Tax Hell
I have been in the middle of tax hell, you know, where you are collecting receipts, trying to find out the cost basis of stocks, and cursing yourself for not being even more organized. In the middle of all of this, I get a notice from the IRS about problems with my 2004 taxes--luckily I got that resolved. However, between that notice, 2005 taxes being due in a little over two weeks, and estimated payments for being self-employed due--it's rather stressful. Don't you just love tax season? Does anyone out there have any tips on how to stay sane while preparing your taxes? I would especially love to hear from others who are self-employed (with all of the estimated payments, extra social security etc. that we enjoy).
posted by Helen at 10:03 AM
27 Comments:
'Does anyone out there have any tips on how to stay sane while preparing your taxes?'
Hire an accountant ;)
-SayUncle
I think Robert Service said it best, in his poem Resentment: http://mygorramden.typepad.com/my_gorram_den/2005/04/resentment.html
Hire an accountant ;)
I second that. I have part ownership in two privately held corporations, a bunch of financial accounts, regular job-related income, and self-employment income. A real tax nightmare. I have no idea. I just hand it off to someone else.
My mother is self-employed. She uses TurboTax and loves it.
When I was married, my wife was a partner in a business with her sister. I would keep up with quarterly income taxes, unemployment, FICA, SS, etc. We always had a CPA do our annual taxes.
With the various sources of income, expenses, etc. that you and yours must have I can't imagine doing your taxes yourself. Take Say Uncle's advice, hire an accountant but make sure the account is a CPA.
Ice Scribe,
Robert Service's poem says it all--but the sad part is, that one's talents and education do go to waste. I often turn down work unless it is of interest to me because my taxes are so high that it is not worth it. But this system keeps people from working hard and using their talents which is a shame. I have often worked pro bono in the past or for less money but I do feel so resentful that I have almost quit this--my time is too precious to give away or to be taxed at a rate that makes no sense for me to go in--oh well, I can spend my time blogging!
Actually, if you are like me, there are two related tasks: bookkeeping, and preparing the tax forms.
My business is simple enought that preparing the forms is easy enough (with the help of TaxCut or TurboTax)
My problem is that I tend to cram all the paperwork, receipts, etc into a couple of folders, instead of doing a bit of bookkeeping weekly or monthly. And hiring a bookkeeper is more costly than just tax preperation.
I bought a book on procrastination, to try to cure myself of the cram-it-in-the-folder, do-it-later problem; but, no joke, I can't bring myself around to actually reading it.
To keep my sanity during bookkeeping season, I go off and read blogs.
Staying sane during tax season?
I recommend a dry martini before setting down to work...and a thirty year old bottle of singe malt Scotch waiting for when the taxes are done!
Taxes ruined February and March for me until I did three things:
1. I established a system for organizing tax documents, receipts, etc., so that I organized them at the time of the transaction and wouldn't need a marathon session at tax time. For me, it started out as one box where I put everything tax-related so I could at least find it at tax time. Now I copy all tax-related items when I get them and have special files, boxes, and baskets for various tax categories. The key for me was to get a system where I organized things one time when I got them, rather than waiting until tax season arrived - because when I waited I procrastinated on the entire task.
2. I use Quicken financial software. It lets me enter my financial data easily and run off tax reports without additional work. I know people who use other programs and they seem fine. I like Quicken because it works with Turbo Tax.
3. I run Turbo Tax to get a picture of my tax situation. I use an accountant to actually prepare my return, because I trust him and he always catches errors and accounting issues that my preparations miss. You may or may not need an accountant depending on how complex your financial issues are. If you aren't sure, I suggest you do it yourself and let an accountant prepare your tax return. After a couple of years of doing this, if everything you do seems to match the returns your accountant files, then you probably would be safe in doing it yourself.
This may be off-topic but I wish we had a flat tax or national sales tax.
DRJ,
I agree that either of those would be better for me as the complexities of doing taxes and keeping up with the paper work (I have a million receipts!) is more stressful than writing the check.
Get an accountant. It'll cost you $300-500 and is well worth it. I found one by searching the yellow pages for accountants with websites, and choosing the website that DIDN'T have dollar signs in place of "S"s. ("$AVING$")
It actually worked pretty well, I found a good one.
What really aggravates me about the complicated legal hurdles that we all have to endure is that the expenses involved in them are not actually counted as part of the tax burden.
Indeed, we are commonly led to believe that those of us living in western countries hand over about 35% of our earnings to our governments.
Far more relevant to us, however, is the fact that if we also take into account all the red tape that EVERYONE has to pay for (e.g. government-imposed red tape on businesses - which increases the price of the goods and services that we consume) we discover that around 50% (not 35%) of our purchasing power is appropriated by government.
FIFTY PER CENT!
For example, in Dr Helen's case, if she pays $500 to an accountant, this will not count as part of her 'tax burden' - but, surely, it should be counted as such because it is the government that has imposed this burden upon her.
Of course, it is not counted as 'tax' because the money goes to her accountant, not to the government.
Indeed, what we see happening nowadays is governments increasingly imposing their demands on people via the **private** sector. The idea behind this is to increase the power of government without this being reflected in the 'tax' take.
This is nothing more than a deceitful scam which is perpetrated by governments to hide the fact that their powers - and the burdens that they impose upon us - are forever increasing.
FIFTY PER CENT!
I'm a corp so I have that tax paperwork to deal with, as well as the personal tax stuff.
I have an accountant to deal with all of the tax payments, quarterly's, etc.
yes, I pay something for him to do this but 1)I have my sanity and 2)my tax burden is in the mid to upper 5 figures, and since he's so in the loop - telling me how much to send for estimated payments, etc. I've never had to write a check to the IRS at tax time for more than 100.00.
If we ever had a flat tax, perhaps I'd try to keep things straight myself, until that happens, the CPA is worth what I pay him.
I'd hate to endorse Eric's suggestion about drinking, except that it's such a wise suggestion.
My own handling of the self-employment situation is this:
1) Send way more money than you think you could possibly owe;
2) Deduct nothing you can't easily prove.
3) Wind up the year by sending a lot more money still.
I can't say it saves money, obviously, but it does spare the sanity a bit. Of course for this to work, you have to prefer time to money, to the tune of thousands a year.
Self-employment is not a great way to live, tax-wise. I assume you have developed an independent understanding of the issue.
I was teaching, p/t, when Bruce started our business. I quit teaching a year later and he turned over all of the finances to me, corporate and personal. I never met a tax form of any kind that wasn't out to get me, so I knew I needed help.
I use QuickBooks Pro for the business: I pay the the p/r tax liabilities when QB tells me how much for each; run all of the quarterly payroll tax reports, myself; and run the two reports the CPA wants at the end of the year.
For our personal taxes, I learned Excel and set up spreadsheets. The main one lists all contributions, medical expenses, professional fees, utilities, interest paid, and so on, by month, with totals at year end. I put the documents (receipts, etc.) that feed the spreadsheet into monthly folders; periodically, I go through the folders, my check register and credit card bills, all a month at a time. It's less confusing to do a whole month at a time than as I go, and doesn't take too many hours, at all, to do it that way. I usually end up doing a quarter at a time, spending not more than a couple of hours for each month's data.
It took a couple of years to get everything the accountant needed onto the spreadsheet, but boy, has it paid off. Each of the last two years, I've been ready to meet with him before the end of January. And then I'm done.
One caveat: Do make sure you have a good CPA/tax accountant. We started with a man who apparently got all of his training from a well-known organization that trains people to do prepare tax returns. He held himself out as a small-business specialist and a tax accountant, but he made some really big mistakes. We switched to someone Bruce had known in school before she earned her CPA license; nice woman and no doubt a good accountant, but weak on taxes. Her now-former partner, however, is an excellent CPA who really knows his tax stuff.
Oh--estimated taxes: Mr. CPA tells me each year what percentage of our draws to set aside in a holding account--just a basic checking account, at first--so that the money is there for the tax payments, when they come due. Late last year, Bruce told me about some online banks, and I went with EmigrantDirect online, which offers a savings account. It's currently paying 4.5%. Try getting that at your bank!
I know this is long; hope it's helpful.
Stay Sane. TeeHee. A man with a long haul truck for a revenue producing asset thought he had settled with the IRS when he paid some $50,000. He was asked to come in though, which he did whereupon he was told that well, if he just doubled that amount they could see him in the clear. He tossed his keys on the table and said, 'Well, you feed me.' The agent seemed then to be occupied in other business; meetings adjourned sine die.
I've been self-employed since around 1985. Get Quickbooks and use it for your business. Never pay a business expense with cash. Always a check, checkcard or credit card. Quickbooks will force you to be organized.
Me three, four. . .eight: get a good CPA.
Immediate case in point: literally *today*, I went down to our CPA's office to return the preparation forms he sends us every year. Yes, very late. . .but when I explained why to him, he took me aside into his front office to discuss our *planning* for this year, particularly how to legally avoid paying around 200K+ in capital gains taxes on the sale of the family home, and furthermore potentially avoid paying them at all.
Yes. Get a good CPA.
Heed drj's and sayuncle's advice.
Organization from day one is critical. I have had a sole-proprietor and corp business for years. I have used the same accountant for years (not a CPA).
I do most everything myself except filing taxes, payroll, and depreciation. I send our F/S from Quickbooks along with other info to the accountant. He does the taxes, calculates estimated taxes for the new year and we are off and running.
This time of year is the worst, I agree. I go insane just looking at the IRS instructions. It is more of a game to see how ridiculous they become.
Good luck, Helen. It will be over soon.
Thanks for all of the advice so far, everyone seems to have their own way that works for them when it comes to taxes. I have used accountants in the past but have always been dissapointed--some just take all the work I have done in adding receipts etc. and fill out the forms and charge a lot of money to do something I could do myself and others have offered tax advice that I feel would land me an audit so I have advoided those. But as my taxes become more and more complex, I will shop around and find someone who can assist with reasonable tax planning and help keep me sane.
As an SP I'll echo the statements of the others - hire a good accountant - it'll be the best money spent.
If you hire an accountant and let him/her do your taxes for a year or two, you can probably do them on your own after that -- assuming you retain the proper records.
FYI, there is an organization called National Organization for the Self-Employed, at http://www.nase.org/
I'm not a member, just happened to see a bumper sticker the other day that said, "I love my boss... I'm self-employed" and the URL. Being a curious sort, I had to look up the site. They mention taxes as one of the things they have information about.
John Crawford
cyclops@speakeasy.net
Things that have saved my sanity:
1) Hire Paychex. For $50 a month, they'll cut payroll checks in whatever denomination you designate, and do all the withholding and tax reporting.
2) Get a savvy tax professional, who used to work for the IRS at some point in their career.
3) You ARE organized as other than a sole proprietor, RIGHT?
4) Dome Publishing simplified book keeping products:
http://www.instaoffice.com/Bookkeeping-Record-Monthly-11-x-8-12-Wirebound-128-Pages-Tan-Cover.DOM612.0.7.htm
I second the spreadsheet method, with one addition. Don't wait until the end of the month: every time you spend money, enter the receipt into the spreadsheet *immediately.* Sit down in front of the computer to write checks and enter them in the spreadsheet and the checkbook at the same time; every time you come home, take the receipts out of your bags/wallet and enter them immediately. It seems like a pain at the time, but it's much less time-consuming than puzzling over your credit card statement six weeks later trying to remember what exactly you paid $45.91 at Staples for.
I've been self-employed for four-plus years using this method, and it makes doing taxes a snap. I don't pay an accountant or for QuickBooks--I just pull the totals off of my spreadsheet and drop 'em in the tax forms. I filed this year around February 9, and it would have been earlier except I had to wait for one slowpoke editor to send me the last 1099.
Of course, I'm single, a renter, minimal investments, and the accounting for my "business" isn't too complicated*, so your mileage may vary on whether or not the spreadsheet method means you can do without an accountant. (*I'm a freelance writer. I write stuff, mail it to my editors, deduct the postage, and they send me checks. No home office deduction, employees, inventory....)
I'd have to say, get an accountant too. They speak the same language, I tried to deal with the tax people myself - read what happened here: www.tax-hell.co.uk and the schedule is here http://web.mac.com/nickmorgan/iWeb/HMRC/schedule.html - in short I am a cautionary tail!
視訊做愛視訊美女無碼A片情色影劇kyo成人動漫tt1069同志交友網ut同志交友網微風成人論壇6k聊天室日本 avdvd 介紹免費觀賞UT視訊美女交友..........................
成人a片同志影片5278影片卡通影片做愛影片視訊交友網熟女人影片松島楓免費影片日本美女影像圖庫寫真女郎影片貼影片0800a片區gogo258男同志影音視訊Live秀線上成人影片成人論壇姐姐g罩杯影片小弟弟影片777美女dvd影片視訊交友90739潮吹影片aa影片下載城
Post a Comment
<< Home