1040 federal tax form

Forms of Ownership

One of the first decisions that you will have to make as a business owner is how the company should be structured. This decision will have long-term implications, so consult with an accountant and attorney to help you select the form of ownership that is right for you. In making a choice, you will want to take into account the following:

- Your vision regarding the size and nature of your business.

- The level of control you wish to have.

- The level of structure you are willing to deal with.

- The business’ vulnerability to lawsuits.

- Tax implications of the different ownership structures.

- Expected profit (or loss) of the business.

- Whether or not you need to reinvest earnings into the business.

- Your need for access to cash out of the business for yourself.

Sole Proprietorships

The vast majority of small businesses start out as sole proprietorships. These firms are owned by one person, usually the individual who has day-to-day responsibilities for running the business. Sole proprietors own all the assets of the business and the profits generated by it. They also assume complete responsibility for any of its liabilities or debts. In the eyes of the law and the public, you are one in the same with the business.

Advantages of a Sole Proprietorship

- Easiest and least expensive form of ownership to organize.

- Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit.

- Sole proprietors receive all income generated by the business to keep or reinvest.

- Profits from the business flow directly to the owner’s personal tax return.

- The business is easy to dissolve, if desired.

Disadvantages of a Sole Proprietorship

- Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk.

- May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans.

- May have a hard time attracting high-caliber employees or those that are motivated by the opportunity to own a part of the business.

- Some employee benefits such as owner’s medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).

Federal Tax Forms for Sole Proprietorship

(only a partial list and some may not apply)

- Form 1040: Individual Income Tax Return

- Schedule C: Profit or Loss from Business (or Schedule C-EZ)

- Schedule SE: Self-Employment Tax

- Form 1040-ES: Estimated Tax for Individuals

- Form 4562: Depreciation and Amortization

- Form 8829: Expenses for Business Use of your Home

- Employment Tax Forms

Partnerships

In a Partnership, two or more people share ownership of a single business. Like proprietorships, the law does not distinguish between the business and its owners. The partners should have a legal agreement that sets forth how decisions will be made, profits will be shared, disputes will be resolved, how future partners will be admitted to the partnership, how partners can be bought out, and what steps will be taken to dissolve the partnership when needed. Yes, it’s hard to think about a breakup when the business is just getting started, but many partnerships split up at crisis times, and unless there is a defined process, there will be even greater problems. They also must decide up-front how much time and capital each will contribute, etc.

Advantages of a Partnership

- Partnerships are relatively easy to establish; however time should be invested in developing the partnership agreement.

- With more than one owner, the ability to raise funds may be increased.

- The profits from the business flow directly through to the partners’ personal tax returns.

- Prospective employees may be attracted to the business if given the incentive to become a partner.

- The business usually will benefit from partners who have complementary skills.

Disadvantages of a Partnership

- Partners are jointly and individually liable for the actions of the other partners.

- Profits must be shared with others.

- Since decisions are shared, disagreements can occur.

- Some employee benefits are not deductible from business income on tax returns.

- The partnership may have a limited life; it may end upon the withdrawal or death of a partner.

Types of Partnerships that should be considered:

- General Partnership

Partners divide responsibility for management and liability as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.

- Limited Partnership and Partnership with limited liability

Limited means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decisions, which generally encourages investors for short-term projects or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.

- Joint Venture

Acts like a general partnership, but are clearly for a limited period of time or a single project. If the partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership and will have to file as such as well as distribute accumulated partnership assets upon dissolution of the entity.

Federal Tax Forms for Partnerships

(only a partial list and some may not apply)

Form 1065: Partnership Return of Income

Form 1065 K-1: Partner’s Share of Income, Credit, Deductions

Form 4562: Depreciation

Form 1040: Individual Income Tax Return

Schedule E: Supplemental Income and Loss

Schedule SE: Self-Employment Tax

Form 1040-ES: Estimated Tax for Individuals

Employment Tax Forms

About the Author

www.allfreereports.com

Although the presentation of the food tax, I used a 1040 instead 1040NR. Are there problems?

I am a "foreign non-resident ". I worked in the United States only three months and returned to India.

No problems. You can submit any form.

1040A Federal Income Tax Form for 2009, 2010

1040 federal tax

First Time Home Buyer Federal Tax Credit

As part of the “Housing and Economic Recovery Act of 2008” that was recently signed into law, Congress has created a new, temporary federal income tax credit to provide an incentive for first-time homebuyers.

The highlights of this federal tax credit are as follows:
The amount of the federal tax credit is for 10% of the cost of the home, up to a maximum credit of $7,500 . In essence, this is an interest-free loan that enables consumers to receive a tax credit on a dollar-for-dollar basis on their personal income tax return in the calendar year following the year of closing on their home. They begin paying the tax credit back the year after that and make equal installments during the next 15 years. If the homeowner sells the home at any point during the 15-year payback period, then the remaining amount is recaptured, unless they sell the home at a loss, at which point the balance is forgiven.

e.g., If a home costs $65,000, the allowable credit would be $6,500. If a home costs $120,000, then the allowable credit would be $7,500.
Eligibility is for first-time homebuyers only. In this case, a first-time homebuyer is defined as an individual who has not owned a primary home at any time during the past three years, but who may have done so previously. Although certain income limits do apply, the amount of the credit is the same for all taxpayers, married or single.

 
Individuals, whose Form 1040 filing status is single (or head of household), are eligible for the tax credit if their income is no more than $75,000. Individuals who file a joint return may have no more than $150,000 in income.

Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.

The federal income credit can be claimed on one’s individual or joint tax return for the purchase of any single-family home between April 9, 2008 through July 1, 2009. Individuals should consult a professional tax advisor for exact tax calculations.

e.g., If an individual’s actual tax liability was $5,000, then after the tax credit is applied the purchaser would receive a total refund of $2,500. The refundable amount is the difference between the $7,500 tax credit and the amount of one’s tax liability.

e.g., If an individual’s actual tax refund was $2,000, then after the tax credit is applied the purchaser would receive a total refund of $9,500.

This tax credit is required to be repaid without interest in equal installments of 6.67% of the total credit each year for 15 years beginning the year after the tax credit is claimed.  $7,500 x 6.67% = $500 annual repayment for 15 years.

e.g., If a homebuyer claims the $7,500 credit in 2009 on their federal income tax return for a closing that occurred in 2008, then the credit is received in 2009, so repayment begins in 2010 with an annual repayment amount of approximately $500 a year.

About the Author

Brad Lawrence – Broker/REALTOR

Multi-Million Dollar Producer

ERA Premier Realty

NC HomeTeam Inc

Ranked #1 ERA Team in NC for 2008 & majority of 2007

Website: http://www.nc-homes-for-sale.com

Toll Free: 866-220-6458

Brad’s Cell: 336-909-1293

Angie’s Cell: 336-909-2638

Fax: 866-233-4314

Email: Brad.Lawrence@ERA.com

How do I obtain a copy of my federal income tax from 1040?

Need a way to file. If you need are at www.irs.gov a copy of an old 1040, you must request a copy of the IRS and pay fees

..filing a 1040 tax return is ILLEGAL