SEPTEMBER 2005

Sept 20 - Is your tax payment on the bottom of the ocean?

According to the San Jose Mercury News, a vehicle carrying over 30,000 September 15 estimated tax payments was invlolved in a car accident on the San Mateo Bridge. The accident caused the payments to become loose and blow around. Some of the payments ended up in the bay.

The IRS will waive penalties related to this accident. They have requested taxpayers monitor their bank accounts to see if the payment clears. If your check has not cleared by mid-October, you should call the IRS at 800-529-1040.

Sept 13 - Need a San Jose Business License?

You're armed and loaded with your new business venture and ready to get San Jose Business License Information and complete a San Jose Business License Registration Form.

I put together this page for new business owners: Starting A San Jose Business. I will add more resources in the near future.

Sept 9 - IRS increases mileage rate

With the sudden increase in gas prices, the Internal Revenue Service raised the standard mileage rate by nearly 20% to 48.50 cents a mile from 40.5 cents.

The new mileage rate is effective from September 1, 2005 and expire on December 31, 2005.

The increase will help self-employed people, small business owners and employees who use their own vehicle for business use.

To compute the standard IRS mileage rate, you take the total business miles traveled during the year and multiply it times the appropriate IRS mileage rate.

Here is the the IRS link for understanding the IRS mileage rate and the guidelines when deducting automobile related deductions:

Deducting Auto Expenses - IRS Publication 463

Sept 5 - Consulting and 1099s

I was recently asked the following question:

Question: I have a consulting business in San Jose and operate as a sole-proprietor. My small business requires I hire subcontractors. When I receive a 1099 from my customers I am concerned I will have to pay tax on the entire amount of the 1099, is this correct?

Answer: No, you will be able to deduct the amount paid for the subcontractors. You will need to issue a 1099 to the subcontractors by January 31 if you paid them more than $600 during the year.

Sept 1 - September Tax Calendar

• Thursday September 15 - Due Date for individuals and corporations to pay third installment of estimated tax for 2005.
• Thursday September 15 - Calendar year corporations that obtained an automatic extension for 2004 must file by September 15, 2005.