How do you claim expenses on K-1 income?
-
The taxpayer is a barber. The shop owner called him a partner and gave him a K-1 form. The only thing on the form is $20000 in box 4 and $20000 in box 14. I believe the $20000 will go through Schedule E and end up on 1040 line 17 and it will go through Schedule SE and be taxed on line 56 of form 1040. He had $4000 in expenses. How and where does the barber claim his expenses? If this is his only income, how much will he pay in taxes?
-
Answer:
What does the WRITTEN partnership agreement say as to expenses?
kelby7670 at Yahoo! Answers Visit the source
Other answers
That's crazy. Why doesn't the owner give him a 1099-misc so he can file a schedule C? You're right, now he has to file a SCH E and probably has to use those expenses on SCH A and be subject to a 2% floor that's if he does itemize. Otherwise, he may not be able to deduct those expenses. Did this barber invest money into the shop to become an owner? It's a lot easier for both parties if they just did this by 1099-misc otherwise. This way the owner gets to deduct the amount of wages he pays the barber and the barber can deduct the expenses directly against the wages he earns instead of being subject to a 2% floor. Tell this barber he's getting screwed and would rather be paid by a 1099 unless of course he is an actual partner.
Redjr01
That's crazy. Why doesn't the owner give him a 1099-misc so he can file a schedule C? You're right, now he has to file a SCH E and probably has to use those expenses on SCH A and be subject to a 2% floor that's if he does itemize. Otherwise, he may not be able to deduct those expenses. Did this barber invest money into the shop to become an owner? It's a lot easier for both parties if they just did this by 1099-misc otherwise. This way the owner gets to deduct the amount of wages he pays the barber and the barber can deduct the expenses directly against the wages he earns instead of being subject to a 2% floor. Tell this barber he's getting screwed and would rather be paid by a 1099 unless of course he is an actual partner.
Redjr01
What does the WRITTEN partnership agreement say as to expenses?
Quick Answers
Related Q & A:
- How do you claim a abandon vehicle?Best solution by Yahoo! Answers
- How do we claim day care on our taxes?Best solution by Yahoo! Answers
- How does insurance claim works?Best solution by nolo.com
- How do contributions to personal pension schemes affect income tax position?Best solution by nidirect.gov.uk
- How are the living expenses at Chicago?Best solution by ChaCha
Just Added Q & A:
- How many active mobile subscribers are there in China?Best solution by Quora
- How to find the right vacation?Best solution by bookit.com
- How To Make Your Own Primer?Best solution by thekrazycouponlady.com
- How do you get the domain & range?Best solution by ChaCha
- How do you open pop up blockers?Best solution by Yahoo! Answers
For every problem there is a solution! Proved by Solucija.
-
Got an issue and looking for advice?
-
Ask Solucija to search every corner of the Web for help.
-
Get workable solutions and helpful tips in a moment.
Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.