I read that the new tax laws will lower the tax rates 20% for independent contractors. How will this work for us?

NO IDEA, but then again I only worry about that when it comes time to file.

My understanding is that the new tax law allows the first 20% of contractor income to be excluded from taxes, among other changes. i am counting on TurboTax to sort it out for me. There are also changes on depreciation among other things. Up to a pretty high limit, 100% depreciation is allowed in the first year, so if you need a new PC or printer, or scanner or camera, this may be the time to buy it.

I hope you can actually deduct the cost of dinner, when that is the only payment. I hope this is not "payment in kind" and taxable.

Edited 2 time(s). Last edit at 12/15/2018 04:31PM by Niner.

@Niner wrote:

I hope you can actually depreciate the cost of dinner, when that is the only payment.

LOL!!! Since the reimbursement isn't taxable income, anyway!

@ceasesmith wrote:

@Niner wrote:

I hope you can actually depreciate the cost of dinner, when that is the only payment.

LOL!!! Since the reimbursement isn't taxable income, anyway!

This is my first year with this. I hope it's not. Business dinners are 50% deductible so I am slightly concerned that the IRS will think that these meals fall under that category.

I got to thinking about this last night. It might not make any difference to me. I'm 65, on Social Security. The rest of my earned income isn't even enough to file taxes on. The only reason I file for taxes is because of my Mystery Shopping. I have to pay Social Security and Medicare tax. I hope it lowers those amounts.

@Niner wrote:

@ceasesmith wrote:

@Niner wrote:

I hope you can actually depreciate the cost of dinner, when that is the only payment.

LOL!!! Since the reimbursement isn't taxable income, anyway!

This is my first year with this. I hope it's not. Business dinners are 50% deductible so I am slightly concerned that the IRS will think that these meals fall under that category.

I know "business dinners" are only 50% deductible, and I don't think that's changing.

However, your dinners are NOT "business dinners" -- they are REQUIRED PURCHASES, necessary to complete your assignment.

Therefore, the reimbursement is NOT taxable income AT ALL.

This is why elegant, exquisite, detailed record keeping is a MUST. WITH PAPER RECEIPTS. (IRS shows no sign of entering the 21st century, technologically speaking.)

Edited 1 time(s). Last edit at 12/15/2018 08:15PM by ceasesmith.

Many of my paper receipts have faded to just a white small piece of paper. Some of them from the beginning of the year are already gone....I hope the irs does not mind a shoebox full of blank paper! lol
In any case, even though I have not really looked at the new laws yet this is definitely not a business meal. Thanks Ceasesmith for that nugget. As far as writing off the first 20% I have not heard that. I do remember hearing the tax rate for business income will be 20% but I am not sure how this will work. In my memory when ever anything major changes in the tax code clarity on how the changes work is usually not understood until April 14th or even later. 20% would work for me as my tax bracket is higher than that but my ms income is so small it will not make much of a dent.

Sandy, if you know your paper will go blank, you have a coupla options -- copy them, if you have a printer, and staple the original to the copy. Or, take the page you've printed off for the shop, staple the receipt to it, and note on the page the amount, etc., of the receipt.

Either option is a back-up for your "blank paper". And yes, thermal printers print receipts with disappearing print.

@ceasesmith wrote:

Sandy, if you know your paper will go blank, you have a coupla options -- copy them, if you have a printer, and staple the original to the copy. Or, take the page you've printed off for the shop, staple the receipt to it, and note on the page the amount, etc., of the receipt.

Either option is a back-up for your "blank paper". And yes, thermal printers print receipts with disappearing print.

I have all my receipts scanned into my computer so If I ever get audited I can do this at that time if needed.. Perhaps by then they will allow scanned receipts with my printout from my credit card statement as back up. Since I have never been audited in all these years I will keep my fingers crossed.

@sandyf wrote:

@ceasesmith wrote:

Sandy, if you know your paper will go blank, you have a coupla options -- copy them, if you have a printer, and staple the original to the copy. Or, take the page you've printed off for the shop, staple the receipt to it, and note on the page the amount, etc., of the receipt.

Either option is a back-up for your "blank paper". And yes, thermal printers print receipts with disappearing print.

I have all my receipts scanned into my computer so If I ever get audited I can do this at that time if needed.. Perhaps by then they will allow scanned receipts with my printout from my credit card statement as back up. Since I have never been audited in all these years I will keep my fingers crossed.

Digital copies of receipts have been accepted by IRS since at least 2009. I would think that we all already have formed the habit of scanning all our receipts.

Naw, Wolfie, I gotta tell ya, any group I'm a member of, you can NEVER, NEVER generalize like that.

I have scanned receipts only as required by MSCs. The original paper receipt gets filed with my tax papers.

@Niner wrote:

@ceasesmith wrote:

@Niner wrote:

I hope you can actually depreciate the cost of dinner, when that is the only payment.

LOL!!! Since the reimbursement isn't taxable income, anyway!

This is my first year with this. I hope it's not. Business dinners are 50% deductible so I am slightly concerned that the IRS will think that these meals fall under that category.

Actually I *think* business dinners are 100% deductible. As in taking a client to dinner. It's travel meals that are only 50% deductible. Honestly it's MUCH easier and for most of us a better deal to use the GSA per diem rates almost always anyway. ESPECIALLY if you're doing shops for meals.

Does anyone know how Intelli-shop file their 1099? Do they separate reimbursement from payment? I did a lot of flat rate shops for them. I am afraid I went over the $600 limit

From Forbes, "The Tax Cuts and Jobs Act -- signed into law on December 22, 2017 — gave birth to a brand new provision: Section 199A, which permits owners of sole proprietorships, S corporations, or partnerships to deduct up to 20% of the income earned by the business." But the reality is that this simple statement is not so easy to actually interpret. What is clear is that it is not a 20% tax rate but some type of deduction. Here is the link to the Forbes article: [www.forbes.com] As has been stated many times on this Forum, if you are not sure, don't rely on me or anyone else here. There are some who have been registered agents and CPAs and I have come to know who to trust, but even they remind everyone to go to your own tax professional if in doubt.

Edited to add this link to an article written by a tax attorney [www.nolo.com] .What is clear to me, is that the 20% deduction of pass-through income could be very lucrative for some of us.



Edited 1 time(s). Last edit at 12/16/2018 04:12AM by myst4au.

Bette, it doesn't matter how Intelli-shop files their 1099 -- you are required to report your self-employment income EVEN IF it does NOT exceed the $600.

If you are asking if they separate reimbursements from fees, some companies do, and some don't. Again, it's up to you to keep adequate records.

@BetteL wrote:

Does anyone know how Intelli-shop file their 1099? Do they separate reimbursement from payment? I did a lot of flat rate shops for them. I am afraid I went over the $600 limit

@BetteL wrote:

Does anyone know how Intelli-shop file their 1099? Do they separate reimbursement from payment? I did a lot of flat rate shops for them. I am afraid I went over the $600 limit

Yes they do. Here is mine for 2016
Shop Fee
$769.75

Purchase Reimb.
$652.27

Bgriffin is correct. Business dinners are fully deductible. We use the term "Business Promotion" at my "real" job. Paid reimbursements are income - you then list them as a required expense so it is a wash out. I use the term "Required purchases" and have never had a problem. The meal expenses that are only 50% deductible are the meals you consume on the road while you are working, but don't have anything to do with the shop.

IRS finally released the new 1040 form. In my opinion it is going to make it difficult for some because they have shortened the 1040 form, but have added 6 schedules for information that used to be on the 1040. However for those that use a program like Turbo Tax it won't be a problem because the program makes all the calculations for you. The schedule C has not changed.

You would be surprised on how many MSC do not issue a correct 1099 in terms of how they classify (or don't classify) reimbursements. The best and safest thing to do is report all income and expenses correctly. Keep a spreadsheet using software or on a ledger. Do your tax return using an online tax program or a CPA professional.

No offense, but please don't assume posts from forum members about how to report earnings and expenses are correct. I have seen far more incorrect information than correct. The tax code has changes every year. States that have income tax occasionally have changes as well.