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Tax Help

Discussion in 'General Advice' started by SteveRB, Apr 19, 2005.

  1. SteveRB

    SteveRB Member

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    This post is directed to more of the professional members of the forum, but the discussion will help everyone.

    Last year the majority of my income was from a lighting company in Chicago, I was employed as a freelance technician and worked mainly in their shop. No taxes were taken out of my pay check and instead of receiving a W2 form I received a 1099. If I understand this correctly all of that income is considered “personal business income”, which is taxed significantly higher. I was away at college and my father told me that he would have an accountant look at my taxes for me, I asked him to have her write off the mileage that I had to drive for the job. Unfortunately since my father waited till the last minute the communication wasn’t very good. The accountant told him since I was driving to the same location for this job I was not allowed to write off mileage. This meant that I had no write offs and had to pay a significant amount to the IRS.

    I was hoping if someone who has dealt with a situation like this could fill me in. Also for people who have had some freelance or professional experience, could you give suggestions as to how to prevent this kind of situation from happening. I had to learn the hard way and I hope this will prevent any other members from having to deal with this.

    Thanks,
    Steve
     
  2. ship

    ship Senior Team Emeritus Premium Member

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    I was once in the same situation, didn't do my what are they quarterly filings, and while it did not seem like I made enough money to put food on the table, I had by the end of the year a huge bill in taxes.

    The tax system for "free lance" is tricky. In some cases you are not considered to be an "indipendant contractor" if someone else is telling you where to be, when to be there and what to do. Or is that the definition of liability but not taxes. That's the theory at least.

    There was a large debate on stagecraft a search would show on your same question a few years ago. "Taxes" should pull up something, so also would "free lance"

    Kind of a one sided deal benefitting only the employeer if other than for taxes you are less contractor and more employee.

    Most places will do their proper thing in taking care of the employees who are less contractor with their own business as a sub-hire and more employee trying to punch the time clock and make enough money to cover lay off's as opposed to as a contractor time you decide to take off. I would recommend asking or finding greener pastures. Most places even if only free lance and temporary do take taxes out.

    I also recommend some form of retirement savings and health care but it's probably not in the budget at the moment. - Don't let it go to long or it will be much more expensive later.

    Another option is that if you work some places that do take taxes out, and others that don't, having those places that do take taxes out take out more to compensate. You can adjust how much is deducted. This way by the end of the year while you make a less money at some jobs, you will have it already taken out. At least 1/3 of the year if not more would probably be necessary.




    Things don't change much, the more you make, the less you have and the more that comes out of the pay check in taxes.

    I went for a steady income in going full time and eventually salary in part even if I loved the old job, I could not afford to work there. You get what you pay for as an employeer. Given you are in business for yourself as they say you are, than you have to look out for yourself first.

    You probably can't write off just going to work or every sap driving to work would be able to do this, the car maintinence etc.

    On the other hand, you should be able to write off any tools and educational materials you buy. I'm sure they add up to a lot. You might also be able to start your own business in gaining some tax benefits in doing so at a start up cost. The book "The Business of Theatrical Design" by Moody is an excellent book on doing all sorts of things like this, working free lance and dealing with taxes.

    You should also be able to ammend past and current returns for something like the past three years. Just be glad you also did not get an inheritence at that point as it would complicate it further. But you are going to need an accountant because filing the 1040EZ just won't do the trick.

    A computer based tax prepairing program might help to file on your own but short of a CPA, you won't get many advantages. The more time you wait, the worse it's going to be also. Hope you filed an extension.

    I'll PM you contact for a CPA that's on the north side of the city who specilizes in the entertainment industry. She helped me a lot when I was free lance and was very reasonable in rates. Over a normal accountant or CPA, someone who specilizes in what you do will know more about what tricks you can use.

    You might want to do a more coordinated deal with her to take care of your books all year round and financial planning in making it much more easy should you want to stay free lance.

    I still recommend finding at least a place that will take the taxes out.
     

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