Hello, I'm Ana Flores the founder and CEO of #WeAllGrow Latina,
the online community for Latina creatives, influencers and entrepreneurs.
We're joined today by Lisa Green Lewis, TurboTax CPA and tax expert for final Q&A video
of the #SmartDinero "Ask TurboTax Anything" series.
Lisa has over twenty years of experience in tax preparation.
Her success is attributed to being able
to interpret tax laws, help clients better understand them and save money.
She is going to help answer some of our
community members tax questions for when you're turning your side gigs as your own
full time business and what you need to know from a tax perspective.
Welcome back, Lisa.
Thank you for having me.
It's tax season finally over, almost over.
I can't believe this is our time of the year together.
Yes, it's almost over.
So we're so excited to have you here
answering tax questions from our community.
We asked our Amigas on Instagram to submit their small
business tax questions, and we're excited to share those with you. ¡Empecemos!
So the first question is, there is kind of breaking news,
but what are the latest changes for self-employed under the American
Rescue Plan and the new extensions to the PPP plan?
We know this tax season has brought a lot of changes.
So under the American Rescue Plan, there are multiple provisions.
But I want to highlight a few key ones today.
So first, there was the extension
of unemployment at $300 per week and you have until September 6th,
2021 to get that unemployment.
And then also keep in mind that there is a provision that allows the first ten
thousand two hundred dollars of your unemployment income to be tax free,
if you're single. If you're married,
filing jointly, it's twenty thousand four hundred dollars that is tax free if you
are under the income of one hundred and fifty thousand dollars.
And then also it extended the qualified,
sick and family leave credit if you were impacted by coronavirus.
And then also, President Biden, also signed
into law that there is an extension for PPP loans.
So that extension is until May 31st if you need additional PPP loans.
Oh, perfect. That's a lot of information.
Thank you so much for sharing that with us.
So question number two that we have
from one of our Amigas is, what would be the main difference when filing taxes
between a side gig and a full time W2 employee?
Yes, so the main difference is going to be, first of all,
the forms that are filled out and the forms that you'll receive.
So when you are an employee,
you're going to see a W-2 that reports your income and also your withholdings.
When you're self-employed,
you're going to be seeing a type of 1099 form and used to be the 1099 Misc.
But now it is the 1099 NEC,
which means non-employee compensation.
And then you will file a Schedule C if you are self-employed, that Schedule C will go
with your form 1040 and then if you earn a net income of $400 or
more, you have to pay self-employment taxes when you file your taxes.
So, also there will be a schedule SE with your taxes, but there's no need to worry.
TurboTax fills those forms out for you when you fill out your information.
So, they just ask simple questions about
you and your business and that information goes to the correct forms.
Oh, I'm so glad you mentioned that I was starting to get worried about how would I
figure all this out, but of course, it's all done when you're on TurboTax.
Question number three, can I run personal expenses through my business?
That is a common question,
a lot of people set up businesses and they don't do separate bank accounts,
so they combine their personal and business expenses.
The one thing you need to keep in mind is,
no, you cannot run personal expenses through your business.
Your expenses have to be directly related to conducting your business.
But if you have a car that you use
for your business, you can absolutely write that off.
But it has to be dedicated to your business.
Perfect. Thank you.
So, Lisa, what are the biggest tax mistakes small business owners make?
Give it to us.
The biggest tax mistakes that business owners make.
There are several.
So the first one, I would say is just not
tracking your income and expenses year round.
It is really important to check your
income and expenses year round so you don't forget anything.
Second,
if you have expenses dedicated to your business, absolutely write them off.
Don't hesitate to write them off.
Oftentimes people are afraid to write off some of their business expenses,
but if you are keeping track, then absolutely write them off.
Number three, I would say starting your business off and jumping into, you know,
incorporating or starting an LLC when you're not making any money yet.
A lot of people think that they have to do that in order to take deductions.
When you're self-employed, you can actually take
the same deductions or some of the same deductions as an LLC or a corporation.
So you just want to be mindful before you jump into that, because you may have more
expenses once you become an LLC or incorporate.
Oh, those are such good tips, thank you so much.
Those are all the questions we have for today.
Thank you so much Lisa for being here
and providing all of this important information.
Amigas, make sure to check out all of the valuable content on the TurboTax
blog, often for more tax tips and resources in English,
y claro que Español, and engage with the #SmarDinero hashtag
and post all across #WeAllGrow Latina. Hasta la próxima!