Business tax return vs. individual tax return
Business tax return vs. individual tax return. Who am I? I'm a dancer. But what does that mean to the IRS? Am I a business? Or an individual? Could anyone clear up the confusion?
I did not dance last year, and so did not need to worry about being an independent contractor. All of my jobs sent me a W-2, and I filed a simple 1040.
Now I am a dancer. Does that automatically mean I own a business? (Maybe it's confusing because i AM my business.) What do I file? I have had jobs in 2005 where I was an acual employee and so will be getting W-2's from them in the next few months. That's easy. Now i'm worried about how to file a business tax return. Can my dance income and deductions be taken care of on the simple 1040?? Or do I need to file as a business (dance income and deductions) and also individual (w-2's, college loan interest deductions, dividends received etc...)??? Even more confusing... do I need to file quarterly interest estimates? I want to do this correctly, and by myself.
Can anyone point me in the right direction?
Re: Business tax return vs. individual tax return
Lydia -
Your employment jobs provide a W2 and that is what you have had. As a dancer, unless you have incorporated or created another legal entity, you are in business as a sole proprietorship. You report your business taxable income in your form 1040 using a Schedule C - that summarizes your income and your expenses to determine your business income. From that business income you will have social security tax calculated on schedule SE and depending upon the type of business equipment you may have purchased you may very well file a deprecation schedule. Since this is your first year as a self-employed business person - you should consult a professional tax advisor.
I am available for that and/or assistance in helping you find one - as I don't really use this forum as a direct solicitation of business - however it is directly related.
Feel free to conatce me with further questions.
Regards,
Dan Morris
Re: Business tax return vs. individual tax return
Thanks, Dan!! Glad you could clear that up for me.
Luckily i'll count as a sole proprietorship and should only have the Schedule C and SE added to what I'm used to. I use TurboTax's basic version--the cheap one, which will hopefully ask me about business income. If not, it's off to Walmart to get the slightly more complicated version.
Re: Business tax return vs. individual tax return
You will need TurboTax for Home and Business ... the version that sells for about $70. The ultra-low priced version only does 'employee' tax returns, and doesn't support Schedule C and related functions like depreciation of business property.
Re: Business tax return vs. individual tax return
AWESOME! Thanks for the tip, Melonie!