I echo what Keith said.
The question of “when” you earned the income is really only a matter of “what tax year” it was earned.
At the end of the year, you basically add up all of your income and expenses FOR THAT YEAR and prepare your taxes accordingly.
If you get a 1099, that means it’s sent to you AND the IRS.
If you want to know what the IRS knows, go to the IRS website and request a copy of your “transcript” for the prior year. It identifies all of the income that companies you’ve worked with throughout the year have told them about.
If you fail to file a return, they’ll prepare one for you using the info they have on-hand.
For those of us with businesses, the IRS knows nothing about our expenses. So it’s incumbant upon us to file returns that list our expenses and deductions to offset our income.
From a tax standpoint, the goal of a small business owner is to get to the point where we owe zero taxes on our net income. There’s always the Self-Employment Tax (FICA, FUTA, etc). But having a zero or negative tax liability on our income is the goal. That means we need to be cognizant of what sorts of expenses we can incur that represent legitimate business expenses that can be deducted, especially those that have a statutory deduction that likely exceeds our actual costs, like the cost per mile for business use of our vehicle.
If your side income isn’t very much (ie, not your primary source of income) then you can probably use TurboTax for your tax prep.
But in general, having a legitimate “side business” lets you deduct various expenses that you cannot deduct otherwise with a regular W2 job.
Also, for those of us who work in the computer field, particularly as programmers and consultants, we can enjoy a LOT of deductions for services (internet, web hosting, cloud storage, etc) and stuff (hardware, software, etc.) that others can’t because they’re a “usual and customary” part of what we work with in our field. That doesn’t mean 100% of everything, but most if not all of a lot of things — some of which software like TurboTax doesn’t understand or know about.
For instance, your cell phone probably has a data plan associated with it. If you use it to access the internet while you’re working away from your house, then you can deduct part of your phone and data plan as business expenses.
While I have cable internet as my primary source of connectivity, I also have a phone with a data plan, a data hot-spot, and an iPad with a 4G data plan, all as alternate ways to access the internet. I’m not a gamer or just someone who loves watching videos; rather, as a programmer, access to the internet is an essential part of my ability to conduct my work today. I can deduct most if not all of these expenses.
Someone with a regular W2 job and the same stuff would not be able to deduct any of it, as it would be considered an “unreimbursed business expense” by your employer.
That said, the new tax giveaway to the rich that Congress approved and that took effect last year messed with things to the extent that if you make under 6-figures, you cannot deduct as much as you could in prior years. If you make over $150k or so, you can deduct a larger percentage of your expenses. (My taxes went up $100/mo last year over prior years for the same general business practices.)
There are plenty of books around that are worth reading that relate to the tax benefits of having a home-based business — but be sure to get one that covers the latest tax laws. If you can figure out how to build a website in the cloud, you can figure out basic tax stuff. It’s not all that complex.
That said, I’d highly recommend visiting a tax professional who specializes in small and home-based businesses. A corporate CPA isn’t going to be as insighful for our needs as someone who works with “little guys” — and trust me, there are plenty of us “little guys”!
-David Schwartz
> On May 29, 2019, at 6:11 AM, Michael <bmike1@gmail.com> wrote:
>
> I might get a 1099 job. How does the company report my earnings to the government? Is it reported yearly or monthly or is it something I have to do? Meaning the feds have no idea when you made it just that you made it..... when do they know it though?
>
> --
> :-)~MIKE~(-:
> ---------------------------------------------------
> PLUG-discuss mailing list - PLUG-discuss@lists.phxlinux.org
> To subscribe, unsubscribe, or to change your mail settings:
> https://lists.phxlinux.org/mailman/listinfo/plug-discuss
---------------------------------------------------
PLUG-discuss mailing list -
PLUG-discuss@lists.phxlinux.org
To subscribe, unsubscribe, or to change your mail settings:
https://lists.phxlinux.org/mailman/listinfo/plug-discuss
(text/plain)