Phillip February 28, 2024 No Comments

BUS FPX 4065 Assessment 2 Self-Employed Business Income-Schedule C

BUS FPX 4065 Assessment 2 Self-Employed Business Income-Schedule C Name Capella university BUS-FPX4065 Income Tax Concepts and Strategies Prof. Name Date Completing IRS Schedule C: An Essential Guide To accurately compute the profit or loss from a business on IRS Schedule C, several additional forms must be completed. While most business expenses are common, some expenses are not explicitly listed on Schedule C and must be entered into Part V under “other expenses” with a description. Moreover, in addition to business expenses eligible for tax purposes, considerations must be made for home office deductions. For instance, Jacob, who operates a business from part of his home, must decide between using the simplified method or completing Form 8829 for Expenses for Business Use of Your Home. Utilizing the simplified method involves multiplying the square footage of the space used for business by the standard rate per square foot. In Jacob’s case, with 240 square feet used for business, this amounted to a $1,200 deduction. Alternatively, using Form 8829 resulted in a deduction of $1,096. Jacob opted for the simplified method, thus reducing his net profits. After considering such deductions, Jacob’s net profit from his business amounted to $168,000, derived from original gross receipts or sales of $278,322, minus business expenses and the home office deduction. To ensure accuracy in Schedule C, additional calculations are required, particularly when computing self-employment tax using Schedule SE. These calculations involve multiplying the net profit by 92.35%, determining wages subject to social security tax, and then applying the relevant tax rates. The resulting self-employment tax is then divided and entered on Schedule 1. Given the complexity of tax filings, multiple forms need completion, including Schedule C, Schedule 1, Schedule 8812, Schedule A & B, Schedule 3, along with Form 2441, 8812, and 8995. References Internal Revenue Service. (n.d.). Schedule C (Form 1040). Retrieved from https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

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