As a contractor, TurboTax Business-and-Home or Basic?
"Assuming you file state tax returns, you shouldn't buy Basic. Ever. Your choice is probably between the ""Premier"" version and the ""Business and Home"" version. Price difference is insignificant (I have a comparison on my blog, including short descriptions as to who might find each version useful the most). The prices have gone down significantly, since when I wrote the article, its cheaper now."
"If you live outside the US, then you probably need to deal with foreign tax credits, foreign income exclusions, FBAR forms (you probably have bank account balances enough for the 10K threshold) , various monsters the Congress enacted against you like form 8939 (if you have enough banking and investment accounts), form 3520 (if you have a IRA-like local pension), form 5471 (if you have a stake in a foreign business), form 8833 (if you have treaty claims) etc ect - that's just what I had the pleasure of coming across, there's more. TurboTax/H&R Block At Home/etc/etc are not for you. These programs are developed for a ""mainstream"" American citizen and resident who has nothing, or practically nothing, abroad. They may support the FBAR/FATCA forms (IIRC H&R Block has a problem with Fatca, didn't check if they fixed it for 2013. Heard reports that TurboTax support is not perfect as well), but nothing more than that. If you know the stuff well enough to fill the forms manually - go for it (I'm not sure they even provide all these forms in the software though). Now, specifically to your questions: Turbo tax doesn't seem to like the fact that my wife is a foreigner   and doesn't have a social security number. It keeps bugging me to   input a valid Ssn for her. I input all zeros for now. Not sure what to   do. No, you cannot do that. You need to think whether you even want to include your wife in the return. Does she have income? Do you want to pay US taxes on her income? If she's not a US citizen/green card holder, why would you want that? Consider it again. If you decide to include here after all - you have to get an ITIN for her (instead of SSN). If you hire a professional to do your taxes, that professional will also guide you through the ITIN process. Turbo tax forces me to fill out a 29something form that establishes   bonafide residency. Is this really necessary? Again in here it bugs me   about wife's Ssn Form 2555 probably. Yes, it is, and yes, you have to have a ITIN for your wife if she's included. My previous state is California, and for my present state I input   Foreign. When I get to the state tax portion turbo doesn't seem to   realize that I have input foreign and it wants me to choose a valid   state. However I think my first question is do i have to file a   California tax now that I am not it's resident anymore? I do not have   any assets in California. No house, no phone bill etc If you're not a resident in California, then why would you file? But you might be a partial resident, if you lived in CA part of the year. If so, you need to file 540NR for the part of the year you were a resident. If you have a better way to file tax based on this situation could you   please share with me? As I said - hire a professional, preferably one that practices in your country of residence and knows the provisions of that country's tax treaty with the US. You can also hire a professional in the US, but get a good one, that specializes on expats." "There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like ""tax estimator calculator"", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below." "Linkedlinked, You might want to seriously take another look at the links that Chris provided you.  Specifically the ones on the IRS website: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html From the IRS website: Businesses must weigh all these   factors when determining whether a   worker is an employee or independent   contractor. Some factors may indicate   that the worker is an employee, while   other factors indicate that the worker   is an independent contractor. There is   no “magic” or set number of factors   that “makes” the worker an employee or   an independent contractor, and no one   factor stands alone in making this   determination. Also, factors which are   relevant in one situation may not be   relevant in another. The keys are to look at the entire   relationship, consider the degree or   extent of the right to direct and   control, and finally, to document each   of the factors used in coming up with   the determination. Perhaps more importantly... pay attention to what happens if you're WRONG: Consequences of Treating an Employee as an Independent Contractor If   you classify an employee as an   independent contractor and you have no   reasonable basis for doing so, you may   be held liable for employment taxes   for that worker (the relief   provisions, discussed below, will not   apply). See Internal Revenue Code   section 3509 for more information. I would STRONGLY recommend that you and your partners give your accountant a call and discuss the matter.  They will be able to help you make the right decision. One of biggest mistakes businesses make in this are is to classify their employees as independent contractors.  The IRS (who happens to be hungry for money right now) comes in and says, ""Nooooooooo... those are employees."" ...and the COMPANY gets to pay the employment taxes.  I actually have person experience with this as I worked for a company this happened to.  Every contractor was re-classified as an employee except for two (myself and one other).  The key reason in that case was that none of the other contractors had any other clients. While I understand that you have other clients, I would still recommend talking to your accountant for an hour or so... just to be 100% sure. Sincerely, Andrew Smith TaxQueries.com" Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law. Be ruthlessly meticulous about the IRS regulations for deducting a home office.  If it's allowed, it's allowed. Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld.  At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A).  In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable.  That profit goes into a line in the 1040.   You need to file schedule SE.  This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect.  Self employment tax is SS/Medicare.  There's a line for this on the 1040 as well.  You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES.  That avoids a penalty (which usually isn't that large) for not withholding enough.  As an alternative, you can have your regular W2 job withhold extra.  As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple.  Sorry.  You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well.  You can start a solo 401(k) or SEP IRA, for example.  Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited. Another thing to consider, however, is the deductibility of business expenses.  Let's assume that the employer can legitimately hire you as a 1099 contractor.  (Would you be able to telecommute? Would you have a high degree of control over when you worked and when you didn't?  These factors also affect whether you're a true independent 1099 contractor or not.)  As a legit 1099 contractor, you're able to deduct certain business expenses directly from your income. (You can find a list of the rules at irs.gov.)  As a W2 employee, by contrast, can deduct only business expenses that exceed 2% of the your AGI (adjusted gross income).  So, you also have to consider your personal circumstances in making the calculus and comparing whether a legitimate 1099 contractor job is or is not good for you.  It's not just a comparison of what they'd pay W2 employees versus what they'd pay 1099 contractors. You should ask a CPA or tax lawyer to what extent living in specific housing provided by the employer as a job requirement is exempt from taxation.  You might find a nice surprise.  Your tax professional can also help you to report the items properly if mis-reported. Much of this is in the article you cite in the question, but perhaps a look at some of the original sources is warranted and will show why some expert advice might be useful.  I would argue that an RA who is required to police and counsel undergrads in a college dorm in exchange for a room or a flat is closer to a worker with quarters on a ship or at an oil well than a full professor who receives a rental home in a neighborhood near the university as a benefit.  In the first case living at the provided premises is necessary to do the job, but in the second case it is merely a benefit of the job.   The IRS Publication 15-B guidance on employer provided housing  is not entirely clear, so you might want to get some additional advice: Lodging on Your Business Premises You can exclude the value of lodging   you furnish to an employee from the employee's wages if it meets the   following tests. It is furnished on your business premises. It is furnished for your convenience. The employee must accept it as a condition of employment. Different tests may apply to lodging furnished by educational   institutions. See section 119(d) of the Internal Revenue Code for   details. If you allow your employee to choose to receive additional pay instead   of lodging, then the lodging, if chosen, isn’t excluded. The exclusion   also doesn't apply to cash allowances for lodging. On your business premises.   For this exclusion, your business   premises is generally your employee's place of work. For example, if   you're a household employer, then lodging furnished in your home to a   household employee would be considered lodging furnished on your   business premises. For special rules that apply to lodging furnished   in a camp located in a foreign country, see section 119(c) of the   Internal Revenue Code and its regulations.  For your convenience.   Whether or not you furnish lodging for your convenience as an employer   depends on all the facts and circumstances. You furnish the lodging to   your employee for your convenience if you do this for a substantial   business reason other than to provide the employee with additional   pay. This is true even if a law or an employment contract provides   that the lodging is furnished as pay. However, a written statement   that the lodging is furnished for your convenience isn't sufficient. Condition of employment.   Lodging meets this test if you require your   employees to accept the lodging because they need to live on your   business premises to be able to properly perform their duties.   Examples include employees who must be available at all times and   employees who couldn't perform their required duties without being   furnished the lodging.   It doesn't matter whether you must furnish   the lodging as pay under the terms of an employment contract or a law   fixing the terms of employment. Example of qualifying lodging. You employ Sam at a construction project at a remote job site in   Alaska. Due to the inaccessibility of facilities for the employees who   are working at the job site to obtain lodging and the prevailing   weather conditions, you furnish lodging to your employees at the   construction site in order to carry on the construction project. You   require that your employees accept the lodging as a condition of their   employment. You may exclude the lodging that you provide from Sam's   wages. Additionally, since sufficient eating facilities aren’t   available near your place of employment, you may also exclude meals   you provide to Sam from his wages, as discussed under Meals on Your   Business Premises , later in this section. Example of nonqualifying lodging. A hospital gives Joan, an employee of the hospital, the choice of   living at the hospital free of charge or living elsewhere and   receiving a cash allowance in addition to her regular salary. If Joan   chooses to live at the hospital, the hospital can't exclude the value   of the lodging from her wages because she isn't required to live at   the hospital to properly perform the duties of her employment. One question would be how the conflict with IRC 119(d) is resolved for someone who must live in the dorm to watch over the dorm and its undergrads. Here's 26USC119(d) from LII: (d) Lodging furnished by certain educational institutions to employees (1) In general  In the case of an employee of an educational   institution, gross income shall not include the value of qualified   campus lodging furnished to such employee during the taxable year. (2)   Exception in cases of inadequate rent Paragraph (1) shall not apply to   the extent of the excess of— (A) the lesser of— (i) 5 percent of the   appraised value of the qualified campus lodging, or (ii) the average   of the rentals paid by individuals (other than employees or students   of the educational institution) during such calendar year for lodging   provided by the educational institution which is comparable to the   qualified campus lodging provided to the employee, over (B) the rent   paid by the employee for the qualified campus lodging during such   calendar year. The appraised value under subparagraph (A)(i) shall be   determined as of the close of the calendar year in which the taxable   year begins, or, in the case of a rental period not greater than 1   year, at any time during the calendar year in which such period   begins.  (3) Qualified campus lodging For purposes of this subsection,   the term “qualified campus lodging” means lodging to which subsection   (a) does not apply and which is— (A) located on, or in the proximity   of, a campus of the educational institution, and (B) furnished to the   employee, his spouse, and any of his dependents by or on behalf of   such institution for use as a residence.  (4) Educational institution, etc. For purposes of this subsection— (A) In generalThe term   “educational institution” means— (i) an institution described in   section 170(b)(1)(A)(ii) (or an entity organized under State law and   composed of public institutions so described), or (ii) an academic   health center. (B) Academic health centerFor purposes of subparagraph   (A), the term “academic health center” means an entity— (i) which is   described in section 170(b)(1)(A)(iii), (ii) which receives (during   the calendar year in which the taxable year of the taxpayer begins)   payments under subsection (d)(5)(B) or (h) of section 1886 of the   Social Security Act (relating to graduate medical education), and   (iii) which has as one of its principal purposes or functions the   providing and teaching of basic and clinical medical science and   research with the entity’s own faculty.