, a transcript often is an acceptable substitute for a copy of your original tax return.However, any changes made after the return was filed will not be reflected on a basic transcript. For that you need a tax account transcript.
-A tax account transcript will provide any adjustments you or the IRS made after you filed your return. Like the basic tax transcript, the tax account transcript also shows things such as your marital status, type of return filed, adjusted gross income and taxable income.
-You can have a transcript sent directly to your lender, who should get it in about 10 days after you submit your request.-There's no cost to order your current-year transcript, as well as transcripts for the past three years. If you need an exact copies of your old tax returns, that will take up to 60 days to process. It also will cost you $57 for each copy
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The 1% Sales tax temporary increase was allowed to expire and you have probably already seen the effect when shopping. In Wake county the tax rate is now 6.75%, down from 7.75%. That is a state rate of 4.75% plus a local rate of 2%.
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For those who have been taking advantage of the NC income tax deduction for contributions to the NC college foundation, you can rest easy that this tax benefit has been extended. Here is the press release:
Recent legislation passed by the NC General Assembly preserves the deduction on NC 529 contributions for all North Carolinians, regardless of income. Adjusted gross income limitations scheduled to return in 2012 on the state tax deduction for the NC 529 Plan have been eliminated. The maximum annual contribution deductible from NC taxable income remains the same at $2,500 (individual) or $5,000 (married, filing jointly).
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Currently the IRS website offers links to those who have agreed to provide free tax preparation to qualified individuals. Some recently felt like it would be a good idea for the IRS to create it's own software and offer it free to everyone. Some possible problems with that scenario:
-It would be a giant programming task. I can't tell you how many updates I get during the year to my tax software to keep up with the tax laws as they change. For the IRS to take on this task with no benefit to itself would be difficult to say the least.
-Someone has to foot the bill, so really you are asking the taxpayers to pony up for this plan. Is this the most efficient and cost effective method?
-The IRS has a conflict of interest. They are trying to squeeze what they can out of people, and the job of the software providers and taxpayers is to pay as little as required. It would be giving the fox the rule of the henhouse.
While paying for tax software isn't enjoyable for anyone, it is a small investment to ensure you are getting a reliable product and minimizing your taxes.
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-It would be a giant programming task. I can't tell you how many updates I get during the year to my tax software to keep up with the tax laws as they change. For the IRS to take on this task with no benefit to itself would be difficult to say the least.
-Someone has to foot the bill, so really you are asking the taxpayers to pony up for this plan. Is this the most efficient and cost effective method?
-The IRS has a conflict of interest. They are trying to squeeze what they can out of people, and the job of the software providers and taxpayers is to pay as little as required. It would be giving the fox the rule of the henhouse.
While paying for tax software isn't enjoyable for anyone, it is a small investment to ensure you are getting a reliable product and minimizing your taxes.
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