Hopefully this will be my last question of the year. I dont own my own company and never have, but last year did some one time contracting work for another firm. I received my tax form from them as a 1099Misc, with the income in Box 7. When I go to enter it into Tax Cut, it asks is it self-employment income. Now of course I was self employed at the time, but it makes the distinction for self employment as:
"Most people will answer Yes here, because compensation in box 7 is usually income from self-employment. Box 7 income is self-employment income if it comes from an activity you carry on regularly to make a profit. "
The key word being regularly? This was a one time contracting thing and since I am now employed full time, I wont be doing it again. The difference is a few thousand dollars in tax liabilty so I thought I would ask.
People normally understand that to be independent contracting in an activity of a trade or business which a few thousand bucks makes it "yes" to self-employment income for which self-employment tax applies. Good for the economy and your future retirement base.
Doesn't apply if you didn't do any activity to make and earn that income. For example.... you get a share of it because you owned part or whole of the self-owned company, such as retired and living in a resort to which the business operation isn't in the same State and location, run and operated by a staff without you.
Clearly you should check "no" box, if you're living in nursing home and ready to kick the bucket.
Thanks Ken, unfortunately I read that and it said 'regularly' so I figured I could get out of checking yes since it was a onetime thing, save myself a few thousand.
dcmidnight, good luck to your new job one day.... and don't mind my rhetorics. Those instructions we read sometimes are not all that clear, so I understand your frustration and laugh about them too. But I can see you're very astute in trying to conserve as we likewise for ourselves.
02-06-2004 10:17 PM
