I've moved!

I told you it was going to happen and sure enough it did. 

Follow me to my new blog address at
http://junewalkeronline.com/category/blog/.

See you there ... June

From One Work Place To Another: It's business mileage.

  
The questions below about deducting auto expense were sent to me by our fellow indies. Here's a really simple answer to all of them: You may deduct the cost of going from one work location to another. A work location is any place you must be for your work.

Check out my bracketed [notes] to see if you can figure out the answer.


I have retired and moved to central Illinois. However, my previous employer in Chicago wants to hire me as part time (2 days a week) consultant. Is my mileage from my home [not a work location] in central Illinois to the office building in Chicago [is a work location] a tax deductible business mileage expense?

Kenneth
Chillicothe, IL

Answer: No


Hi June,

My name is Rick from Keytesville, MO. I've gotten several answers to my questions today just by reading your blogs.

Being in the clergy I have a difficult time finding someone who really knows about my tax situation. I work for an association of 26 churches. We have an associational office 40 miles away in a larger town and in that office I have an office. [is a work location] I also have an office in my home [is a work location] which I work from so I don't have to drive the 40 miles to town. I work both places about the same amount of time. I also have to drive to my churches [are a work locations] and various other locations for work [obvious work locations]. I understand that when I drive from my home office to my associational office that it considered a commute.[Not a commute unless you are going there solely to get that day's work assignment.] but if I drive from my home office straight to a different work location can I still get reimbursed for that mileage even if the work location is within 5 miles of the associational office. At the end of the day do I get to count my mileage back to my home office [is a work location] as reimbursable. Sometimes I go back to work other times just to go home [is not a work location].

Rick

Answer: All driving as described is deductible business mileage expense except the drive home.


Hi June!

I found your site just in time to file my 2008 taxes and have been bragging ever since. My friends continue to love your straightforward advice too!

OK, so I move. A lot. and always have my main office in the home. [is a work location] My current home (and for the last part of 2010 tax year) is a rented room and a separate rented studio/office/shed in the backyard. I rent both from a couple. I pay a set rate for the bedroom, we split utilities for the house that we share, and they just added $200/month for the shed space (which is only used for work). This is currently spelled out in the lease.

I travel frequently for work, and once or twice a week drive to an office for one of my main clients [is a work location]. My question: How should I claim my studio? I would like to be able to deduct miles driven from my office [is a work location] to stores [are work locations if you are buying items for your business], to meet with clients [is a work location] , or to airport to travel for work [is a work location].

Of course, I don't drive from my house to the office (I just walk a few steps).

Amanda
Asheville, NC
artist - arts administrator
4 years as an indie

Answer: All driving as described is deductible business mileage expense.

No Mileage Rcords

  
Dear June,

First I would like to say thank you for sharing your tax expertise with so many. We need the help! Especially me. This is my first year working my own business and I'm quite lost with tallying up all the business expenses and which ones I can tally up being appropriate.

One of my main questions I need help with is mileage. Earlier in the year I worked as an independent contractor for a photography company which required me to put a ton of miles on my car driving to and from different customers homes to show them the photos. My husband told me I should have kept a book logging each and every mile from every day, including my mileage for my new business (permanent makeup).

Needless to say, I didn't realize I was supposed to keep such a log, however, would like to write off the miles. Could you please advise me and tell me if there are any other options?

Thanks so much for your help! It is very much appreciated.
Kristina


Kristina, your husband is correct but why didn't he tell you sooner?!

You will need to reconstruct your time as an independent. Pull out your calendar, receipts, phone records, anything that can help recall where you went and when. Keep in mind errands that you did. A post office receipt means a trip to the post office. Same with an office supply store receipt. Then go to mapquest or the like and start charting mileage.

Every 20 business miles may say you about $3 to $4 in taxes. So you decide how much your time is worth and whether the reconstructing will be of value.

-- June

Please Take Note

                                                
                                                
Important Notice!!!!
I am moving this blog to my new website.

On or before December 1st my blog address will change to: http://junewalkeronline.com/category/blog/. Please visit often.

There's other news: My eLetter, Ways Through The Maze, will be back on track. And my website has had a revamp.

Thanks to some wonderful people my new site will be up and running within days. We can all hope for no glitches.

Cheers,
June

Don't be a faux-indie.

                         
I receive so many questions asking whether someone should choose to work as a self-employed or an employee. The simple answer is: It is not a choice. It is circumstance that determines your work status.

The complication arises because everyone wants to manipulate the work situation to his or her best tax advantage. More often it is the person doing the hiring who wants to cheat. Yup. It's cheating. It's fraud.

Who gets screwed: The one who does the hiring or the one who does the work? More often the one who does the work.

Do many get away with it? Yes, they do.

Do they get caught? Sometimes.

Are taxes, interest and penalties assessed when caught? More often, yes.

Why do workers accept an unfair and fraudulent work status? Because they need the money. If they question or complain they will not get the work because someone else will step right in to do the job as a faux-indie.

Be sure to read Employee vs. Self-employed for more info on how the IRS determines work status.

Below are four worker situations that my web visitors questioned. And there's one question from someone doing the hiring.

BTW -- I've shortened their queries a bit.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Hi June,

I graduated from dental school and found 2 part-time jobs working as a dentist in Queens, NY. Both employers are classifying me as an Independent Contractor and will file a 1099 at the end of the year.

I get paid $500/day. I think I'm supposed to be an employee since they are dictating the days and hours I'm that I'll be working and they are supplying their patients, office and supplies for me to use to treat their patients.

The thing is this seems to be the norm for dentist jobs in NYC. Every interview I've been on has only offered a 1099.

-- Jennie

[Jennie then listed many questions on how to avoid this situation, including incorporation, forming an LLC. None would be to her advantage. She is an employee.]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Hello,

I work in Farmville, VA as an office assistant for 3.5 years. My problem is this: The IRS defines me as an employee. The company I work for would rather list me as a self-employed person which I have done for the past 3 years. I need to know how they should record reimbursements I receive so they do not show up on my 1099 as income. They use QuickBooks and I am the one entering the bank statements monthly. What is the best way to record these reimbursements?

Tahirah

[The company would "rather" list you as a self-employed. Rather?! Tahirah is an employee. The reimbursed expenses are expenses of the employer.]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Hi,

I'm debating on either becoming a w-2 employee for my Dad's company or an Indie and charge his home health care business a consultant fee. I've kept my self up to date with Medicare laws for home health care and have been training individuals for Medicare billing as well as setting up their organizations. My dad's company (who has two other partners) are requesting my help and I need to let them know how I want to get paid.

Please help me in this ordeal, would this profession be considered self-employed or would it constitute a relationship. I will inform this agency the guidelines and audit patient charts and will propose a corrective action. I have never worked independently so I'm a little worried about calculating my own taxes.

I would appreciate all your help.

Thanks. Fahad
West Chester, OH

[Were Fahad to offer his services to only his father he would be an employee. But since he offers similar and related services to many others it appears he is self-employed.]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
June,

I came across your site and it's very good. I'm trying to determine if I'm an Indie. I started working for just one mortgage processing company that had only 1 client.

I signed an indie contractor agreement. So I got a 1099-MISC.

The mortgage company was my only source of income. I have a lot of freedom to do my job but all my business was paid by one company who had 1 client. They did have some control as to what banks business was done with. I had expenses but of course no taxes taken out. It will make a huge difference as far as my tax bill this year since not having worked as a 1099 person, I didn't set much aside in quarterly payments, oops!! What am I??

HARVEY
Broomfield, CO

[How much is a "lot of freedom?" What is "some control?" A contract does not change or negate tax regulation. This should have been discussed with the mortgage company before Harvey started to work for them. He is an employee.]

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Hi June,

I'm a Self Employed Website Designer living in Ocala, FL. I started my business in 2009. I haven't the income to hire any employees at this time.

I have considered inviting a private contractor in to help out with sales and client services. He would get a percentage of any work he brings in. I've found someone with sales experience who would like to do this, but he's not self employed. What steps does he have to take to become a private contractor? And, what steps do I need to take to have a private contractor work for my business?

Thank you,
Sandra
Ocala, FL

[Only if the worker offers his services to others in addition to Sandra and he also meets the relationship-control criteria may he be considered an independent.]

Good to be back!

                          
Hello My Fellow Indies,

I’m back. Sorry for the hiatus. My long absence was unavoidable, unprecedented, and unique – unique in the sense that it won’t ever happen again.

I have a financial and tax consulting business with an extensive list of clients, all of them self-employed. They take a considerable portion of my time. This past year the issues of one client took over much of my professional life. As a responsible hippie I did what was needed which meant months of additional work. 

Now one of my clients told me that in all the lyrics ever sung by Janis Joplin he did not find "responsible" and "hippie" in the same line. But, believe me, 'tis true.

I know that so many of you have sent me questions about your tax and financial quandaries. I can say only that I hope you have found answers from competent professionals during my absence and also that I will get to your questions ASAP. They are staring at me from my email DO folder.

Thank you all for hanging in there wih me. You've been emailing and telling me how helpful my material is. My goal: To make a lot more of it more easily available to you.

And a Happy Thanksgiving weekend to all of you.

Best,
June

Federal Budget 101: Your money; Where it goes

The following from a client-friend in Red Bank, New Jersey

How much do you know about the federal budget?

If your answer is "not much," you're not alone. In fact, very few people have an in-depth knowledge about the federal budget process or its impact on their daily lives.

"Federal Budget 101" is designed to give you a guided tour of the budget. We outline how the federal government raises revenues and spends money, how the President and Congress enact the budget, and how much money goes into the many different federal programs. Please visit our site.

-- June