Originally Posted by TwinKristi
So here I am again getting less money back if I claim my expenses. I ran my numbers both ways on paper and I'm not sure what I "legally" have to do vs what is best in most cases.
Example- I made $24,000 and won $3600 gambling. If I file a Schedule C and use self-employment tax it's about $4400 in taxes and $6044 in EIC which gives me a refund of about $1760. If I don't file a Schedule C and just use standard deductions my taxable income is much lower with a tax of only $650. I get $4400 in EIC and would get back $3800.
Obviously the latter is better for me, but do I HAVE TO claim my business expenses? Do I have to pay self-employment taxes if I'm not writing off business expenses?
You must report your day care income on Schedule C. That's because you are a self-employed business owner and you must pay Social Security/Medicare taxes (15.3%) on your business profit. You must claim your house expenses on Form 8829, even if by doing so you will reduce your EIC. Do not report your gambling earnings on Schedule C, unless you are in the business of trying to make money as a gambler. If so, report gambling winnings and losses on a different Schedule C.
Don’t miss my February 4th webinar “Tax Changes for 2013: How to Avoid Mistakes When Filling Out Your 2013 Tax Forms.” It starts at 9pm Eastern Time and is sponsored by Daycare.com. Register here: http://events.r20.constantcontact.co...&llr=yatrx4cab