Jewelry Business w/ 1099-MISC

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Subject Author Date Jewelry Business w/ 1099-MISC doug4772 03-19-2009  Re: Jewelry Business w/ 1099-MISC smithff33 03-20-2009  Re: Jewelry Business w/ 1099-MISC Gene E. Utterback, EA, RF... 03-20-2009  Re: Jewelry Business w/ 1099-MISC removeps-groups@yahoo.com 03-20-2009
Posted by doug4772 on March 19, 2009, 5:49 pm Please log in for more thread options My wife sells jewelry for Lia Sophia as a side business. She received a 1099-MISC for the amount of money she was paid over the last year. This is the first year we have had to file her taxes for the business. I am filing them with my personal taxes and have a few questions. I entered the 1099-MISC into taxcut but it's now asking me questions about inventory valuation. She did receive statements throughout the year that show the amount she was paid. We're only talking about $1400 in income. It's asking me whether I maintained records of cost of goods sold. I would imagine this is so I can claim expenses. It then wants to know what method I used to calculate the closing inventory value (cost, lower of cost, or other). She purchased a kit with a base level of inventory and a few extra pieces throughout the year. Other than that, she only ordered items when they were purchased by customers. I have to account for that right? Cost of Materials and Suppies..... this is where I claim mileage and ink for the printer right? (little stuff). I apologize if this is the wrong forum for this question. Thanks in advance, Doug -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by smithff33 on March 20, 2009, 5:17 am Please log in for more thread options On Mar 19, 2:49�pm, doug4...@gmail.com wrote: > My wife sells jewelry for Lia Sophia as a side business. �She received > a 1099-MISC for the amount of money she was paid over the last year. > > This is the first year we have had to file her taxes for the > business. �I am filing them with my personal taxes and have a few > questions. �I entered the 1099-MISC into taxcut but it's now asking me > questions about inventory valuation. � She did receive statements > throughout the year that show the amount she was paid. > > We're only talking about $1400 in income. �It's asking me whether I > maintained records of cost of goods sold. �I would imagine this is so > I can claim expenses. �It then wants to know what method I used to > calculate the closing inventory value (cost, lower of cost, or other). > > She purchased a kit with a base level of inventory and a few extra > pieces throughout the year. �Other than that, she only ordered items > when they were purchased by customers. �I have to account for that > right? > > Cost of Materials and Suppies..... this is where I claim mileage and > ink for the printer right? (little stuff). > > I apologize if this is the wrong forum for this question. > Read the small business publication (IRS Pub 334), then come back with more specific questions. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Gene E. Utterback, EA, RFC, AB on March 20, 2009, 12:45 pm Please log in for more thread options > My wife sells jewelry for Lia Sophia as a side business. She received > a 1099-MISC for the amount of money she was paid over the last year. > > This is the first year we have had to file her taxes for the > business. I am filing them with my personal taxes and have a few > questions. I entered the 1099-MISC into taxcut but it's now asking me > questions about inventory valuation. She did receive statements > throughout the year that show the amount she was paid. > > We're only talking about $1400 in income. It's asking me whether I > maintained records of cost of goods sold. I would imagine this is so > I can claim expenses. It then wants to know what method I used to > calculate the closing inventory value (cost, lower of cost, or other). > > She purchased a kit with a base level of inventory and a few extra > pieces throughout the year. Other than that, she only ordered items > when they were purchased by customers. I have to account for that > right? > > Cost of Materials and Suppies..... this is where I claim mileage and > ink for the printer right? (little stuff). > > I apologize if this is the wrong forum for this question. > > Thanks in advance, > Doug You are in over your head. I would suggest you make an appointment with a local accountant who works with small business owners. Your wife is now a small business owner. You will need to attach at least a Schedule C to your personal returns to account for this business activity. Along with the Schedule C come a LOT of disclosure questions - did she actively participate, what method of accounting and inventory valuation does she use, did she start this in 2008, and on and on and on. You may also need to attach: Schedule SE - for self employment taxes Form 4562 - for depreciation of any equipment she used to conduct this business. This opens another can of worms for you including what method is used to calculate depreciation and what useful life to assign to the assets. You'll need to know how many miles she drove for this business - the law requires she have a log. And 2008 has two mileage allowance rates so you'll need to split the mileage and multiply by the different rates, then add the results together to get her mileage allowance. Get help, at least the first year - Gene E. Utterback, EA, RFC, ABA -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on March 20, 2009, 9:55 pm Please log in for more thread options On Mar 19, 2:49 pm, doug4...@gmail.com wrote: > My wife sells jewelry for Lia Sophia as a side business. She received > a 1099-MISC for the amount of money she was paid over the last year. > > This is the first year we have had to file her taxes for the > business. I am filing them with my personal taxes and have a few > questions. I entered the 1099-MISC into taxcut but it's now asking me > questions about inventory valuation. She did receive statements > throughout the year that show the amount she was paid. > > We're only talking about $1400 in income. It's asking me whether I > maintained records of cost of goods sold. I would imagine this is so > I can claim expenses. It then wants to know what method I used to > calculate the closing inventory value (cost, lower of cost, or other). Is that $1400 just her commission for selling items? Or it is something more complicated like the cost of the goods she sold, or the price she sold them for? If the former, it's quite possible that the cost of good sold is zero as the company will take care of the cost of goods sold on their own tax return. And yes, she will get to deduct or depreciate items such as miles driven, assets purchased for her business, and they will be in the expenses section of Schedule C (not in cost of goods sold for most businesses). Be aware that she'll have to pay an additional worst case 15.3% social security and medicare tax on her $1400 minus deductions. Be prepared for that tax bite! It's a good idea to see a professional especially for your first year. I understand that $1400 is not a big amount, and the professional fees would be a sizeable chunk of this $1400. But if her business grows, the investment will be worth it. And if the starts making more money, you should make estimated payments. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Filing as Sole Proprieter for my main business but have small general partnership business on the side March 16, 2009, 11:37 pm Mileage Deductions When Driving for Both Business and Non-Business. 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