2nd guessing myself, never had this situation before. I know if there is any business income, people have to file for SE tax. In this case today, the people had a business loss and no other income except for social security. They don't need to file right??? I advised them to keep their records of business expenses, mileage, etc... Did I do this right?
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If they don't file, the SOL never runs. That could be a problem if there are questionable expenses, missing income, or other factors which alter the business income/loss in any meaningful way. If they do file, then any potential problem goes away after 3 years."The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
You mean the NOL? These people won't need that I don't think!Comment
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I believe that income for filing requirement for self employed or business is $400 before deductions.Comment
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What I am reading from the IRS says net self employment earnings of over $400, that would be after COGS right?Comment
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No, I meant the SOL (Statute of Limitations).Originally posted by Super Mom View Post
There is always some benefit to knowing there is finality, especially if the client is relying upon our advice.
I'm VERY reluctant to ever tell a client they don't have a filing requirement."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Your question CANNOT be answered without knowing the "numbers".Originally posted by Super Mom View Post
What were the gross receipts from the business, the COGS and the other business operating expenses?
The $400 net-earnings threshold under ยง6017 is an additional filing requirement in addition to the filing requirements in ยง6012.Comment
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If the gross proceeds are $400 or more the T/P must file a return per IRS. Then on the return it will show a profit or loss. If there is any activity in the business a return should be filed regardless. A final business return should be marked if the business is ending.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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Regarding Filing Threshold
Regarding filing threshold, you might use Line 7 of Sch C, yes.Originally posted by Super Mom View Post
But you don't know that they will never need that NOL. Do the return and get paid. I would never advise a client not to file. Especially one with a business.
Last edited by RitaB; 10-14-2016, 10:55 AM.If you loan someone $20 and never see them again, it was probably worth it.Comment
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Gross Proceeds?? Do you mean sales or gross receipts? If yes, then you are not correct. If no, what do you mean by gross proceeds?Originally posted by BOB W View PostComment
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It is net earnings of $400 or more, right?Originally posted by New York Enrolled Agent View PostComment
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YesOriginally posted by Super Mom View Post
But the net earnings requirement doesn't fully answer the filing requirement question. YOU need to answer the questions I gave to you.
The mere fact that the taxpayer had a loss at the end of the Schedule C does not establish whether or not they have a filing requirement. YOU need to provide the "numbers".Comment
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IRS does not know what the earnings are unless a return is filed. But if the Sales on a 1099 shows $400 or more a return must be filed because of the SE threshold of $400. On the other hand, if there is no 1099 issued then the IRS does not know of the filing requirement to satisfy SE tax.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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no 1099---avon salesComment
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Sorry, but unless the Ronkonkoma, LI area has different rules, there is NO requirement to file a tax return, merely because there are $400 in sales.Originally posted by BOB W View Post
What the IRS knows or likes or whatever does not determine the requirement to file a tax return. The Internal Revenue Code does that. I would suggest you read IRC ยงยง 6012(a) and 6017 - they give the basic rules for to determine if a return is required to be filed based the facts posted in this thread.Comment
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