Self-Employed Tax Tips & Summer Jobs

Self-Employed Stocksy_txp6268419bgPV100_Medium_583065

Ah, summer – the time of year when young adults become entrepreneurs. Whether it’s a summer job or a part-time gig, by the time high school and college roll around, many young adults can be considered self-employed. If that’s you or someone you know, here are a few helpful things to know to help you navigate your tax situation.

Know if you’re self-employed. If your income is from a business or service, for example, working as an independent contractor in sales or from babysitting, housecleaning, gardening, etc., that income is self-employment income that you should report on Schedule C or Schedule C-EZ, Profit or Loss from Business. You may also receive nice tax deductions from your business expenses in connection with that income, such as supplies, auto mileage, and cost of goods sold. If the net income after subtracting those expenses exceeds $400, Schedule SE for self-employment taxes will be included as a part of your personal income tax return on Form 1040. There’s no need to know what forms to use. TurboTax will figure it out for you based on your answers to simple questions.

Withholding and estimated taxes. If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated taxes directly to the IRS on set dates during the year.

All income must be reported. Although you can earn a certain amount of income each year without having to pay taxes or file a tax return, if you are required to file a tax return, all income you receive from any source should be reported on your tax return. That includes income from side jobs, self-employment, barter exchanges, and any sort of fellowship for which you perform services.

Barter income. Sometimes you aren’t paid in cash, and instead you receive services or goods in exchange for your work. That’s called bartering, and you must report the fair market value of the goods and services you receive. For example, if you spend the summer tutoring your neighbors’ children and you receive a credit for the restaurant  they own or a bicycle from the bicycle shop they own, that’s income to you.

ROTC pay. If you are in ROTC, you might receive active duty pay for summer advanced camp. That income is taxable to you, though a subsistence allowance you get while in advanced training is not taxable.

Filing a tax return. Even if you can be claimed as a dependent on someone’s tax return, you’ll still need to file a tax return if your income exceeds $6,350 for single taxpayers in 2017, or if your self-employment income is $400 or more. Even if you aren’t required to file a tax return, you’ll still want to file if income taxes have been withheld from your paycheck since you may get that money back.

Don’t worry about knowing these tax rules and how to claim self-employment income. TurboTax asks you simple questions about you and helps you easily file your taxes and gives you the tax deductions and credits you deserve based on answers to your questions. You can also use QuickBooks Self-Employed to track your business income and expenses, mileage, capture receipts and estimate your quarterly taxes year-round, and your information can be transferred directly to TurboTax Self-Employed, making tax filing effortless.

Comments (6) Leave your comment

  1. This introduction should have mentioned the low income tax credit as a clear reason to file even if no income tax must be paid.

  2. I work for 2 gig employment companies. Ridesharing and food delivery that are 1099 companies in addition 5 different on-call security companies which all are W-2 employers. Auto miles, maintenance, wear & tear is heavily used and needed for all to be employed as well as cell phone necessities. How does one destinctly separate and yet use and or combine my multiple expense usage for tax purposes. Need help ASAP.

  3. I filed with yall last year and was spouse to get a refound around 2,200-2,400$ never got nothing but a letter on back taxes.what happend to the 2,000&something did it go thawerd the back taxe our what? I filed this year and havnt heard nothing with a taxe repersenteative .i got a son that hast got nothing but i-o,! I only make 1,200 to 1,800 those years. I started my on buisness this year, and this ant straighted out yet. I need dessprent help with all this if the other lady didnt do nothing. Thank You, Jonathan Gokden

Leave a Reply