Do You Have Any Tax Questions - Send Them to Me.

[pamperedlinda]

My girlfriend works for H&R Block. She has a quota to meet for "Tax Talks" - which basically means that she has to meet with people and answer their questions, I'm having lunch with her on next week Wednesday and we are going to talk about Pampered Chef/direct Sales and she is going to give me advice on what we can legally write-off and what am I not writing off that I should. She's supposed to meet with groups of at least 5 so I told her that I'd get questions from you all.

Send me your questions via email @ [email protected] I'll put them together in a document and post her answers and advice.

 

[jesusluvsu2005]

Linda,
How neat! I'm just needing to know what all I can write off as a business expense. Some clothes, car maintainance, etc.? I am so clueless about it since this is my first year. Let us know what you find out. Thanks!
God bless,
Amanda

 

[pkd09]

I am thinking about writing a check to my DH before the year end for services rendered (keep your mind out of the gutter ladies!). Helping stamp, collate, etc. How much can I write the check for without him having to get a 1099? (he is on Social Security). I believe it use to be less than $600. How many of these individuals checks to different people can I write without a red flag going up?

 

[amy07]

****hanging head in total embarrassment*****This goes back to my total lack of organization, and my little pieces of paper being piled up or little notepads (mileage logs) being misplaced

Mileage: does it have to be actual odometer readings or can I just have mileage?

Samples - I give almost all of my doubles to my team for incentives. How do I document that? Is it necessary or can I just use the value as an expense?

I'm sure I will think of a TON more. You are so awesome for offering this!:thumbup:

 

[susanr613]

on the other end of the paying your family spectrum, what about children under 16? how much can i write off paying DS to stamp, sticker etc? how would i document this?

thanks!

 

[jrstephens]

Be sure to email your questions to Linda like she asked and not just post them here. I am sure that will make it a little easier on her to compile them.

 

[pamperedlinda]

Great questions - keep 'em coming! She is supposd to have about 5 people in attendance - so you all will be there in spirit.

 

[wadesgirl]

I would be curious to know about major purchases like my laptop. What is the best way to write it off? I use this 90% of the time for business.I would also like to know about items I purchase from other people in which I don't get any kind of a receipt (items from here on Marketplace, door prizes at cluster meetings, etc).

 

[jcsmilez]

I like that people are posting some of their questions here to because it gets my brain wheels turning. Some of these make me think ... "Hmm, I hadn't even thought about doing that!!"

 

[pamperedpnina]

What about if you have a decal on your car? can you write off all your millage for the year???

 

[JMT]

How do you deduct cell phone and internet etc. that are both personal and business use? Also, does the mileage amount factor in maintenance costs with it, or is that separate?

 

[Jules711]

My biggest thing is always WHERE to put the expenses. Like samples, food for shows, prizes, setup for booths, booth fees, etc. I would LOVE to just see the Schedule broken out with what goes under each actual category.

 

[pampered.chris]

I emailed my questions to you!! Thanks so much for doing this!! I really appreciate it!!

 

[pamperedlinda]

got it Chris. thanks.

 

[pamperedpnina]

Linda do you want me to email you or is posting here ok?

 

[pamperedlinda]

Linda do you want me to email you or is posting here ok?

it doesn't matter - I'm checking here too.

 

[Flamingo]

Linda will you post all the answers for us also....??? PLEASE!!!

 

[chefsteph07]

So Linda, did you meet w/ your friend yesterday??

 

[JackieBozeman]

What about if you have a decal on your car? can you write off all your millage for the year???

I've attended a tax meeting at my Director's place. Signs will not qualify for writing off all expenses on a vehicle. You either have to do mileage (must keep good records--starting and end and where went) or expenses totally itemized.

 

[pampered.chris]

Linda, Any update on the meeting w/ your friend?
Thanks!!

 

[candiejayne]

I'm assuming that she may not have met with her friend, she may be at services this week for her MIL. I haven't seen her online for a while.

 

[chefsteph07]

I'm assuming that she may not have met with her friend, she may be at services this week for her MIL. I haven't seen her online for a while.

Shoot, I forgot about her MIL...thanks for reminding me...

 

[pamperedlinda]

Here's the answers. Sorry it took so long. My gf wrote the answers up and she's been busy too. The attachments she's referring to are in a 'tif' file and I can't attach those.

Pampered Chef Consultant Tax Questions:

1. What can I write off as a business expense, clothes, car maintenance, etc.? Only clothes with Pampered Chef logo would be deductible. See attached pages 7.9-7.13 for other expenses and how categorized.

2. I am thinking about writing a check to my husband before the year-end for services rendered. Helping stamp, collate, etc. How much can I write the check for without him having to get a 1099? (he is on Social Security). I believe it used to be less than $600. How many of these individual checks to different people can I write without a red flag going up? Correct, less than $600. Tax law states that if $600 or more, you should issue a 1099. Unlimited number of checks, if to different people.

3. On the other end of the paying your family spectrum, what about children under 16? How much can I write off paying my children to stamp, sticker etc? How would I document this? Contract labor expense, less than $600.

4. Mileage: does it have to be actual odometer readings or can I just have mileage? Figures you need: Total mileage for the year, to be broken down. Total business miles, total commute miles if you have another job with a commute, total other miles. These three equal your total miles for the year.

5. Samples - I give almost all of my doubles to my team for incentives. How do I document that? Is it necessary or can I just use the value as an expense? IRS would rule that you would need receipts for these (if audited). If you have receipts for value, they could be for advertisement (incentives).

6. Major purchases like my laptop. What is the best way to write it off? I use this 90% of the time for business. Two options: 1) Section 179 deprecation which means depreciate the full amount the year placed in service, or 2) depreciate for 5 years.

7. I would also like to know about items I purchase from other people in which I don't get any kind of a receipt (items from here on Marketplace, door prizes at cluster meetings, etc). I would not recommend expensing anything without receipts, if audited the IRS will disallow the expense.

8. What about if you have a decal on your car? Can you write off all your millage for the year? Decal or not, only deduct actual business miles.

9. How do you deduct cell phone and internet etc. that are both personal and business use? Also, does the mileage amount factor in maintenance costs with it, or is that separate? Determine the business percent usage and that is deductible. Vehicle expenses are either deducted by standard business mileage or actual expenses. Actual expenses allows for oil changes, tires, any maintenance for vehicle and also allows for car washes.

10. My biggest thing is always WHERE to put the expenses. Like samples, food for shows, prizes, setup for booths, booth fees, etc. I would LOVE to just see the Schedule broken out with what goes under each actual category. See the attached pages (7.9-7.13) for the expenses and how they are categorized with definitions on the Schedule C.

11. I have heard that you were only allowed to claim a loss for X amount of years before you HAD to claim a profit or it would be considered a hobby and not be tax deductible? Is this true? If so, how many years can you be "in the red" before you have to be in the black? The IRS presumes that it is a hobby if in the red for 3 straight years, however, this is not a tax law.

12. Computer (laptop) purchases. Do you have to claim a portion per year or all at once? And if I am thinking correctly, you can do the internet in full b/c I only have it for business use only. See questions and answers to #6 and #9.

13. Also, as far as utilities and a portion of your home and insurance it is only the % of the home that is business use, like the office then use that for the % of the utilities you deduct? Correct. Example: your home is 2000sq ft. Your office room is 200 sq ft. You can deduct 10% of utilities, insurance, home maintenance, etc. I would not recommend depreciating the home, if you sell it you have to recapture the amount you have depreciated (claim as income).

 

[wadesgirl]

Linda, the tiff files should be able to be placed in Word and uploaded that way.

 

[pamperedlinda]

Linda, the tiff files should be able to be placed in Word and uploaded that way.

really? It looks like scanned pages to me. Maybe I can save them as a pdf?

 

[pamperedlinda]

nope, doesn't work.

 

[wadesgirl]

nope, doesn't work.

If I could find my usb flash drive you could email them to me and I can covert them at work for you. Unfortunantly, I have been unable to find it again for 2 weeks!

 

[emo812]

Linda is it possible to e-mail the files? My e-mail is [email protected]Thanks for the info...it's very helpful!!

 

[amy07]

thanks for this. I was just checking back to see if there was an update! You are awesome for posting all this great info!

 

[pamperedlinda]

Linda is it possible to e-mail the files? My e-mail is [email protected]

Thanks for the info...it's very helpful!!

you've got mail!

 

[nicki25]

Can you write off any part of a purchase of a GPS system for your car, because of using it for finding hosts houses???

 

[raebates]

Just be careful about using the GPS, Nicki. Anyone trying to use one to find my house winds up about a mile and a half away and hopelessly lost. Then again, I live in the geographical center of nowhere.

 

[MissChef]

Linda.... this is the first time I have saw this thread... I haven't spent near as much time on this site in the last few months... too busy with either my business or my family!

I just wanted to thank you for this thread and tell you what a jewel I think you are!! You know that already... but I just wanted to restate the obvious!
Thanks Linda for all you do for us!:thumbup:

 

[pcchefjane]

Linda, how much do we have to make in commission/free product to get a 1099 issued?

 

[pamperedlinda]

Linda, how much do we have to make in commission/free product to get a 1099 issued?

I guess $600 - see answer #2 in post #23

 

[PamperedSheep]

love this thread. very helpful!!!

 

[pcchefjane]

I guess $600 - see answer #2 in post #23

I mean for us to receive one from HO? I only had less than $100 last year so I didn't get one but after 12 months, I had a good year of commission!

 

[pamperedlinda]

I mean for us to receive one from HO? I only had less than $100 last year so I didn't get one but after 12 months, I had a good year of commission!

I do not know. I assume they follow the same rule. You could call HO and get your answer from the source.

 

[legacypc46]

Did your gal say anything about filing social security tax since we are self-employed? I've been told it's mandatory and I've been told it's not. ***So confusing!***

 

[pamperedlinda]

Did your gal say anything about filing social security tax since we are self-employed? I've been told it's mandatory and I've been told it's not. ***So confusing!***

I'll ask.

At my current level, I have so many write-offs that I don't think it matters. Now, when I reach Nancy Jo's level (ummm....stop laughing!) that would probably be a good idea.

 

[pcchefjane]

Social Security is optional because some companies have their own pension plan and not SS.

 

[beepampered]

Another questions. A little late but here it is.....Do long trips with lots of mileage give a red flag for an audit? I drove from NC to FL and did two shows over spring break. I wonder if several thousand miles will be a bit more than they'll accept....Thanks.

 

[Mel92504]

I also had a late question...I am new to PC & wondered if anyone had a rough idea what percentage of our commission should be set aside for taxes. My husband is a little concerned that we'll owe this year & not get a refund.

 

[pamperedlinda]

I also had a late question...I am new to PC & wondered if anyone had a rough idea what percentage of our commission should be set aside for taxes. My husband is a little concerned that we'll owe this year & not get a refund.

If you have kept a good log of all your expenses your husband will be plesantly surprised at the refund you will be getting!.

Last year my DH did our taxes and entered everything except my expenses. When he first entered my earnings we were getting back just over $600. After he entered all on my expenses we got back over $6,000! So, keep up with everything! Mileage is huge, keep a log in your car so you can make a note of it everytime you do something PC related....bank, USPS, grocery, deliver Host Pkt, deliver product, meet with a recruit, shop for office supplies.....it doesn't matter if you are droping your child off at school or going on other errands - it part of it was for PC then list that part of it! If you drove further for the PC part thatn the personal part, then write off the entire part! Keep your receipts for postage, groceries, supplies....everything that you use for PC - keep a receipt! You'll be amazed

 

[pamperedlinda]

Oh and if you earn products with sell a thon or whatever promotion is going on, that will show-up on your 1099 as "other income' - If you give them away or use them in your shows you can also write that part off as an expense!

 

[legacypc46]

Social Security is optional because some companies have their own pension plan and not SS.

The person who told me it was mandatory said you had to if you're earning income and are not contributing to a company pension plan. Would really love to hear an IRS person weigh in on this.

 

[priscilla]

SS is mandatory on your profit, and become deductible. When depreciating your home office, the rules state it must be your office only...no combo rooms like office and guest room. You cannot even store non-business related items in your office.Robin

 

[Deb Bixler]

Business Plan Protects Your Tax DeductionsThe Secret To Success In Direct Sales
I replaced my full time job with my Pampered Chef business in about 9 months. I am often asked “what is your secret?” referring to my successes in creating a full calendar. The secret is that I treat it like a business or a profession. There are certain business practices that all successful businesses follow. They are called best-business-practices. One best-business-practice that all successful businesses follow is to write and rewrite annually a business plan.

A business plan has three purposes:
1. Provides clarity and purpose
2. Gives you IRS compliance when taking home office deduction
3. Gives you a road map for success over the next year

Not only does a good business plan spell out your goals, mission and purpose but it also provides you with actions to take. When you have a plan in place you will have a better understanding on where to invest your time and money.

A IRS direct sales specific business plan template makes it easy to plug in your own details. Listen to an audio recording on :thumbup:http://www.createacashflowshow.com/inspiration-and-motivation/business-plan.htm at my blog.

Your business plan is a perpetual work in progress. It will change from time to time and year to year and without one your goals will most likely elude you. I encourage you to complete your business plan as soon as you can. It is amazing what it will do for your business.

 

[pamperedlinda]

Thanks Deb! I'll have to listen to that.

 

[legacypc46]

SS is mandatory on your profit, and become deductible. When depreciating your home office, the rules state it must be your office only...no combo rooms like office and guest room. You cannot even store non-business related items in your office.

Thanks for posting, but I don't fully understand your first sentence. Is the SS paid on your income pre-deductions or after deductions...and does it become a deduction in itself? If so, is it deducted on the following year's taxes? Thanks.
Kris

P.S. Linda, just noticed the new avatar! It's nice!