Cash payments and taxes

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  #1  
Old 06-14-14, 06:12 PM
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Cash payments and taxes

What do I need to know?

After how much do I have to report?

Is it legal for me to give a 5 to 15% discount for people who pay in cash?
 
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  #2  
Old 06-14-14, 06:23 PM
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You can give a discount for any reason to anyone you desire. As for how much to report, that is determined by the local taxing authority.
 
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Old 06-15-14, 03:20 AM
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If this is in reference to your roof painting venture, I would suggest securing the services of an accountant or business planner. You do 't want to get caught "not knowing" what you should to start a business.
 
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Old 06-15-14, 04:49 AM
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All business profits are taxable! it doesn't matter if they pay with cash or write a check.
Unless I'm mistaken, the IRS has a bunch of publications covering business expenses and taxes. You can do all the paperwork on your own but an accountant makes it a lot easier.
 
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Old 07-20-14, 02:20 PM
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You need to report all of the payments to you unless specified otherwise in the tax instructions.

From the total payments to you as an independent painter (or other independent contractor) you may typically subtract (deduct) expenses including paint and supplies, mileage for traveling to job assignments, and payments you make to subordinates and subcontractors. All of this goes on Schedule C for your federal Form 1040 tax return. The final result goes on the front page of Form 1040 for federal tax.
 
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Old 07-20-14, 02:31 PM
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mileage for traveling to job assignments
Typically, you cannot deduct your initial and final commute - if you leave your house to go to a job and then drive home from the job, nothing would be deductible. A trip to the store for supplies or driving to the next job would typically be deductible. Short version is the IRS does not allow deductions from home to the first stop nor from the last stop back home but mileage between any other stops is allowed.
 
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Old 07-20-14, 02:40 PM
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Since gunlover made two posts and then never returned (it's been over a month) I suspect that he either didn't like the responses or just gave up.

That notwithstanding, he specifically asked about giving a discount for paying cash. Discounts are NOT payment but a professional courtesy extended to some but not others. ONLY the money, or the value of goods or services provided by the person paying in lieu of money, are taxable.

Example. I contract with you to do some work for an agreed price of $500. not including any supplies or materials. You accept an old car as $100 worth of payment and I pay the rest in dollars. You have received $500 and that is fully taxable. However, if you agree to give me a discount of 15% ($75.) by paying cash then all I have paid is $425. and all you have received is $425., all of which is still taxable. The original price of $500. has been reduced to a price of $425.
 
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