Tax and retirement advice

chocoholic1976 · #1 (**permalink**) 08-08-2004, 09:37 AM

Hello.
I have a new situation with many things I have never dealt with before, so I have several questions. I started a new job this year. I work for a private family. I do not have any tax being taken out from my paycheck. I have been saving money each month so that I can pay the tax next year. I believe that I will have to file a 1010 (?) form for my taxes next year, but I'm not sure about this. If so, am I able to deduct all work expenses on my taxes? Also, I did work part of the year with a W-2. Do I have to use two separate forms when I do my taxes next year?
The second part is that I have some retirement from school districts saved up. I would like to roll that over into an IRA. Can anyone recommend a good IRA? Any other suggestions on saving for retirement would be helpful. I have never done any investing on my own and would like to get started doing the right thing. Thanks!
Brend@

terry1156 · #2 (**permalink**) 08-09-2004, 02:51 AM

Welcome to the boards!

I have a few questions to ask to clarify your situation and maybe I can give you a bit of help.

1) Working for the private family, are you an employee for them or a independent contractor working for them. Do you have a specific contract or did you make arrangements yourselves and they pay you for the work you do?

2) What is your risk tolerance for your investments and how long before your will be usung your retirement money?

chocoholic1976 · #3 (**permalink**) 08-09-2004, 05:37 PM

Thanks for replying. I do have a contract with the family. I am in my 20's, so retirement is a long way off. I just want to make sure I continue so that I can hopefully enjoy retirement when I get there.

terry1156 · #4 (**permalink**) 08-09-2004, 11:39 PM

It sounds like you are working for yourself and have a contract to do work for a private household. If that is correct, then you would file a Schedule C (its an acrobat reader link). You would be able to deduct all your work related expenses in this case. This site has a decent basic introduction article on home businesses if you haven't read it already. There are a lot of additional deductions you can claime with a home business.

If I were you, I'd open a Roth IRA invested in a Vanguard Fortune 500 Index Fund, at least until you are more comfortable picking stocks on your own. There is a short thread talking about the Roth IRA and on Index Funds. Please ask if you have any other questions. I don't know if I can answer them, but I will try.

chocoholic1976 · #5 (**permalink**) 09-28-2004, 05:05 AM

Hello all.
I have one more question. Do I file the 1040 and schedule C for each quarter? I really don't enjoy doing taxes, so I am hoping that I don't have to do all of this paperwork 4 times a year. Also, do I have to file self employment tax? (schedule SE)

terry1156 · #6 (**permalink**) 09-28-2004, 06:31 AM

No, you file the shedule C with your 1040 form...just once a year. if you made money then, yes, you will have to file self employment tax. But remember that the amount of space your home office (if you don't have one, create one) takes up (say 10% of your living area) means that you can deduct 10% of your rent/mortgage each month, gas, water, electricy bills. Also a % of phone charges, Internet fees, car mileage, etc. which should lower your income quite a bit.