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111 votes
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The USA "self-employment tax dodge" mystery

You pretty much have it straight. In the first case, for 2017, She would have to pay 12.4% (social security) on 127,200 of salary and 2.9% (medicare) on the full amount. That would be $15,772, and $...
Pete B.'s user avatar
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53 votes
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Do I need to pay taxes as a food delivery worker if I make less than $12,000 in a year?

Because you're self-employed and make more than $400, you'll need to file a federal return. If you make less than the standard deduction ($12,400 for a single person in 2020), you won't owe any income ...
Craig W's user avatar
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51 votes
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What US tax laws apply to a 13 year old game developer?

After doing a little research, I was actually surprised to find many internet resources on this topic (including sites from Intuit) gave entirely incorrect information. The information that follows is ...
BrianH's user avatar
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44 votes
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Why is this tutor agency startup so highly valued by investors?

There is an interesting phenomenon in the world of eCommerce that the existence of an established online marketplace for a specific family of goods or services makes it very difficult to find clients ...
Philipp's user avatar
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41 votes
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In USA, can I set up a one-person corporation and pay myself mainly through dividends?

Is this possible (for a single-person corporation) in United States? Yes, but if the salary you pay yourself is too low then you risk getting flagged for not providing yourself with reasonable ...
Nosrac's user avatar
  • 6,839
32 votes

15% tax on $7.5k earnings. Is that right?

The 15% you're seeing is self-employment tax. The standard deduction still applies, and you are not paying any federal income tax. Self-employment tax pays for social security and medicare, normally ...
Hart CO's user avatar
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32 votes
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Can I send back money I "loaned" from my personal account to business account?

You won’t have to pay tax on it, but if HMRC asks about it (unlikely but possible) you will have to explain it. But saying “I was repaying myself the money I put in to start the business”, together ...
Mike Scott's user avatar
  • 23.5k
24 votes

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

Single proprietorships, even if they are incorporated as a limited-liability corporation (LLC), and especially those in which the proprietor is the sole employee, are usually treated as pass-through ...
Dilip Sarwate's user avatar
21 votes
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How much should a hobby business make to be worth the effort for taxes?

So long as you don't hate what you are doing, I'd say the price is somewhere in the neighborhood of $100-200 year of income to be worth the bookkeeping. I'd only say more than that if you have a ...
BrianH's user avatar
  • 11.7k
20 votes

High self-employment rate projected by TurboTax

You pay 15.3% for your payroll taxes. 6.2 for FICA, 1.45 for Medicare -- multiplied by two because self-employed individuals are paying both employee and employer portions.
NL - Apologize to Monica's user avatar
19 votes

Do I need to pay medicare/social security as full-time employee but with a business on the side of which I'm the sole owner/employee?

(Your situation is not unique: lots of people have part-time "sole proprietorship" side jobs.) Any revenue from your mobile app business is... income. Therefore you have to pay tax on it. Even if ...
RonJohn's user avatar
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18 votes
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High self-employment rate projected by TurboTax

That's a total tax amount of $425 - more than 37% of the amount received! Taxes on self-employment income is usually pretty high since you are responsible to pay both the employer taxes and employee ...
Nosrac's user avatar
  • 6,839
18 votes
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Taxes mileage deduction for delivery worker and methods of proof

For deducting vehicle business expenses from your business income, you have two options: Deducting the actual expenses for your vehicle (depreciation, fuel, maintenance, etc.) Taking the standard ...
Ben Miller's user avatar
  • 116k
16 votes

US: how to prove business expenses?

My internet fees should count as business expense and be deducted from gross Says who? Since I also use internet for entertainment etc, how can I prove myself when I say 50% of the internet fee ...
littleadv's user avatar
  • 177k
16 votes

Are miles driven for business deductible expenses if the travel expenses are reimbursed?

First I wondered whether this is considered taxable income to me. The linked question refers to the IRS Pub. 463, specifically you should look at this section. It says this: If you received a ...
littleadv's user avatar
  • 177k
14 votes

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

Sometimes an example is worth a thousand words. Let's compare a Sole Proprietorship to an S-Corporation that profits $100K a year: As a Sole Proprietor with $100K in income (after expenses): Self ...
TTT's user avatar
  • 47.2k
13 votes

Employer forgot to file 1099 for me, when do I file my taxes?

My question is, can the company send me a Copy B of 1099-NEC at the same time they send copy A with their tax amendment so I can immediately file it before the deadline? If I do that, will it create ...
Ben Miller's user avatar
  • 116k
13 votes

When to claim check dated in one year but received the next

When you deposited the check is not important. Because if that was true and you knew the tax rates were going down significantly in January you could hold all your December checks and maybe even your ...
mhoran_psprep's user avatar
12 votes

15% tax on $7.5k earnings. Is that right?

Self-employment tax is basically you covering the medicare and social security "tax" that would have been covered by your employer if you were on their payroll. The standard deduction is for income ...
D Stanley's user avatar
  • 137k
11 votes
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US Tax Form 1040EZ: Do I enter ALL income or ONLY income specified in W-2 forms?

Yes, you need to include income from your freelance work on your tax return. In the eyes of the IRS, this is self-employment income from your sole-proprietorship business. The reason you don't see ...
Ben Miller's user avatar
  • 116k
11 votes

Are miles driven for business deductible expenses if the travel expenses are reimbursed?

If you don't report the money you received because it was a reimbursement for an expense, then you are essentially deducting the expense from the reimbursement to get no net taxable income. You can't ...
Acccumulation's user avatar
10 votes

How much should a hobby business make to be worth the effort for taxes?

I had a chat with a coworker whose spouse also teaches music lessons. One interesting insight was that after raising prices, the children were much more likely to come prepared because the parents ...
NL - Apologize to Monica's user avatar
10 votes

Is it true trips for YouTubers are tax deductible, while investment research costs are not?

I think you are confused about what the IRS considers a business or not. The IRS has written on this issue regarding a person who makes investments for a living with Topic No. 429 Traders in ...
Morrison Chang's user avatar
10 votes
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Do freelancers who receive a W2 qualify for home office tax writeoffs in the US?

Therefore, the 2-month period where I received W-2 income cannot be included because that technically makes me an employee so no longer self-employed. Is this true? If they are giving you a W-2, and ...
mhoran_psprep's user avatar
9 votes
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In the U.S., can I deduct coffee as an expense if I am a self-employed software developer?

Can i write this off as a tax deduction? No. You're buying coffee. The coffee costs the same whether you use WiFi or not, therefore the WiFi has no attributable business cost. If you were buying ...
Hart CO's user avatar
  • 70.5k
9 votes

Can I send back money I "loaned" from my personal account to business account?

When you give the loan, print a sheet of paper recording it: "I, Gergö Horvath, give a loan of £100 to "Gergö's Children's Entertainment Company". And keep it. And when you return the ...
gnasher729's user avatar
  • 23.3k
9 votes

When to claim check dated in one year but received the next

Quoted from https://www.irs.gov/pub/irs-wd/06-0005.pdf (2006): Generally, we consider checks income to a cash method taxpayer in the year he or she receives them unless constructively received in an ...
Jeorje's user avatar
  • 99
8 votes

Looking to buy a property that's 12-14x my income. How can it be done?

It is your choice to have "insignificant income", and that has consequences. One is that you cannot borrow money to purchase a home independent of your credit score. In order to purchase a home you ...
Pete B.'s user avatar
  • 76.7k
8 votes

Self-employed net income for affordable housing - valid to take from profit/loss?

Yes, self-employment income is the net (income - expenses) from the self-employed activity. Note that "from the self-employed activity" is important here. When you're self-employed, you need to ...
Justin Cave's user avatar
  • 27.3k
8 votes
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Mother wants me to "be a consultant" for her as way to save on income tax

In reality, I do help her every now and then with various bits (specific to her work, e.g.: translation, graphic design, software tutorials) but I would not think of it as consulting... But you are ...
RonJohn's user avatar
  • 50.7k

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