Filter by Cash Transactions in QuickBooks Self Employed

 How to see all the transactions and receipts you entered manually in QuickBooks Self Employed.

Change the Accounts dropdown menu from your bank or credit card account to Cash.

This will filter transactions and only show ones that did not come in automatically from connected accounts.

Filtering with this method will more easily help you check off receipts and see what's been entered.

Dividend tax rate tables

 

Qualified dividend tax rate

Non-qualified dividends tax rate

When is coffee a deductible business expense?

 The deduction for business meals changed in 2021 and 2022 to encourage business owners to patronize restaurants, coffee shops, and more.

See all the rules here: Is your coffee a tax write-off? 

In essence, you must be meeting with a client, or providing the coffee to a client or employees to write off the coffee as a business expense. In 2021 and 2022, business meals are 100% deductible, whereas in previous years it was only a 50% deduction.

Federal Taxes and Montana Taxes for Active Duty or Combat Zones

Military Members in Combat Zones do not pay Federal Taxes

Although any base pay earned by a member of the armed services while serving in a combat zone is excluded from federal income tax, it is still subject to Social Security tax and Medicare tax.

• For enlisted service members, the amount of the exclusion from federal income tax is unlimited.
• For officers, the exclusion is limited to the maximum amount of enlisted pay.
• States vary on whether or not the federal combat pay tax exclusion applies to state income taxes.

source: QuickBooks: Combat Pay, Tax Style: Benefits When Serving in a Hot Zone

Montana does not tax active duty pay. 

(2) (a) The salary received from the armed forces by residents of Montana who are serving on active duty in the regular armed forces and who entered into active duty from Montana is exempt from state income tax.

Source: Montana Tax 

Single Member LLC vs. a Sole Proprietorship

This article from BizFilings details the advantages and disadvantages of a Single Member LLC vs. a Sole Proprietorship.  The primary difference is that the LLC comes with a legal shield and may require more licenses/registrations, depending on the state where it's registered.

Unless the single member LLC has employees, the EIN is the owner's social security number.

LLCs typically do not pay taxes at the business entity level. Any business income or loss is "passed-through" to owners and reported on their personal income tax returns. Any tax due is paid at the individual level.

An article from Entrepreneur magazine: What to Consider When Deciding Between Forming a Sole Proprietorship or LLC

 

Cheap 1099 Misc Forms

Since the 1099 MISC is one of the few tax documents you cannot simply download as a PDF and print on your home or office printer, the forms must be ordered online or bought at a local office supply store, including Staples, Office Max, etc.

If you only need to send 1099 forms to one individual or a few people, it doesn't make sense to have to waste extra money for excess copies of the form.

Locally, the 1099 MISC forms were expensive at Staples, so I opted to buy them online because somewhere, there had to be a smaller pack or discounted item!

This pack of forms for 25 vendors is only $10 on Amazon (free Prime shipping), and the cheapest option if you only need forms for a handful of vendors.  This kit includes the IRS copy, state copy, and confidential envelopes.

There is also single marketplace vendor selling 1099 MISC forms here for $4.20 and it has Prime shipping.

File Your Tax Returns for Free

Free File: Do Your Federal Taxes for Free
TaxAct and TurboTax both offer services linked from the IRS where you can prepare and send your federal tax return for free.

Free File: Everyone Can File an Extension for Free
Anyone can file a tax extension for free and it only takes about 10 minutes.

Individual Return Due Dates and Filing an Extension - Form 4868 | TaxAct Help Topics
TaxAct® supports the completion of Form 4868 Automatic Extension of Time to File U.S. Income Tax Return for your federal return, as well as any necessary extension forms for your state, if applicable. Form 4868 must be filed by the regular due date of the return.

Paper records for taxes: what to toss, what to keep

Excerpted from an article by:
Laura Cohn, Associate Editor

The most important documents to hang on to are your annual tax returns. You should keep the actual returns forever, but you can get rid of the supporting documents after three years. That's how long the IRS has to initiate an audit. Once the time elapses, toss the records -- and shred any that reveal your Social Security number or other personal information.

Other papers to save for at least three years include thank-you letters from charities and year-end investment statements. You don't need to save your monthly mutual fund reports forever. But before you toss them, wait for the year-end statements and make sure they match up. Also be sure to keep records that show the initial purchase price for stocks and mutual funds so you can calculate your basis when you sell them. After that, you can shred the documents once the three- or six-year IRS window draws to a close.

You also need to save records pertaining to your house as long as you live in it. Records showing your purchase price, and what you spent on improvements, may come in handy when you're trying to prove the value of your home to potential buyers. Another reason to keep these papers: If you sell your house at a hefty profit (more than $500,000 for couples filing a joint return or $250,000 for single filers), certain expenses can be used to lower your tax bill. After you sell the house, keep the documents for three years.

Finally, hold on to records showing how much money went into and came out of IRAs and 401(k)s -- especially if you've made any nondeductible contributions -- so you don't overpay taxes when you withdraw the money. Keep any 8606 forms on which you reported nondeductible contributions to traditional IRAs.

Federal and Montana State Tax Rates

Assuming $30,000 of income as an individual living in Montana (head of household, or cannot be claimed as a dependent on another person's tax return).

15.00% Federal Tax (for income of $8,351 - $33,950)

7.65% Social Security and Medicare Tax (flat rate)

6.90% Montana State Income Tax (for income of $15,601 and over)

____________________

29.55% total tax

• Federal Tax Brackets [Wikipedia]
• Social Security and Medicare Tax Rates [SSA.gov]
• Montana Income Tax Rates [Salary.com]

Miscellaneous tax stuff

Business and Personal Expenses Don't Mix - Financial Web
"Perhaps it started out as just a way to spend a few weekends each month doing something that you like to do, and make a few bucks at it to boot. You probably never bothered to give much thought to organizing, much less turning things into a permanent enterprise. And, as such, all of the money you made from your little diversion simply went into your personal account. But then, things actually began to pick up and soon you were making money hand-over-fist. Here's where the fun begins, because the IRS now categorizes you as "self-employed" for tax purposes, and because your sideline occupation is pulling in more than $400 of profit a year, you have to pay taxes on it. Your single personal checking account is now going to make things more confusing for both you and your accountant."

You must file a Schedule SE (self-employment) if:
You had net earnings from self-employment from other than church employee income (line 4 of Short Schedule SE or line 4c of
Long Schedule SE) of $400 or more

In the USA, a sole proprietorship just means you add two new pages to your annual tax return. That would be a Schedule C to show your income and expenses, and a Schedule SE to figure your self-employment tax.

The official definition of a deductible expense according to IRS is that “a business expense must be both ordinary and necessary.” An ordinary expense is defined as one that is “common and accepted in your trade or business.” A necessary expense is defined as one that is “helpful and appropriate for your trade or business.”

High Income Means a Higher Audit Risk
"The fact is," former IRS Commissioner Charles O. Rossotti once said, "people who make more than $100,000 pay more than 60% of the taxes, and we need to focus there."
If you're making more than $100,000 a year, your risk of an audit is higher. That means it's even more important to keep adequate records to substantiate your deductions.

Recent IRS statistics show a substantial decrease in the percentage of returns audited. Only 1.03% of all returns filed were audited in fiscal 2007. That's more than the 0.98% audited in 2006, but well below the 1.67% audited as recently as 1996. It's simply a question of money and resource allocation. Between 1996 and 2005, the number of tax returns filed jumped from 158 million to 177 million. During the same period, the number of IRS employees declined from 114,000 to 94,000.
source: 6 ways to keep the IRS at bay - MSN Money

Keeping Good Records for Business Taxes

• If you want to deduct an expense, you must have a receipt
• Note the business purpose right on the receipt
• Store all receipts and bills in a folder, so that all your expenses and deductions will be at your fingertips.
  
• Track expenses by category on a spreadsheet.
• On meals and entertainment, note who was with you.

Resources:
Business Expenses | IRS.gov

Standard Mileage Rates | IRS.gov

What kind of records should I keep?

Small Business Tax Tips: Make Your Filing Easy - Financial Web

Tax deductions for small businesses

Small Biz Survival: Checklists for starting your first business
- Web hosting, domain names
- The business percent of your cell phone
- Part or all of your home internet service, based on how much you use it for business
- Business cards or other promo items
- Computer equipment
- Software used in the business
- Paper, ink cartridges, office supplies

101 Tax deductions for bloggers and freelancers | Wise Bread
- Industry books or periodicals
- Graphic design fees
- Computer upgrades (RAM upgrades)
- Unpaid invoices (can right off as a loss)
- Tax and accounting software
- Tax preparation fees
- Stamps
- Paid professional advice