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Tips for understanding and completing IRS tax form Schedule C
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1
HEAVEN’S HARVEST
MINISTRIES – FINANCE NIGHT
Small Bus - Schedule C and Other Tax Forms
Presented by: Jennoa R. Graham, Ph.D.
Friday, April 12, 2013
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KEY TERMINOLOGY Income – Money that is received in exchange
for a product, service or contract agreement
Expense – Money that is paid out in exchange for a product, service or contract agreement
Depletion – consumption of a resource faster than it is replenished (natural resources)
Self Employment (SE) Tax – tax rate applied to SE income in addition to federal taxes
Income – Expenses = Profit (Loss)
= Surplus (Deficit)
Profit = SurplusLoss = Deficit
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KEY TERMINOLOGY (CONT.) Estimated Tax – Installment payments
made by independent contractor/ SE owner from the total income received for services or product sales
IRS Form 1040-ES – voucher used to submit estimated federal income tax installment payments
GA Form 500ES - voucher used to submit estimated Georgia state income tax installment payments
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OVERVIEW Briefly review tools for calculating the
dollar amount of estimated tax
Review components of Schedule C – Profit (Loss) From a Business
Review components of Form 8829 – Expenses for Business Use of Your Home
Review components of Schedule SE – Self Employment Tax
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ESTIMATED TAX Federal Installments- Voluntary
1040-ES Estimated Tax Worksheet (Prepay)Tax Season (1040-V, may include penalty
fees)See www.irs.gov for more information
State of GA Installments – Voluntary 500-ES Individual and Fiduciary Estimated Tax
Payment Voucher (Prepay) GA-9465 Installment Agreement Request (Tax
Season) See www.etax.dor.ga.gov for more
information
Also see “Tax Withholdings and
Estimated Payments” presentation and
documents
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SCHEDULE C – PROFIT (LOSS) Information Section – Basic information
about the business
Part I – Income and Cost of Goods SoldHow much money did you make?Are sales properly recognized?
Part II – Expenses (Home use excluded)
Business use of home and Net Profit (Loss)
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FORM 8829 – BUSINESS USE OF HOME Part I - Quantifies how much of your
home is used for business
Part II – Calculates the allowance (deduction) assigned to the quantified use of your home
Part III – Home Depreciation assigned to quantified use of your home
Part IV – Casualty losses and negative operating expense are not deductible
*See tax advisor
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SCHEDULE SE – SELF EMPLOYMENT Short form vs. Long form
Short = less detailLong = more detailChurch employee or farming income = Long
Determines if SE tax applies to income
Calculates amount of tax owed
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QUIZ What form is used to file GA estimated
taxes?Form 500ES
What line on Schedule C would tax preparation fees be reported?Line 17
What line on Schedule C would home real estate taxes be reported?Line 30
What is the minimum dollar amount earned to qualify for self-employment tax?$400
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REFERENCES IRS (2013). Tax forms and definitions.
Internal Revenue Code, Retrieved March 5, 2013, from http://www.irs.gov
GA Dept of Revenue (2013). Tax forms and definitions. Office of Tax Policy, Retrieved March 6, 2013, from http://etax.dor.ga.gov
The American Heritage® Dictionary of the English Language (2009), Fourth Edition, Houghton Mifflin Company. Retrieved March 6, 2013, from http://www.thefreedictionary.com