Video instructions and help with filling out and completing Can Form 4797 Employment

Instructions and Help about Can Form 4797 Employment

In this video we will complete a Schedule C which shows the profit or loss from a business to fully complete the Schedule C we will have to also complete form 4562 for depreciation along with Schedule se to report self-employment taxes once completed we will move the correct figures to the appropriate lines on form 1040 first we'll fill out the limited information that we're given about the taxpayer at the top of Schedule C so here we have a Schedule C we're going to enter the name of the taxpayer that were given in the information along with their social security number we're not given any further information about Cassie's business but we will assume that she is using the cash basis method of accounting that she did materially participate in the business during 2016 that she was not required to make any 1099 payments so let's go and enter Cassie's income so according to our problem she had grocery seats of two hundred and three thousand so on line one the in the income section we will enter two hundred and three thousand there was no reported returns or allowances so the two hundred and three thousand will come on down to line three there were no cost of goods sold reported so we'll bring the number down to line five and then finally to line seven to report the gross income of 203,000 next let's go back over to the problem and look and see what types of expenses Cassie has it says she purchased a van placed in service on one 116 at a cost of $27,000 now this will either have to be depreciated or taken as a section 179 expense will decide that a little later she had business mileage of 27,000 miles with the total of 35,000 miles so we will go ahead and figure out her business usage of the van so all we do there is we're going to take the 27,000 and divide it by the 35,000 total miles and when we do that we get seventy seven point one four three percent so that's going to be the amount of her business usage of the van and we will refer back to that a couple of times in the problem so let's go ahead and get some of the more obvious expenses entered into the Schedule C and then we will come back and pick up the auto expenses and the depreciation expenses first we have a few office expenses we have postage the telephone expense of 1250 and the internet service if we add the postage of 500 the office phone at 1250 and the internet service of 600 we can take that over to line 18 and enter that as our office expense so those totaled 20 350 that Gover in our problem we see that we also have wages of 26,000 and taxes and licenses of 1950 so the taxes and licenses can go on line 23 and then the wages can go on line 26 next we have supplies for twelve thousand five and rent of 2400 and insurance of twenty eight hundred so we'll make sure we get those on the appropriate lines so insurance was twenty eight hundred and that will go on line 15 we have rent of other business property it was not a vehicle or machinery so that will be twenty four hundred and then the supplies on line 22 of 12,500 the next expense that will address will be the van expenses forty five hundred dollars was spent on van expenses but keep in mind we only use the van seventy seven point one four three percent of the time for business so we can't take the entire $4,500 for for business expense so what we'll have to do is multiply that 77.1 43% and that was going to give us 3471 so over on line 9 for car and truck expenses we will enter 3471 as our expenses now the last expense we have to enter is line 13 depreciation before we can do that we need to calculate our depreciation on Form 4562 form 4562 can look a little intimidating but we're just going to take it one section at a time until it's completed so make sure at the top as always you put in the taxpayer information or the amount that we have and now we'll start with part one so the first section is the election two expense section 179 property tax law allows taxpayers to elect to expense up to five hundred thousand dollars of personal property each year instead of depreciating them over the next few years Kassie has sufficient income to cover her expenses so she is going to expense the cost of the van that she acquired in 2016 along with the two computers so let's start with line 1 line 1 asks for the maximum amount so for 2016 IRS is allowing 500,000 as the maximum amount of section 179 deduction neckline 2 is asking for the total cost of section 179 property placed in service so let's go over to our instructions and look and see what is eligible so any said that was purchased in 2016 so we have our van and we also have the two computers computer one and computer two now remember the van is not 100% used for business there was some personal use we used the van seventy seven point one forty three percent so we are going to have to multiply the cost of that van times seventy seven point one four three percent in order to figure out how much we can actually deduct so the total business cost of the van is twenty thousand eight hundred and twenty nine dollars then we're going to add the two computers down here which costs twenty two hundred and twenty seven hundred so when we add the twenty thousand eight