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[wakingtime]

I teach as an adjunct, but in addition I do a small amount of side work as an independent contractor; this past quarter I probably earned $1,500 in side gigs. I'm wondering about filling out a Schedule C, of which I know little. For this small amount, hiring an accountant seems silly, so I'm contemplating purchasing Turbotax, which has less than stellar reviews on Amazon. Any suggestions?

[prytania3]

First, don't do your taxes by hand; that is the best way to screw yourself over.

Second, you should definitely file a schedule C because you might have had expenses that would result in a net loss since it's a new business, and that gets deducted before adjusted gross income. This is a good thing.
For itemizing,  you can probably deduct for things like home office. You can deduct for mileage between your college and your next job. There's a lot of stuff.

If you don't like turbo tax, try H&R Block's software. It is pretty good.

A CPA would be the best, but the net cost of what you'll pay him and what you'll get back may not be worth it.
But if you are going to do it yourself, get a software package. Don't do it by hand. You will be throwing money away.

I haven't used turbo tax for years, and I didn't much like it then, but I hear it's improved, but I like the H&R Block software pretty well.

[wakingtime]

Thanks, I wasn't aware that H&R Block sold software. I'll check it out.

[ahsonek]

I would go to the CPA.  First, part of what you spend for him or her to do the taxes comes off THIS year's taxes on the schedule C.  And, when you use a CPA, you will also get advice - especially if this freelance income is likely to continue at this rate in the future.  They can help you identify all sorts of deductions and sort the iffy ones into personal or business.

Once you see the CPA, then you can do the taxes yourself (software of your choice), using what they did the previous year as an example.

yes, it is more than the software - but if you are going to have this much freelancing income every quarter, then think of it as an investment in your blooming business.  A good CPA is worth it - worth more than the software or one of the office front places.

[arty_]

If you can find a good tax person, you can avoid the high cost of a CPA. When I say good, I mean several recommendations for the same person: not an HR Block newbie.

[wanna_writemore]

When we needed a Sch. C a few years ago, we went to HR Block and it was worth it, esp. since I work for the state and there were some screwy things about my withholdings.  I looked through the bios of folks there and found someone (1) who does taxes all year, (2) has done it forever (20+ yrs), and (3) has special certification that requires extra continuing ed. 

I would never go there and just take whoever's up next - they (and all the firms like this) hire too many temp people who don't really know what they're doing.  Someone with 6 wks of training to input my numbers into a computer program can't do any better than I can.

[parispundit]

I have always done my own taxes, which for many years have included schedule C. You got a Ph.D., it's not that hard. Let me add that I was letter-audited twice by the IRS - and they accepted my explanations both times. You will have to invest some hours, but in the long run they will pay off, even if later you choose to hire someone.

The only reason I could do my taxes myself was a book called "Tax & Financial Guide for College Teachers", by Donald T. Williamson, published by Academic Information Services. Unfortunately the latest edition was 2005 (I think the author reitred or died). Even though it is a little out of date, what is in it will be enough for you to start with.

[fleabite]

I have also filed my own schedule C for years. For income declared on a 1099, it is very straightforward and the instructions available from the IRS Web site are clear. For the OP, with that little income, you can probably use C-EZ, which is simple. I would at least read through the instructions, or look at one of the tax preparation books available at the library, before concluding you need a CPA or an electronic filing program. Now, if you have a business that includes inventory, that's a very different kettle of crocodiles—I've done that myself also, and frankly, I would much rather have an accountant do it for me.

[prytania3]

I have also filed my own schedule C for years. For income declared on a 1099, it is very straightforward and the instructions available from the IRS Web site are clear. For the OP, with that little income, you can probably use C-EZ, which is simple. I would at least read through the instructions, or look at one of the tax preparation books available at the library, before concluding you need a CPA or an electronic filing program. Now, if you have a business that includes inventory, that's a very different kettle of crocodiles—I've done that myself also, and frankly, I would much rather have an accountant do it for me.

Just because you've been doing it every year by hand doesn't mean you aren't losing a ton of money. I know about H&R Block software because I'm taking a Fed Tax course, and we use it to do income tax returns. The professor even said if you want a lousy grade on the homework, do it by hand. That said, there are many credits the OP might be eligible for, and the software will prompt him. If you are doing it by hand, what you know is what you know, and if you aren't an experienced tax person, it won't be much.

CPA is definitely the best way to go. Even though I'm pretty good at doing tax returns at this point, I still use a CPA, but unless you are filing a 1040EZ, don't do it by hand. What's more, the state forms can be worse than the federal forms.

Here's a video that discusses the C v. C-EZ

 http://www.irsvideos.gov/Individual/PayingTaxes/ScheduleCWho

[wakingtime]

Thanks for the video link, Pry, it was helpful and led me to more info.
Ashonek, I like the idea of using a CPA and then software on my own. I didn't know about that deduction tax prep fees.
Paris, I don't have a doctorate actually, and I don't trust myself...
Thank you all for help with this.

[parispundit]

Given you are an adjunct and presumably don't own a house with a large mortgage, you won;t be itemizing, so that deduction will be worth zero. As will the CPA.

[prytania3]

Given you are an adjunct and presumably don't own a house with a large mortgage, you won;t be itemizing, so that deduction will be worth zero. As will the CPA.

Business expenses (profit/loss on income section) are before adjusted gross income. Itemized are after AGI. You are confusing the two.

[prytania3]

Given you are an adjunct and presumably don't own a house with a large mortgage, you won;t be itemizing, so that deduction will be worth zero. As will the CPA.

Business expenses (profit/loss on income section) are before adjusted gross income. Itemized are after AGI. You are confusing the two.

What's more, since OP is an adjunct, if he had enough deductions for adjusted gross income, he could even be eligible for the Earned Income Credit, and he shouldn't forget Making Work Pay Credit either.

And not for nothing, I probably know at least ten times more about income taxes than anyone else on this thread, and what I know could fit on the head of a pin. And because people don't know what all they're eligible to get and deduct, they constantly overpay their taxes. And if you overpay, you can deduct the overpayment as a charitable donation--a gift to the federal government to pay down the deficit. No lie. But you have to know you're overpaying.

[fleabite]

he shouldn't forget Making Work Pay Credit either

If the tax compromise passes today, it eliminates the Making Work Pay Credit.

[ahsonek]

Without knowing what OP freelancing work is - it is hard to make general comments. 

However, I have a small freelancing busines on the side.  We went to a CPA who helped us to set up the bookkeeping for the business, gave us lots of suggestions for deductions, clarified the home office rules (we are not eligible for it) and also told us what we should be tracking as it relates to our business - Little things, like the Office Depot runs - they all add up and without someone saying "keep this - file this - track this - report this quarterly" we would have made some expensive mistakes.......For example, monies spent to find freelance customers are deductable - which we did not know, and quickly capitalized on that deduction......

The store front places do not have people trained in this area - other than they took a 30 minute class on the schedule C. 

And, while a CPA is a good source, there are others out who have the knowledge and ability.  For a couple of years, we went to an enrolled agent (not sure if that is the right term) - someone who did business taxes out of his home.  He did the set up when we moved from one state to the next and got the business side situated for that particular state.


So, whenever we move or we get a huge contract, we see the CPA that year and the next year.  After that, we use tax software but with our last CPA tax form in front of us for reference.