Taxed To Death

Discussion in 'Business Operations' started by 2 man crew, Feb 9, 2003.

  1. 2 man crew

    2 man crew LawnSite Senior Member
    Posts: 403

    I just got done with my taxes for 2002. I owe quit a bit more than I was anticipating. Over $20k I owe. Getting taxed 50% is tough. Is anyone else going through this. Or am I the only moron not cheating the system? Is there something I'm missing.
     
  2. Currier

    Currier LawnSite Senior Member
    Posts: 564

    Are you incorporated?
     
  3. ladibugg

    ladibugg LawnSite Member
    Posts: 79

    Two things I see that someone should question.


    I just finished.

    1) did you do your own tax work?

    20k at the end of the year.

    2) did you pay your quarterlies?
     
  4. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    How much did you owe for the 2001 year?
     
  5. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    Why would you imply everyone is cheating the system just because you have a $20,000 tax bill.

    You need to see a CPA if you can't find why you owe so much. I hope you are using 'Turbo tax' or 'Taxcut' or some other tax software to do your Federal and state taxes. It is cheap to buy, cuts out math errors, and can find you areas to reduce taxes that you may not have thought of.

    Several questions -
    1. Like others have mentioned, have you been paying quarterly.
    2. Maybe you miscalculated somewhere if you are doing it by hand.
    3. Did you forget to include deductions related to employees, vehicle deductions, section 179 equipment deductions,etc.
    4. Check your returns for 2001 and see if you missed filling out a certain IRS form for 2002 or maybe you forgot to enter amount(s) for certain IRS forms.

    Something doesn't sound right.
     
  6. 2 man crew

    2 man crew LawnSite Senior Member
    Posts: 403

    I have had the same accountant prepare my taxes for the last 6 years.

    No I did not pay quarterlies in 2002. I think I will be getting a penalty for that also. I'm sure I will need to pay quarterly from now on.
    No I'm still a sole proprietor. My accountant suggested we talk about other options ASAP when the tax season is over.

    Only a couple grand but I also had a ton of expenses. Also my gross almost doubled from 2001 to 2002
     
  7. dougaustreim

    dougaustreim LawnSite Senior Member
    Posts: 488

    Actually, you should be congratulated, because in order to owe that much tax, you obviously made a good profit. Also remember as a sole proprietor, a lot of that is SS tax. While SS may not be the best retirement investment, for a lot of sole props that and thier equity in the business is all they end up having at retiremnt. If you never pay into SS you will never draw much.

    Certainly, you could look at sticking the max in an IRA, if you haven't already.

    Remember too, if you incorporate etc, your own wages will have the taxes withheld up front, and you'll be paying state unempoloyement on your own wages etc. Often, what you seem to save one one line just comes out on another.

    A lot of the guys in this forum, I'm quite sure would be tickled to death to be in your position, at least you made some money, many of the others did not

    Doug
    Austreim Landscaping
     
  8. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    IMO, that is gross mismanagement to owe that much at the end of the year. One of the services your CPA SHOULD offer, is a bit of consulting. It is your responsibility to track your business dutring the year and adjust payments accordingly. Having that big of a bill due as well as not paying quarterlies sends up red flares, not red flags. You better be careful.
     
  9. ksland

    ksland LawnSite Senior Member
    Posts: 927

    Ditto That!:dizzy:
     
  10. Lawn DOG

    Lawn DOG LawnSite Senior Member
    Posts: 276

    I agree with Doug. Congratulations and welcome to the real world. Taxes suck but a small price to pay to live in this great country. You couldn't do this in Iraq or very many places in this world. I would check into a S Corp. It has saved me thousands but I still pay like everybody else running a ligit business. Hope you pay $40,000 next year .
     

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