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Ways Through the Maze: A Tax Guide for Indies

#28: The Indie Experience: Giving and Reliable Sources
August 2010
 
Hi Indies,

Maybe some of you read my post Oh, the hype ... lies ... and edited video tapes . It's about knowing your sources. Donna, the indie who sent the question, was careful enough to ask for more information before acting. Sad to say, Vipal did not.

Please heed my warning during these frenzied times when anybody can say anything to millions of people and just by having been said, it becomes fact.
 
On a more positive note, here's something about helping those less fortunate than we. The September 2009 issue of the MAZE explained what to do when you donate your time toward a good cause. Below you'll learn what to do about actual expenses incurred for a charity.
 
Take care,
June
 
June Walker
Consultant to Indies
June Walker -- photo by Chip Simons
June's Blog
What's an Indie?

Whether you call yourself a
1099 Worker
Sole Proprietor
Freelancer
Subcontractor
Free Agent
or
Self-employed

You are an
independent professional.
  
The IRS classifies you as an
independent contractor.
 
I call you an indie.
June's Book
Self-employed Tax Solutions
Be A Confident Indie
The Confident Indie: Five Easy Steps
Five Easy Steps
Recordkeeping for 2010
62 page downloadable PDF 
Includes Worksheets
 
$19.00 Introductory Price
$5.00 Discount for Maze Subscribers
 

That's "maze" all lowercase. 
 

Tax Solutions for Creatives

Tax Solutions for Creatives: An Audio CD
 
Basics for the Visual Artist
An Audio CD
by
June Walker

1. Introduction
2. Self-employed in Business 
3. Three Ways to Deductions
4. Expenses in General
5. Office-in-the-Home
6. Auto & Transportation
7. Travel or Transportation
8. Meals & Entertainment
9. Income
10. Taxes  
11. Recordkeeping
12. A Final Caution
Donating Services and Products to the Lance Armstrong Foundation
June:

I'm from Las Vegas, NV, and I own a production company.

We have recently been asked to have our photobooth at a
Lance Armstrong Foundation event coming up in May and was trying to see if it was considered a tax deduction and what I would need to have the proper documentation to show at the end of the year.

From what I understand, I can't charge for my time, but I can charge for my expenses. Since it won't be me running the booth, it is one of my employees running the booth, using our paper and ink, our equipment tech setting and tearing it down, I am thinking that the payroll, supplies, and gas is tax deductible.

Am I correct in this or completely off base?

I thank you in advance for your time.
Gabriel


Hello Gabriel,

Congratulations on being asked and congratulations on accepting.

You are correct. All your expenses are deductible -- payroll, supplies, auto expense. Your name will be outside the booth so I assume this is a means of promoting your business. Since that is the case, then these are business deductions.
  

If there were no business purpose for your helping a good cause then it would not be a business deduction. Any costs would be a personal deduction on your tax return.

Best,
June

 

Check your sources BEFORE you act!

June --

IT consultant. Thank you for taking my comment.

I have been an independent contractor for 7 years.


The problem I have now is that I have been trying to purchase a house and the person helping with my loan advised me to amend my 2007 taxes and take no deductions and even had me add some income to it to make the numbers for the loan as my  income was low due to the deductions.

He also advised me to file 2008 with no deductions and add some income to that as well.

Now my problem is that I have not received financing and am stuck with a huge tax liability as I did not take my deductions.

I am not sure where to go now.

Any help is appreciated.

Vipul
Vienna, VA


Dear Vipul,

As I alert indies all the time: Know the source of the info you use. Even though they are both trades people, would I ask my plumber to fix an electrical problem? Did the person helping you with the loan know anything about taxes? Did you ask him?


Inflating income to get a federal loan is fraud. Yup. It's really bad.

You need to go to a legitimate tax professional experienced with self-employed taxes and have her file amended tax returns for 2007 and 2008.
 
You may want to speak with an attorney about reporting the loan company that you used.

In my book, Self-employed Tax Solutions, I warn about just such a situation. Sammy Segar the clueless CPA advises the musician Miles Mingus just as your loan guy advised you.

Best,
June
 
[email protected]

Ways Through the Maze

Will bring you clear and simple solutions to complicated situations about
income
expenses
taxes
recordkeeping
indie pensions
beiing self-employed

The Why of Ways Through the Maze

  • To guide indies to a more simple and secure tax life. 
  • To promote indie-business self-confidence.  
  • To humanize tax issues with glimpses into the lives and concerns of self-employed people. 
  • Each issue will include one or more Q&As that come out of real-life situations of indies who have visited my blog or my website. 
  • From time to time I'll also announce indie happenings of interest to you.
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