- 1 what is a schedule c tax form descriptions what is schedule c ehow
- 2 Frequently Asked Questions about U.S. Taxes
- 3 Tax Basics for Authors: 7 Quick Tips for Making Tax Time Easier
- 4 Free Course: How to Earn a Full-Time Income as an Author!
- 5 What Businesses Should Know About Schedule K-1s Before They File Taxes
- 5.1 Partnerships Must Issue K-1s Every Year
- 5.2 What if my partnership isn’t profitable?
- 5.3 Issue Schedule K-1s Before Your Partners and Shareholders File Taxes
- 5.4 The Consequences of Not Issuing Schedule K-1s
- 6 How are web hosting/net expenses categorized for taxes (schedule C) ?
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Frequently Asked Questions about U.S. Taxes
Click on the question to jump to the answer below.
1. Can Berkeley International Office help me file my taxes?
Berkeley International Office staff are not tax experts and cannot provide tax advice. To assist our clients, Berkeley International Office has purchased GLACIER Tax Prep (GTP). GTP is a user-friendly tax preparation software created specifically for international students and scholars who are nonresident aliens for tax purposes. GTP will help you navigate U.S. federal tax forms, residency status, tax treaties, exemptions, and deductions. GTP is accessible from around the world.
2. Do I have to file a tax return?
International students and scholars who have been in the U.S. for any portion of 2016 must file an annual tax report by the following year's tax filing deadline. International students and scholars should access GTP to determine their tax filing requirement. You may be required to file taxes with the State of California as well. Income that is taxed includes wages, scholarships and earnings on investments. (A complete list of taxed income may be found in IRS and state tax guides.) The most common type of income is wages; the money withheld from each paycheck is an estimated payment of the federal and state income tax obligation. This money is sent by the employer to the IRS and Franchise Tax Board in the employee's account (the account number is the Social Security number). Taxable scholarship payments may have some amount withheld similar to wages. Investment income (not including bank interest) rarely has an amount withheld in advance, the applicable tax is paid when filing the tax forms.
3. What is the deadline to file tax forms?
If you received taxable income, the deadline is April 18, 2017. If you had no US income and are only filing IRS Form 8843, the deadline is June 15, 2017. The deadline refers to the date the envelope is postmarked by the post office.
4. What should I do if I am unable to file my tax form by the deadline?
If you need more time, you can file Form 4868 to request an automatic extension of time until August 15. You will not be notified if the extension request is approved, it is automatic. If you owe any taxes, you must still mail the estimated tax payment by April 18 or you will be assessed penalties and interest as of April 17 on any payment owed. Be sure to sign and date the forms and keep copies for your records.
5. There is a tax treaty between the U.S. and my country. Should I file a tax form?
Yes, since you were present in the U.S. during 2016 you are required to complete and file a tax form.
6. How can GLACIER Tax Prep help me complete my tax forms?
GLACIER Tax Prep includes a tax resource library AND a comprehensive tax preparation program that:
- Calculates the substantial presence test to determine the foreign national's U.S. tax residency status
- Checks each type of payment against any applicable tax treaty to ensure that the individual takes advantage of any tax treaty benefits
- Completes the correct U.S. federal income tax form - either Form 1040NR or Form 1040NR-EZ
- Prepares any additional statements or attachments, as applicable - Form 2106, Form 8843, Schedule C, and/or Scholarship/Fellowship Grant Statement
- Prints the federal tax return and all additional attachments (please note, the IRS does not allow nonresident aliens for tax purposes to file a tax return electronically)
- Provides detailed instructions about how, when and where to submit the tax forms, as well as information about the required documents to attach and complete the tax return filing process.
- Current students or scholars who received a 1042-S from UC Berkeley:
Follow the instructions in the email sent from [email protected]
9. What are some of the typical forms I may receive for tax filing purposes?
Some of the forms you may receive from UC Berkeley, your employer or other sources are: 1042-S, W-2, 1099-INT, 1099-MISC, 1098-T. For more information about the specific forms, see Tax Forms
10. Do I qualify as a nonresident or resident alien for federal tax purposes?
The GLACIER Tax Prep program will ask you a series of questions based on the substantial presence test to determine your residence status for federal tax filing purposes. If you qualify as a nonresident alien for tax purposes, you can use the GTP program to assist you with federal tax filing. If you qualify as a resident alien for tax purposes, you cannot use the tax preparation software in GLACIER Tax Prep but you can still use the resource library to navigate filing your taxes as a resident alien. You can also file your taxes with a tax preparation company such as H&R Block or Turbo Tax. Generally, tax treaties do not apply to individuals who qualify as resident aliens for tax purposes, there are of course, exceptions. For more information on exceptions consult the GTP library regarding closer connections. Resident aliens for tax purposes file taxes in the same manner as U.S. citizens and residents. See also nonresident vs. Resident
11. I'm an F-1/J-1 student with no U.S. income or scholarships for 2016. Do I need to file anything?
All nonresident aliens for tax purposes, in F or J status, are required to complete Form 8843 with the IRS regardless of whether payment was received or not. This also includes dependents in F-2 and J-2 status regardless of age. This form can be completed by participating in one of the "nonresident Taxes for F and J Visa Holders with No Income" workshops and webinars. For dates and times, see Tax Workshops Schedule.
12. I arrived in the U.S. in December 2016 and I didn't work. Do I still have to file Form 8843?
All nonresident aliens for tax purposes, in F or J status, are required to complete Form 8843 with the IRS regardless of whether payment from an employer was received or not.
13. Does my F-2 or J-2 dependent need to file a tax form?
Yes, anyone in F or J status, present in the U.S. and a nonresident for tax purposes are required to complete a tax form. If your F-2 or J-2 dependent did not earn any income, they would be required to fill out the Form 8843. J-2 dependents who received an EAD, and earned an income, may be required to complete additional tax forms. They would be eligible to gain access to GLACIER Tax Prep to assist in the federal tax form process.
14. Do I need to file a Form 8843 for my US citizen child?
No, if your child is a US citizen and did not earn any income, no tax forms need to be completed.
15. I worked in 2016 but returned to my home country. Must I file taxes in the U.S.?
Yes, all students or scholars who were in F or J status, a nonresident for tax purposes and were present in the United States in 2016 must file a tax report for that year. Ask your employer to mail the Form W-2 to your home country address or explain how you may access it online. If you overpaid federal tax, the IRS can mail a refund check overseas.
16. What should I do if I didn't receive or if I lost the Form W-2?
If you have not received Form W-2 or Form 1099-R, or received an incorrect form or information, contact your employer. You may not have received the form because of an incorrect or incomplete address. Be sure to verify the address used if already mailed. If the form was returned to the employer because of an incorrect address, or never mailed, and the employer intends to issue or re-mail, allow a reasonable amount of time for this action to occur before calling the IRS for help. Students or scholars who were employed at UC Berkeley and did not receive their W-2 Form should email [email protected]
If you have requested the W-2 from the employer but have not received your Form(s) W-2, the IRS will help you obtain the missing form(s). Call 1-800-829-1040 . Be prepared to provide your name, address (including zip code), phone number, Social Security Number, and dates of employment and the name, address (including zip code), and phone number of the employer. For additional information, see Tax Topic 154, "Form W-2 - What To Do if Not Received" on the IRS website.
17. Who will receive the form 1042-S from the University?
- A student or scholar who was employed and was exempt from tax withholding under a tax treaty.
- Any nonresident alien student or scholar who received a taxable fellowship/scholarship/grant stipend.
- Any nonresident alien who received a non-employee service payment.
18. What should I do if I didn't receive Form 1042-S from UC Berkeley?
The UC Berkeley payroll office will distribute Form 1042-S no later than March 15. If you currently have a GLACIER record you should be able to find your 1042-S within the record. If you expect to receive a Form 1042-S and have not received it by March 15, please contact the Payroll Office by emailing [email protected] Not all students and scholars will receive a Form 1042-S.
19. Can I submit my tax forms electronically through GLACIER Tax Prep?
No, nonresident aliens for tax purposes cannot file tax reports electronically. Once you provide GLACIER Tax Prep with all of the required information, the system will auto-fill the appropriate tax forms. To complete the tax filing requirement, you must print the forms and mail them to the address provided on the instruction sheet on GLACIER Tax Prep. The address will depend on the form(s) you are filing. California state taxes must be filed with the California Franchise Tax Board. The address is available on the appropriate California tax form.
20. Do I have to file taxes with the State of California?
The State of California (through the Franchise Tax Board) requires an annual report of income, and assesses tax on the same type of income that is taxed by the federal government. Individuals who earned less than the minimum filing requirement do not have to file, however if any tax was withheld by the employer the individual would want to file a return in order to be refunded for the withholding.
21. Do I have to file taxes in California if I did not earn income?
Unlike federal rules, California does not require an annual tax report from those who made less than the minimum filing requirement or had no income at all. Visit the Individual Filing Requirements section of the California Franchise Tax Board for more information. If you do not have a filing requirement but had taxes withheld from your income, the only way you can get your money back is to file a California tax return and get a refund. A California Franchise Tax Board representative will present a tax workshop and online webinar in March. Students or scholars who are considered a resident for California state tax filing will complete and file California Tax Form 540.
22. What are the consequences of not filing?
Payment of income tax due is not voluntary, it is required by law. One of the conditions of your visa is to comply with US law. If you owe taxes and don't file, the IRS can assess penalties, interest and seize U.S. bank assets for repayment. Fines and penalties can often amount to more than the original tax debt. There can also be immigration consequences for failing to file taxes. Applicants for permanent residency or "green cards" are frequently asked to show proof of tax filing for previous years in the U.S.
23. I filed my tax report and am expecting a refund, but haven't received it.
Go to Where's My Refund? to track your refund. Where's My Refund? will usually have information about the refund three to four weeks after filing a paper return. Check weekly, on Wednesdays, for any updates to your refund information.
Tax Basics for Authors: 7 Quick Tips for Making Tax Time Easier
Making a full-time income as an author is a wonderful thing—except for that little detail where it also means that you may have some extra complications on your taxes. It’s worth dealing with those small headaches for the amazing financial and professional freedom that being a writer can provide, though. Especially when you do a little careful preparation to help make life easier when it’s time to file each spring!
Even if you’re relying on shoeboxes full of crumpled receipts and a gigantic cup of coffee when you do your taxes, there are ways to make the whole process simpler and ensure that you’re getting the most of your author income each year.
Just remember: a little preparation and organization during the year saves hours each April!
As a professional author, you need to report your writing income on your taxes, and the procedure for doing that is a little different from reporting money you’ve made from a day job. Plus, if you’ve made more than $400 from your writing this year, you’ll need to pay self-employment taxes. All of this requires some careful thought to make sure that you don’t have any unpleasant surprises after the April deadline.
There are a lot of moving parts involved with taxes when you’re self-employed, but taking care of your taxes as a professional writer doesn’t have to be scary. Here’s a few tips to help streamline things and make tax time less of a headache.
When you start making money from your writing, it’s tempting to immediately go blow it on a vacation to Aruba. Don’t let us stop you from celebrating—it’s awesome that you’re on your way to author success!—but make sure not to spend every penny.
Always set aside some cash for taxes. As a professional writer, you’re technically self-employed, so you don’t have an employer paying part of your Social Security and Medicare taxes on your new earnings. That means you’ll need a cash reserve to pay your state and federal taxes from.
In general, tax pros suggest setting aside about 30% of your earnings to cover taxes. Personally, I keep closer to a third, just in case. I’d rather have a little less free cash in my bank account now than have to scramble to cover a bigger-than-expected tax bill later.
Most banks let you set up sub-accounts for particular purposes, like saving up for holiday expenses or a new car; you can even label the accounts so you know what they’re for. It’s smart to set up a sub-account of your writing business bank account (you do have a separate one for your author income, right?) to use just for taxes. Every month, transfer 30% of your writing income to the Tax Account and you’ll have tax time covered.
And I mean everything. Receipts, Kindle sales reports, paperback sales reports, everything.
Did you travel to a writing convention? Keep all the receipts and log the mileage you spent driving (there’s really convenient apps for that, or you can just look it up on Google Maps).
Did you buy books on writing or take a publishing course? Keep the receipts.
If storing all those receipts is a problem, invest in a scanner and keep everything in folders on your computer. that you back up regularly. Technically, you only have to keep receipts for three years in case of an audit, but if you have everything scanned, labeled, and filed, you can keep them indefinitely in case the IRS ever has questions. With hard drives being so cheap these days, there’s no excuse for not keeping great records and holding onto them indefinitely.
It’s not just receipts, either—if you wrote articles for a magazine or website and got paid for them, you need to have that information written down. You should get a Form 1099 from the company that paid you sometime between December and February, prior to doing your taxes, but just in case, you need to keep your own records.
The downside of making a full-time income as an author is that you need to pay self-employment tax on all that income. If you’ve made more than $400 as a writer in a given year, you have to pay both your portion of your Social Security and Medicare taxes and the portion that an employer would pay. That adds up, right now, to 15.3% on the first $118,500 of your self-employed income (12.4% for Social Security and 2.9% for Medicare).
Anything you earn over $118,500 is taxed 2.9% for Medicare.
Self-employment taxes are recorded on Schedule SE, which gets attached to your Schedule C when you file.
Self-employment tax is 15.3% of the first $118,500 of your self-employed income. If you’re making more than that, get yourself some professional tax help! Self-employment taxes are reported on a Schedule SE and attached to your Schedule C.
4. Stay on Top of Your Estimated Tax
Are you totally self-employed as a writer? Then you’ll need to pay quarterly estimated taxes to both the state and federal government. This means that once every three months (on April 15, June 15, September 15, and January 15), you need to send in a check along with form 1040-ES, paying approximately the taxes that would’ve been withheld if you worked for someone else.
But how much is that? In general, you should pay exactly what you owe every quarter. So once you know how much money you’ve made, you calculate that 15.3% and mail it in. But this can be tough to do on a deadline, so a lot of people just use last year’s income to estimate. Figure 15.3% of last year’s writing income, divide by 4, and mail that amount in every quarter.
As long as you make payments equal to the amount you would’ve owed last year, you won’t be penalized by the IRS if that’s not enough to cover this year’s taxes (say, because you had a great year and sold enough books to triple your income).
At tax time, you’ll write the total amount you paid in quarterly payments on the “Payments” line of your 1040 tax return (line 65). That’ll get you credit for what you already paid.
What if you’re just starting as a professional author and you have no idea how much you’ll make this year? Do your best to pull together your income figures each quarter and send in a check based on 15.3% of that amount (from your Kindle sales, print sales, etc.). It’ll get you close enough that you should be in good shape when April rolls around.
Schedule C is the most important form for you as a professional author. That’s the “Profit or Loss from Business” form you fill out if your writing business has been formed as either a sole proprietorship or a limited liability corporation (the two easiest choices for most writers).
On this form, you record your income and expenses. The various categories look pretty overwhelming, but because you kept great records thanks to Tip 2, everything you need to fill this form out should be at your fingertips. Just fill out all the fields that are relevant to you (most likely some combination of office expenses, travel, supplies, utilities, and legal and professional services) and you can follow the instructions to work out your total profit or loss.
As a professional author, your books are probably the biggest part of your writing revenue stream. But you might also run courses, write articles, or do guest speaking. If you’re earning income those ways, you’ll want to make sure to document it.
Whenever you do work for a person or company and get paid, even if it’s just writing a short blog post or proofreading a manuscript, you should always fill out a W-9 form. This makes sure that the company you’re freelancing for has your tax information on file. If they pay you more than $600 in a year, the company is supposed to send you a 1099-MISC form, which lists exactly how much they’ve paid you.
Time Saving Tax Tip: You can fill out a W-9 form once each year using the IRS’s PDF W-9 form, save that file on your computer in a tax-related folder, and then send the same W-9 form to each company that pays you. This little tip will save you a bunch of time so you don’t have to keep filling out the same form over and over.
Even if a company doesn’t send you a 1099, you are obligated report what you earned on your taxes. You have been keeping track of all the payments you receive, right? If so, it’s pretty easy to add up all your writing income and to report it on Schedule C on your regular 1040 tax return.
The flip side of this is that if you pay a contractor more than $600 in a year, you need to send them a 1099! So if you did great this year and were able to bring on a publicist and a virtual assistant to help you, you’ll need to provide each of those people with a 1099.
And it’s not just people you work with regularly. Did you pay more than $600 for a custom cover design? 1099. Did you hire someone to build your author website and pay them more than $600? 1099.
Don’t worry, though—sending 1099s isn’t too awful. You can order the actual forms for free from the IRS at http://www.irs.gov/orderforms; click on Employer and Information Returns. Libraries often have free copies of various tax forms on hand in March and April, too. Once you have the form, just fill out the tax information of your contractor and send Copy A to the IRS and Copy B to the contractor. You can also use an inexpensive service like 1099Online or eFile4Biz to have the forms sent electronically.
Remember, you have to send the 1099 to your contractor no later than January 31 of the appropriate year (so, January 31, 2017, for the 2016 tax year, and so on).
So when you looked at that Schedule C up above, you saw all those “expenses” categories, right? That’s where your deductions go.
You can lower what you owe in taxes on your author income by claiming deductions. “Deductions” is another way of saying “allowed expenses.” They reduce the amount you’re taxed on: so if you made $40,000 as a writer, but spent $15,000 on allowed expenses related to your writing, you’d only be taxed on $25,000 of income. Basically, you can deduct all the money you spend on things that are completely, 100% relevant to actually getting your work as a writer done.
Many of us writers work from home, but that doesn’t guarantee that you can take a home office deduction on your taxes. There are a few criteria you have to meet for the IRS to allow you to use a home office tax deduction on your return.
Your home office has to be set aside only for work. That means you can’t work at the kitchen table and claim your kitchen as a home office deduction. There are two ways to calculate how much you can deduct for your home offices; the IRS has a worksheet comparing them so you can decide which is best for you.
If you write at a co-working space and pay a membership fee, you can deduct this expense on your taxes.
Writing Supplies and Equipment
This is a great place to take deductions! Lots of the things we writers need to work are deductible, like paper, pens, printer ink, and more. But did you know that you can also deduct the cost of that new laptop or your word processing software? Even Dropbox fees are potential deductions as long as you’re using the service only for business purposes.
Professional Fees, Memberships, Etc.
If you’ve joined a professional group like Independent Book Publishers of America that has annual dues, you can deduct on your taxes.
You can also deduct the cost of magazine subscriptions or books related to your writing and the cost of professional conferences you attend.
Do you travel to writer’s conferences, professional workshops, business seminars, or other business-related events? Do you drive or travel to meetings with PR professionals, publishers, agents, or other business contacts? As long as you keep track of how much your business travel expenses cost, you can deduct business travel expenses and save a lot on your taxes. Just make sure you keep mileage logs when driving, gas receipts, and receipts from meals or coffee with clients.All of this is deductible (although you only get to deduct 50% of a meal expense)!
All of these travel-related expenses are deductible (although you only get to deduct 50% of a meal expense)!
You can download our free author tax preparation checklist to make sure you don’t miss any important tax deductions when you file your taxes this year.
It’s always smart to know when to ask for help, and taxes are the #1 place people tend to freak out and need some solid advice.
That’s why tax professionals exist, and why you should absolutely get help if you need it!
Software like TurboTax and H&R Block now has versions for self-employed people (often called Home & Business) or for small businesses. For $99 or less, you can have the software walk you through income and possible deductions. You can even sometimes buy “insurance” that will help if you happen to get audited (always a possibility).
If you have a more complicated situation or you’re just nervous, get local recommendations for a good tax preparer or accountant. It’s often not as expensive as you’d think to hire someone—usually a few hundred dollars (which is deductible as a business expense!)—and it’s worth the peace of mind that comes with knowing your taxes were done right.
Interested in earning even more as a professional author? Try these resources to jump-start your sales:
Word of Caution: I’m not a tax professional, just a writer who’s been through the freelance trenches for many years. All the information given here is for informational purposes only—don’t rely on it for tax, legal, or accounting advice. You should always hire your own tax, legal, or accounting advisor for the best possible advice for your unique situation.
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What Businesses Should Know About Schedule K-1s Before They File Taxes
June 16, 2017 Posted by Melissa Hollis to Taxes, Business
I recently overheard a casual conversation between two of my friends from inDinero’s tax team in the breakroom. Their conversation was animated, and I kept hearing the term “K-1”—naturally, I assumed they were talking about a new Star Wars character. But boy was I wrong.
I learned that the Schedule K-1 is not a new imperial droid, but can be just as villainous in the eyes of many small business owners.
As someone who researches and writes about business taxes all days, I was surprised. How could I have missed such an important topic? Apparently, I’m not alone.
“In my experience, most people have no idea what a K-1 is. It’s just not on their radar,” said one of our CPAs. But whether they are aware of this requirement or not, many types of businesses are on the hook for K-1 forms, and the consequences of not issuing them are expensive.
Because inDinero works proactively with clients, we can ensure they meet their K-1 obligations with all partners. If you’ve been handling taxes yourself or working with an inexperienced tax preparer, keep reading.
Partnerships Must Issue K-1s Every Year
Partnerships and S Corporations are known as pass-through entities because they generally don’t pay income tax. Instead, the business income flows through to the partners or shareholders who then file and pay tax on any income. So, each year when tax season rolls around, partnerships must file Form 1065 with the IRS and issue Schedule K-1s to their partners or shareholders.
The Schedule K-1 is what allows partners and shareholders to report their shares of income, deductions, and credits to the IRS on their tax returns, typically via Form 1040. (Estates and trusts with multiple beneficiaries also issue Schedule K-1.)
The Schedule K-1 has three sections:
- Issuing entity information: Includes information about the business issuing the K-1. This includes employer ID number, address, and the business’s IRS filing location. You can also find the publicly traded partnership status if applicable.
- Partner/shareholder information: This area includes the partner’s information, such as their tax ID number, name, and address.
- Financial details: This section shows the partner’s profits and losses related to the business’s activities, as well as non-business activity such as interest, dividends, and capital gains. If you are a partner or shareholder and have received a distribution, or if you have income from a partnership or S-corp, this is where you find that information. Your losses also appear in this section. This is the longest section of the form, and additional pages may be attached.
What if my partnership isn’t profitable?
If your business is operating at a loss and there is no taxable income for any partner or shareholder to report, the partnership is still responsible for issuing Schedule K-1s.
In fact, in this case, your shareholders or partners are going to be even more eager to get their K-1’s if the passthrough entity has a loss because it may help reduce their income tax liability. No matter what, partners and shareholders will need information from the K-1 to file their tax returns.
Partners and shareholders use Schedule K-1 to complete their annual tax filing, typically due on March 15 or April 15 (unless they file for an extension). This goes for teams of all sizes. So even if your business has only two partners or shareholders, you must issue Schedule K-1s to yourselves.
You must issue K-1s to your partners or shareholders on or before the deadline of the partnership or S corporation’s tax return. For calendar year businesses, this falls on March 15, or in September if you’ve filed for an extension. This typically only leaves recipients a month to use the information from the K-1 to file their taxes.
If partners and shareholders file their personal returns without their final K-1s, their return might be missing key details about the partner’s gains and losses from their involvement. If this happens, they would need to amend their returns after the fact or risk having to deal with local or federal tax authorities who have questions about incomplete information.
If you’re a member of a partnership and haven’t received a Schedule K-1, be sure to estimate your expected taxable income or loss from the business when you file your extension. In some instances, CPA’s can prepare draft versions of K-1’s for partners or shareholders to help provide the most accurate estimate.
The Consequences of Not Issuing Schedule K-1s
The IRS is not messing around. There are two expensive penalties companies face when they fail to meet their Schedule K-1 responsibilities:
- If a flow-through business is late to file their tax returns and issue K-1s, they are fined $195 per partner or shareholder per month—even if the business isn’t profitable.
- Additionally, the flow-through will face fines up to $260 for each K-1 that is not issued to their partners or shareholders on time.
For example, if your S Corp has five shareholders, and you don’t file your S Corp return with K-1s on time, you’ll owe $2,275 in fines after just one month, even if you have no income to report.
These are fines that put major pressure on a small business—especially one that isn’t profitable. With a little diligence, however, every business can avoid penalties like these by issuing K-1’s to their partners and shareholders on time.
Melissa Hollis is a content marketer and lover of all things West Coast. She enjoys waking up every day and getting the chance to rethink the obvious and enable the dreams of aspiring entrepreneurs.
How are web hosting/net expenses categorized for taxes (schedule C) ?
I have my store host, email hosts (go daddy), back up hosts, site host, just all the things that keep my online store and site running. When I look it up online I get a variety of answers. From Utilities to Advertising. Some say advertising, but my site IS my business, it doesn't just draw attention to it. Right now I just have a category site/net expenses, but I don't know what main Tax Category it should go under.
Also, how would I categorize a shipping service fee (not the actual postage costs). For example, Endicia charges me a monthly fee for to provide shipping rates and labels to my store host. Would the Endicia service fee be in the shipping category (along with my Fedex and USPS postage charges?) or would that also be considered a a net host fee? or?
Thanks for you help!
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On my tax return, you do have a category of Other Expenses, where you can put everything else that does not have a specific category. I have a hard time believing that it would go under utilities, but I don't think the IRS would take an issue with it. In Outright, you can create an expense called "Hosting Fees" and when you do your taxes, it would go under Other Expenses.
As far as the shipping service, Line 18 is for office expenses, which would include postage and other office expenses. In Outright, just create an account called Shipping Service Fee, and put these costs there.
Thank you. I just took your advice and created a Shipping Service Fee and then put that category under Office Expense.
I'm keep going back and forth on the Utilities thing, but because I am not a brick and mortar location, I see my site as the location. Without the site, there would be nothing to bring attention to. (And things like google ads, amazon ads etc get people to website), so the maintaining of the website feels equal to that of Retail location making sure their power stays on so they can operate. I'll keep it as is for now just so I can move on to the next thing as I try and get things more organized.
Thanks again for your help -- I do have another question regarding where merchant and paypal fees should go on Schedule C - but I just created a new post about that here. (If you feel so inclined
the shipping can also go under "cost of goods sold" which is what we do. But I still have a shipping income and a shipping expense category so I make sure the rates we charge equal the rates we pay throughout the year. I just have the shipping expense linked to "cost of goods sold."
I've put mine under utilities for several years now.
@BWN Publishing - . That's where it makes more sense for me too. I'm glad to know it hasn't caused any issues for you during tax time.
After reading the info from this link: http://www.accountingweb.com/topic/cfo/top-9-confusing-business-deductions - I chose to follow their guideline - I just copied what they noted below for convenience
You pay a monthly hosting fee to firms like GoDaddy or Dreamhost. But does that go under equipment rental? Office expense?
Which do I choose: Advertising, Utilities, Equipment Rental, or Office expense?
Recommendation: Advertising or Utilities
According to Neubelt, this expense is similar to business cards in that it is likely used to help attract customers and drive revenue. However, Hinkson sees it a bit differently: "Web Hosting is a service and with a detailed P&L you would list it as Service Provider but on a simple P&L you will list it as a Utility."
So I used their advice: In GDBookkiing, I created a subcategory under Utilities called "Utilities/Service Provider -Net Hosts" but they are still under the main Category of Utilities for the P&L Schedule C.
It is helpful for me personally to separate them out though from my regular Utilities (Electric Gas etc) because I write a percentage off of those due to the fact they are part of a home office, while the my store host, site host etc are 100% write-off as they are only used for business. But again, in the end they are all still under the main category of Utilities.