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joshjones120
New Member

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

 
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Accepted Solutions
SweetieJean
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Those expenses are a deduction from your income, before the tax rate is applied. It is not a tax credit or a refund.

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8 Replies
SweetieJean
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Are any of those expenses commuting?
TaxGuyBill
Level 9

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Are you asking why your taxes owed doesn't decrease by $17,000?  If so, the US government doesn't pay for all of your business expenses (by decreasing the amount your owe by the amount of expenses).  If they paid for it all, why not spend a billion dollars for your business, if the US government would just pay for it?

You just don't pay tax on those expenses (a percentage of your expenses).
joshjones120
New Member

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

makes sense to me! I made around 140,000 and have around 80,000 expenses but still have to pay $21,000 in just federal taxes
SweetieJean
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Your net income is $60,000. You owe regular taxes on that, plus approx 15% self employment tax. $21,000 divided by $60,000 is 35%.
SweetieJean
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Those expenses are a deduction from your income, before the tax rate is applied. It is not a tax credit or a refund.

SweetieJean
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

and are any of them reimbursed by your customers?
joshjones120
New Member

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

no customers. I was 1099-Misc all year. This is my first year as a sole proprietor doing write offs on turbo tax.
VolvoGirl
Level 15

How come when i put in $17,000 off transportation expenses, why is is only giving me a certain percentage and not the full amount off of my federal taxes due?

Here's some general info for new self employment.

You will need to keep good records.  You may get a 1099Misc at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small.  You might want to use Quicken or QuickBooks to keep tract of your income and expenses.  

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.

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 line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  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
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

PAYING ESTIMATES
The first year you don't need to pay estimates as long as you pay in (by withholding) as much as your tax was last year.  But if you will have a big income you should send in estimates so you don't owe too much next April on your tax return.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
 
- 2. You expect your withholding and credits to be less than the smaller of:
    90% of the tax to be shown on your current year’s tax return, or
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year you start with your current return, but be careful not to change anything.  For Online versions, if you can't get back into your return, Try this, you can sign back onto your account, click the Visit My Tax Timeline and then under SOME THINGS YOU CAN DO, click on Add a State.  This should get you back into your return.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….
Federal Taxes or Personal (H&B/Self Employed version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

The 1040ES quarterly estimates are due April 18, 2017, June 15, Sept 15 and Jan 16, 2018.  Your state will also have their own estimate forms.

To just estimate the remaining quarters put in that you paid $1 for the quarters you missed so it will only calculate the remaining quarters.

Or you can pay directly on the IRS website <a rel="nofollow" target="_blank" href="https://www.irs.gov/payments">https://www.irs.gov/payments</a>
Be sure to pick the right kind of payment and year.....2017 Estimate

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