• About Us
    • PR & Advertising
    • OneMilFam
  • Submit a Featured Story
  • Are You A MilSpouse Who Works?
  • Contact Us

NextGen MilSpouse

The Online Destination for Today's Military Spouse

  • Podcast
  • Year of You
  • Career
    • Career Advice
    • Small Business
  • MilSpouses Who Work It
  • Money
  • Military Life
    • Deployment
    • Tricare
    • Resources
    • Travel
    • Humor
  • Self
    • Wellness
    • Personal Growth
  • Relationships
    • Marriage
    • Friendship
    • Parenting
  • PCS

Tax Checklist For The Self-Employed Military Spouse

December 15, 2017 By Guest Contributor Leave a Comment

by Erin Kidd, Guest Contributor

Part of what makes military spouses amazing is our ability to adapt. That means quite a few of us have made our careers ones that can move with us by becoming entrepreneurs.

Given everything else we are handling, tax time can be especially stressful.

Here is a checklist that can help creative and boss military spouses make sure they have every deduction.

Tax Checklist For The Self-Employed Military Spouse

Know The Military Spouse Residency Relief Act

Don’t forget about your state taxes too. Each state has different rules on how they handle the federal Military Spouse Residency Relief Act. The standard 3 prongs of the act are:

  1. Your service member is in the state due to military orders.
  2. You are only in the state to accompany your service member.
  3. You and your spouse are domiciled in the same state.

Remember that you typically cannot just choose a state in which to be a resident. You must have actually lived there and taken steps to establish your domicile in that state. There may be other provisions available, but you should check with your state.

Tax time can be especially stressful for self-employed military spouses.

Click To Tweet

Each state will also have rules regarding whether or not your income is considered sourced to the state in which you are conducting your business or if you can re-source that income to your home state. If you have set up an LLC or other entity, there may be special regulations that apply.

Report All Of Your Income

The first thing you should do when preparing for tax time is make sure you have captured all of your income. Many organizations will issue 1099-Misc to those they work with to whom they have paid over $600.

Even if you aren’t issued a 1099, it is important that you report all of your income.

Because the purpose of having a business is to make money, the IRS may eventually question (read: AUDIT) you if you don’t have income over 3 out of the last 5 years. That’s not to say you can’t have losses, but you should be careful to show you are in business for a profit, not just to set off your other income. See my LinkedIn article to determine if your side hustle is a business or a hobby.

Track Your Expenses Closely

The most important thing to know about expenses is that they must be ordinary and necessary for your business industry and that you must have proper documentation. Keep those receipts!

There are all kinds of planners, trackers and checklists out there. A quick Pinterest search will yield at least 20 different printables to help you out.

I have found a simple envelope for each month will work as a quick place to keep all your receipts. It also helps to keep notes about what the business purpose was and date of the expense on each receipt, on the envelope or in your planner because receipts often fade.

A Short Guide To Inventory and Charitable Contributions

If you have a business that requires you to carry inventory, you will need to be sure to include your beginning inventory, ending inventory and any amounts related to cost of goods sold (COGS). You will need to note if any inventory was withdrawn for personal use.

If you donate an item to a raffle at a craft fair, that does not need to be separately accounted for, however, if you withdraw inventory to donate to a charity, that item is considered withdrawn for personal use and you would then take an itemized deduction on your Schedule A. The same goes for cash donations in your business name.

If you are a sole proprietor, reporting business activity on a Schedule C, cash donations are a personal itemized deduction, not an expense for your business.

Business Use Of Home And Home Office

If you use a portion of your home for business use, you can take certain expenses for it. It must be used regularly and exclusively for business use, so no paying your personal bills or setting up the kids to do homework in there.

If you are an in-home child care provider or use space for inventory, there are special rules about the deductions you can take. Child care providers have an hours of use allocation, and those that use it for inventory can avoid some of the exclusive use rules.

Be sure to research or work with a tax professional who is familiar with these types of considerations.

Don’t Forget Your Retirement Contributions

One of the most overlooked deductions for self-employed individuals is retirement contributions. As long as you have net profit from your business you can take an above the line deduction for contributions to a SEP IRA or Solo 401(k). Many brokerage houses offer services as SEP IRA custodians as well as solo 401(k) custodians or administrators.

Setting up a SEP IRA is almost as easy as setting up any other IRA. It functions in much the same way as a Traditional IRA, without being subject to the AGI limits.

Business owners can stock away around 20% of their net profit, up to around $53,000 into a SEP IRA and defer it from taxation. Distributions will be subject to tax when they are withdrawn, and there are limits when those can be taken without penalty, similar to traditional and Roth IRA rules.

A solo 401(k) functions the same as any other employer’s 401(k) but the business owner is the only participant. This allows for even further deferral of income, for “employee” and “employer” contributions. If you have employees, there are rules about setting up these plans to ensure they meet regulations and are meeting ERISA requirements. Whomever you select as your plan custodian can help guide you in establishing a plan.

Questions? Ask For Help

If you are not sure, ask. Retain a CPA or Enrolled Agent to assist with your tax filings. Check with Military OneSource or your local VITA Program on your installation. Some military VITA sites will assist with filing tax returns that include business income.

Erin KiddErin Kidd is a third-generation military spouse, Enrolled Agent, Accredited Financial Counselor®, and avid cook and eater, who believes economic success begins at the dinner table.  You can find her on Twitter @TaxLadyErin or at www.taxladyerin.com

 

Filed Under: Articles, Money, Slider, Small Business Tagged With: Amazed By You, freelancer, milspouse entrepreneur, saving for retirement, small business owner, state taxes, Tax Filing, Tax Resources

Episode 61: She’s Going To France

December 8, 2017 By NextGen MilSpouse Staff Writer Leave a Comment

The Blended Retirement System is coming and we’re talking all about it with the CEO of First Command and one of their financial advisors, who just happens to be a military spouse. We also talk about Jessica’s trip to France (*eye roll*) and why Tricare can be the worst.

This week's guests answer your questions about the new Blended Retirement System and how it impacts service members and military spouses.

This Week’s Guests: Scott Spiker and Katy Stevick, First Command

Scott Spiker is the Chairman and CEO of First Command Financial Services. A 1977 graduate of the U.S. Naval Academy, Scott holds an MBA in Marketing and Finance from the University of Chicago Booth Graduate School of Business. He is married and has two daughters.

Army spouse and First Command Financial Advisor Katy Stevick has lead the Milspo Project Fayetteville Chapter, served as an ambassador for the Greater Fayetteville Chamber and is a member of the Association of Bragg Spouses. She is also a former FRG leader within the 82nd Airborne Division. She joined First Command in 2014. 

Scott recently wrote the new Blended Retirement System requires financial planning in a guest post on NextGen MilSpouse.

In episode 61, we talk with Scott and Katy about the new military retirement system and what military families should be thinking about today to plan for the new system starting on Jan. 1.

Connect with First Command on their website, Facebook and Twitter.

NextGen MilSpouse Articles That Have Us Talking

Why I Said Yes To A Family Pet

The Military’s Best Kept Secret

3 Reasons Why Military Families Need To Explore National Parks (Sponsored by Expedia.com)

Amy Brings the News from Military.com

What’s up with Tricare and the cost of pregnancy? Nothing…kinda.

Tell those retirees to listen to the podcast because many of them aren’t aware of the coming Tricare changes

Jessica Tells Us What We Missed on Social Media

The Army FINALLY released its spirit video and it’s pretty freaking epic. And long. Like ridiculously long. Jessica suggests watching only the last 2 minutes of it.

The Military Spouse JD Network Annual Survey is here – if you’re a military spouse and an attorney, you should take it, even if you’re aren’t a member of their network.

We want to answer your burning questions about us or life or Katy Perry or whatever. Post your question in our Facebook group and we’ll answer it on a special edition of the podcast.

NextGen MilSpouse’s Happy Hour Podcast is the official podcast of NextGenMilSpouse.com. We offer a fresh and modern take on military life for today’s military spouse. From navigating your career to surviving your next move, NextGen MilSpouse has you covered.

Our news and current events are brought to you by our friends at Military.com. Make sure you never miss a show or a story by subscribing to our podcast on iTunes or GooglePlay and by signing up for the NextGen MilSpouse Newsletter at NextGenMilSpouse.com. Still want more? Connect with us and other listeners in our Happy Hour Facebook Group. 

 

http://media.blubrry.com/ngmshappyhour/p/nextgenmilspouse.com/wp-content/uploads/2017/12/Episode-61-shes-going-to-france.mp3

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Android | Google Play | RSS | More

Filed Under: Articles, Happy Hour, Military Lifestyle, Money, Slider Tagged With: Army-Navy Football Game, Blended Retirement System, Happy Hour podcast, investment, military friendly employers, military retirement, Military Spouse JD Network, portable careers, saving for retirement, talking money, Tricare

52 Goals Challenge Week 8: Pay Yourself First

February 22, 2016 By Adrianna Leave a Comment

Unless you’ve been hiding under a rock devoid of wi-fi signal, you’ve probably seen and/or listened to (and then hit repeat on) Queen Bey’s unapologetic anthem proclaiming how she slay…”Formation.” If not, don’t worry. We found a totally safe-for-work version here.

Now, I’m not here to talk about how Beyoncé and I are twinsies because of our mutual love for Cheddar Bay Biscuits or how I’ve been missing out by NOT having hot sauce in my purse…I mean, I don’t have an excuse, have you seen the tiny Tabasco sauce bottles that come in every MRE?

I am here to tell you that I guarantee that right after Beyoncé slays, she sure as hell pays herself first (and then she goes out to buy that “Givenchy dress” and “Roc necklaces”…obvi).

This week show us how you slay by taking at least one step toward paying yourself first as part of NextGen MilSpouse’s You Got This: 52 Challenges to Make 2016 Your Bitch.

52 Goals Challenge Week 8: Pay Yourself First

Week 8 Challenge: Pay Yourself First by Setting Up Automatic Deposits to Your Savings and Investing Accounts

This challenge is extra special because it’s just in time for Military Saves Week! Check out Military Saves to take your savings to the next level with a Military Saves Pledge. 

Challenge Details: Do you have an emergency savings account? An IRA? A 401(k)? TSP? Set aside 1 hour this week to set up an automatic deposit from your bank account or paycheck to put toward your savings and investing goals.

Your Deadline: February 29

Challenge accepted. I’m about to slay like Queen Bey and pay myself first. #igotthis…

Click To Tweet

Bonus points if you post a photo of you telling us how you played this goal on Instagram or Twitter with the hashtag #2016IsMyBitch

Because you’re awesome and you already completed the Week 2 Challenge  and the Week 3 Challenge, you should have a pretty good idea of how much money you have to play with when it comes to paying yourself first

But first, what the heck does it mean to pay yourself first?! Good question.

Paying yourself first is just the most overused way ever to say,

Hey, before you spend all of your money, why don’t you set aside some money for an emergency or when you decide you’re too old for this shit (this shit=working full-time).

I know, it’s SO hard to save for things because life is SO expensive and you hardly have money to…

hold on, let me set down this grande nonfat smoked butterscotch latte…

make it through each month, but seriously…Rome wasn’t built in a day and neither will all of your savings goals.

That’s OK, we get it. Baby steps are still steps forward. Here’s a quick priority list of all of the things you should consider setting up for automatic deposits.

How to Prioritize Your Savings and Investing Goals

52 Goals Challenge Week 8: Pay Yourself First

Priority 1: Emergency Savings

Emergency savings is like the foundation of paying yourself first. Everybody needs to be working toward having at least 6 months of living expenses (not necessarily salary) set aside in a savings account. Remember, emergency savings are supposed to be liquid assets, meaning that, in the event that you need the funds you can get to the funds quickly.

There are 2 easy ways to set this up: 1) via allotment from an LES or paycheck 2) via an automatic transfer from your main checking account.

If you’re someone who likes to shuffle money between your savings and checking accounts, you may want to consider having a savings account at a different bank than your checking account. You know who you are.

Priority 2: Retirement Savings

Because retirement savings are a bit of a long game, the sooner you get started, the better. Here are a few examples of the types of retirement savings accounts you might have: Thrift Savings Plan, 401(k), 403(b), Roth or Traditional IRA.

A lot of times, we think of retirement savings as a benefit associated with being actively employed, but did you  know that there are spousal IRAs for spouses who work limited hours or stay at home? Check out the IRS guide on spousal IRAs here.  

For employer sponsored retirement savings, oh like TSP, you should be able to designate a portion of your salary to be deposited into an account on your behalf. For non-employer associated retirement savings, you will have to set up automatic deposits from your bank account. The cool thing is that you can typically save as little as $25 a month to start saving toward retirement! That’s like one night out at a restaurant or 5 lattes.

Priority 3: Long-Term & Short-Term Goal Savings

Saving for long-term goals, like cars or houses, can feel like a daunting task, but with a clear goal in mind (i.e. deadline and total amount to save) it is something you can easily work into your monthly budget.

Say, for example, you just paid off one of your cars. Chances are you might need to replace said car in 5 years. For the next 5 years you could “pay” a car payment to a savings account so you can buy your next car  with cash or have a sizable down payment. Heck, you were already making a car payment…will you miss it THAT much?

Priority 4: College Savings

You read that right. The last priority on your “pay yourself first” list is college savings. I know you love your kids, but there are ZERO grants or loans for senior citizens. Unless your retirement plan includes being a boomerang parent, you’ve got to put your current finances first and worry about the kiddos later. Once you’ve minimized debt, got your emergency savings on lock, and set up your retirement savings plans THEN and only then should you look at college savings.

There are tons of options out there when it comes to saving for college, but our fave is the 529 plan. Not sure where to start? Check out Morningstar’s 529 ratings.

I’m paying myself first. Do you? 52 Goals in 52 Weeks #Make2016YourBitch

Click To Tweet

Now show us how you slay (how you slay) everyday by paying yourself first! Have any questions about saving for your future? Ask us in the comments section below!

Filed Under: Articles, Events, Make 2016 Your Bitch, Slider Tagged With: 401(k), 52 Goals in 52 Weeks, 529 Plan, emergency savings, money saving tips, Roth IRA, saving for retirement, TSP

Connect with us!

  • Facebook
  • Instagram
  • Pinterest
  • RSS
  • Twitter

Find Your Faves!

Navigate

  • About Us
  • PR & Media
  • Contact Us
  • Write With Us
  • MSB New Media

Connect with us!

  • Email
  • Facebook
  • Instagram
  • Pinterest
  • RSS
  • Twitter

Listen Now!

on Apple Podcastson Androidon Google Playvia RSSMore Subscribe Options

MSB New Media | NextGen MilSpouse

Advertise

  • Paid Reviews are available

Copyright © 2018 MSB New Media, LLC