Business Income - Schedule C

Business Income - Schedule C

Who should report business income?

Tax advantages of a small, unincorporated business

Hobby loss rules

Who should report business income

Report business income on Schedule C if

You perform free-lance work

You sell goods but are not in a partnership or corporation

Avon, Amway etc.

You receive a 1099-MISC for work done as an independent contractor

Some employers send out 1099-MISCs when the worker should be classified as an employee and therefore receive a W-2

Complain to the employer or to the IRS, but if you receive a 1099-MISC and don't report it, the IRS will be contacting you

Tax advantages of a small, unincorporated business

Ability to try out a business idea in a quick manner

Ability to gain business income from a hobby like computer programming

Ability to deduct business expenses (even losses) from your other income

Hobby loss rules

If your business loses money in more than three of five years the IRS may say that your enterprise is a hobby

Expenses related to income-producing hobbies

In this case expenses that exceed revenues become deductible as a miscellaneous expense, subject to 2 percent of AGI floor, on Schedule A