For TY 2019, if I purchase office supplies and furniture for a small business to be started in 2020, can I write off home office deductions in 2019 for those purchases?

[christopherdelima]

If so, will TT Premier work?  Or do I need Small Business?

Thank you

[Critter]

Those will be deducted in 2020 when they are placed in service when the business opens.  

[christopherdelima]

Thanks very much!

And for the purposes of small business write-offs, is it best to use Turbo Tax Small Business edition (for the 2020 tax year)?  Or will Premiere work?

[VolvoGirl]

Depends what kind of business entity you have set up.  Turbo Tax Business is for 1041 Estate/Trust Returns, 1065 Partnership/multi member LLC and 1120 S or C corp returns.  It will not do your personal 1040 tax return.

If your business is a self employment/sole proprietor/independent contractor/freelance etc. or a Single Member LLC that is NOT a S corp. you file Schedule C in your personal tax return.  Any Desktop version will work but the Home & Business version will have the most help.  If you want to use the Online web version you would need to use the Self Employed version to fill out schedule C.

[christopherdelima]

This will be a Single person LLC in California (no S Corp).  For that, I'm pretty sure I'd be filing as part of my 1040.  For that, I should use Premiere?  Or are you saying I'll get better (more comprehensive) help by using Home Business?  

(I appreciate the help!  Thank you!)

[VolvoGirl · Accepted solution]

Yes you can use Premier or even Deluxe Desktop program.  You can always upgrade to Home & Business later from inside the program if you want.  Are you new to filing a business?  Here is some info to keep in mind.

You might want to use Quicken or QuickBooks to keep tract of your income and expenses. There is one called QBSE QuickBooks Self Employed that works with Online Turbo Tax and will give you a free online tax return next year.
http://quickbooks.intuit.com/self-employed

You need to report all your income even if you don't get a 1099Misc. You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.

After it asks if you received any 1099Misc it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 27 (goes to 1040 line 7). The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 4 line 57 (goes to 1040 line 14). The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf

[tagteam]

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@christopherdelima wrote:

This will be a Single person LLC in California (no S Corp).  

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You just need Home & Business in that case. Although you could use Forms Mode to prepare Schedule C with Premier, you will be better off paying the few extra dollars for the higher level of guidance with Home & Business.

[christopherdelima]

Super!  Thanks very much!