Numerics
- 90 percent rule, safe harbor method vs., 170–171
- 401(k) plans, 53–54
- 403(b) plans, 54
A
- accessibility, of funds, 56
- accordion file, 109
- accounting
- managing with FreshBooks, 241
- managing with QuickBooks, 241
- methods of, 139–140
- accounting system
- about, 104
- documenting expenses and income, 105
- employment (payroll) tax, 106–107
- income tax, 106–107
- reducing taxes, 107–108
- sales tax, 106–107
- separating business and personal finances, 104–105
- accrual method of accounting, 140
- accuracy, double-checking for, 215
- ACS (automated collection system), 211
- adjusted gross income (AGI), 120, 126
- adjustments to income
- about, 125–126
- Line 23: Educator expenses, 126
- Line 24: Certain business expenses of reservists, performing artists, and fee-basis government officials, 126–127
- Line 25: Health savings account deduction, 127
- Line 27: Deductible part of self-employment tax, 128
- Line 28: Self-employed SEP, SIMPLE, and qualified plans, 128–129
- Line 29: Self-employed health insurance deduction, 129
- Line 32: IRA deduction, 129–130
- Line 33: Student loan interest deduction, 130–131
- Line 34: Tuition and fees, 131
- advertising, on IRS Form 1040 Schedule C, 143
- Affordable Care Act (a.k.a. Obamacare), 15, 40–41
- AGI (adjusted gross income), 120, 126
- allowances, on IRS Form 1040 Schedule C, 141
- alternative minimum tax (AMT), 20
- amending tax returns, 209–210
- American Institute of Certified Public Accountants, 228
- American Opportunity Credit, 131, 133–134
- AMT (alternative minimum tax), 20
- apps
- Electronic Merchant Systems' EMSplus, 240
- Expensify, 239–240
- FreshBooks, 241
- MileIQ, 240
- PayPal, 240
- Payroll, 241
- QuickBooks, 241
- recommended, 239–242
- Square, 240
- Stripe, 240
- TurboTax Self-Employed, 242
- assessment notices
- about, 189
- income verification, 190
- IRS Form CP515, “Request for Your Tax Return,” 190–191
- IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
- IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
- IRS Form CP2501, 190
- asset allocation, retirement accounts and, 61–62
- assets
- giving away, 91–94
- leaving to a spouse, 94–95
- protecting,
- at-risk rules, on IRS Form 1040 Schedule C, 153–155
- attorneys, 201
- audits
- about, 197–198
- correspondence, 198
- field, 200
- office, 199–200
- preparing for, 201–202
- random statistical, 200–201
- reducing chances of, 212–215
- risks of, 26, 166–167
- statute of limitations on, 203
- types, 198–201
- winning, 202–203
- auto costs, as an employee benefit, 43
- automated collection system (ACS), 211
- automobiles, depreciation deduction for, 14
- awards, on Schedule 1, 125
B
- backup withholding notice, 192
- balance due notice, 206
- balanced funds, 66
- bartering, 124
- BBB (Better Business Bureau), 234
- benefits, employee
- about, 37–38
- auto costs, 43
- deductible for corporation owners, 44
- dependent care, 43
- dues, 43
- educational expense reimbursement, 43
- group term life insurance, 43
- health insurance plans, 38–42
- long-term care insurance, 43
- meals, 43
- programs on IRS Form 1040 Schedule C, 149
- retirement plans, 38
- travel and hotels, 43
- Better Business Bureau (BBB), 234
- bond funds, 67–70
- bond returns, estimating, 71–72
- bootstrapping, 77
- brokerage commission, ETFs and, 60
- brokers, for negotiating leases, 80
- business entities
- choosing, 252
- incorporation, 26–32
- limited liability companies (LLCs), 35–37
- partnerships, 34–35
- S corporations, 32–34
- sole proprietorships, 25–26
- types of, , 24–37
- business expenses
- about, 108
- documenting, 105
- temporary waivers of, 69
- tracking with apps/software, 239–240
- business finances, separating from personal finances, 104–105
- business income (loss)
- about, 121–122
- declaring all, 212
- documenting, 105
- double-counted, 204
- exempt, 204
- incorrect, 204
- repeated, 166–167
- taxable, 16–17
- business property, buying, 82–86
- buying
- business property, 82–86
- cash-value life insurance, 95–97
- health insurance, 41
- software, 220–221
C
- C corporations, 26–32, 33
- canceled debt, 124
- capital gain (or loss), 122
- capitalization (cap), 62–63
- car expenses
- about, 109
- on IRS Form 1040 Schedule C, 143–146
- cash accounting basis, 11
- cash basis, 107
- cash method of accounting, 139
- cash-value life insurance, 95–97
- certified public accountant (CPA), 197, 201, 227–228, 230
- CFA (Chartered Financial Analyst), 55
- charitable contributions/expenses, 247–248
- charitable lead trust, 99
- charitable remainder trust, 98–99
- charitable trusts, 98–99
- Chartered Financial Analyst (CFA), 55
- Cheat Sheet (website),
- cheating, 213–214
- child care expenses, 133
- choosing
- business entities, 252
- investments for retirement accounts, 54–70
- stock funds, 62–65
- Clifford, Denis (attorney)
- collection due process hearing, 212
- collections, 254
- commercial leases, 85–86
- commissions, on IRS Form 1040 Schedule C, 146
- commuting expenses, 145
- compounding returns, 73–74
- consumer debt, 247
- continuity of life, 31
- contract labor, on IRS Form 1040 Schedule C, 146
- contributing to health savings accounts, 244
- co-payments, for health insurance plans, 39–40
- corporate taxes, 12, 20–21, 29–31
- correspondence audits, 198
- cost of goods sold, on IRS Form 1040 Schedule C, 141–142
- costs. See also accounting system
- about, 103
- for bonds, 67
- controlling with home office, 77
- ETFs and, 60
- of funds, 55
- minimizing for funds, 57–58
- CPA (certified public accountant), 197, 201, 227–228, 230
- credit card expenses, 107
- credit quality, for bonds, 67
- Crumney trust, 94
- custodian, 56
D
- data processing errors, 205
- date, misunderstood, 204
- declaring all income, 212
- deductibles, for health insurance plans, 39–40
- deductions
- interest, 14–15
- itemizing, 115, 120–121, 213, 245–246
- meal and entertainment, 15
- missing, 10
- for pass-through entities, 13–14
- Delaware, incorporating in, 32
- delinquent tax return notice, 194–195
- dependent care
- as an employee benefit, 43
- expenses for, 133
- depletion, on IRS Form 1040 Schedule C, 146
- depreciation
- for automobiles, 14
- for cars, 145
- for home office, 163–165
- on IRS Form 1040 Schedule C, 147–148
- percentages for, 148
- depreciation recapture, 168
- discipline, home office and, 78
- diversification
- ETFs and, 60
- of funds, 55
- dividends, return of principal as, 69
- Dodge & Cox Balanced, 66
- Dodge & Cox Income, 69
- Dodge & Cox International, 65
- Dodge & Cox Stock, 64
- double-counted income, 204
- DoubleLine Total Return, 69
- dues, as an employee benefit, 43
- durable power of attorney, 92
- duration, 67
E
- EA (enrolled agent), 197, 201, 227, 230
- earnings, reducing, 213
- education credits, 133–134
- educational expense reimbursement, as an employee benefit, 43
- educator expenses, 126
- EFTPS (Electronic Federal Tax Payment System), 21–22
- EIN (employer identification number), 136–137
- Electronic Federal Tax Payment System (EFTPS), 21–22
- Electronic Merchant Systems' EMSplus, 240
- employee benefits
- about, 37–38
- auto costs, 43
- deductible for corporation owners, 44
- dependent care, 43
- dues, 43
- educational expense reimbursement, 43
- group term life insurance, 43
- health insurance plans, 38–42
- long-term care insurance, 43
- meals, 43
- programs on IRS Form 1040 Schedule C, 149
- retirement plans, 38
- travel and hotels, 43
- employer identification number (EIN), 136–137
- employment (payroll) taxes, 21–22, 106–107
- enrolled agent (EA), 197, 201, 227, 230
- entities
- choosing, 252
- incorporation, 26–32
- limited liability companies (LLCs), 35–37
- partnerships, 34–35
- S corporations, 32–34
- sole proprietorships, 25–26
- types of, , 24–37
- equipment, expensing, 14
- Eric's Picks icon,
- eSmartTax (website), 222
- estate planning/taxes
- about, 87
- determining tax concerns, 88–91
- minimizing, 88
- rates for, 89
- reducing expected taxes, 91–100
- for small businesses, 89–91
- sole proprietorships and issues with, 26
- estimated quarterly tax payments, –10
- estimating investment returns, 71–73
- ETFs (exchange-traded funds), 55, 59–60, 65–66
- evaluating leases as a real estate investor, 83–86
- exchange-traded funds (ETFs), 55, 59–60, 65–66
- exempt income, 204
- expenses. See also specific types
- about, 108
- documenting, 105
- temporary waivers of, 69
- tracking with apps/software, 239–240
- Expensify app, 239–240
- expensing equipment, 14
- experience, of fund management, 57–58
F
- farm income (or loss), 123–124
- federal estate tax exemption, 88
- federal tax lien notice, 192–193
- fee-basis government officials, business expenses of, 126–127
- fees
- for bonds, 67
- education, 131
- on IRS Form 1040 Schedule C, 146
- on Schedule 1, 125
- for tax advisors, 233
- Fidelity, 54
- Fidelity Freedom Funds and Fidelity Puritan, 66
- Fidelity Low-Priced Stock, 64
- field audits, 200
- FIFO (first in, first out) method, 142
- financial safety, of funds, 56
- financials, tracking,
- finding tax advisors, 229–230
- first in, first out (FIFO) method, 142
- flat-rate method, 144
- flexible spending account, 42
- foreign tax credit, 132–133
- Form 668(F), 192–193
- Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
- Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
- Form 940, “Employer's Annual Federal Unemployment (FUTA) Tax Return,” 106, 174
- Form 941, “Employer's Quarterly Federal Tax Return,” 22, 106, 174
- Form 944, “Employer's Annual Federal Income Tax Return,” 22, 106, 174
- Form 1040
- about, 113
- adjustments to income, 125–131
- income lines, 115–121
- itemizing deductions, 115
- Line 1: Wages, salaries, tips, etc., 116–117
- Line 2a: Tax-exempt interest, 117
- Line 2b: Taxable Interest, 117–118
- Line 7: Adjusted gross income, 120
- Line 8: Standard deduction or itemized deductions (from Schedule A), 120–121
- Lines 3a and 3b: Ordinary dividends and qualified dividends, 118
- Lines 4a and 4b: Total pensions and annuities, 118–119
- Lines 5a and 5b: Social Security benefits, 119–120
- “new and improved,” 113–114
- nonrefundable credits, 132–134
- Schedule 1: Additional Income and Adjustments to Income, 121–125
- Form 1040, Schedule 1: Additional Income and Adjustments to Income
- Line 12: Business income (or loss), 121–122
- Line 13: Capital gain (or loss), 122
- Line 14: Other gains (or losses), 123
- Line 17: Rental real estate, royalties, partnerships, S corporations, trusts, etc., 123
- Line 18: Farm income (or loss), 123–124
- Line 19: Unemployment compensation, 124
- Line 21: Other income, 124–125
- Form 1040, Schedule 4, “Other Taxes,” 125
- Form 1040, Schedule A, 42
- Form 1040, Schedule C, “Profit or Loss From Business”
- about, 37, 104, 135, 136
- basic information, 136–140
- Line 1: Gross receipts or sales, 141
- Line 2: Returns and allowances, 141
- Line 4: Cost of goods sold, 141–142
- Line 6: Other income, 142–143
- Line 8: Advertising, 143
- Line 9: Car and truck expenses, 143–146
- Line 10: Commissions and fees, 146
- Line 11: Contract labor, 146
- Line 12: Depletion, 146
- Line 13: Depreciation, 147–148
- Line 14: Employee benefit programs, 149
- Line 15: Insurance (other than health), 149
- Line 16a: Mortgage interest, 149
- Line 16b: Other interest, 149
- Line 17: Legal and professional services, 149–150
- Line 18: Office expense, 150
- Line 19: Pension and profit-sharing plans, 150
- Line 21: Repairs and maintenance, 151
- Line 22: Supplies, 151
- Line 23: Taxes and licenses, 151
- Line 25: Utilities, 152
- Line 26: Wages, 152
- Line 27: Other expenses, 152–153
- Line 30: Form 8829, 153
- Lines 20a and b: Rent or lease, 150–151
- Lines 24a and b: Travel and meals, 152
- Lines 32a and b: At-risk rules, 153–155
- Part I: Income, 141–143
- Part II: Expenses, 143–155
- Form 1040, Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135–136
- Form 1040, Schedule E, “Supplemental Income and Loss,” 35, 36, 123
- Form 1040, Schedule F, “Profit or Loss from Farming,” 123–124
- Form 1040, Schedule SE, “Self-Employment Tax”
- about, 125, 176–177
- long version, 177–180
- short version, 177–181
- Form 1040-ES, “Estimated Tax for Individuals”
- about, 10, 106, 170
- completing, 171–173
- filing, 171–173
- safe harbor method vs. 90 percent rule, 170–171
- Form 1040X, “Amended U.S. Individual Income Tax Return,” 209
- Form 1065, “U.S. Return of Partnership Income,” 35
- Form 1099, 205
- Form 1099-DIV, 118
- Form 1099-INT, 117
- Form 1099-MISC, 125, 146, 149
- Form 1099-OID, 117
- Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132, 245
- Form 1120, “U.S. Corporation Income Tax Return,” 26–27
- Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33, 34
- Form 2106, “Employee Business Expenses,” 127, 144, 147
- Form 2210, “Underpayment of Estimated Tax by Individuals, Estates, and Trusts,” 205
- Form 2441, “Child and Dependent Care Expenses,” 133
- Form 2553, “Election by a Small Business Corporation,” 33
- Form 4506, “Request for Copy of Transcript of Tax Form,” 111
- Form 4562, “Depreciation and Amortization,” 136, 147, 154
- Form 4797, “Sales of Business Property,” 123
- Form 4822, “Statement of Annual Estimated Personal ad Family Expenses,” 199
- Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
- Form 6198, “At-Risk Limitations,” 153
- Form 6251, “Alternative Minimum Tax-Individuals,” 20
- Form 8606, 130
- Form 8829, “Expenses for Business Use of Your Home,” 149, 152, 153, 157–166
- Form 8832, 37
- Form 8863, “Education Credits (American Opportunity and Lifetime Learning Credits),” 133
- Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
- Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
- Form 8889, “Health Savings Accounts (HSAs)”
- about, 127, 181
- completing, 183
- how health savings accounts work, 181–182
- Form 8941, “Credit for Small Employer Health Insurance Premiums,” 39
- Form 9465, “Installment Agreement Request,” 210
- Form CP49, 189
- Form CP515, “Request for Your Tax Return,” 190–191
- Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
- Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
- Form I-9, “Employment Eligibility Verification,” 176
- Form SSA-1099, 119–120
- Form W-4, for employee withholding, 174
- 401(k) plans, 53–54
- 403(b) plans, 54
- Free File, 222
- FreshBooks, 241
- funding retirement accounts, 244
- funds
G
- general partners (GPs), 34–35
- generation-skipping transfer tax, 93
- gifting, 93, 94
- GPs (general partners), 34–35
- Griswold, Robert (author)
- Real Estate Investing For Dummies, 86
- gross receipts, on IRS Form 1040 Schedule C, 141
- group term life insurance, as an employee benefit, 43
- growth stocks, value stocks vs., 63
- guaranteed renewability, for health insurance plans, 40
H
- Harbor Capital Appreciation, 64
- Harbor International, 65
- Health Care and Education Reconciliation Act (2010), 40–41
- health insurance agents, 41
- health insurance mandate, 15
- health insurance plans, as an employee benefit, 38–42
- health savings account (HSA), 42, 127, 181–182, 244
- healthcare provider choice, for health insurance plans, 39
- healthcare reimbursement account, 42
- HealthEquity, 182
- hiring tax preparers, 223
- hobby loss, 24, 155
- home expenses, 109
- home office
- about, 11, 76, 157–160
- controlling costs, 77
- cost comparisons, 79
- disadvantages of, 166–168
- IRS Form 8829, “Expenses for Business Use of Your Home,” 160–166
- local ordinances, 76–77
- separating work and personal life, 78
- hotels, as an employee benefit, 43
- household employment taxes, 175–176
- H&R Block tax preparation and filing software, 242
- HSA (health savings account), 42, 127, 181–182, 244
I
- icons, explained,
- ID number, incorrect, 204
- income (loss). See also adjustments to income
- about, 121–122
- declaring all, 212
- documenting, 105
- double-counted, 204
- exempt, 204
- incorrect, 204
- repeated, 166–167
- taxable, 16–17
- income tax, paying, 106–107
- income verification notices, 190
- incorporation, 26–32
- index funds, 59
- individual 401(k), 53
- individual tax rates, 12–13
- inheritance tax, 89–91
- insurance (other than health), on IRS Form 1040 Schedule C, 149
- interest
- on additional tax, 194
- deductions for, 14–15
- on IRS Form 1040 Schedule C, 149
- intermediate-term bond funds, 69
- Internal Revenue Service (IRS), 106, 113, 116, 124, 136, 174, 195–196, 203–209, 219, 221–222
- international stock funds, 64–65
- Internet tax resources
- about, 221
- Internal Revenue Service (IRS), 221–222
- research sites, 223
- tax preparation sites, 222
- TaxTopics.net, 222
- interviewing tax advisors, 230–235
- intestate, 92
- Investigate icon,
- investigatory expenses, 154
-
Investing For Dummies (Tyson), 117, 253
- investment minimums, for funds, 56
- investments
- selecting for retirement accounts, 54–70
- in wealth-building assets, 243–244
- IRA deduction, 129–130
- IRS (Internal Revenue Service), 106, 113, 116, 124, 136, 174, 195–196, 209, 219, 221–222
- IRS Form 668(F), 192–193
- IRS Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
- IRS Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
- IRS Form 940, “Employer's Annual Federal Unemployment (FUTA) Tax Return,” 106, 174
- IRS Form 941, “Employer's Quarterly Federal Tax Return,” 22, 106, 174
- IRS Form 944, “Employer's Annual Federal Income Tax Return,” 22, 106, 174
- IRS Form 1040
- about, 113
- adjustments to income, 125–131
- income lines, 115–121
- itemizing deductions, 115
- Line 1: Wages, salaries, tips, etc., 116–117
- Line 2a: Tax-exempt interest, 117
- Line 2b: Taxable Interest, 117–118
- Line 7: Adjusted gross income, 120
- Line 8: Standard deduction or itemized deductions (from Schedule A), 120–121
- Lines 3a and 3b: Ordinary dividends and qualified dividends, 118
- Lines 4a and 4b: Total pensions and annuities, 118–119
- Lines 5a and 5b: Social Security benefits, 119–120
- “new and improved,” 113–114
- nonrefundable credits, 132–134
- Schedule 1: Additional Income and Adjustments to Income, 121–125
- IRS Form 1040, Schedule 1: Additional Income and Adjustments to Income
- Line 12: Business income (or loss), 121–122
- Line 13: Capital gain (or loss), 122
- Line 14: Other gains (or losses), 123
- Line 17: Rental real estate, royalties, partnerships, S corporations, trusts, etc., 123
- Line 18: Farm income (or loss), 123–124
- Line 19: Unemployment compensation, 124
- Line 21: Other income, 124–125
- IRS Form 1040, Schedule 4, “Other Taxes,” 125
- IRS Form 1040, Schedule A, 42
- IRS Form 1040, Schedule C, “Profit or Loss From Business”
- about, 37, 104, 135, 136
- basic information, 136–140
- Line 1: Gross receipts or sales, 141
- Line 2: Returns and allowances, 141
- Line 4: Cost of goods sold, 141–142
- Line 6: Other income, 142–143
- Line 8: Advertising, 143
- Line 9: Car and truck expenses, 143–146
- Line 10: Commissions and fees, 146
- Line 11: Contract labor, 146
- Line 12: Depletion, 146
- Line 13: Depreciation, 147–148
- Line 14: Employee benefit programs, 149
- Line 15: Insurance (other than health), 149
- Line 16a: Mortgage interest, 149
- Line 16b: Other interest, 149
- Line 17: Legal and professional services, 149–150
- Line 18: Office expense, 150
- Line 19: Pension and profit-sharing plans, 150
- Line 21: Repairs and maintenance, 151
- Line 22: Supplies, 151
- Line 23: Taxes and licenses, 151
- Line 25: Utilities, 152
- Line 26: Wages, 152
- Line 27: Other expenses, 152–153
- Line 30: Form 8829, 153
- Lines 20a and b: Rent or lease, 150–151
- Lines 24a and b: Travel and meals, 152
- Lines 32a and b: At-risk rules, 153–155
- Part I: Income, 141–143
- Part II: Expenses, 143–155
- IRS Form 1040, Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135–136
- IRS Form 1040, Schedule E, “Supplemental Income and Loss,” 35, 36, 123
- IRS Form 1040, Schedule F, “Profit or Loss from Farming,” 123–124
- IRS Form 1040, Schedule SE, “Self-Employment Tax”
- about, 125, 176–177
- long version, 177–180
- short version, 177–181
- IRS Form 1040-ES, “Estimated Tax for Individuals”
- about, 10, 106, 170
- completing, 171–173
- filing, 171–173
- safe harbor method vs. 90 percent rule, 170–171
- IRS Form 1040X, “Amended U.S. Individual Income Tax Return,” 209
- IRS Form 1065, “U.S. Return of Partnership Income,” 35
- IRS Form 1099, 205
- IRS Form 1099-DIV, 118
- IRS Form 1099-INT, 117
- IRS Form 1099-MISC, 125, 146, 149
- IRS Form 1099-OID, 117
- IRS Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132, 245
- IRS Form 1120, “U.S. Corporation Income Tax Return,” 26–27
- IRS Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33, 34
- IRS Form 2106, “Employee Business Expenses,” 127, 144, 147
- IRS Form 2210, “Underpayment of Estimated Tax by Individuals, Estates, and Trusts,” 205
- IRS Form 2441, “Child and Dependent Care Expenses,” 133
- IRS Form 2553, “Election by a Small Business Corporation,” 33
- IRS Form 4506, “Request for Copy of Transcript of Tax Form,” 111
- IRS Form 4562, “Depreciation and Amortization,” 136, 147, 154
- IRS Form 4797, “Sales of Business Property,” 123
- IRS Form 4822, “Statement of Annual Estimated Personal ad Family Expenses,” 199
- IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
- IRS Form 6198, “At-Risk Limitations,” 153
- IRS Form 6251, “Alternative Minimum Tax-Individuals,” 20
- IRS Form 8606, 130
- IRS Form 8829, “Expenses for Business Use of Your Home,” 149, 152, 153, 157–166
- IRS Form 8832, 37
- IRS Form 8863, “Education Credits (American Opportunity and Lifetime Learning Credits),” 133
- IRS Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
- IRS Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
- IRS Form 8889, “Health Savings Accounts (HSAs)”
- about, 127, 181
- completing, 183
- how health savings accounts work, 181–182
- IRS Form 8941, “Credit for Small Employer Health Insurance Premiums,” 39
- IRS Form 9465, “Installment Agreement Request,” 210
- IRS Form CP49, 189
- IRS Form CP515, “Request for Your Tax Return,” 190–191
- IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
- IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
- IRS Form I-9, “Employment Eligibility Verification,” 176
- IRS Form SSA-1099, 119–120
- IRS Form W-4, for employee withholding, 174
- IRS Notice 904, 199
- IRS Publication 15-A, “Employer's Supplemental Tax Guide,” 146
- IRS Publication 15-B, “Employer's Tax Guide to Fringe Benefits,” 43
- IRS Publication 17, “Your Federal Income Tax,” 120, 219
- IRS Publication 334, “Tax Guide for Small Business,” 146, 219
- IRS Publication 463, “Travel, Entertainment, Gift, and Car Expenses,” 144, 150
- IRS Publication 534, “Depreciating Property Placed in Service before 1987,” 148, 164
- IRS Publication 535, “Business Expenses,” 129, 146
- IRS Publication 583, “Starting a Business and Keeping Records,” 219
- IRS Publication 594, “The IRS Collection Process,” 254
- IRS Publication 946, “How to Depreciate Property,” 148, 164
- IRS Publication 1450, “Certificate of Release of Federal Tax Lien,” 193
- IRS Publication 1779, “Independent Contractor or Employee Brochure,” 146
- IRS publications, 219–220.See also specific publications
- iShares, 66
- issuer type, for bonds, 67
- itemized deductions, 115, 120–121, 213, 245–246
J
-
J. K. Lasser's Your Income Tax (Lasser), 254
- joint tenants with a right of survivorship, 98
L
- Lasser, J.K. (author)
- J. K. Lasser's Your Income Tax, 254
- last in, first out (LIFO) method, 142
- lease abstract, 85–86
- lease estoppel, 86
- leases
- commercial, 85–86
- defined, 79
- evaluating as a real estate investor, 83–86
- on IRS Form 1040 Schedule C, 150–151
- negotiating, 80–81
- transferability of, 84–85
- leasing business space, 79–81
- legal services, on IRS Form 1040 Schedule C, 149–150
- levy source information, 211
- liability exposure, for sole proprietorships, 25
- liability insurance, 29, 234
- liability protection, for corporations, 28–29
- licenses, on IRS Form 1040 Schedule C, 151
- licensing, for tax preparers, 226–227
- life insurance, on Schedule 1, 125
- Lifetime Learning Credit, 131, 133–134
- LIFO (last in, first out) method, 142
- limited liability companies (LLCs), 33, 35–37
- limited partners (LPs), 35
- Litman Gregory Masters International, 65
- living trusts, 97–98
- living will, 92
- LLCs (limited liability companies), 33, 35–37
- local ordinances, 76–77
- longer-maturity bonds, 68
- long-term bond funds, 70
- long-term care insurance, as an employee benefit, 43
- long-term care premiums, 129
- loss. See income (loss)
- lower-credit-quality bonds, 68
- LPs (limited partners), 35
M
- maintenance, on IRS Form 1040 Schedule C, 151
- managing
- accounting with FreshBooks, 241
- accounting with QuickBooks, 241
- transactions with apps/software, 240
- manila file folder system, 109
- marginal tax rate, 17–18
- market timing, ETFs and, 60
- marketplace, 39–40
- “Married Filing Jointly,” 248–249
- “Married Filing Separately,” 248–249
- material participation, 140
- McCain, John (Senator), 15
- meal and entertainment deductions, 15
- meals
- as an employee benefit, 43
- on IRS Form 1040 Schedule C, 15, 152
- medical power of attorney, 92
- Medicare tax, 176
- MileIQ, 240
- minimizing
- estate taxes, 88
- fund costs, 57–58
- operating expenses, 58
- misapplied payments, 204
- mortgage debt, 247
- mortgage interest, on IRS Form 1040 Schedule C, 149
- moving expenses, 128
- municipal bonds, 16
- mutual funds, for retirement accounts, 54–58
N
- nanny tax, 175–176
- National Association of Enrolled Agents, 227
- National Conference of State Legislatures (NCSL), 22
- National Governor's Association (NGA), 22
- National Taxpayer Advocate, 207
- NCSL (National Conference of State Legislatures), 22
- negotiating leases, 80–81
- net operating losses (NOLs), 15, 154–155, 209
- Nevada, incorporating in, 32
- NGA (National Governor's Association), 22
- 90 percent rule, safe harbor method vs., 170–171
- no-load funds, 58
- NOLs (net operating losses), 15, 154–155, 209
- non-assessment notices, 193–196
- nonprofit organization, 403(b) plans for, 54
- nonrecourse loan, 125
- nonrefundable credits
- about, 132
- Line 48: Foreign tax credit, 132–133
- Line 49: Credit for child and dependent care expenses, 133
- Line 50: Education credits, 133–134
- Line 51: Retirement savings contributions credit, 134
- Notice 904, 199
- notices
- about, 187, 189
- additional tax due, 194
- assessment, 189–193
- backup withholding, 192
- balance due, 206
- components of, 188–189
- delinquent tax return, 194–195
- federal tax lien, 192–193
- income verification, 190
- IRS Form CP515, “Request for Your Tax Return,” 190–191
- IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
- IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
- IRS Form CP2501, 190
- non-assessment, 193–196
O
- Oakmark International and Global, 65
- Obama, Barack (President), 40
- Obamacare, 15, 40–41
- office audits, 199–200
- office expense, on IRS Form 1040 Schedule C, 150
- office leases, 81
- operating expenses, minimizing, 58
- operating loss, 154–155
- overseas employment, 245
- owners, sole proprietorships and numbers of, 26
P
- partially corrected errors, 205
- partnerships, 34–35, 123
- pass-through entities
- about, 30
- deduction for, 13–14
- S corporations, 32–34
- Patient Protection and Affordable Care Act (2010), 39, 40–41
- payable-on-death (POD), 98
- PayPal, 240
- Payroll (software), 241
- payroll, resources for, 253
- payroll (employment) taxes, 21–22, 106–107
- pension plans, on IRS Form 1040 Schedule C, 150
- performance, role of risk in evaluating, 57
- performing artists, business expenses of, 126–127
-
Personal Finance For Dummies (Tyson), 50, 105, 252
- personal finances, separating from business finances, 104–105
- personal life, separating from work life, 78
- phone scams, 195–196
-
Plan Your Estate (Clifford), 100
- POD (payable-on-death), 98
- power of attorney, 92
- preparing
- for audits, 201–202
- taxes with H&R Block tax preparation and filing software, 242
- taxes with TurboTax Self-Employed, 242
- your own return, 218–219
- price fluctuations, ETFs and, 60
- privacy, home office and, 78
- private activity bonds, 117
- prizes, on Schedule 1, 125
- probate, 97–98
- Problem Resolution Program, 207
- processing sales with apps/software, 240
- professional management, of funds, 55–56
- professional services, on IRS Form 1040 Schedule C, 149–150
- profits, taxes on, 26
- profit-sharing plans, on IRS Form 1040 Schedule C, 150
- Publication 15-A, “Employer's Supplemental Tax Guide,” 146
- Publication 15-B, “Employer's Tax Guide to Fringe Benefits,” 43
- Publication 17, “Your Federal Income Tax,” 120, 219
- Publication 334, “Tax Guide for Small Business,” 146, 219
- Publication 463, “Travel, Entertainment, Gift, and Car Expenses,” 144, 150
- Publication 534, “Depreciating Property Placed in Service before 1987,” 148, 164
- Publication 535, “Business Expenses,” 129, 146
- Publication 583, “Starting a Business and Keeping Records,” 219
- Publication 594, “The IRS Collection Process,” 254
- Publication 946, “How to Depreciate Property,” 148, 164
- Publication 1450, “Certificate of Release of Federal Tax Lien,” 193
- Publication 1779, “Independent Contractor or Employee Brochure,” 146
- publications, 219–220.See also specific publications
Q
- qualified dividends, 118
- qualified plans, as adjustments to income, 128–129
- QuickBooks, 110, 241, 252
- Quicken, 110, 252
R
- random statistical audits, 200–201
- real estate
- about, 10–11, 75
- buying business property, 82–86
- leasing space, 79–81
- working from home, 76–79
-
Real Estate Investing For Dummies (Tyson and Griswold), 80, 86
- real estate returns, estimating, 72–73
- record-keeping systems, setting up, 109–110
- reducing
- estate taxes, 91–100
- taxes, 107–108, 243–249
- Remember icon,
- rent, on IRS Form 1040 Schedule C, 150–151
- rental real estate, on Schedule 1, Line 17, 123
- rent-versus-buy analysis, 83
- repairs, on IRS Form 1040 Schedule C, 151
- replacing lost business records, 111
- research websites, 223
- reservists, business expenses of, 126–127
- resources, recommended, 251–255
- retail businesses, leasing, 80–81
- retirement accounts
- about, –9, 10, 45–46
- as an employee benefit, 38
- asset allocation and, 61–62
- balanced funds, 66
- bond funds, 67–70
- exchange-traded funds (ETFs), 59–60, 65–66
- 401(k) plans, 53–54
- 403(b) plans, 54
- funding, 244
- guidelines for saving, 49–50
- index funds, 59
- individual 401(k), 53
- maximizing value of, 51
- mutual funds for, 54–58
- ongoing tax breaks, 47
- options for, 50–54
- penalties for early withdrawals, 48–49
- return expectations for, 70–74
- selecting investments for, 54–70
- SEP-IRAs, 52
- SIMPLE plans, 52–53
- stock funds, 62–65
- tax credits for lower-income earners, 47–48
- upfront tax breaks, 46–47
- retirement savings contributions credit, 134
- returns
- compounding, 73–74
- on IRS Form 1040 Schedule C, 141
- revenues, 103.See also accounting system
- risks
- ETFs and, 60
- role of in evaluating performance, 57
S
- S corporations, 32–34, 123
- safe harbor method, 90 percent rule vs., 170–171
- sales
- on IRS Form 1040 Schedule C, 141
- processing with apps/software, 240
- sales taxes, 22, 106–107
- SALT (state and local taxes), 79
- Saver's Tax Credit, 47–48
- saving tax records, 110
- savings incentive match plans for employees. See SIMPLE plans
- Schedule H, 175–176
- Schell, Jim (author)
- Small Business For Dummies, 251
- secret lien, 192
- section 179 rules, 14, 148
- selecting
- business entities, 252
- investments for retirement accounts, 54–70
- stock funds, 62–65
- self-employed SEP, as adjustments to income, 128–129
- self-employment
- cutting corners if self-employed, 214
- expenses for, 248
- health insurance deduction, 129
- income reported on Schedule C, 121
- Line 1: Wages, salaries, tips, etc. (Form 1040), 117
- self-employment taxes
- about, 22
- deductible part of, 128
- deducting, 180
- minimums for, 176
- SEP-IRAs, 52
- setup
- record-keeping systems, 109–110
- trusts, 97–99
- short-term bond funds, 69
- sideline businesses, 24
- Siegel, Jeremy (professor), 71
- SIMPLE plans
- about, 52–53, 150
- as adjustments to income, 128–129
- withdrawing from, 48
-
Small Business For Dummies (Tyson and Schell), 77, 251
- small business taxes, –8.See also specific topics
- Social Security
- benefits, 119–120
- incorrect number, 204
- tax for, 176
- website, 119
- software
- buying, 220–221
- Electronic Merchant Systems' EMSplus, 240
- for estate planning, 100
- Expensify, 239–240
- FreshBooks, 241
- H&R Block tax preparation and filing software, 242
- MileIQ, 240
- PayPal, 240
- Payroll, 241
- QuickBooks, 241
- recommended, 239–242
- Square, 240
- Stripe, 240
- TurboTax Self-Employed, 242
- sole proprietorships, 25–26
- spending,
- spouse, leaving assets to a, 94–95
- Square, 240
- standard deduction, 120–121
- standard mileage rate, 144–145
- start-up expenses, 154
- state and local taxes (SALT), 79
- state differences, in tax records, 111
- state income taxes, 18–19
- State Street Global Advisor SPDRs, 66
- statute of limitations, on audits, 203
- statutory lien, 192–193
- stepped-up basis, 93
- stock funds
- international, 64–65
- selecting, 62–65
- U.S., 64
- stock returns, estimating, 72
- Streamlined Sales Tax Governing Board, 22
- Stripe, 240
- student loan interest deduction, 130–131
- subchapter S corporations, 32–34
- supplemental income, 123
- supplies, on IRS Form 1040 Schedule C, 151
T
- T. Rowe Price, 54
- T. Rowe Price Balanced, 66
- T. Rowe Price Spectrum Growth, 65
- TAO (Taxpayer Assistance Order), 209
- tax advisors
- for estate planning, 99–100
- filing when not necessary, 191
- finding, 229–230
- for incorporation, 31
- interviewing, 230–235
- using effectively, 11
- tax attorneys, 228–229
- tax benefit rule, 210
- tax brackets/rates, Federal, 17–18
- tax Court, 203
- Tax Cuts and Jobs Act (2017), 12, 17, 20–21, 24, 79, 88, 114, 128, 152, 167
- tax mistakes, common, –11
- tax planning year-round, –11
- tax preparers/professionals
- about, 215, 225
- finding tax advisors, 229–230
- hiring, 223
- interviewing tax advisors, 230–235
- types, 225–229
- websites, 222
- tax protesters, 214
- tax rate, marginal, 17–18
- tax records
- about, 108
- “complete and accurate” return, 108–109
- replacing lost, 111
- saving, 110
- setting up a record-keeping system, 109–110
- state differences for, 111
- Tax Reform Act (1986), 12
- tax returns
- amending, 209–210
- lost, 204
- preparing your own, 218–219
- tax withholding
- about, –10, 173
- defined, 170
- for employees, 174
- Form W-4 for employee withholding, 174
- household employment taxes: Schedule H, 175–176
- tax write-offs, 24
- taxability, for bonds, 67
- taxable estate, 89
- taxable income, 16–17
- taxes. See also specific types
- corporate, 29–31
- employment (payroll), 21–22
- on IRS Form 1040 Schedule C, 151
- preparing with H&R Block tax preparation and filing software, 242
- preparing with TurboTax Self-Employed, 242
- on profits, 26
- reducing, 107–108, 243–249
- sales, 22
- self-employment, 22
- state income, 18–19
- total, 16–17
- unable to make payment of, 210–212
- withholding, –10
- taxpayer advocate, 192, 207–209
- Taxpayer Assistance Order (TAO), 209
- Taxpayer Bill of Rights, 202
- tax-preparation software, 220–221
- tax-reduction strategies and rules
- about, 217–218
- benefits of preparing your own return, 218–219
- buying software, 220–221
- hiring tax preparers, 223
- Internet tax resources, 221–223
- using IRS publications, 219–220
- TaxTopics.net, 222
- term life insurance, 95
- territorial tax structure, 12
- TIGTA (Treasury Inspector General for Tax Administration), 195
- Tip icon,
- total taxes, 16–17
- tracking
- expenses with apps/software, 239–240
- tax information, 109–110
- transactions, managing with apps/software, 240
- transferability, of leases, 84–85
- travel
- as an employee benefit, 43
- on IRS Form 1040 Schedule C, 152
- to a second job, 145
- to a temporary job site, 145–146
- Treasury Inspector General for Tax Administration (TIGTA), 195
- triple-net lease, 81
- truck expenses, on IRS Form 1040 Schedule C, 143–146
- Trump, Donald (President), 15
- trusts
- on Schedule 1, Line 17, 123
- setting up, 97–99
- “The Truth About Frivolous Tax Arguments,” 214
- tuition, 131
- TurboTax, 221, 255
- TurboTax Self-Employed, 242
- Tyson, Eric (author)
- Investing For Dummies, 117, 253
- Personal Finance For Dummies, 50, 105, 252
- Real Estate Investing For Dummies, 80, 86
- Small Business For Dummies, 77, 251
- website, 57
U
- UMB Bank, 182
- unemployment compensation, 124
- unenrolled preparers, 226–227
- U.S. Citizenship and Immigration Services (website), 176
- U.S. Department of Labor (website), 106
- U.S. stock funds, 64
- U.S. Tax Code On-Line, 223
- utilities, on IRS Form 1040 Schedule C, 152
V
- value stocks, growth stocks vs., 63
- Vanguard, 54, 59, 66
- Vanguard Dividend Appreciation Index Fund, 64
- Vanguard Global Equity, 65
- Vanguard LifeStrategy Funds, Star, Wellesley Income, and Wellington, 66
- Vanguard Long-Term Investment-Grade fund, 70
- Vanguard Short-Term Investment-Grade fund, 69
- Vanguard Total Bond Market Index, 69
- viatical settlements, 125
- voluntary disclosure, 195
W
- W-2, 117
- wages, on IRS Form 1040 Schedule C, 152
- Warning icon,
- wealth-building assets, investing in, 243–244
- websites
- American Institute of Certified Public Accountants, 228
- Cheat Sheet,
- depreciation tables, 148
- Dodge & Cox Balanced, 66
- Dodge & Cox Income, 69
- Dodge & Cox International, 65
- Dodge & Cox Stock, 64
- DoubleLine Total Return, 69
- Electronic Federal Tax Payment System (EFTPS), 22
- EMSplus, 240
- eSmartTax, 222
- Expensify, 239
- Fidelity, 54
- Fidelity Freedom Funds and Fidelity Puritan, 66
- Fidelity Low-Priced Stock, 64
- FreshBooks, 241
- Harbor Capital Appreciation, 64
- Harbor International, 65
- H&R Block tax preparation and filing software, 242
- Internal Revenue Service (IRS), 106, 113, 116, 124, 136, 174, 209, 219, 221–222
- IRS Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
- IRS Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
- IRS Form 1040 Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135
- IRS Form 1040 Schedule E, “Supplemental Income and Loss,” 35
- IRS Form 1040 Schedule F, “Profit or Loss from Farming,” 123
- IRS Form 1040-ES, “Estimated Tax for Individuals,” 170
- IRS Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132
- IRS Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33
- IRS Form 2441, “Child and Dependent Care Expenses,” 133
- IRS Form 4506, “Request for Copy of Transcript of Tax Form,” 111
- IRS Form 4562, “Depreciation and Amortization,” 147
- IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
- IRS Form 6198, “At-Risk Limitations,” 153
- IRS Form 8829, “Expenses for Business Use of Your Home,” 158
- IRS Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
- IRS Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
- IRS Form 8889, “Health Savings Accounts (HSAs),” 181
- IRS Form 9465, “Installment Agreement Request,” 210
- IRS Form I-9, “Employment Eligibility Verification,” 176
- IRS Publication 17, 120
- IRS Publication 463 (“Travel, Entertainment, Gift, and Car Expenses”), 150
- IRS rules and regulations, 254
- iShares, 66
- Litman Gregory Masters International, 65
- MileIQ, 240
- National Association of Enrolled Agents, 227
- Oakmark International and Global, 65
- PayPal, 240
- Payroll, 241
- QuickBooks, 241
- Social Security, 119
- Square, 240
- State Street Global Advisor SPDRs, 66
- state tax authorities, 21
- Streamlined Sales Tax Governing Board, 22
- Stripe, 240
- T. Rowe Price, 54
- T. Rowe Price Balanced, 66
- T. Rowe Price Spectrum Growth, 65
- Taxpayer Bill of Rights, 202
- TaxTopics.net, 222
- “The Truth About Frivolous Tax Arguments,” 214
- TurboTax, 255
- TurboTax Self-Employed, 242
- Tyson, Eric (author), 57
- U.S. Citizenship and Immigration Services, 176
- U.S. Department of Labor, 106
- U.S. Tax Code On-Line, 223
- Vanguard, 54, 59, 66
- Vanguard Dividend Appreciation Index Fund, 64
- Vanguard Global Equity, 65
- Vanguard LifeStrategy Funds, Star, Wellesley Income, and Wellington, 66
- Vanguard Long-Term Investment-Grade fund, 70
- Vanguard Short-Term Investment-Grade fund, 69
- Vanguard Total Bond Market Index, 69
- WisdomTree, 66
- Wolters Kluwer Tax & Accounting, 223
- will, 92
- WillMaker Plus, 100
- WisdomTree, 66
- withholding
- about, –10, 173
- defined, 170
- for employees, 174
- Form W-4 for employee withholding, 174
- household employment taxes: Schedule H, 175–176
- Wolters Kluwer Tax & Accounting, 223
- work life, separating from personal life, 78
- working overseas, 245
- Wyoming, incorporating in, 32
Y
- year-round tax planning, –11
- years to maturity, for bonds, 67
- yield-chasing, 68–69
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