I work full time out of state for a company, in which I have to provide my own internet. I do not have enough to itemize my deductions on a schedule A, so I am not able to include this expense in there. I do however have freelance income and loss that I fill in on a schedule c-ez. Is is OK to include my internet bill that is used primarily for my full time job in my itemized losses for my freelance job? And if so, I read somewhere if you have w-2 income, you cannot claim more than 2% of your income in business expenses, would this apply?

From September 2008 to the end of the year, I made exactly 21 in babysitting income. I have no idea at this time if the mother of the child I watch is going to claim him, but after much research I think I must file as an independent contractor. I do the work in my home. The only thing she tells me to do is when to work and what to give him for food.

Question #1. Do I claim the money I earned in December even though I was not paid in December for that money?

Question #2. What are legal deductions I can take and is it worth it? I take him to storytime and Kidz Klub- so could I count that as a driving expense? Also, I must pay for all his food, and the first couple months his diapers/wipes. Are these deductible?

In regards to the ebay business, I sell items I find at the thrift store, in my home (already have from long ago) or things that are given to me by family members. I do this as a hobby. I made around 0.

Question #3. Do I count this as income?

Question #4. I kept very accurate records of what I earned, how much I paid for each item, what it sold for,- all boiling down to profit and loss. How do I report this, and would it be a seperate Schedule C from babysitting?

Question #5. What is deductible? My trips to the post office, paper to print packing slips, my time on the internet to post/list/respond, shipping materials, my trips to the thrift store?

We want to be able to get the most back as possible (as does everyone). We qualify for the EIC credit even with my income from babysitting/eBay. Would it be wise to show a loss?
Question #6. Can I claim part of my rent as an expense since I work out of my home? What about my car payment for either since I partly use it for business?

Lastly, where do I find information about moving expenses and what’s claimable?

IRS says I owe 00 from miscalcuation on Sch SE, I think they are wrong?
Ok so I have a side business and I collected some 0k from clients, but I paid people to do the work to the tune of 5k. I paid them by check, and issued them 1099′s, and submitted a 1096, and I used my EIN that I’ve been using for 3 years.

I put the 5k as a deduction on my schedule C, just like I always do, but this year I get a letter saying I made a mistake on my calculation of subj:
Schedule SE and that I owe some 00. They mention the SCH SE, and the 6251 (AMT) but say nothing about SCH C.

I find it suspicious that the $$$ amount of the discrepency is almost exactly 2.9% of the 5k ( I maxed out the other part of Fica taxes with my day job.)

Now the IRS says to challenge this I should fax them my SE, AMT and they will take a look. I don’t think they have enough information, so I also sent them copies of my 1040, 1099′s I mailed out, and the 1096. I stupidly forgot the Schedule C.

My question is did I miss something or am I supposed to pay Medicare (the 2.9%) of the 5k my consultant staff is supposed to pay? Or is there something else going on here?

I might be completely off-base with the 2.9%, I just can’t think of any other reason they think I made a 00 mistake.

TIA

Additional Details
I originally paper filed. I use a tax excel spreadsheet to do my taxes.

In the old days, the IRS would send a very clear list of forms/line #’s that are being changed and the mistake (either theirs or mine) was very clear. all they told me this time is that they "changed" the schedule se, WTF is with that? why can’t they tell me old vs new value for what they corrected?

It doesn’t make sense that they simply "left out" the 125k on the schedule C, if they did that I would of been hit with a whole lot more than 00 on Sch SE.

I know there is no limit on the medicare portion of of my income, but the 5k is NOT INCOME is was an EXPENSE of my business. On my schedule C, I take the money I collected, the 0k, and then I get to subtract my expenses of the business, the materials I used, etc, and my biggest expense was the 5k I spent on contractors. That 125k wasn’t my income its theirs.

I had a phone number to call. all I got was the front desk who said to fax in the sheets SCH SE, and AMT 6251. They wouldn’t put me through to anybody who knew about anything. Last time I got a letter like this, I called with the id#, I was put through to a case worker who knew the issue, and we had the solution worked out in 10 minutes.
I believe I did do my SE correctly. So why did they charge me 00 supposedly for a "mistake" on my SE?

If my SE taxes go up, so should my AGI, (as per my schedule C ) NO? so that means my regular taxes should of changed, but they didn’t.
yup just checked SSI withheld: 00 (me and spouse) and Sched SE added 0.

yes, I know I asked this question about a week ago. I was hoping for some better insight with the weekend crowd.
katie, there can’t be any penalties, all they did was reduce my tax refund. they have the money. I don’t understand why they didn’t mail me a line for line report of what they adjusted. I used to get that when they made adjustments.

I have had a direct sales business/hobby for the past 5 years. The first year I had it, I claimed the income and expenses as a business on a schedule C and claimed a loss (I was expecting to run it as a business). The next year, I realized I was spending more money than I was making and claimed it on my personal taxes as misc income (not for profit) and equal amount losses (IRSmaximum) as deductions and have now done this for the past 3 years. This past year, I have been working harder at making it a more "for-profit" buisness. I feel I should be doing a Schedule C, but will this be a red flag for the IRS? My husband also has a hobby on the side that we also listed as misc income with equal losses on our 1040 but he is making more money as well (he received a 1099-misc with income in box 7). How will this look to the IRS, if we now have 2 schedule C’s for businesses we were only claiming as hobbies for the past 3 years?

Thank you in advance for your advice!
Yes, looking at things now, I probably should have keeped a schedule C (I didn’t realized I could extend the loss to profit years), unfortunately it is too late . No, I do not keep an inventory for my direct sales.

i work on commission at a salon, and filed my taxes. my preparer said im considered self employed and filed a schedule c, and i am now getting audited….i dont own my own business, and although i do blame myself for signing something i had no knowledge of what it was, what can i do? its basically my preparers fault, for making a mistake. i had no deductions that year they are now asking for receipts, logs, bank statements, and bills….im stressed because i dont own the business…any advice?

I don’t have any license yet, but will get one next week. I’m unemployed so I started selling things around my apartment since a few months ago. And I have also pick up a hobby of crafting, and sell sell the things I made. I was told that I have to file schedule C on internet incomes. I sell my things on ebay and etsy and have all my transaction on paypal. I buy everything and sell everything mainly online. And I also print shipping postage on paypal so I have no paper receipts to keep at all. I upload all my transaction from paypal to outright (Bookkeeping Program) and trying to sort out my expense. I put Shipping fee, paypal, ebay, etsy fees under "Cost of Goods Sold and I also put things that I buy then resell on ebay under "Cost of Goods Sold."

After all the sorting, it shows I have 00 income on the first line. But after all the fees and deductions, I have -0 loss on "Net profit or (loss)"

What’s the point of me filing it when I’m not even making money? Is it really necessary for me file this income? The schedule C s very complicated, but plan to file it with my husband’s tax return.

Turbo tax fee version don’t have Schedule C, so I plan to get the home and business edition. It cost ,95, do you think it’s worth it?

Hi there. I am going through Turbo Tax and am getting more confused. I had three jobs last year: two with standard W2′s and one with 1099 Misc income as I am an Independent contractor for them. I have a good amount of business expenses related to the 1099 income (k out of 12,500 income) Do I need to fill out a schedule C? I don’t have an LLC or anything of that nature. Not sure where to put these deductions. I originally put them with personal but maybe they should go directly with the business income? They keep asking me what basis. Cash, actual, etc. I am out of my league here! Sorry if this seems confusing; I remember why I hated accounting in college. thanks to anyone in advance!

I have read the IRS rules to determine if my side job is a hobby or business but I fall somewhere in between. It seems like the IRS would rather you consider it a business if you’re making money and just a hobby if you’re not. Well in my situation I did make money in 2009 from the side job but I only decided to get a separate business account, DBA and become more serious in 2010.
My deductions exceeds the the 2% Gross rule therefor going with hobby eliminates me having to pay an additional self employment tax and of course the higher audit rate that every keeps talking about with filing a schedule C. Your advise is appreciated.

So I’m 22 and I’ve been unemployed for the past 3-4 years staying with my cousin on and off. (Please no insults, I was depressed, dropped out of high school like an idiot and had a lot of trouble finding jobs) I had a few part times jobs before that.

Anyways, I havent filed taxes since 2005 or 2006 when I did for my part time jobs. Earlier this year I started on a website called keen doing advice work over the phone (they dont send me a 1099 but I’ve been keeping track of all money I’ve received from them and have made about 5,000 in income so far and will be reporting it as self employed from what I’ve read. I know about the tax rules and everything now from days worth of reading and researching but it has got me to thinking about audits now. I have very few deductions to write off on my schedule c (mostly advertising expenses like business cards and flyers i passed around) so I’m not worried about getting audited based on my deductions. But I’ve read that they compare this year’s tax return to last years, so since I havent filed a tax return for about 3 years and there is nothing to compare this year’s return to am I likely to selected? I have receipts for my deductions saved but I’m more worried/embarrassed about dealing with the confrontation and explanations of the past 3 years with an IRS agent.

So as a newly self employed person with no prior year return filed am I likely to get audited?

Hi everyone! Thanks in advance for even reading my question. And if you have any input it would be much appreciated!

So I have already filed my taxes! Yeah! But…I just received another 1099Misc in the mail (Isn’t it way too late for that, legally?) representing about 5 in income. What to do!?

I am an actor and so receive, like many other professions, both W2s and 1099s. While doing my taxes this year I had all of my 1099s entered and I realized that that 5 was not accounted for. So I entered that income, without having received the 1099misc yet, in some field (I used Turbo Tax) called "other income" or "additional income" that applied it towards my profit from business/business income (where the other 1099misc were applied to). Then a week later I receive the 1099misc!! So annoying!

SO….I did report the income. But do I need to amend my taxes and report it under the 1099misc and take it out of the "other income" column? It will change absolutely nothing on the bottom line.

As mentioned I am an actor. I don’t make much money so I am using the Qualified Performing Artist deductions and other work related deductions. I assume that that makes me a larger target for audit and I dread that like everyone does. So I don’t want to become a larger target!

Thanks everyone!!
c.e.h.
Thanks guys for all the info…heres the thing. I DID include the income in question on my schedule C-EZ. It was added to line 1 (Gross receipts) with the totals from the 1099misc i did enter. And so it was included in the net profit on my schedule SE when determining my self employment tax. I did not add it to line 21 of my 1040.

So the question stands, knowing this. Since I did pay taxes on it, do I still need to amend my taxes putting that income with the 1099misc even though the totals/bottom line would not change?

You guys are great! Thank you!
Thanks JVTM! That would be very helpful!!

Yes we are in the same boat. Everything was claimed in the right place, just less the 1099 form itself. Anyone else have any input?