We had our income tax done...

[old CB]

Oh, and if your previous accountant made enough mistakes on your tax returns it may be worth it to file "amended returns" to remedy those mistakes. But you'll need good help to figure out this stuff.

 

[svk]

Going to agree with those comments. Unless you are going to a bargain basement priced tax preparer, your accountant should be providing advice to you.

My cpa charges a minimum of 275 (my taxes cost $550 but I’ve got multiple income sources). The guy who used to do my taxes jacked his prices every year and then handed me off to an underling so I left. He charged a lot more. But in the big picture if a good accountant can find an additional $1500 in deductions for you, those tax savings paid his fee.

 

[Sandhill Crane]

We payed $505.00 for tax preparing.
They called several times with questions, but we never spoke with the accountant herself.
Edit: Hard to make good choices in the dark.

 

[NSMaple1]

Selling your truck isn't income per se. It should have been an equipment purchase when you bought it. Then would generate a depreciation expense every year after that. Then when you sell it it will either generate one last depreciation expense if you sell for less than its remaining book value, or a recapture (opposite of depreciation) if you sell for more than its remaining book value.

Sounds like you might need a sit down with your actual accountant. Or find another one.

 

[NSMaple1]

Actually, you should be having 2 tax returns/accounts going on. One for your business, and one for you. The business should show no income for last year, and yours should show no income (proceeds) from the business. Or is that what's going on?

 

[Sandhill Crane]

My understanding is it is all one income for LLC's and personal income.

 

[NSMaple1]

My understanding is it is all one income for LLC's and personal income.

We're in different countries, so maybe. Here, a business is a separate entity that files its own return. Especially if it has a tax number and is an incorporated company. Even a partnership. I'm in a partnership of two and that's the way it's been for us for 20+ years. And a sole proprietorship is the same as a partnership, just that it's a partnership of one.

 

[old CB]

Here in the states a simple business is accounted for on Schedule C, which is included on an individual (or married filing jointly) income tax return.

But I think we've established that Sandhill Crane needs better tax advice/accounting than he has been furnished in recent past.

 

[NSMaple1]

Gotta correct myself. Partnerships here don't need to file. Incorporated, yes.

Not sure a new accountant is needed, but I'd say a sit-down with the current one certainly is. Then go from there. If things get explained to you satisfactorily and your questions get answered so you can understand them - you might be ok going forward. Ours has a way of talking over your head.

 

[CentaurG2]

Here is a quick primer on LLC vs sole proprietor as far as taxes and business models are concerned. This can vary somewhat state to state. Despite the covid, taxes this year were brutal. They are probably not going to get any better in the near future. Might want to sit down with a business/financial planner and define what you want to do and where you want to be in the future.



Sole Proprietorship vs LLC: A Guide to Tax Benefits & Liabilities (communitytax.com)

 

[alderman]

Very interesting read as I can relate very closely with your situation. I have taxes taken out of my pension and social security so don’t have to make quarterly tax payments.
We purchased a 40 acre woodlot and I sell excess firewood also.
I don’t know how all of the tax implications work but since the government wants me to claim the small amount we make annually we’ve also been able to deduct the cost of equipment such as saws, winches, trailers, and vehicles.
Personally I feel the tax laws are so screwed up it becomes just a matter of what flies by them and if they want, they can lower the boom on anything they decide they want to.
When I was in college many years ago, I remember a professor telling me the only way to make good money in accounting is to sign your name on some pretty suspicious dealings.

I believe this year will be the first where we actually have a profit as other than fuel, no purchases were made.


Sent from my iPad using Tapatalk

 

[ChoppyChoppy]

Then your accountant advising you to not claim something as a business expense when thats what its being used for doesn't compute.

I had an accountant do my taxes 1 year.
I ended up redoing it and turning it from incorrectly owing a bunch to a refund.
They refused to put purchases as business expenses because it would show a loss and "that's a red flag".
Oh darn. If it true, no need to worry!

 

[CaseyForrest]

It may be a red flag, but if you have receipts and good books, there's not much to worry about.

 

[NSMaple1]

Yes, I think some accountants will err on the side of extreme caution too much sometimes so they would be less apt to draw the attention of IRS or CRA (whatever side of the border you're on) to themselves later as the preparing professional. At the cost of their client paying more taxes than they really needed to.