Complete the tax forms required for a sole proprietorship return. Determine if J

Question

Complete the tax forms required for a sole proprietorship return.

Determine if Jacob's business is eligible for any tax credits.

Determine eligible business deductions.

Analyze official rules and instructions to correctly compute SE tax and SE deduction.

Interpret official rules and instructions to record correct entries on tax forms.

Scenario:

Jacob Weaver is a contractor operating as a sole proprietorship (EIN 12-3456789).

2014 Gross income: $243,322.25.

Business expenses: Fuel for equipment $64,080.00

                                Repairs and maintenance $17,342.00

                                 Lubricants for Equipment $9,670.00

                                 Insurance $6,500.00

                                 Wages $6,300.00

                                 Vehicles $1,768.00

                                 Legal and Professional Expenses $1,750.00

                                 Taxes and Licenses $1,412.00

                                  Advertising $300.00

Clients owe him a total of $53,000, for work completed in 2014.

2014 estimated tax payments were $18,000.

He is using a bedroom in his house as a home office. (Square footage of home 5,600 Office 240 sq. ft.)

He has one half-time employee, Martin, who had been unemployed since returning

from Afghanistan, and is disabled.

Martin worked for Jacob for 20 hours a week, for 41 weeks of 2014.

He earned $10,500.

Jacob had to spend $7,350 for disabled access equipment for Martin.

Explanation / Answer

Jacob Weaver SE tax and SE deduction Figures for 2014 in dollars Gross income 243322.25 278472.25 Due from clients 53000 243322.3 Martin's wages 10500 Business expenses: Martin's disabled eqpt 7350 Fuel for equipment 64080 Total 17850 Repairs & Maintenance 17342 Lubricants for equipment 9670 Insurance 6500 Wages 6300 Vehicles 1768 Legal and Professional Expenses 1750 Taxes and Licences 1412 Advertising 300 Total expenses 109122 Net income 169350.25 Taxable net income 156394.96 0.9235 tax rate Estimated tax payments 18000 Calculation of SE tax (15.3%) 23928.43 less Estimated tax payments -18000 Payable for 2014 5928.43 SE deduction 2964.21 Payable for 2014 2964.21

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