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I couldn't seem to find the appropriate sub forum for this in the main forum so I
thought I would post it here.

What I would like to know is this. First a little bit of background since my personal situation is probably different than most on here. I am currently technically on disability(and trying to get the ball rolling to the point where I am no longer eventually dependent on collecting SSD). Based on a conversation I had with someone over the phone last week it has come to my attention that if you are self employed you need to report your earnings directly to the IRS(as well as to the SS office in my case). However, this woman only gave me half of the picture as she didn't seem to know all the details. She said you either report once a year to the IRS or quarterly depending on your business. Well, I don't at the moment have a business but plan on doing more than one thing. So what I would like to know is who reports quarterly and who doesn't? Is it different for those who have employees than those who are independent(like I will be). Also, does anyone know if you just type them a letter or tell them what you made over the phone.Thanks.
  • Profile picture of the author Kay King
    The link below is what you need - the IRS site is one of the most informative govt sites online.

    Self-Employed Individuals Tax Center
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    Sometimes I just want someone to hug me and say...
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  • Profile picture of the author Mikej413
    Thanks. I think I'm better off speaking to an expert about this in person though since it all seems a bit confusing to me.
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    • Profile picture of the author bizgrower
      Originally Posted by Mikej413 View Post

      Thanks. I think I'm better off speaking to an expert about this in person though since it all seems a bit confusing to me.
      I would try to find an "Enrolled Agent". A good one knows as much about taxes as a CPA and they
      are not as expensive and can represent you in front of the IRS. Should be able to get a free consult.
      Some people at companies like H and R Block are "Enrolled Agents".

      Dan
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      "If you think you're the smartest person in the room, then you're probably in the wrong room."

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  • Profile picture of the author Mikej413
    An Enrolled Agent huh? Can I find one online? Thanks for the advice.
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    • Profile picture of the author bizgrower
      Originally Posted by Mikej413 View Post

      An Enrolled Agent huh? Would I need to pay them just to have an initial consultation? Thanks for the help.
      You're welcome. I do not believe you would have to pay for that.
      Ask people you know and trust for a referral, or just try a few
      until you get one who will give a free initial consultation.
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      "If you think you're the smartest person in the room, then you're probably in the wrong room."

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  • Profile picture of the author seasoned
    Mike,

    From what I have seen in the past, and Kays link does have a statement that it is the same HERE, you only have to do it quarterly if you go over a certain amount. WHAT is that amount? It says:

    "Use the worksheet found in Form 1040-ES, Estimated Tax for Individuals to find out if you are required to file quarterly estimated tax."

    As for the enrolled agent, etc... I'm sure there are ones that will give you a short consult, and maybe longer if you send more business their way. Realize though that if they don't put their name to any work, by their like cosigning the tax return, for example, which they would do if you have them do the whole return, you can't start pointing fingers, etc... if they are wrong.

    It may be only a little better than asking the IRS, and the IRS actually has a codified rule that says they should be treated as some off the street STRANGER! That is, if you follow their advice, and it happens to be wrong, you may be judged guilty with prejudice. So you pay the error, fines, penalties, and interest. It could take them YEARS to come back at you retroactively. Of course, they wouldn't charge you for much of an error at that point if you pay at least annually.

    If you had employees, you would want to get an EIN. That is a special TIN you can use instead of the SSN, and you file a separate return for that. AGAIN, it might be quarterly or yearly. If you are the sole employee, you can use your SSN, and file a few extra and/or different forms.

    Calling them is not generally an option with such things as reporting, and if you write them a letter, GOOD LUCK!!!!! BESIDES, it will attract attention, and you DON'T want that.

    Just file the proper forms, that you can easily print from their site, and they will blindly be accepted! If they match what they find out elsewhere, are fully filled out as appropriate, and are correct, it is possible that NOBODY will give them a second look!

    I only got audited ONCE, and it was because a STUPID law lead them to believe I made TENS OF THOUSANDS of dollars more than I reported. They brought it up only because the broker reported info according to the stupid law, and they didn't see it on my return. Apparently, they changed that law, so hopefully it won't happen again.

    Steve
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  • Profile picture of the author Mikej413
    Thanks Steve. It sounds like you are advising me to not contact the IRS directly(except to report earnings either quarterly or once a year). If that is the case then it is probably in my best interest to just contact the Tax office near me and ask them or try to contact an enrolled agent online. I may do both. I haven't decided yet.

    Also, I don't know how much I'll be making(too soon to tell)so I don't yet know if I need to report quarterly or not. I consider myself to be honest to the t and plan on recording all my expenses(to the best of my ability) as well as earnings.

    I actually tried to start my own ebay business online several years ago(right before the big economic crisis)and had to file bankruptcy since it didn't work out and I leveraged thousands of dollars that the dubious company insisted that I pay. What happened is I had bad credit for about five years or at least not good credit. Anyway, I'm only mentioning this because I had an EIN number and did not have any employees except myself so it's my opinion that you also need an EIN number if you want to be incorporated or have an official business(something that I assume many entrepreneurs don't bother with). My mother tried to start a jewelry business online and she had it as LLC. The thing is it was costing her lots of money just for the upkeep and since she never really got off the ground as far as selling it through the internet anyway she didn't have much choice but to relinquish the business. She now just sells as a hobby locally and usually just breaks even and not much more due to expenses for the table etc. Anyway, since this is just me and me making money online it is refreshing to know I will not need to bother with having an EIN or all that other stuff. Like I said I went down that road before and it was a hassle. This is not to say I will not take my endeavors seriously. I most certainly will. Thanks again for the advice.
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    • Profile picture of the author Kay King
      You are making things much harder than they need to be. Your question has been answered and you keep asking it again.

      No one told you to contact the IRS - and there's no reason to do that. The information is on the link I gave you - or finding an "enrolled" agent is as simple as finding a tax preparation office (a private business - not IRS office) and having a short discussion.

      She said you either report once a year to the IRS or quarterly depending on your business. Well, I don't at the moment have a business but plan on doing more than one thing.
      WHEN you have a business you will file taxes based on THAT business model. Until you have a plan and know what you will be doing or selling - no one can give you specific advice on taxation.
      Signature
      Saving one dog will not change the world - but the world changes forever for that one dog
      ***
      Sometimes I just want someone to hug me and say...
      "It's going to be OK - here's a horse and two million dollars."
      {{ DiscussionBoard.errors[9649769].message }}
    • Profile picture of the author seasoned
      Originally Posted by Mikej413 View Post

      Thanks Steve. It sounds like you are advising me to not contact the IRS directly(except to report earnings either quarterly or once a year). If that is the case then it is probably in my best interest to just contact the Tax office near me and ask them or try to contact an enrolled agent online. I may do both. I haven't decided yet.
      NO!!! I mean you CAN call them, etc...., but DON'T do things like call to report earnings. They have FORMS to do that, and likely ALSO provide electronic access. If you don't give them a reason,or opportunity, to second guess your return, they are less likely to.

      If you DO ask a question, be careful. They may not be right, and you are still responsible.

      Also, I don't know how much I'll be making(too soon to tell)so I don't yet know if I need to report quarterly or not. I consider myself to be honest to the t and plan on recording all my expenses(to the best of my ability) as well as earnings.
      EASY! Assume it will be quarterly, use the worksheet, and annualize any quarter values(just use 4 times the quarter values) for the annual amounts. If it says you should file quarterly, do so. If it doesn't, don't.

      Steve
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  • Profile picture of the author Mikej413
    ^ I understand that but I am trying to figure out who is the best person to talk to about this so I know what to do when I need to do it. I still feel I should contact someone and it seems to me based on what I have read here that someone is an Enrolled Agent.
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    • Profile picture of the author bizgrower
      Originally Posted by Mikej413 View Post

      ^ I understand that but I am trying to figure out who is the best person to talk to about this so I know what to do when I need to do it. I still feel I should contact someone and it seems to me based on what I have read here that someone is an Enrolled Agent.
      I thin that would be the right thing for you to do. you should be bale to find one online or by referral.
      Signature

      "If you think you're the smartest person in the room, then you're probably in the wrong room."

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    • Profile picture of the author seasoned
      Originally Posted by Mikej413 View Post

      ^ I understand that but I am trying to figure out who is the best person to talk to about this so I know what to do when I need to do it. I still feel I should contact someone and it seems to me based on what I have read here that someone is an Enrolled Agent.
      Intuit has some nice software for filing taxes. You CAN use THAT. It will tell you if things don't match IRS policies, do the math, and even compare according to various metrics to tell you how much you will stand out. You can also purchase an audit guarantee of sorts. They will represent you if you have an audit.

      OH, and they ALSO will file ELECTRONICALLY! That means it goes into a computer and possibly NOBODY will ever see your return unless it breaks certain standards, is wrong in a certain way, or info from other sources doesn't match. You ALSO get refunds back quicker. Of course, the IRS, if they get bored, etc...., WILL "randomly" pick returns to audit.

      Steve
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  • Profile picture of the author dlwebb610
    THERE IS NO LAW THAT REQUIRES YOU TO PAY INCOME TAX!!!!!!!
    PERIOD, END OF DISCUSSION

    Watch and learn:
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    • Profile picture of the author seasoned
      Originally Posted by dlwebb610 View Post

      THERE IS NO LAW THAT REQUIRES YOU TO PAY INCOME TAX!!!!!!!
      PERIOD, END OF DISCUSSION

      Watch and learn: America : Freedom to Fascism - YouTube
      I haven't even watched the video yet. You're RIGHT! An improperly ratified law based on a false premise that broke promises, etc... You could say the SAME about the ACA!

      With the ACA, they BRIBED most, if not all, of the people to vote for it. It FAILED! The senate changed the last bill rendering it INVALID!

      They THEN found that they lost the majority, so they broke ANOTHER LAW that TED KENNEDY HIMSELF fought for! It is IRONIC that they broke the law to override the absence caused by Ted kennedy's impending death. But that WAS illegal! THEN, a LEGAL election elected a guy to fill the interlopers seat, but HE was AGAINST the ACA!

      So THEN, they broke ANOTHER law and, viewing THEIR illusion, they delayed seating the representative, and use the minimal contrived majority to "deem as passed" the bad senate bill, thus "making it valid again".

      After THAT, everyone HAD to pass new measures to basically override the one just passed that nobody really liked.

      And YEP, the IRS one was much the same. It basically funds a company that controls the currency by fiat. It is ironic that those that say the most against its franchises, and they ARE effectively franchises, are doing the most to support it.

      The problem with both, is that the LEOs are paid to RECOGNIZE them as legal.

      Steve
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