My wife does interior design, and she is going to school for it. She stopped working May of last year. She only had one client last year, mainly because she started just less than halfway through the year and some people are leary about hiring a student. What are the specifications for self employment.? I am asking this because from what I understand if shs can claim self employment on taxes, then she claim her mileage to school as a business expense?
2007-01-24 03:58:10 · 6 answers · asked by Vince 2 in Business & Finance ➔ Taxes ➔ United States
She has to make more then $720(?), and she CANNOT claim her mileage. She can claim her tuition and her books (if she is required to buy them from the school). also her "client" needs to submit a 1099 if she isn't incorporated.
2007-01-24 04:12:34 · answer #1 · answered by Nicole E 4 · 0⤊ 0⤋
Assuming that she wasn't working as an employee for the client, with taxes taken out, then she was self-employed and would file a schedule C or probably C-EZ. She'd also file a schedule SE to calculate her self-employment tax if her net was over around $400.
Don't count on that mileage deduction. If the schooling is to enhance her skills, and she's already been working in the field before this schooling, then you'd probably be able to take it, but if the schooling is to qualify her for a new trade or business, then the education expenses and associated mileage wouldn't be deductible as a business expense, although she could probably get the Hope or Lifetime Learning credit for her tuition. From your question, it's hard to tell which it is.
2007-01-24 12:13:13 · answer #2 · answered by Judy 7 · 0⤊ 1⤋
She can include a Schedule C-EZ in your joint tax return. This form covers a "sole proprietor" in business for herself. On the form claim the mileage related to the business revenue, which is the money she received from the one "client." Just make up something like, "Jane Doe dba YourDesign Works." Anything.
Use a tax software package like TaxCut or TurboTax, just the basic product IMHO. This will guide you through the process. It's not difficult. The bottom line from Schedule C fits neatly into the first page of your joint Form 1040. There's a line right there.
The other answer is not completely correct. The business can show a negative number, which reduces your "adjusted gross income." He refers to the idea the business cannot show continuous loss for many years. However, a "loss" in one year is not something to worry about. Just have the receipts for most of the expenses directly related to the "sales."
2007-01-24 12:14:02 · answer #3 · answered by Blu 3 · 0⤊ 0⤋
To a self-employed job- yes. Mileage to school - no. If she earned self-employment income that goes in Sched C. forget the school stuff.
2007-01-24 13:34:32 · answer #4 · answered by vegas_iwish 5 · 0⤊ 0⤋
If she's self-employed, I think she has to file a special tax return for her business. Also, the business must be making money .
2007-01-24 12:03:23 · answer #5 · answered by Yellow Tail 3 · 0⤊ 1⤋
If you earned money for services, and that money was not being paid to you by your employer, you are self employed.
2007-01-24 12:01:37 · answer #6 · answered by jseah114 6 · 1⤊ 0⤋