Jerry Newman, CPA
Your San Francisco CPA

5010Geary.com - burke5010@yahoo.com - (415) 668-5001

Frequently Asked Questions

1. QUESTION: My husband and I bought a home for $ 83,000. We had top put $5,000 into the home to make it livable. Now, we are considering selling it and moving. If we sell for $99,000 and buy a home for $65,000, what part will we have to pay taxes on? And how much will our taxes be?
2. ANSWER: You will have to pay taxes on $11,000 ($99K - $83K-$5K). But you have a big exclusion, once in a lifetime - $125,000 off the capital gains for anyone over 55. The form to fill out is IRS Form 2119.
3. QUESTION: Do you know how much each withholding on you W-4 will drop you salary. I'm getting 41% taken out of my paycheck for S-1.
4. ANSWER: Each withholding is about $750.00 to $1,000 less withholding over the course of a year. Again, as you move through the wage brackets, you can jump from 15% withholding to 28% withholding to 31% withholding + state 2-5% (or more), and FICA and Medicare withholding(7.65% withheld). It all depends upon the individual wage situation as to how much the government wants from you. Remember, the FICA is enforced retirement savings for YOU.
5. QUESTION: Last Year I started a small business. I only grossed $1,000 over that period. I've spent roughly $10,000 on equipment What can I deduct on my taxes?
6. ANSWER: In this case, you can deduct only up to the earned net income of the business in that first year. If you elect to expense all $10,000, you can carry forward $9000 to the next year of net income. You would not get a depreciation deduction, since you are expensing the whole amount in the first year , and carrying over the remaining balance until the second year.