Today TaxMama® hears from Trina in the Tax Quips Forum who wasn’t an employee. “I started working for a newspaper company over the summer of 2011, delivering papers to homes using my own vehicle. The company did give me company checks, but they did not take any taxes out. I believe they called their employees “independent contractors.” How do I file my taxes, since there has not been anything taken out?”

Today TaxMama® hears from Josh in the TaxQuips Forum with a complex question about reimbursement plans. So, TaxMama wants to explain the overall concept.

Today TaxMama hears from Matt in the Tax Quips Forum, who has the right idea. “I have started a side business doing yard work. I am trying to determine the best way to save to pay my taxes. I have a checking account that is just for the side business. I deposit all the money I am paid for yard work directly into this account. I also use only this account to pay for fuel, repairs, equipment, etc. (business expenses). I need to use some money from my business for personal expenses. I plan to write myself a check from the business checking account, and then deposit that into my personal checking. I also plan to take 25% of the check I write to myself and put it in a savings account that is just for my taxes. Should I being doing this, or do I have to set aside 25% of everything I deposit into the business checking account into a savings account for taxes?”

Today TaxMama hears from Kennet in the TaxQuips Forum, who has this issue. “I incorporated my HVAC company from a sole proprietorship (c-corp) six months ago. I was told that I could temporarily borrow the income coming in from the company to pay my bills – and that I could create a payroll later. Long story short, I still haven’t created the payroll yet. How do I do handle the taxes for the moneys borrowed?”

Today TaxMama hears from Bradley in the TaxQuips Forum with a business idea. “I’m thinking about starting a business like Groupon. My partners and I are planning on sharing the cost of the coupon with the company offering it. We want to know if we will be taxed on the full amount, or just the portion we keep?”

Article reprinted with the permission of W. Murray Bradford, CPA

QUESTION:  I sell property and casualty insurance in Florida. I also like to scuba dive. I would like your opinion on whether or not the following is deductible. I  spent five hours with a prospect. First we went on a dive, then we spent two hours at dinner, where I asked the prospect to buy his car insurance and homeowners insurance from me. May I deduct the cost of the dive and the dinner? (S.D., Vero Beach, FL)

 Courtesy of IRS http://www.irs.gov/pub/irs-drop/a-11-40.pdf

The following standard mileage rates will apply:

• January 1 – June 30:  51 cents per mile for business miles driven
  • July 1 – December 31:  55.5 cents per mile for business miles driven
• January 1 – June 30: 19 cents per mile driven for medical or moving purposes
  •  July 1 – December 31:  23.5  cents per mile driven for medical or moving purposes
• January 1 – December 31: 14 cents per mile driven in service of charitable organizations.
  • This can only be changed by an Act of Congress. So it rarely changes 

These rates apply to the use of cars, vans, pickups, or panel trucks.

Today TaxMama hears from SB in the TaxQuips Forum with a common problem. “As a real estate professional, I had to kick back some commissions to a buyer to close a sale. But I am getting the 1099-MISC for the full commission. Can I give the buyer a 1099-MISC for the commission I paid her? Should I put the information in Box 7? How does all this work?”