Ask an Accountant



As we all know, it’s that dreaded time of the year-Tax time! In honor of tax season, I have a new series called “Ask An Accountant”. Send in your tax questions each week to momondeals@yahoo.com and I will post the question and give an answer from an experienced accountant.
Question:
I am way behind and know I will not have my stuff ready in time to file by the 15th. What should I do?
Answer:
You will need to file an extension with the IRS. This is an automatic 6 month extension that is valid until October 15th. Keep in mind this will only be an extension for time to file, not time to pay. What you will need to do to avoid underpayment penalty (under paying your taxes) is pay 90% of your previous year tax liability (in this case 2009). For example if your total tax liability for 2009 was $10,000-90% of that would be $9,000. That’s what you would have to pay in. However your withholding is included in that. So if you had $8,000 withheld that same year, you would need to pay in $1,000 to make it to the $9,000 of your liability.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Kids Frugal Fun

Each week I try to bring you a craft you can do with your kids that is both educational AND frugal. Bubbles are always a favorite with kids but can get costly if you continually purchase them. I’ve given you a very frugal recipe for bubbles and some educational applications. They may seem a little far fetched but teachers are notorious for being able to make anything educational! :)

Bubble Recipe:
4 cups water
1 cup dishwashing liquid (I used generic and it worked just fine)
1/4 cup corn syrup
[click to continue…]

Ask an Accountant


As we all know, it’s that dreaded time of the year-Tax time! In honor of tax season, I have a new series called “Ask An Accountant”. Send in your tax questions each week to momondeals@yahoo.com and I will post the question and give an answer from an experienced accountant.
Question:
I keep hearing that as a person who enters giveaways you have to file taxes on the prizes that you win (no matter the value). Is this true? Do you claim the prizes as income and as a new blogger I haven’t earned any income yet, but I sometimes work out of my home just doing hair with no chemicals (more of a stylist because I work with dreads). How do I claim this as an income or can I and if so: Do I estimate my earnings and will this hurt me because I haven’t paid any taxes but earned income (plus I am a mom of 4).
Answer:
While most people are aware they must include wages, salaries, interest, dividends, tips and commissions as income on their tax returns, many don’t realize that they must also report most other income, such as:

  • cash earned from side jobs,
  • barter exchanges of goods or services,
  • awards, prizes, contest winnings and
  • gambling proceeds.

You would normally include these as miscellaneous income on your tax return, not subject to self-employment tax.
For the hair business, that income would be reported as a Schedule C (Profit From Business). I would also suggest you get yourself a separate business license and an EIN for each of these ventures ASAP. This will generate additional taxable income as well as “self-employment” tax which is an additional tax (estimated to be around 14%) on the profits from these activities. So for every $100 dollars in profit you should expect to pay $14 in self employment tax. Avoid “estimating” as the use of whole round numbers sends a red flag to the IRS that you may be estimating the figures and they may ask for substantiation of these figures.
As an accountant that has Hair Salon clients, I would say there must be some basic supplies you need to operate (combs, brushes, scissors, clippers, water bottles, clips, aprons, as well as Home Office expenses (for the portion of your home used exclusively for hair styling) such as a portion of the electricity, water, mortgage interest/rent, taxes, etc… All of these can be deductible items for you business.
*Please keep in mind this post is for informational purposes only and answers given are very general. Many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Frugal Family Fun

Visit Mom on Dealz for more of her awesome Frugal Family Fun ideas!!! 

Each week Mom on Dealz will try to bring you a craft you can do with your kids that is both educational AND frugal. Mom on Dealz said she has been having some table manners issues with her son so she came up with a craft that is geared towards improving this behavior. She has  included educational modifications at the bottom of the post.

Materials:
1 toilet paper roll
1 paper plate
Various colors of construction paper ( or 1 color based on your preference)
tape or glue
Directions:
1. Cut the center circle out of a paper plate. Write your topic in the middle. Theirs was “Will’s Meal Time Rules”.
2. Set the circle on top of the toilet paper roll to mark where you will need to slit the roll to insert the plate.

3. Trace your child’s hand about 5 times. You can just trace it once and then cut all the sheets at once, but Will LOVES when we trace his hands.

4. Write a rule on each “hand”.
5. Tape or glue the hands around the plate and you have a “flower” of learning!
Educational Modifications:
Language Arts:
1. Write 1 word on the plate and have each hand be a rhyming word.
2. Write the title of a book on the plate and story elements on each hand (setting, problem, solution, etc).
Math:
1. Put “I Know My Shapes” on the plate and put different shapes on each hand for your child to identify.
2. Put “Math Symbols” on the plate and put math symbols on the hands. Have your child tell you what symbol represents (ie: + means to add).
Science:
1. Put a habitat on the plate and characteristics or animals that live in that habitat on the hands.
Social Studies/History:
1. Put “I Am A Good Citizen” on the plate and put citizenship traits on the hands.