Taxes freaking out now please help

[fishnut9]

Ok so i dont know what to do now. I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes. That only gives me a couple hundred dollars off. Does anyone know if this is true. She owes 5800$ to the government now here is my question. I want to go to hrblock then have them do the taxes for me. if i dont like the results can i back out for a second opinion. I have 3000 to go towards the taxes. After hr block i will see if i can get a accountant to check it out. Problem is what if he charges me 1000$ leaving me 2000$ for taxes only to have the same number pop up as hr block. Now im 1000$ short. Do accountants allow free evaluations or no. I just dont want to spend the money to get the same results.

[Dennis780]

Ok so i dont know what to do now. I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes. That only gives me a couple hundred dollars off. Does anyone know if this is true. She owes 5800$ to the government now here is my question. I want to go to hrblock then have them do the taxes for me. if i dont like the results can i back out for a second opinion. I have 3000 to go towards the taxes. After hr block i will see if i can get a accountant to check it out. Problem is what if he charges me 1000$ leaving me 2000$ for taxes only to have the same number pop up as hr block. Now im 1000$ short. Do accountants allow free evaluations or no. I just dont want to spend the money to get the same results.

Yea, I know your pain my friend. I run two businesses, and had to learn alot of this the hard way also. The message is a little jumbled, but let me see if I can offer some assistance.

First, from what I gather, the business is registered under your wifes name alone? If so, the amount owing doesn't affect your taxes, only hers, and the gov't keeps taxes separate, even for married couples (though you can file together if you wish). A truly good business accountant will not look over your numbers for free, that goes without saying. Anyone willing do bend over backwards and so something free is either very nice, or very bad at what they do. Accountants are swamped during tax season, so the latter is more likely. HR Block can do very well for small business taxes. My wife used them with her home business. It was fast, easy, and I paid my accountant to look it over afterwards, and he said the return was almost exactly how he would have done it.

Why is HR Block bad? The same reason it is good. They service thousands of clients every day. They perform the same tasks every day, and can process your taxes swiftly. However to them you are a number, one of thousands that are in line behind you.

A real accountant does a good job, because his reputation is on the line.

Just remember that you aren't going to jail if you don't pay the government what you owe right away, you filed, and you will get a letter giving you your payment options. On that paper, you can call the offices and work something out if the options don't suit your financial state. The government doesn't want to put people in jail, they want to fine you, collect interest on money owed, and get paid. They will work with you, but try your best to pay it back asap, interest is the devil.

Dennis

[Dennis780]

$1000 bucks is a little steep, how big is your business? I pay around that, for both combined.

[fishnut9]

its just a dayhome. We would have had the whole amount but we spent half of the 5800$ on our wedding. Now we only have 3k. But like i said i just dont want to spend more money on an accountant to get the same result at half price.

[Dennis780]

its just a dayhome. We would have had the whole amount but we spent half of the 5800$ on our wedding. Now we only have 3k. But like i said i just dont want to spend more money on an accountant to get the same result at half price.

Firstly, congratulations! Now lets try to save you some money, shall we?

Your business is home-based. You can write that off. If you have your taxes in front of you, it's on line 9945 of the T1. There is also a child care tax credit, of which I know nothing about (never ran a day home, kids have too much energy).

Before you go to an accountant (or HR Block), you will want to know the dimensions of your home, and the monthy cost. Do you own the residence? Because sometimes you can breach your renters agreement or lease if you didn't notify the holder that you are using the space for a business. If thats the case, no worries, just don't write it off, and no one will be the wiser (but I'd suggest stopping until you reach an agreement).

Do you have kids of your own? Because that is also a tax write-off (who said kids cost money hey?).

If you own the home, is it your first? Because that is also a tax write off!

See where this is going? The important thing to remember is not what you made, is what you SPENT in a year that is more important. Anything including food can be used as a tax write-off for child care.

In fact, I remember reading that in 2004 (I think) Pepsi-Cola actually got a refund come tax time. This is because even though they made billions, they donated, paid out bonuses, etc.

You aren't in as much trouble as you think. If you want more tax writeoff stuff, I can dig. I'm not sure where you are from, by my accountant also could do a number on your returns, but it would be in the neighborhood of 300-400 bucks, and he wouldn't review them for free.

Let me know if you have any other questions! Good Luck!

Dennis

[Frans]

I'm in a similar boat, though I think I put aside enough to pay up. Switched from sole-proprietor to incorporated last fall. Always used Quick Tax (not Turbo Tax) software for the filing which worked very well. But the Incorporated package isn't as clear and straight cut as the Home Business package. The terminology is killing me. What are Directors Fees? :-)

I'm gonna need to report to someone who knows and pay my dues I guess.

[DarkAisling]

I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes. That only gives me a couple hundred dollars off. Does anyone know if this is true.

That is correct.

[ishootbambi]

Ok so i dont know what to do now. I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes.

that reminds me of when kramer tried to get jerry a new stereo by screwing the post office. "they know....and theyre the ones writing it off......."

its amazing how many people dont do the research before trying to run a business. dennis has given you good advice fishnut. to others reading this and thinking about starting a business, these are the kinds of things you should learn about BEFORE jumping in. good luck fishnut.

[wwbirds]

Originally Posted by fishnut9
I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes. That only gives me a couple hundred dollars off. Does anyone know if this is true.

but you had a pamphlet or something that you felt indicated otherwise when we tried to explain it last week. As we said last week get an acountant to set this up correctly once and for all. If you guess and get it wrong it can come back to bite you 2-3 years from now for a lot more than you are willling to risk right now.

Frans if you converted from proprietorship to incorporated last fall it is unlikely you needt to be concerned with directors fees.
Generally large public corporations (not private) would have a Board of Directors who receive a fee (honorary) for directing the affairs of the business. If incorporated within 6 months you probably have to wrap up a partial proprietorship year (to incorportion) and then your first fiscal year return for corporation will be due 6 months after fiscal year end (fall of 2011).
As above spend a few dollars to get it set up right as your trial balance from the proproietorship year end is very necessary to the start up of the incorporated entity. Well set up to begin with is essential to regular maintenance, planning and reporting.

[fishnut9]

but you had a pamphlet or something that you felt indicated otherwise when we tried to explain it last week. As we said last week get an acountant to set this up correctly once and for all. If you guess and get it wrong it can come back to bite you 2-3 years from now for a lot more than you are willling to risk right now.

Frans if you converted from proprietorship to incorporated last fall it is unlikely you needt to be concerned with directors fees.
Generally large public corporations (not private) would have a Board of Directors who receive a fee (honorary) for directing the affairs of the business. If incorporated within 6 months you probably have to wrap up a partial proprietorship year (to incorportion) and then your first fiscal year return for corporation will be due 6 months after fiscal year end (fall of 2011).
As above spend a few dollars to get it set up right as your trial balance from the proproietorship year end is very necessary to the start up of the incorporated entity. Well set up to begin with is essential to regular maintenance, planning and reporting.
Oh don't even give me that. I told you what I could deduct I never said off what. As for you guys telling me about not doing research we had the money so we weren't worried.then some one who said they would pay for our photographer backed out last moment so we had to take the money out of the tax fund.

[wwbirds]

not going there again bye

[fishnut9]

not going there again bye
Then don't I asked for advice not criticism.

[MWD 800]

Get an accountant.


Thats all there is to it. I am a consultant and I wouldn't dream of doing my own taxes. Accountants are paid to know all of this stuff. You aren't saving any money if you do it wrong and end up having to pay. H and R block are a rip off.

[Albertadiver]

Get an accountant.


Either that or go find some garden gnome to serve some mojito's to the person that will audit your file.

Seriously dude, people try to give you some advice, and when it's not to your liking you ignore it.

Pay for a freaking accountant. That's what they're their for. Mine has saved me thousands of dollars in taxes. If you think of that in terms of an investment, a little money in means lots of money saved.

[MWD 800]

oh and accountant fees are a write off

[DarkAisling]

Either that or go find some garden gnome to serve some mojito's to the person that will audit your file.

Where's the "Like" button!

We really need some sort of post ranking system.

[mooseknuckle]

Where's the "Like" button!

We really need some sort of post ranking system.

Agreed! Some posts deserve the slow clap cap tilt.

[Coulee]

I have had the same professional accountant do my taxes since 1996. Never had a bad experience. This year he charged me $115.00 to do them. Money well spent for a proper return and peace of mind. I don't know what H&R will charge you, but you won't be getting as qualified and experienced help as you will with a proper accountant. It might be too late for this year, but for 2011, get an accountant.

[horsetrader]

Ok so i dont know what to do now. I just realized that my wifes business writeoffs are actually deducted from her total income not the actual taxes. That only gives me a couple hundred dollars off. Does anyone know if this is true. She owes 5800$ to the government now here is my question. I want to go to hrblock then have them do the taxes for me. if i dont like the results can i back out for a second opinion. I have 3000 to go towards the taxes. After hr block i will see if i can get a accountant to check it out. Problem is what if he charges me 1000$ leaving me 2000$ for taxes only to have the same number pop up as hr block. Now im 1000$ short. Do accountants allow free evaluations or no. I just dont want to spend the money to get the same results.

Get an accountant he will save you more in the long run than what he cost you.
Should cost no more then 3 to 4 hundred and you can use it next year as a deduction.

[fishnut9]

Get an accountant he will save you more in the long run than what he cost you.
Should cost no more then 3 to 4 hundred and you can use it next year as a deduction.

See that's affordable. I called one accounting firm and they said they charge 2k for small businesses.

[FishingMOM]

See that's affordable. I called one accounting firm and they said they charge 2k for small businesses.

That is about right for small businesses.
WWBirds is the MAN when it comes to accounting, but you blew him off. Very stupid move.
Instead of reading a brochure that you hope is right why not rely on the men and women around you give you proper advice.

End of the day, you need an accountant.

[Rackmastr]

Sure doesnt take long to read some previous posts to realize that a person who seems to act like they know everything doesnt really take advice very well from the people that do.....

Makes me chuckle a bit to see that same person asking for help....

[greylynx]

not going there again bye

:)

I knew you meant good, but let them learn the hard way.

[densa44]

File it any way you want. Revenue Canada will assign an accountant to your case and won't charge a cent. They'll then tell you how much you own plus interest and penalties.

Nothing to it. Takes all the guess work out.

Or you could pay your own on accountant. Your choice.

[Lefty-Canuck]

My Wife had a dayhome as well and we use an accountant for the taxes, I think he charged $120.00. The crappy thing about dayhomes is you have to pay almost double the EI and CPP when you are self employed to the gov't !! For some silly reason and thats what really bit us. You basically have to save about 30% of what your wife pulls in to cover the cost of taxes at the end of the year. Then you have the money (my wife used a toally separate account to deposit that money every month) to front it out come tax time. She used the 30% rule and had a small amount left over in the account when it was all said and done. Again take the advise and go with an accountant over H&R block.....had bad experiences with them.

Lefty

[fishnut9]

Let me explain this again. I never said I would do my own taxes. I asked whether or not to go to hr block. I was never wrong at any point. Also ww didn't know anything about claiming utilities even though that info I posted was strait from the government site.so excuse me for not trusting anyone that didn't know squat about dayhome write offs

[Lonnie]

H &R block are for the masses most of them that work their just plug numbers in to a form. they would not even begin to know what you are or are not allowed for deductions. your best bet is find an accountant that knows taxes for day cares or do a lot of research and figure out every possible deduction that you can get and do them your self remember its a lot better to take a small percentage of a lot of deductions than full deductions on a few things.small percentages on a lot of things makes it harder for them to argue about during an audit.

[FCLightning]

Let me explain this again. I never said I would do my own taxes. I asked whether or not to go to hr block. I was never wrong at any point. Also ww didn't know anything about claiming utilities even though that info I posted was strait from the government site.so excuse me for not trusting anyone that didn't know squat about dayhome write offs

Why would anyone bother to try and help?

An accountant cannot manufacture deductions from your taxes for you. You are the best one at manufacturing deductions (didn't you already want to claim a higher percentage of square footage than the accountant felt comfortable with?). Keep your fingers crossed on the audit.

[MWD 800]

A bunch of us have said H&R Block are a rip off. Is that plain enough for you?

Joe

[slipbobber]

Why would anyone who is obviously smarter than everyone on this board be asking foe help? Just about see it all now.

[Sporty]

I agree with those telling you to go to an accountant and bypass H&R all together. You're in GP aren't you? Go see Craig Powell, he's a good man, good at his job and his rates are affordable. H&R Block doesn't hire accountants, you could go take their 2 month course and do taxes too. They only know the basics of tax filing, what many people could do themselves.

[fishnut9]

Why would anyone bother to try and help?

An accountant cannot manufacture deductions from your taxes for you. You are the best one at manufacturing deductions (didn't you already want to claim a higher percentage of square footage than the accountant felt comfortable with?). Keep your fingers crossed on the audit.

It was a person from hr block not an accountant that refused to use the proper percentage. So how about but out if you don't know what your talking about as well. How many people have come across the same problem as me. their agent will forget about a deductible that an accountant wont.

[fishnut9]

I agree with those telling you to go to an accountant and bypass H&R all together. You're in GP aren't you? Go see Craig Powell, he's a good man, good at his job and his rates are affordable. H&R Block doesn't hire accountants, you could go take their 2 month course and do taxes too. They only know the basics of tax filing, what many people could do themselves.

Thank you.this is the type of help I need. Not all accountants will take my case. Some keep saying my business is too small.others charge 2k for something another accountant will do for 5 hundred. Others are telling me to go to hr block instead. This is why I'm panicking. I'm getting different messages from the accounting firms.

[Sporty]

Craig Powell does all kinds of accounting, he's open to everyone during tax time along with his regular clientelle. As I said, he knows his stuff and he's affordable. I'm assuming some of the accountants that turned you down don't do taxes for the masses, only their clientele base.

[gunslinger]

I feel your pain buddy, my wifes come to 20000$ this year. That one hurts big time..

[fishnut9]

I feel your pain buddy, my wifes come to 20000$ this year. That one hurts big time..

well at least you guys are successful. Thats double my wifes. Also to the other post yeah in order for me to even get in with some of the accountants i need to be a regular client. Im just thinking to myself that i only need them 1 day a year and they want 2k annually while others only want 500 for a 1 time thing.

[horsetrader]

That is about right for small businesses.
WWBirds is the MAN when it comes to accounting, but you blew him off. Very stupid move.
Instead of reading a brochure that you hope is right why not rely on the men and women around you give you proper advice.

End of the day, you need an accountant.

Anyone that pay's $2000 to an accountant for a small business is crazy.

Have had a couple of small businesses for 20 years now and have never payed

my accountant over $500 here or in Ont. Just had mine done last month bill

was $340

[Sporty]

well at least you guys are successful. Thats double my wifes. Also to the other post yeah in order for me to even get in with some of the accountants i need to be a regular client. Im just thinking to myself that i only need them 1 day a year and they want 2k annually while others only want 500 for a 1 time thing.

You certainly clarified much more in this post than you did in the entire thread. I thought it would be odd for an accountant to charge 2k for one time tax filing. Go see Craig Powell and your issues should be solved.

[fishnut9]

Well i apologize for not being more clear. here is how my conversation went with one accounting firm
"hi i need an accountant to look over my taxes for this year for my wifes business."
"Are you a current client."
"no"
"Well you will need to come down and sign up to be our client."
"Ok how much will it cost though"
"2k for most our small businesses."
"What?! you charge 2k just to file taxes."
"Well we also do all your bookkeeping as well."
"ive already do my own bookkeeping dont you guys just file taxes and look over books."
"No sir that is not what an accountant does. For one time tax filing you should just go to hr block."
"but i was told i could go to an accountant because they are more knowledgeable in this area than the people at hr."
"well unfortunately we cant help you with what you are asking sir."
Thats why im so confused. Im being told by a firm that i must be a client and they dont do 1 time things. While people on here tell me otherwise. Thanks for clearing it up though.

[uglyelk]

Just tell them your not paying, then tell them how much you can bench press, I'm sure they will leave you alone.:sHa_shakeshout::sHa_shakeshout:

http://www.joe-ks.com/archives_oct2010/BabyWeightlifter.gif


Heat, power, water, phone,insurance....add up the totals and them multiply by the % of your home that's a day home. (sq ft used / total sq ft) x (hrs operated per week / 168)


Feed the kids? Keep seperate receipts for this food, 100% deduction

How did you get the food...if you used a personal vehicle to go out and purchase anything directly related to the operation of the day home you can claim a milage allowance. You'll need to keep a record of the number of k's you drove. you can deduct $.52 for each K you drive. up to 5000 k. If you drove to some where like edmonton to purchase something for the day home the milage would be claimable at 52 cents per k. Mileage adds up in a year.

Any cleaning supplies purchased this year? Government demands a clean day home, write it all off.

Take a first aid course? Should be deductable.

Your using a computer, is it new did the business buy it, write off! Just get some accounting software and use it to generate invoices to your clients etc.

Buy turbo tax (formerly quick tax) and file your own taxes next year. You'll save money.

Lots of guys offered you some good advice, get rid of the chip on your shoulder and take it.

Another good source of information is the CRA, call and ask questions they are the experts. keep records of who you talked to, it can help if you ever go through a tax audit.

Two guarantees in life Death and Taxes. The goal is to pay as little tax as possible in your life time. Good luck.

[winged1]

you have to understand what it is that an accountant does. Other than wanting to maximize their profits for services rendered, they 'account' for your business. Asking them to file without 'accounting' is asking for a horse to win without running.

On the other hand, asking a tax filer/preparer to file without accounting, is what it is.

You can expierence what an accountant provides, at reasonable fees however. By having;
- a business plan. Know where you are going. If you make money hand over fist, you need to manipulate it to reduce your taxes. If your heading for bankrupcy, it might be a good time to retrain. Accountants, including auditing agents, can reconcile your numbers much quicker if they have an idea of what your intent is.
- organize your reciepts. Bank statements, invoices, documentation, must be of the type required for taxation. A simple visa bill won't suffice for the tax man for any specific expense. It must be itemized. Don't drop a box of bills on the accountants lap and not expect to pay for the time it takes to file.
- prepare your financial statements. This is really where you save the dough. There are a number of good accounting software packages out there, but I prefer MYOB because entries can be reversed out. The trick here is that your financial statements must be backed up with the two previous items, good document organization, and a plan.

"Ok how much will it cost though"
"2k for most our small businesses."
"What?! you charge 2k just to file taxes."
"Well we also do all your bookkeeping as well."
"ive already do my own bookkeeping dont you guys just file taxes and look over books."

Now, when you talk to an accountant, you either asking them for advice on a specific topic, or you are asking them to reconcile your accounting, and to carry that forward with a tax filing. With this approach, you can realize the greater value they can offer, without paying for the labour.

It'll help you decide on the value of your expenses in the long run as well. You decided to expense a marriage, rejoice in that, or next time reconsider it's financial implications down the road.

One word of caution however. You mentioned square footage and others have mentioned a number of deductions. At some point, the tax man may inform you that a portion of the building is a corporate asset and may be taxed on it's disposition.

[Redfrog]

If you think hiring a professional to do your taxes is expensive, try hiring an amateur and see what it costs.:thinking-006:

I can't wait for the tomorrow's episode of as the stomach turns.:scared0018:

[Sundancefisher]

I understand that lunch room expenses...ie. supervision if you kids eat at school is a taxable write off.

Is this true?

[geo]

The reason that the accountants want you on as a client is liability. Remember, these guys are highly scrutinized professionals.

They don't simply take your financial statements from Quickbooks and input them into a tax form. They have a professional obligation to know what they are inputting into that form. If there is a misstatement, they may have to deal with the consequences.

You know how many people once they get audited probably say, "oh, my accountant advised me to do that, not my fault?" Then the accountant needs to defend himself with the CRA, potentially risking his livelihood.

H&R Block people are not professionals and they don't have the same test of reasonability that a designated accountant has. They can just take your Quickbook statements and plug them in for deductions.

There is no way a professional designated accountant will advise you on an aggresive tax strategy based on some financial statements that you hand him and he has no insight into what you've done behind them. If you want someone to get creative (within the law) it's going to cost a pretty penny. For most people, it's simply not worth it.

Seriously, consider their liability before being so critical. You're asking someone to put their name and their business and their livelihood on the line for you. How much would you charge for that same service to someone else?

I know damn well most people when audited will point their finger at their accountant and say, "oh, they told me to do that." So the accountant needs to know damn sure what exactly is going on in the tax return.

And as a word of advice, the time to get an accountant involved is at the beginning of your business. There are things that can be done on day 1 that minimize tax liability that can't be done after the fact.

[geo]

I understand that lunch room expenses...ie. supervision if you kids eat at school is a taxable write off.

Is this true?

As with all things tax, it depends. You need to talk to an expert to find our if your circumstance applies or not. Or take your chances on an audit if you don't want to fork the bucks over.

If the child would otherwise have to come home at lunch and you'd need to quit your job as a result, then probably you can deduct the cost.

I can't imagine this adds up to a huge windfall savings for anyone though. The individual with the lowest net income must take child care deductions. It's also likely that if either was unemployed or not full-time employed during that period there may be significant complications.

Here is the line and description from CRA:

Line 214 - What are child care expenses? Child care expenses are amounts you or another person paid to have someone look after an eligible child so that you or the other person could:

•earn income from employment;
•carry on a business either alone or as an active partner;
•attend school under the conditions described in Educational program; or
•carry on research or similar work, for which you or the other person received a grant.
The child must have lived with you or the other person when the expense was incurred for the expense to qualify. Usually, you can only deduct payments for services provided in Canada by a Canadian resident..

[billie]

X2 on what Geo said.

It never ceases to amaze me the questions that get asked on an outdoor forum (some are quite amusing though). Not that the advice is wrong, its just that unless you know the basics, how can you separate the good advice from the bad. And there is some bad advice here without understanding the basics behind it.

You acknowledged that you did not know how deductions work which is the basis of how you calculate taxes owed. My advice is to take a course if you are going to do your own bookkeeping and taxes, or hire an accountant to take care of it for you. This could be bad advice from an outdoorsmen forum too but you will have to decide.

Everyone needs advice once in a while, no shame in that. For example, I believe that "The person that represents himself in court has a fool for a client". :) Likewise accounting and tax preparation is not difficult for a basic small business but learning on the fly from an outdoormen forum seems like the wrong way to learn to me.

FWIW, we do our own bookkeeping for our incorporated company but use an accountant to review periodcally and prepare our year end documentation. About $1000/year but both of us have basic bookkeeping education and understanding.

Good luck with your decisions.

[bb356]

Sure doesnt take long to read some previous posts to realize that a person who seems to act like they know everything doesnt really take advice very well from the people that do.....

Makes me chuckle a bit to see that same person asking for help....

x2 ............................ JERRY SPRINGER !!! :)

[Cattle Dog]

Agree with Slipbobber and others.

We may have thick heads, but not as thick as yours.

I would not go h and r block. but good accountants can cost several thousand depending how long they have to hold your hand to educate you, and then do the forms.

In your business, also make darned sure your pl and pd insurance is several million in coverage.

[badger]

Anyone who seeks free legal or tax advice from strangers on the internet gets what they pay for. I prefer to pay experts to do what I don't know. Some people will never acknowledge that somebody's expertise is worthwhile and choose the "cheapest" solution.

[Brady]

Wow....guy asks for advice......board members give advice......guy insults board members giving advice. Getting a little old on here....And that concludes another episode of Dear Abby......