Tax question

[fussle]

Just curious as to how financing should be handled as a CFI. How do you handle the taxes since your self-employed, etc?

 

[nosehair]

Three words: Ten Ninety Nine

 

[SiuDude]

You will still have to fill out a 1040 but in addition to that you'll have to fill out a Schedule C and attach your 1099-misc to that. You'll end up paying double the Social Security and Medicare taxes than if you were someone's employee (W-2).
Confused yet?

 

[pilotyip]

Sub Chapter S Corp

Talk to a CPA or Atty about the tax advantages of Sub Chapter S Corp. I own an airplane and instruct in it, run it through a S corp. You get to deduct alot of expenses. Of course if you have no income, there are not many tax advantages.

 

[A Squared]

You also have to file a schedule SE (self employed)

 

[JB74]

Keep receipts of EVERYTHING you buy with cash. You should prepare simple monthly income statements on your revenue/expenses (not required, but helpful if you get audited). The more expenses you have, the less you will owe. Keep all your bank statements and make a copy when it comes in. Go over it and write "personal" or "business" next to each line item. Personal is what is considered your "draw" and that is what is going to get taxed.

ASAP go to your state’s official department of corporations website and print the necessary forms and mail them in. This shouldn’t cost that much (less than $100 here in FL), and shortly you will receive your official corporation documents.

Then apply for your EIN # http://www.irs.ustreas.gov/pub/irs-pdf/fss4.pdf

Then apply for your subchapter S status http://www.irs.ustreas.gov/pub/irs-pdf/f2553.pdf

Being an S corp allows your "corporate" taxable income to carry down to your 1040, thus not getting "double taxed". If you are simply a C corp, (which is the default corporate filing status) you will pay tax on the corporation’s profits (your paychecks in this case), then taxed again on the dividends (your paychecks once again).

Unfortunately right now, the SE tax will get you (over 15% right off the bat, pre income tax). Change your filing status and you will start saving some money.

Good Luck and PM me with any questions. I used to do this boring a$$ sh!t for a living.