Any Tax Experts Out There?

consumerkitty

consumerkitty

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After sitting on hold with the IRS for an hour and not getting someone to answer a question, I decided to ask here.

I designed a website for someone and made $150. It was a one time thing and I don't have a web design business. Do I still have to file a schedule C plus pay self employment tax? Also do I need to get a 1099 from the person who paid me for the website?
 
gayef

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Companies who pay independant contractors for their services are not legally obligated to send them a 1099 unless they paid them over $600 for the year. However, they did pay you $150 and yes, you are supposed to report it. You probably had expenses against it to lessen the self-employment tax due on it.

While I am in no way, shape of form telling you what decision to make, the fact is that unless the company sends you a 1099, the IRS doesn't know you made that money. Food for thought - you might want to keep it that way.
 
momofmany

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Originally Posted by gayef

While I am in no way, shape of form telling you what decision to make, the fact is that unless the company sends you a 1099, the IRS doesn't know you made that money. Food for thought - you might want to keep it that way.
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And if I'm not mistaken, if you run your own business, you may need to file your business name with your state. If you file a schedule C and report income from your own company, the state may question it when you send them a copy of that return. I know I had to set up an account with the state of Missouri when I operated there.
 
gailc

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I have my own business and while my company name is not registered with the state I do have a sales permit and have to collect tax on eligible transactions. This could be applicable?

As to the 1099 was this a business that you designed the website for?? I only receive one 1099 from one business that I work for that has two locations.

If you would like my husband is a CPA and I can ask him your question.
 
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consumerkitty

consumerkitty

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Originally Posted by GailC

If you would like my husband is a CPA and I can ask him your question.
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Thanks Gail. I would be interested to know what a CPA would say about this.

Originally Posted by gayef

Companies who pay independant contractors for their services are not legally obligated to send them a 1099 unless they paid them over $600 for the year. However, they did pay you $150 and yes, you are supposed to report it. You probably had expenses against it to lessen the self-employment tax due on it.

While I am in no way, shape of form telling you what decision to make, the fact is that unless the company sends you a 1099, the IRS doesn't know you made that money. Food for thought - you might want to keep it that way.
Click to expand...
I gave a receipt to the person who paid me and she is going to deduct it from her taxes, so won't the IRS will know about it? Do I have to pay self employment tax on an amount less than $400?

Originally Posted by Momofmany

And if I'm not mistaken, if you run your own business, you may need to file your business name with your state. If you file a schedule C and report income from your own company, the state may question it when you send them a copy of that return. I know I had to set up an account with the state of Missouri when I operated there.
Click to expand...
If it's just a one time thing and it isn't really a business, do I still have to register with the state?
 
gayef

gayef

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Originally Posted by ConsumerKitty

... I gave a receipt to the person who paid me and she is going to deduct it from her taxes, so won't the IRS will know about it? Do I have to pay self employment tax on an amount less than $400?
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According to the IRS (http://www.irs.gov/businesses/small/...=98846,00.html)

you do not have to pay Self Employment Tax on any amount $400 or less.

If it's just a one time thing and it isn't really a business, do I still have to register with the state?
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At the link provided above, it defines a self-employed person. Your State's rules may vary and it is best to check with them. For a one time thing and not your regular, normal daily small business that you run to earn an income, I'd pocket the money, be grateful for it and leave it be at that.
 
momofmany

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Originally Posted by gayef

For a one time thing and not your regular, normal daily small business that you run to earn an income, I'd pocket the money, be grateful for it and leave it be at that.
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I totally agree with this. I obtained both a federal and state ID for my business (required in the state that I lived in at that time) and I can tell you, the red tape you have to go thru at a state level is horrible. I recall having to make 2 trips up to the government offices in the city, which were only open M-F 9-5 and I had to take off my normal job just to work thru the maze of paperwork.
 
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