How Your Business Tax Forms Fit Together
Before sending in your tax forms, here's a review of the key business tax forms you must file and the order you should be filling them out.
Form 8829 Expenses for Business Use of Your Home
\On this form you will enter the numbers that will be used to determine your Time-Space Percentage. This includes the amount of square feet you used on a regularly basis for your business, the total square feet of your home and the number of hours you used your home for your business.
Enter all of your house-related expenses on this form, including: property tax, mortgage interest, rent (if you rent your home), utilities, house insurance, house repairs, and house depreciation.
If you live in the home where you do child care, you must file this form. If you don't, claim your house expenses directly on Schedule C Profit or Loss From Business.
Enter the amount from Form 8829, line 36 onto Schedule C, line 30.
Form 4562 Depreciation and Amoritization
Under a 2018 tax law, any item costing more than $2,500 can be deducted in one year. Exceptions: the home, home improvements and home additions. You may chose to depreciate some items on this form if you want to show a lower profit in the current year. If so, put these items on this form. Don't enter your house depreciation here. Instead, enter it on Form 8829.
Enter the amount from Form 4562, line 22 onto Schedule C, line 13.
Schedule C Profit or Loss From Business
Enter on this form your income and all other business expenses.
Enter the amount from Schedule C, line 31 (your net income/profit) onto Form 1040 U.S. Individual Income Tax Return, Schedule 1. In addition, enter the amount from Schedule C, line 31 onto Form 1040 SE Self-Employment Tax, line 2.
After entering your net income from Schedule C on line 2, fill out the rest of the form to determine your Social Security/Medicare tax on line 12. Enter this amount on Form 1040 U.S. Individual Income Tax Return, Schedule 2. Also enter the amount on 1040 SE, line 13 (half of your Social Security/Medicare tax) onto your 1040 tax form, Schedule 1. By doing so you will be deducting half of your Social Security/Medicare tax as a deduction that will reduce your personal income taxes.
1040 U.S. Individual Income Tax Return
Fill out Schedules 1 and 2.
You may have other personal tax forms that you might be filing with your Form 1040.
Tom Copeland - www.tomcopelandblog.com
Image credit: https://www.moneycrashers.com/common-federal-irs-tax-forms/
For more information on how to file your tax return, with detailed explanations on how to fill out each line on the above business tax forms, see my Family Child Care Tax Workbook and Organizer.
