Do I only get taxed if I make profit?
2007-10-20 04:58:00 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
As a sole proprietor your business activities are reported on a Schedule C from which the results are transferred to your individual income tax return on line 12 as a income or a loss. If you have other income and you show a loss on line 12 that will reduce your taxable income by the amount of the loss. If your income from business on line 12 is greater than $400 you are subject to Self Employment tax which is assessed at a rate of 15.3% (however you get a adjustment for one half on line 28). You would be wise to report revenue from business activity on a Schedule C even if you have no profit or a loss.
2007-10-20 05:15:12 · answer #1 · answered by ? 6 · 0⤊ 0⤋
Yes, you only get taxed on your self-employment activity if it makes a profit.
Also, if you make a loss on your self-employment activity, that loss is used to offset your other income. So a loss has some benefit for a self-employed person with other income.
Lastly, if your net income from self-employment is $433 or less, you do not pay Social Security or Medicare taxes. However you will include the net income with your other income on your tax return.
2007-10-20 06:31:55 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
You are taxed on your net income - expenses on your schedule C are subtracted from your gross income before any taxes are calculated.
2007-10-20 05:03:10 · answer #3 · answered by Judy 7 · 0⤊ 0⤋