I have stayed in US from August 2000 to January 2007. Since Feb 2007, I am now woking full time

(more than 40 hrs/week) for a US based company on contract basis. I receive fixed monthly fee

in US dollars through wire transfer (conversion rate applied on the day of receipt). For

finalcial year 2006-07, I filed my taxes as a Professional.

I have done B.Tech in COmputer Engineering, and Masters of Computer Science.

Now for Financial year 2007-08, my receipts are more than 10 lacs. I am not able to understand

under which category should I file my taxes; i.e. Business or profession.

Here are some facts:

I am a sole proprietor, and I have hired few employees under a Business Name. Their income is

less than the Taxable limit, so I have not deducted the TDS yet. But I have also get some work

done on contract basis which amounts to more than 1.25 lacs. I consulted a CA and I was told

that if the contract work is more than Rs.20,000, then I am liable for TDS deduction from the

next financial year (I am exempt for the first year). But he also told that if I file under

Professional category, then only I shoudl worry ablout TDS from next year. But if I file under

Business, I should not worry as the limit for Business for AUDIT and TDS libalityis 40 lacs,

and my receipts are less than 40 lacs.

As far as the nature of my US contract is concerned, following are the facts:

1) I develop and support a product of a US company.
2) I do not own the intellectual property rights of the work I do for the company.
3) I am paid a fixed monthly fee for my product development and support services
4) The contract ie between the US comapany and ME.
5) I work under supervision of the US comapny.
6) The work is done on Servers sitting in US and india.
7) The work is 100% exported.

HEre is my delimma. I am sure that if I register my company, then I’ll fall under the BUsiness

category (40 lacs AUDIT and TDS libality). But since I am a sole proprietor, should this be a

profession or a Business. All the CA’s I have consulted advised me to file under Profession.
1)But I fail to understand just because I have an engineering degree and I am a sole

proprietor, why would I come under professional category?
2)Also, if I sign the future contact in the name of my Propertier company, would it help to

file under Business category.

Please advise?

I’m a full-time student who worked sporadically last summer and fall moving furniture. I received a 1099c stating I earned about 00. With my education expenses, and other deductions, my "net income" is something like -6000 dollars.

However, Turbo Tax is telling me that I still made about 4300 dollars in "business profits" and that, despite living a student loan debtors life with a hugely negatively net income I still owe 615 dollars for business income. Is this right? Do I need to pay 613 dollars despite my income being incredibly inadequate to my expenses?
I did mean misc. Thank you Wayne.
Thanks Anna. It did dawn on me that there were probably "business expenses" that could be deducted.

I’m 22 and a full time student (16 credits). I pay for my own tuition, books, and other misc. school expenses. I also pay a relatively small monthly "boarding fee" to live at home. My parents are dropping me from their insurance this month. I teach music lessons to get through school and have made close to 10K while taking 16 credits. Can they feasibly claim me as a dependent and keep taking tax reducing "education credits" for me? It doesn’t seem to be adding up. I don’t qualify for medicaid and will have to go without insurance. I also pay my own car bill and car insurance.
It seems to me that this year I should be filing as an independent? It is my concern that because I have made 10K, that should they make me file as a dependent I will need to pay more in taxes than if I filed as an independent? I’ve kept good business logs and think with proper deductions I’d pay a lot less as an independent.
Thanks so far everyone. As far as food and clothes go…that is all me. I usually cook for everyone when I am around. Most of what I eat at the house is breakfast, and even with that if we are out of something I go buy it. I didn’t think I had to make an issue out of it until this. Market value for the room is definitely fair game for them (I pay 200 a month for a room in a 4 bedroom house)…but how many people do you know that would move into a house with 3 other people and live in close quarters? I’ve rarely seen that when I was looking for places, and even then it was an elderly person looking to give board to a yardsman. I’d think it would be a conflict of interest with a teenage daughter in the house? I’ll check out that sheet.

My first question is deduction for any employee currently available, and second if made available how would it effect economy. Instead of suggested stimulus offer business full deduction for their portion of SS and Medicare tax paid FOR FULL-TIME EMPLOYEES.

I’m considering a home-based business and I’m wondering how the taxes will differ compared to my current salary, assuming all other elements are remaining the same. (Please note, I’m not asking about the forms to use, how to submit tax information, or taking obscure deductions into consideration; I have already read up on all of these items.)

I currently have a salary of ,000. Based on what I actually bring home, roughly 35% of my paycheck currently goes to taxes (ridiculous, isn’t it?). If I were to stop my corporate job and do a home-based business full time, what % increase or decrease could I expect in taxes for a sole proprietor that makes enough money to qualify as income. Again, I’m not considering deductions like running a business out of my primary residence, business travel expenses, etc. I’m strictly comparing taxes to taxes.

It may not be possible as there are tons of factors to consider, but if anyone has insight, personal experience, or even a rough idea to guide me, that’d be great!

I just started working full time for myself as a graphic designer. Before now it was just side income. I have three issues:

1) I heard that I don’t need a business license, I can just use my SSN?

2) I’ve spent money on the business all year, but I didnt think that I would be going full time so never thought to keep track of it. Is there any way to claim deductions if I didn’t keep the receipts?

3) Do I have to claim taxes on all the money I have made since the beginning of the year, or just since I went full time? 90% of it has been paid through PayPal. I havent set aside ANYTHING for taxes, I wasnt expecting to have to deal with it this year. Will they let me make payments?

Thank you!!!

I’m just getting into the business world so I don’t know much about taxes or filing out w-4 forms properly. I’m 19, full time student at the university of colorado and i’m home for the summer working as an intern. I receive hourly pay of .45 with a monthly stipend. My parents are still fully supporting me and I work just to get a little extra money. I got my first pay check today and my father pointed out that I must have filled out my w-4 form incorrectly because I was being taxed federal income taxes, SS, federal medicare, CA income taxes, and CA Vol. Disability. (and well thats a pretty big lump of money if you’re not making much) I figured out that I won’t get any of that money back until I file my tax returns for 07 correct? But when I correct the w-4 what should I put down???

I just started a home based business that will probably give me tons of deductions for my taxes this year. I also work full time at another job that takes the normal taxes for a single person (1 exemption). Is it safe to have them stop takaing out taxes from my payckeck so I can have that money available to me?

I am a full-time, W-2, commissioned sales person. I need a blackberry because I travel ofen, but my company will not pay for it. If I get a second blackberry/mobile phone strictly for business purposes, can I deduct the expense on my income taxes? I itemize my deductions rather than take the standard deduction.

IThose of you that wite full time, do you operate as a business, creating a business name, trax Id, with tax deductions,, expenses, income and all the rest?

I was reading a private email i just recieved, they were telling me of groups that help with everything from writing ( all that is under that ymbrella) and tax attornrys,and so on. I had never thought you guys would be a business but i guess you could be huh?

Jim T