Credit Cards

[SAIDFICOMUSTBEASCAMLOL]

I'm debating is it worth paying the $450 per year for $3000?

Pros:

If  I am going to get room upgrades, especially at Starwood hotels because I like the WOW Suites. LOL  

Will be my longest opened account

At least I know they won't block my account

How can I fail an FR after they told me my income is $16k? LOL --- clearly they realize my income is more. $16k/per year does not equal 3k/mth. 12mths x $3k/mth=$36000/yr

Cons:

Only problem $3000 is not enough to book an entire vacation on. 

Hmmm. If the price difference between upgrades ( and other benefits) were less than the AMEX fee I would 86 it. I think I'm just going to keep it. This year my IRS total income is way higher. Maybe I'll get lucky and get FR again. I hear they can do it every six months. lol

PS. Im traveling twice this month so lets see if I get those upgrades! 

Dear SAIDFICOMUSTBEASCAMLOL

:

We are writing to you today because we have taken an action on your account and wanted you to be aware of this change as soon as possible.

We have placed a spending limit of $3,000.00 on your account.   Please be aware that once the outstanding balance on your account reaches this level, we will not approve any charges above this amount.  The limit is for total spending on all Cards on this account so if you have any additional Cardmembers, please ensure they know about this change.  You will also receive this information by letter.

To help you manage your spending within this limit, you can check your balance any time at www.americanexpress.com/managemycard.

Sincerely, American Express Account Services

[LS2982]

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dharalex wrote:
LS, have you ever purchased a home?

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No, I actually get a perk from my company where I get a free liv-on, makes finances go very smooth.

[fusioncredit]

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SAIDFICOMUSTBEASCAMLOL wrote:

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CribDuchess wrote:

Something is just not adding up here.  Itemized deductions do not reduce your "income", they simply reduce your tax liability.

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Aye, I use taxact.com. Remember I'm talking 1099s and 1065s as well, but yes if I have 43k or more in med expenses and other things it will decrease my income. I know this for certain because I put in additional deductions under itemized just now to check and my total income went down. I took it off and it went back up.

Expenses just reduce my tax refund. The more expenses I put on my 1099s the less they will give me back. I'm not a CPA but what I'm telling you is 100% legit for me. I have ALL of my reciepts. And I mean ALL. I just follow the questions and answer them honestly and this is what happens to me, my income gets decreased. Like I mentioned yesterday...even my state income varies depending on which state I have to file with. One said 16k last year and others had all types of ranges.

:/ aye... I'm not complaining about the IRS. Shoot, I even got a letter yesterday from them saying they OWE ME MONEY!  I was just mad about the Amex word play.

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Regarding deductions it only decreases the amount of taxable income not your AGI so I'm puzzled at the low AGI you mentioned in a previous post.

[SAIDFICOMUSTBEASCAMLOL]

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fusioncredit wrote:

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SAIDFICOMUSTBEASCAMLOL wrote:

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CribDuchess wrote:

Something is just not adding up here.  Itemized deductions do not reduce your "income", they simply reduce your tax liability.

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Aye, I use taxact.com. Remember I'm talking 1099s and 1065s as well, but yes if I have 43k or more in med expenses and other things it will decrease my income. I know this for certain because I put in additional deductions under itemized just now to check and my total income went down. I took it off and it went back up.

Expenses just reduce my tax refund. The more expenses I put on my 1099s the less they will give me back. I'm not a CPA but what I'm telling you is 100% legit for me. I have ALL of my reciepts. And I mean ALL. I just follow the questions and answer them honestly and this is what happens to me, my income gets decreased. Like I mentioned yesterday...even my state income varies depending on which state I have to file with. One said 16k last year and others had all types of ranges.

:/ aye... I'm not complaining about the IRS. Shoot, I even got a letter yesterday from them saying they OWE ME MONEY!  I was just mad about the Amex word play.

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Regarding deductions it only decreases the amount of taxable income not your AGI so I'm puzzled at the low AGI you mentioned in a previous post.

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The AGI comes after the total income (IRS's total.) The IRS calulates the "total income" AFTER I enter all of my deductions and expenses. My AGI comes after they give my adjustments. I have all my transcripts all the way back to 2007. All I have to do is add back in the deductions and expenses to the "total income" and it matches my cash flow/income. Now if I add it back to my AGI, the amount is WAY off. Everyone's tax situation is different. I wrote exactly which  income forms I get, BUT I didn't share what misc forms I have to complete every year when filing my return. My return is normally 26 to 30 pages per year. 

REVISE... so I took what you said into consideration and now I get it. THE IRS DOES NOT CLUE ANY OF MY OTHER INCOME ( for whatever reason they consider it not taxable.) Shrugs... Check this out. I see the W-2 amount there. Than I see the Business income there which is a LOSS ( because of the expenses but not actual lost.) On the other income line I have over 55k sitting there. My IRS total income was the "other income" +w2 minus the "loss from the 1099s. But it still does not make sense. I see that a worksheet says the taxable income was 40k but thats out of over 200k before expenses.

I went back again over every line. When I did the first 1099 and submitted the expenses it was negative. I did the other too and theh balance was WAY over the total income. So I went and did the medical deductions  and it was lower than the total income. 

At this point, I give up. (and that is rear.) I used taxact.com and I entered all of the right numbers and followed all of the questions. I even did the review with alerts. All I know, and like I said before, I did my taxes correctly because I got a 1099 late and I did a 1040x ...and the IRS just sent me a letter saying that they owe me more money.

Thanks  for the mini tax lesson. At least I've learn more about taxes.

I found this link last week:

Source: http://goo.gl/mcLvs

Gross income from self-employment is the amount you earn for services you provide before expenses are considered. In most cases, your gross income from self-employment does not equal the amount of incomeyou pay tax on, or the amount of income you actually make from being self-employed. Your gross income figure is the first important calculation in determining how much you earn during a specific period, so you must calculate the amount accurately.

Step 1
Calculate the total amounts reported to you on 1099-MISC forms concerning the services you provide. If you receive 1099s for different types of work, in different industries, you must separate the business activities and calculate the income from each type of activity separately. Separation applies only if the industry classification for the activity is different. For example, if you provide construction services and office services, a difference in industry exists. If you provide framing services and residential flooring services, on the other hand, the industry is the same.

Step 2
Calculate any non-1099 income you receive. Non-1099 income includes money you receive from customers that is not reported on a 1099. Do not include any discounts, incentives or coupons redeemed by customers in your calculation.

Step 3
Add the 1099-MISC and non-1099 income together. The result is your gross profit.

Step 4
Calculate the total amount of coupons and discounts you extend to customers. The result is called "Returns and Allowances." Look at customer invoices to determine the value of incentives you applied. For example, you may give a 20 percent discount to new customers. Compute the value of the discount from the customer's invoice.

Step 5
Subtract the returns and allowances total from your gross profit. The result is your gross income.

Here is another link:

Source : http://www.realestateabc.com/loanguide/afford2.htm

If you are self-employed or receive 1099 income, then you need a two-year track record. Lenders go by what you declare to the IRS as income, since that is documentable. Since some self-employed people overstate their expenses, this may understate your income. Look at the Schedule C of your tax returns for the last two years and the number at the bottom that says "profit" is your annual income. You can add any depreciation to that figure. Add them together and divide by twenty-four.

[SAIDFICOMUSTBEASCAMLOL]

I thought it was the itemized deductions but its actually ADJUSTMENTS thats making my AGI so low.

http://taxes.about.com/od/taxglossary/g/adjustments.htm

http://www.moneyinstructor.com/art/taxadjustments.asp

This is what I am assuming... the "total income" gets reduced by what I thought was itemized deductions and all that OTHER stuff. My AGI is my new income (IRS income not gross) minus the adjustments. If I am wrong...no problem but I know my taxes are done properly on my side. I used taxact.com and tired turboxtax before too. I get the same $, turbotax just gives me the child credit when I'm not supposed to have it. So, I use taxact.com instead. See honest, even when doing taxes.

Using this calulator http://www.bankrate.com/calculators/tax-planning/1040-form-tax-calculator.aspx it all makes sense and it gives me the same AGI.

Line 12 is not being caulated with basic math ( profit minus expenses) its not the same as the net loss from the 1099 with the loss. This is reducing the income by ALOT. Had the IRS totaled up all monies and subtracted expenses the total income before any other adjustments or what have you would be over 100k. Shrugs.

PS. this is my last reponse about this topic/taxes. I passed the AMEX FR, they gave the hard limit of $3k based off the Line 22 on the 1040.  Hopefully this thread will help others who make a living as myself. W-2, multiple 1099s, 1065 ...even tho they own a corp with a 1120.

[SAIDFICOMUSTBEASCAMLOL]

Yet another update (guess this is why my account is still "suspended" and is still being reviewed by the FR dept) since my last post my credit limit got uped from  $3000 to $5000. I didn't get a second email yet. The update JUST happened within the last hour.

I wonder what's going on? I did see that AMEX did a soft pull aka Account Review / AR on Jan 14 although I've never even used the card (remember it was suspended upon arrival pending a FR decision.) 

( I looked over my old acct that I had from July 2010 to Dec 2010...Spent and paid off $14k in charges on my Zync... maybe that has something to do with it. My old history. Average monthly charge was $2.5k+ per month after  I got rid of that $1000 cap/ no pre-set limit.) 

Correction... got the card Aug 2010...saw five statements listed online... which meants my average was $2800/mth.  When I closed my account b/c of the FR in 2010 I see my last payment as being $3800.

[Jazzzy]

My husband and I are both self-employed....he is totally self-employed and my self-employment income is in addition to salary I earn elsewhere.

We were FRed by AmEx when we first applied. I assumed it was the self-employment aspect that triggered it. Whenever we are asked on an application (from AmEx or anyone else) for our "income," we put down the income we claim for tax purposes (gross income minus writeoffs...in other words, net income). Only when asked for "gross income" do we list the higher amount.

I think it eliminates misunderstandings and is more realistic for us to state our income this way. For example, I am a traveling medical provider. I am paid back for my hotel rooms, mileage, etc. Those amounts are all included on my 1099s, but they are not really "income." They are reimbursement for traveling expenses, and I then deduct those traveling expenses when I pay taxes....so, I don't claim that amount as "income" when applying for anything.

Our "gross income" looks really great...but we all know it's not a clear picture of our "income."

[cashnocredit]

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LynetteM wrote:

My husband and I are both self-employed....he is totally self-employed and my self-employment income is in addition to salary I earn elsewhere.

We were FRed by AmEx when we first applied. I assumed it was the self-employment aspect that triggered it. Whenever we are asked on an application (from AmEx or anyone else) for our "income," we put down the income we claim for tax purposes (gross income minus writeoffs...in other words, net income). Only when asked for "gross income" do we list the higher amount.

I think it eliminates misunderstandings and is more realistic for us to state our income this way. For example, I am a traveling medical provider. I am paid back for my hotel rooms, mileage, etc. Those amounts are all included on my 1099s, but they are not really "income." They are reimbursement for traveling expenses, and I then deduct those traveling expenses when I pay taxes....so, I don't claim that amount as "income" when applying for anything.

Our "gross income" looks really great...but we all know it's not a clear picture of our "income."

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This illustrates the difficulty. An employee typically asked will consider income to be the gross annual pay and creditors make the same assumptions. If one is self employed (sched C) things get tricky because gross income is usually far greater than net income. OTOH there are retired people who's income is largely dividends, interest and capital gains. These produce net income after taxes that is much closer to gross income than would be the case for a regular employee. However, cap gains typically vary by very large amounts.

I am not self employed but retired. My income is mostly cap gains from an investment portfolio and has been for 10 years so what I do is use the average 3 year AGI for income and typically understate that since there is no guarantee it will continue. That seems the fairest way but it's a complicated question for any of us who's income is not standard employee income.

[SAIDFICOMUSTBEASCAMLOL]

The platinum AMEX application reads "Total Annual Income*"  Income Source* ( drop down menu- you can select EMPLOYED without selecting an industry.)

*Include income from all sources including employment, retirement, investments, rental properties, etc. Alimony, child support, or separate maintenance need not be revealed if you do not wish to rely upon it.

For starters AMEX does not specify if the annual income  needs to be earned or unearned income because it does not matter. It just needs to be documented. In my case they only asked for a 1040. Okay no problem. I supposed if I was living off of 1M inheritance in addition to my "net income" I would still be capped because they never asked me why I had X amount as my annual income. What if I had X amount in a bank account and every month auto transferred an allowance to myself. I wouldn't have to report this to the IRS the estate already paid taxes on it. All I would report to them is the interest earned right?

Furthermore, I never told them that I earned X  from  solely "self-employment" or " employment"  the application. It states "Total Annual Income*"  Income Source* ( drop down menu- you can selected EMPLOYED without selecting an industry. That's what I did.) In my case I do have a W-2 from my C-Corp. Not to mention there is a spot to write off employee expenses that are not reimbursed, i.e.. Parking, metro passes, etc. That reduces I believe. But anyways, how could I say I get a low W-2 but have a zillion bucks in the bank? There is no extra spot. If I chose unemployed, I would be lying. I think that would be the only way for them for them to know to ask for my bank accounts. That or "homemaker."

*Include income from all sources including employment, retirement, investments, rental properties, etc. Alimony, child support, or separate maintenance need not be revealed if you do not wish to rely upon it.

That being said, I think what confuses me when it comes to the Schedule C is the fact that I have so many + I manage everything myself. So  lets say I earned $200k in 2011...and I did not spend that $200k that I got in 2011 but rather spent the money I had sitting in a bank account, in my mind my income was $200k because when the new year rolls in its still there. I spent the left over money from the previous year/s.  I'm not spending my newly made $. Bookkeeping wise clearly I'm wrong, but to me it makes sense. My profit would be the new money minus the expenses but my income is the money I actually earned/made, right? I think the only people walking around the world giving NET INCOMES  are AMEX bullied folks. No one does that ( not in my city), and no one asks for net (in my city.) Everyone wants BEFORE TAXES, why? Because people will write off god knows everything reducing their net income. There are tons of articles about this, especially for parents who have children that will be entering college or recent graduates trying to buy more time before they pay back their federal loans ( because IBR goes off AGI just like FAFSA.)

BTW My gross income is not the same as revenue or sales. I'm spending the monies from my cash account which is never low. Not operating working sale to sale.

I can get a half a million dollar account and the person/company decides to back out of it. I report that, and then enter the returns/allowances. The next few screens will be other income and here is where I report 1099s. So I'm not claiming all of the money I touched, just the money I did not return. I do not see anything on the 1040 that asks me how much cash do I have sitting in my bank accounts? If there is a spot let me know. :/  I know on my 1120, has a line at the very top of the return. As for reimbursement, I personally do not get reimbursed for anything. 

My personal life is my professional life so I can write off the cost of living (so to speak.) Because of what I do for a living (well one of the industries I work within) I can not live certain places, wear certain things, child can not attend public school, etc.  This is another reason why the IRS total income decreases. I have no life, everything is work... I am a entity so to speak. So where I can deduct xyz as an expense, the average person would have a hard time proving this to the IRS, when I don't. On the flipslide, most people can't deduct their mortgage or rent, clothing ...I can because its needed for work.  

Sidebar: Another thing that confuses me, the whole "this person is worth X." If I own all shares of my companies and the business valuation  per company is 5 to 8 MM...am I worth that? I'm just curious because I know a lot of celebrities with publicized  "net worths" of X amount but they did not earn for self and do not even have 10% of that in their bank accounts, all that $ was earned via sales for the big boys aka companies. I'm just trying to figure out how to package myself because the money is there but based on what everyone's response is via this supposed AMEX gon tax forced...clearly I am not doing something right. I just hate hiring folks because no one ever has my best interest at hand. They just google me and try to rip me off. They see me as quick money. That's one reason why I am not as successful as I should be. I'm busy fighting off people and trying to convince banks in general that I am 100% legit. Even with 4506-Ts ( on the biz side) they act silly. No winning I tell you. :-)

http://www.irs.gov/businesses/small/article/0,,id=104696,00.html

http://www.irs.gov/publications/p529/ar02.html

http://www.irs.gov/publications/p535/index.html

http://www.irs.gov/publications/p529/ar02.html#en_US_publink100026966

Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.).

Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.

http://www.howardlevyirslawyer.com/2009/04/11/your-budget-vs-irs-expense-allowances-how-do-you-compa...

http://www.carnahanlaw.com/IRS/collectionstd.html

 http://www.ehlcpa.com/tax_deductions_for_models_actors.html

 http://www.cbsnews.com/8301-505145_162-51404314/tax-deductions-for-freelancers-and-consultants/ ( the parking part is on the 1040

 http://en.allexperts.com/q/Tax-Law-Questions-932/2009/1/Parking-Fee-Tax-Deduction.htm <-parking

[haulingthescoreup]

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SAIDFICOMUSTBEASCAMLOL wrote:

...Sidebar: Another thing that confuses me, the whole "this person is worth X." If I own all shares of my companies and the business valuation  per company is 5 to 8 MM...am I worth that? I'm just curious because I know a lot of celebrities with publicized  "net worths" of X amount but they did not earn for self and do not even have 10% of that in their bank accounts, all that $ was earned via sales for the big boys aka companies. I'm just trying to figure out how to package myself because the money is there but based on what everyone's response is via this supposed AMEX gon tax forced...clearly I am not doing something right. I just hate hiring folks because no one ever has my best interest at hand. They just google me and try to rip me off. They see me as quick money. That's one reason why I am not as successful as I should be. I'm busy fighting off people and trying to convince banks in general that I am 100% legit. Even with 4506-Ts ( on the biz side) they act silly. No winning I tell you. :-)

http://www.irs.gov/businesses/small/article/0,,id=104696,00.html

http://www.irs.gov/publications/p529/ar02.html

http://www.irs.gov/publications/p535/index.html

http://www.irs.gov/publications/p529/ar02.html#en_US_publink100026966

Examples of workers who may be able to deduct the cost and upkeep of work clothes are: delivery workers, firefighters, health care workers, law enforcement officers, letter carriers, professional athletes, and transportation workers (air, rail, bus, etc.).

Musicians and entertainers can deduct the cost of theatrical clothing and accessories that are not suitable for everyday wear.

http://www.howardlevyirslawyer.com/2009/04/11/your-budget-vs-irs-expense-allowances-how-do-you-compa...

http://www.carnahanlaw.com/IRS/collectionstd.html

 http://www.ehlcpa.com/tax_deductions_for_models_actors.html

 http://www.cbsnews.com/8301-505145_162-51404314/tax-deductions-for-freelancers-and-consultants/ ( the parking part is on the 1040

 http://en.allexperts.com/q/Tax-Law-Questions-932/2009/1/Parking-Fee-Tax-Deduction.htm <-parking

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That right there is why I would mail back my cards to AmEx if they ever F/R'd me. The thought of having to wade through and understand all that is enough to make me want to lie down and take a nap.