Self-Employment and Business Taxes Flashcards

Which method allows a self-employed taxpayer to calculate the home office deduction using $5 per square foot?

Answer: Simplified method

The simplified method allows a deduction of $5 per square foot of the home office, up to 300 square feet ($1,500 maximum).

Business meals are generally deductible at what percentage for self-employed taxpayers?

Answer: 50%

Business meals are generally only 50% deductible; the TCJA eliminated the deduction for entertainment expenses entirely.

A self-employed individual buys a $20,000 vehicle used 60% for business. What is the maximum first-year depreciation deduction using Section 179?

Answer: $12,000

Section 179 deduction is limited to the business-use percentage: $20,000 × 60% = $12,000 (subject to annual limitations and luxury auto caps).

Quarterly estimated tax payments are due on which dates?

Answer: Apr 15, Jun 15, Sep 15, Jan 15

Estimated tax due dates are April 15, June 15, September 15, and January 15 of the following year.

A taxpayer can avoid the underpayment penalty by paying at least what percentage of the prior year's tax?

Answer: 100% of prior year tax (or 110% if income over $150,000)

The safe harbor rule allows avoiding the underpayment penalty by paying 100% of the prior year's tax (or 110% if prior year AGI exceeded $150,000).

A sole proprietor reports income and expenses on which form?

Answer: Schedule C

Sole proprietors report business income and deductible expenses on Schedule C (Profit or Loss from Business) of Form 1040.