Other Income or Self-Employment??

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Subject Author Date Other Income or Self-Employment?? Drew27410 04-07-2009  Re: Other Income or Self-Employment?? removeps-groups@yahoo.com 04-07-2009
Posted by Drew27410 on April 7, 2009, 2:00 pm Please log in for more thread options Another question to the group; and thank you for your help so far. I'm trying to figure out when money I earn can b placed in other income, and when I have to consider myself self-employed. I'm helping out a few friends with their yards, mowing, taking down a couple of trees. They have given me a few hundred dollars as payment. I was thinking it was proper to just put this on line 21 of the 1040 as other income. On the other hand, is it really necessary to claim this as self employment income, and pay the appropriate social security taxes on it? If so, I can then deduct all of my expenses, mileage, etc, correct? Again, thanks for your opinions and help. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on April 7, 2009, 3:56 pm Please log in for more thread options > I'm helping out a few friends with their yards, mowing, taking down a > couple of trees. > They have given me a few hundred dollars as payment. > I was thinking it was proper to just put this on line 21 of the 1040 > as other income. This sounds right to me. The instructions for Line 21 say to include here "Income from an activity not engaged in for profit. See Pub. 535.". Pub 535 is not very helpful, but the following link is: http://law.justia.com/us/cfr/title26/26-3.0.1.1.1.0.2.71.html Deductions are allowed, but except for personal deductions (home mortgage interest, property taxes) they can be no more than your profit. Furthermore the deductions are taken on Schedule A, subject to the 2% of AGI limit -- only deductions above 2% of your AGI are deductible. The good news is that you put all the misc expenses -- including those for your job here, tax preparation fees, fees you pay people to manage your money to generate taxable income, un-reimbursed employee expenses, certain attorney fees, etc -- add them up, and then apply the 2% rule. And remember, the deduction is not allowed under AMT. > On the other hand, is it really necessary to claim this as self > employment income, and pay the appropriate social security taxes on > it? If so, I can then deduct all of my expenses, mileage, etc, > correct? Yes, but see the limits above. Your honesty is good. I imagine most people would have considered this amount as a gift from friends and not reported anything. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted OH Retirement Income Credit - Income from decedent IRA to heir March 14, 2009, 11:37 pm Reporting income from a MLP (Master Limited Partnership) income??? February 18, 2010, 12:25 am Should two states income on W2 sum to Federal Gross Income ? April 9, 2008, 2:23 pm Federal income tax on state income tax refund March 13, 2009, 7:37 pm Income Tax on Social Security Income September 10, 2007, 6:58 pm Re: Income Tax on Social Security Income September 12, 2007, 10:05 pm what type of income is interview income January 15, 2010, 12:07 pm Schedule C Earned Income - Excluded as Foreign Earned Income? May 31, 2007, 12:58 am Re: Schedule C Earned Income - Excluded as Foreign Earned Income? June 3, 2007, 10:29 pm Re: Schedule C Earned Income - Excluded as Foreign Earned Income? June 3, 2007, 10:29 pm