Roadpilot,
According to your additional answers and questions
My wife is still employed. I collected unemployment for the first 4 months of 2005.
Q") If I want to pay into Social Security, how do I figure the amount and how do I make a payment?
A) If i am not getting two personal What Tax status is you wife claiming at work that she put on the W-4 at the beginning of the year.
Married 0, or other
Since you were on unemployment with no federal or state tax taken out
I would suggest making an estimated payment on form 1040es, there was a payment due Sept. 15th, then the next payment would be January 17th 2006
Goto [
www.irs.gov] when the page opens on the left side click on forms and publications, then click on forms and instructions. in the box on the bottom find 2005- 1040ES click on that and you will find a .pfd.file, this is adobe aerobat reader, if you have it in your Pc you should have no problem with the download. there you will find the estimiated payment vouchers and addresses for your state to send to the IRS office. In order to find your State Estimated payment forms, use the search engine and go there for there forms. and make that estimated payment to them as well.
The amount that I would suggest paying is $1000.00 and the check should be made out to the "US Treasury"with your SSN and 2005on the check so that it can be credited to your account. and sent to the correct address stated in the instruction for your state. And also send $500.00 to your state Dept of Revenue with the same information on the check.. This at least will give you a credit towards your taxes plus whatever your wife already paid in on her w-2. just incase you are underestimating what and if you owe taxes.
Q.)For next tax year, what taxes would be due or how would things change? Taking out 10% still figure in or will the taxes change after the first year of business operation?
I am considering the purchase of a new van. As I read the Section 179 deduction, if I take the full depreciation once, I cannot depreciate the vehicle any further. Can I still claim mileage?
A) For tax year 2006 it will change quite a bit if you continue to stay in business. if you are considering purchasing a new vehicle, the 179 full depreciation can be taken for 2005 but not for 2006. it go back to a max of $25,000 and the balance would be depreciated at straight line depreciation over 5 years. whioch means if you want to take advantage of it you must purchase it this year. And yes, once you depreciate the complete vehicle, you have nothing left for the following years, As far a mileage is concerned, that cannot be taken if you use the depreciation method. You cannot take both. it is either mileage or actual depreciation methods.
Q)One last thing. How long can you NOT show a profit for? Isn't there some limit to how long you can not be profitable according to the IRS?
A) There really is no set limit on how long that you show no profit, but 5 years is about average. the only problem is that the loss has to reduce down toward a profit each year.
If you have any additonal question please do not hesitate to ask, I will be happy to try and answer all of them.
Frank
Frank's Tax & business Service
(704) 739-4039
Fax: (704) 739-3934
