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.
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.