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U.S. Tax question
Thread poster: Ron Stelter
Ron Stelter  Identity Verified
Local time: 19:24
Partial member (2003)
German to English
Aug 2, 2004

I deferred my taxes so they are coming up again.

I had usually gone to H&R Block before, but I didn't last year as they couldn't give me a straight answer on the price. Normally, they charge by the number of W-2's you have so if I walk in with 100 invoices, are they going to charge me $3000? (I had usually paid 100-200 before).

Well, I tried to do it myself last year. It was a real disaster. I really didn't have the slightest clue about how to do it. The adding up of all the invoices itself wasn't that hard. But I really had no clue as to how best to get the deductions. I had bought two computers and probably a couple of thousands of dollars worth of books. So I definitely want my deductions. But I've also heard there are rather low limits on what you can deduct as business expenses. Otherwise, you might bring about an audit. On the one hand, I am single with no dependents and have not been having any money withheld. Translation is also my only source of income. So you think I might well owe something. But, on the other hand, I did OK, but didn't make a king's ransom in total salary with a lot of business expenses. Plus nickel-and-dime stuff.

Any tips appreciated about how best to do this all legally, painlessly and still not get soaked at the end. Particularly for the U.S. Do you go to an H&R Block or the like? Do it yourself? How much can you legally declare in deductions?

It seems like translation is not your ordinary type job where you just have one W-2 form and everything is nice and easy to figure out.

Thanks a lot.


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IrinaGM  Identity Verified
United States
Local time: 20:24
English to Georgian
+ ...
Get an accountant Aug 2, 2004

It is always best to get an accountant when you have such a complicated expense list. It might cost you more than H&R Block but in the end you'll save much more. But be careful choosing one. Go with the one that has good references or has worked for a satisfied client that you know. Good luck!

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Daina Jauntirans  Identity Verified
Local time: 19:24
German to English
+ ...
It's a nightmare to do yourself Aug 2, 2004

I'm sure you'll get some replies from people who are able to do it themselves, but I'm sure not (for me the kicker was figuring the self-employment tax - ugh). I pay about $250 for an accountant to do them. I just have to supply totals - total income, total expenses in different categories, and they give me a form with questions to fill out to help them. Haven't tried H&R Block, though a friend recommended them.

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Rosa Maria Duenas Rios  Identity Verified
Local time: 20:24
A good accountant will bring you peace of mind... Aug 2, 2004

Having lived in Mexico, Virginia and Maryland during 2003, and having never prepared a US tax return before, I was facing a small "tax hell". As Irina well says, I asked a few friends for references for a good accountant, and my tax "problem" disappeared! I just had to provide the usual information plus some forms (such as W2, W8, statements of account, and so on), and wait for a while (he did file a tax extension in our behalf). He charged 525.00 which, to me, was money well spent and worth every penny! I first had tried registering for a tax course at H+R Block, and some tutorials on the web, but none addressed my particular situation, so an accountant was the best solution. Good luck!

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Kevin Fulton
United States
Local time: 20:24
German to English
No easy answer Aug 2, 2004

You might want to use an accounting program such as Quick Books to keep track of your income and expenses (even if you use an accountant to do your taxes). It helps you sort expenses by category and provides you with a summary at the end of the year. You can then export the results to a program like Turbo Tax which then explains the various allowable deductions. Turbo Tax keeps track of your deductions/ depreciation from year to year. Turbo Tax is not necessarily a replacement for a competent tax accountant, but I've been using Turbo Tax for 9 years without any adverse response from the IRS.

I might suggest avoiding H&R Block, since your tax preparer will probably not be available in the event of an audit. A full-time accountant will be.
Kevin


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xxx00000000
English to French
+ ...
An accountant Aug 2, 2004

We pay $300 for our joint reports - we live in a pricey area, it might cost you less elsewhere. We fill out a form and get all three reports (two states and federal) all neatly done. We just have to sign and mail them. In our view, it's money well spent.

Best,
Esther


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ntext  Identity Verified
United States
Local time: 19:24
German to English
+ ...
TurboTax Aug 2, 2004

... can help. It will walk you through these things. You can even purchase "Audit Defense," which means that if and when an audit comes up, an accountant will handle it for you.

Of course, you might indeed find it less stressful to just hire a pro to begin with.

Ron Stelter wrote:

But I really had no clue as to how best to get the deductions. I had bought two computers and probably a couple of thousands of dollars worth of books. So I definitely want my deductions. But I've also heard there are rather low limits on what you can deduct as business expenses. Otherwise, you might bring about an audit.


Well, what is legal and what "might bring about an audit" are two seperate questions. You should, however, be able to deduct your computers and books (and I doubt that this would look "suspicious," in and of itself). AFAIK, you can deduct up to $25,000 per year for purchasing assets like these ("first year depreciation"), assuming you use them only for your business, and assuming you've earned at least as much. If the amount is higher, you have to depreciate over several years.

http://www.jdugancpa.com/sect179.htm


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Nazim Aziz Gokdemir  Identity Verified
Local time: 20:24
English to Turkish
+ ...
TurboTax vs. accountant Aug 2, 2004

I've been using TurboTax for seven years and I've been very happy with it. I tried an accountant years ago, but I don't think he was sufficiently diligent; I went over the return he prepared and found a couple of mistakes.

TurboTax has its quirks; sometimes it messes things up if you return to the interview and try to get going from the middle of a section. Your previously logged childcare deduction suddenly disappears, for example, because by starting from the middle you missed the part where you're supposed to check a box (it should remember that you checked the box the first time, but sometimes it doesn't; it's a little unclear on the concept of "remembering previous state"). So I have to bring up the actual forms and tweak/correct them once in a while.

Bottom line is I like to examine my return before I send it, and I don't send it until I know why every single item is the way it is. I can do this with TT as well as with an accountant, and TT is a lot cheaper. If I had money to burn, though, I'd go with a really good accountant. (And still study the return.)

Whatever you do, don't prepare your return by hand; self-employment tax is a bear to calculate. The $20 you spend for the bare-bones version of TT will save you hours in return (and you can deduct the expense next year). And TT offers lots of guidance and hand-holding; it'll probably stop you from entering a dubious deduction by mistake, and it'll suggest things you might be forgetting. The audit protection (which I've never used) sounds like a nice little option too, and pretty cheap.

Aziz


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Nazim Aziz Gokdemir  Identity Verified
Local time: 20:24
English to Turkish
+ ...
Don't forget estimated taxes Aug 2, 2004

By the way, as a self-employed person you need to pay estimated taxes quarterly (state as well as federal) unless your tax return ends up showing a net loss. TurboTax will calculate the penalty (if any) and calculate next year's estimated taxes for you so you're not penalized by the IRS again.

Aziz


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Susana Galilea  Identity Verified
United States
Local time: 19:24
English to Spanish
+ ...
I will be happy to recommend an accountant in your 'hood Aug 2, 2004

I see you live in NYC...I moved to Chicago last year, but still get my taxes done by my accountant in Midtown Manhattan. For a couple of hundred dollars he takes care of the entire process, and will answer any questions you may have about your particular situation. And you know he deals at least with one more freelance translator

Let me know if you'd like his info, the hardest part is usually getting a good recommendation.

Cheers,

Susana Galilea
Accredited Translator EUTI
sgalilea@ispwest.com
www.accentonspanish.com


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xxxjmf  Identity Verified
Spanish to English
+ ...
Aug 2, 2004



[Edited at 2004-08-03 14:32]


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