Author Topic: Let the race for 2012 begin...  (Read 142532 times)

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Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #4995 on: November 14, 2012, 07:33:43 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Wait a minute; are your mortgage repayments tax deductible?

Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #4996 on: November 14, 2012, 08:38:45 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Wait a minute; are your mortgage repayments tax deductible?

The interest on the mortgage that you paid the entire year is tax deductible. So are your local property taxes.

Also, for my fiance, he can deduct the percentage of the house space used for his business. Which also includes a deduction on that percentage for electricity and any other utilities that would affect that business space... which is pretty much all of them.

He can also deduct stuff he uses for the business. Like the generator we bought because the power was out for 15 hours during Hurricane Sandy. That's money and time lost so the generator is tax-deductible for his business since he needs to use it to keep his business going. Also, all the furniture he buys for the office space. Stuff like that.
« Last Edit: November 14, 2012, 08:40:56 AM by MarsGirl~A freak like me needs company... »

Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #4997 on: November 14, 2012, 08:41:00 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Wait a minute; are your mortgage repayments tax deductible?

The interest on the mortgage that you paid the entire year is tax deductible. So is your local property taxes.


On the mortgage of your home or business premises?


Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #4998 on: November 14, 2012, 08:43:15 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Wait a minute; are your mortgage repayments tax deductible?

The interest on the mortgage that you paid the entire year is tax deductible. So is your local property taxes.


On the mortgage of your home or business premises?

Oh you get an interest deduction on your house in general. So the house I had before I met him, I can always deduct the interest from the mortgage as well as the property taxes. Some percentage of this will also be deducted from the business portion of the house. I dont know how the business stuff works per se. That's what his accountant figures out. I can barely do my own taxes. I generally use TurboTax but this year with me owning half of the house we share, plus my original house that has not yet sold, I think I'm going to have his accountant handle my taxes as well.

Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #4999 on: November 14, 2012, 08:49:18 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Wait a minute; are your mortgage repayments tax deductible?

The interest on the mortgage that you paid the entire year is tax deductible. So is your local property taxes.


On the mortgage of your home or business premises?

Oh you get an interest deduction on your house in general. So the house I had before I met him, I can always deduct the interest from the mortgage as well as the property taxes. Some percentage of this will also be deducted from the business portion of the house. I dont know how the business stuff works per se. That's what his accountant figures out. I can barely do my own taxes. I generally use TurboTax but this year with me owning half of the house we share, plus my original house that has not yet sold, I think I'm going to have his accountant handle my taxes as well.

So just to be clear, is it only the interest and property tax on the portion of your house that is used for business purposes that is tax deductible, or is it the whole house?

And I have an accountant as it saves a lot of hassle and he usually gives good advice.  Plus their fees are tax deductible too.

Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #5000 on: November 14, 2012, 09:01:06 AM »
The interest and mortgage on the whole house is deductible regardless of whether or not it's business property. That will help on my fiance's taxes in general since he rented previously which is NOT tax deductible.

Now, if you use a part of that house as business space, that business space is deductible on the business taxes. Since the house we own is bigger than the apartment he had, that will now be a bigger percentage. The things that are tax deductible on that space also include a percentage of the utilities used in that space... So some percentage the accountant derives.

So I am saying that that is some kind of additional deduction. It's going to be confusing, though, because I also occupy the house, have 50% ownership, and also report taxes. This year, we are not married, so who knows how that gets divided up. Next year, we have the option of filing together as married. Or we could file separately as single, depending on which gives us the best advantage. These are things for the accountant to crunch around. It sounds messy to me!

Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #5001 on: November 14, 2012, 09:11:47 AM »
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The interest and mortgage on the whole house is deductible regardless of whether or not it's business property. That will help on my fiance's taxes in general since he rented previously which is NOT tax deductible.

Now, if you use a part of that house as business space, that business space is deductible on the business taxes. Since the house we own is bigger than the apartment he had, that will now be a bigger percentage. The things that are tax deductible on that space also include a percentage of the utilities used in that space... So some percentage the accountant derives.

So I am saying that that is some kind of additional deduction. It's going to be confusing, though, because I also occupy the house, have 50% ownership, and also report taxes. This year, we are not married, so who knows how that gets divided up. Next year, we have the option of filing together as married. Or we could file separately as single, depending on which gives us the best advantage. These are things for the accountant to crunch around. It sounds messy to me!

OK I understand now.  I wish we could deduct the mortgage interest on our home over here and deduct our council tax (local property tax), but unfortunately we can't.  There used to be tax relief on home mortgages in the UK, called MIRAS (Mortgage Interest Relief At Source), which was introduced by the Thatcher government in the 1980s to encourage home ownership, but that was scrapped by the Major government.  I suppose it's fair because rent was never tax deductible.


Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #5002 on: November 14, 2012, 09:43:06 AM »
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The interest and mortgage on the whole house is deductible regardless of whether or not it's business property. That will help on my fiance's taxes in general since he rented previously which is NOT tax deductible.

Now, if you use a part of that house as business space, that business space is deductible on the business taxes. Since the house we own is bigger than the apartment he had, that will now be a bigger percentage. The things that are tax deductible on that space also include a percentage of the utilities used in that space... So some percentage the accountant derives.

So I am saying that that is some kind of additional deduction. It's going to be confusing, though, because I also occupy the house, have 50% ownership, and also report taxes. This year, we are not married, so who knows how that gets divided up. Next year, we have the option of filing together as married. Or we could file separately as single, depending on which gives us the best advantage. These are things for the accountant to crunch around. It sounds messy to me!

OK I understand now.  I wish we could deduct the mortgage interest on our home over here and deduct our council tax (local property tax), but unfortunately we can't.  There used to be tax relief on home mortgages in the UK, called MIRAS (Mortgage Interest Relief At Source), which was introduced by the Thatcher government in the 1980s to encourage home ownership, but that was scrapped by the Major government.  I suppose it's fair because rent was never tax deductible.

Our deductions are in place to encourage home ownership too... I doubt they will get removed. I am not sure when they were put in place... Maybe after WWII when people came home from the war and they encouraged people to buy houses? (someone with some better historical knowledge can help me out here.)

Offline imaginary friend

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Re: Let the race for 2012 begin...
« Reply #5003 on: November 14, 2012, 10:00:50 AM »
very interesting map:   You are not allowed to view links. Register or Login

Offline uplate6674

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Re: Let the race for 2012 begin...
« Reply #5004 on: November 14, 2012, 10:18:38 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Still. I get scared when people talk of a corporations taking over things like aid to people in replacement of FEMA. No big corporation is going to do that.

Has he incorporated (I think a sole proprietor can still do that)? If he's still filing his business income as his personal income, he's going to get reamed by the IRS. If his income is incorporated, it gets taxed as a business, where the graduated tax categories are different from those who declare all their income as personal, etc. Might be worth asking his accountant. Anyone whose small business income puts them in one of the higher tax brackets should look into this. I don't know if he'd still qualify for the same deductions, but a professional should be able to tell him.

For a while I had both standard salaried paychecks from a full-time job and freelance (editorial) income on the side, so I legally deducted the cost of printer cartridges, annual depreciation on my computer and printer, paper, pens, post-its, mailing envelopes, etc. You have to keep records of receipts for all these things, but every deduction helps. As a renter, I could not deduct any housing or utility expenses, though. I made nowhere near the top tax brackets, so it was more advantageous to file it all as personal income. Still got reamed with Social Security taxes on the freelance portion of my income (if you work for someone else, your employer is legally required to pay half your SS tax, if you work for yourself you pay it all).

Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #5005 on: November 14, 2012, 10:33:38 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Still. I get scared when people talk of a corporations taking over things like aid to people in replacement of FEMA. No big corporation is going to do that.

Has he incorporated (I think a sole proprietor can still do that)? If he's still filing his business income as his personal income, he's going to get reamed by the IRS. If his income is incorporated, it gets taxed as a business, where the graduated tax categories are different from those who declare all their income as personal, etc. Might be worth asking his accountant. Anyone whose small business income puts them in one of the higher tax brackets should look into this. I don't know if he'd still qualify for the same deductions, but a professional should be able to tell him.

I think MarsGirl is referring to the amount of tax he gets clobbered with.

I don't know if he'd end up paying less tax in the end because if his small business was incorporated he'd just pay himself most, if not all, of his profits in salary, which would then be taxed at the same rate as his profits from being a sole trader.  The main advantage of incorporation for a small business is the limited liability aspect which could be beneficial if there's a danger of bankruptcy as it would protect his personal assets.


Offline uplate6674

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Re: Let the race for 2012 begin...
« Reply #5006 on: November 14, 2012, 10:47:52 AM »
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Big Business does concern me.

It should because they can crush your walnuts just as bad as big GVT--

You got that right!!!

My fiance is a small business owner (he has no employees, it's just him). He gets taxed like he's a big business. I mean, seriously, last year 40% of his income when to taxes. Bleh. Hopefully some of that is alleviated now that we bought a house and can deduct his work space which is bigger than he had in his apartment. And, also, we have that whole mortgage deduction.

Still. I get scared when people talk of a corporations taking over things like aid to people in replacement of FEMA. No big corporation is going to do that.

Has he incorporated (I think a sole proprietor can still do that)? If he's still filing his business income as his personal income, he's going to get reamed by the IRS. If his income is incorporated, it gets taxed as a business, where the graduated tax categories are different from those who declare all their income as personal, etc. Might be worth asking his accountant. Anyone whose small business income puts them in one of the higher tax brackets should look into this. I don't know if he'd still qualify for the same deductions, but a professional should be able to tell him.

I think MarsGirl is referring to the amount of tax he gets clobbered with.

I don't know if he'd end up paying less tax in the end because if his small business was incorporated he'd just pay himself most, if not all, of his profits in salary, which would then be taxed at the same rate as his profits from being a sole trader.  The main advantage of incorporation for a small business is the limited liability aspect which could be beneficial if there's a danger of bankruptcy as it would protect his personal assets.

Hmm. I didn't know that. Thanks for the info, TD.

Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #5007 on: November 14, 2012, 11:34:55 AM »
He is incorporated or an LLC or something. I forget which. He actually is taxed as a company and not an individual. So we have his company paying things like the electric bill so that he doesnt have to do gymnastics proving he paid it come tax time. It's very weird how he has to show paper trails to take money out of his company account to put it in his personal and our joint account. Very weird.

But, yeah, he still got socked with 40% of his income in taxes. Which made his take-home salary just a little over mine... It's not bad. But it's frustrating. Like they should really have some sort of relief on his social security payments and health insurance since it's just him. My parents said they used to do that (my dad is self-employed as well and has always been). But they dont anymore.

Technically, I could put him on my medical insurance next year when we're married. If I continue to stay employed and dont do something stupid like go postal and quit my job, and then run off to grad school.

Offline Tumbling Dice

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Re: Let the race for 2012 begin...
« Reply #5008 on: November 14, 2012, 11:49:03 AM »
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Technically, I could put him on my medical insurance next year when we're married. If I continue to stay employed and dont do something stupid like go postal and quit my job, and then run off to grad school.

What would you want to study at grad school if you could?


Offline MarsGirl

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Re: Let the race for 2012 begin...
« Reply #5009 on: November 14, 2012, 11:59:55 AM »
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Technically, I could put him on my medical insurance next year when we're married. If I continue to stay employed and dont do something stupid like go postal and quit my job, and then run off to grad school.

What would you want to study at grad school if you could?

I want to get an MFA in Creative Writing. And, yes, I know it's worthless and I can be a writer without it. But I would learn more about my craft and also it would fix the fact that I didnt get to major in writing for my undergrad degree. Which is what I really wanted. (Though I got an English degree, similar. Took a lot of writing classes.)