Today TaxMama hears from Michelle in MN who wants to start out right. “If I were to earn summer income of $900 or less through casual labor, online surveys, mystery shopping, and garage/eBay sales, how should I go about reporting all this stuff? Would I have to establish myself as a business in order to do all this miscellaneous work even if some jobs don’t add up to more than $100? “
Well, Michelle,
You’re going to have a fun summer trying out all those adventures and getting paid for them. I used to spend my summers baby-sitting, selling Time-Life Books, being a candy girl and whatever else I could string together, too. Those are good memories.
Will you have to register as a business for all those little joblets? Not really. Not if the whole thing isn’t really going to add up to $1,000 or so. Even if you also do work over the winter holidays and pick up another few hundred dollars.
But, you will have to track the income and pay taxes on the profits. You’ll use Schedule C to report the income.
https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
And you can deduct your out-of-pocket costs. Things like part of your phone bill and Internet (if you pay it yourself), supplies, your mileage (if you drive) or auto costs. If you don’t drive, but get around by bus, subway, train…those transportation costs or passes will be deductible.
Don’t forget the cost or value of the stuff you sell. Even if your parents have told you that you could sell off stuff from around the house, those things cost money. Find out their cost to your or your parents, or current fair market value (whichever is lower) and reduce your eBay profits by those amounts.
You may still end up with a small profit. You won’t owe any income tax. But you will find yourself paying a small amount into Social Security via your Self-Employment taxes of 15.3%.
https://www.irs.gov/pub/irs-pdf/f1040sse.pdf
You can learn more about all this in IRS Publication 334, for Small Businesses.
https://www.irs.gov/publications/p334/index.html
Or of course, you can invest in a copy of Small Business Taxes Made Easy – which is a deductible cost. Who knows, once you read it, you might decide you want to pick up extra money helping your friends do tax returns!
And remember, you’ll find answers to lots of questions, about your teen businesses and other tax information, free. Where? At TaxMama.com
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- Schedule C :: Profit and Loss for Small Business
- Schedule SE :: Self Employment Taxes
- IRS Publication 334 :: Information for Small Businesses
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