I am a self-employed dancer/entertainer that gets paid in cash. When getting hired at the club I do business at, I signed a contract that states I am an independent contractor. I don’t get a paycheck and don’t have an hourly wage. Every day I work, I pay the club a “house fee” to do business there, and tip out 10% of my earnings for the day when I am done working. I have been considering myself an independent contractor since then, but when reading self-employed tax articles and filling out my own information on TurboTax, I am basically being told I am a sole proprietor. Which is correct and is it possible to be both? What is the difference between the two and how will it affect the way I file my taxes?
I’ve attached an image below. All of the bullet points apply to me besides “receive other business income from sales.” And I am not entirely sure what “do 1099 contract work with existing businesses” means. Can someone explain?
Thank you!
If you have not set up a business entity such as a LLC, partnership, or corporation, then sole proprietor and independent contractor are basically the same. Either title will have to report their income and expenses on the Form 1040 Schedule C or Form 1040 Schedule C-EZ. Furthermore, the job titles will not make a difference on your tax return because the income tax and possible self-employment tax is computed on your net income.
Generally, doing work as independent contractor may include receiving a Form 1099-MISC with box 7 checked, or entering into a contract that stipulates that you are not an employee and are responsible for your own expenses and taxes.
As a self-employed individual, you may generate your own income without a third party involvement in determining methods and prices. This would align with receiving other business income from sales.
When there are several occupations (e.g. artist, dancer) then you must file a separate Schedule C or C-EZ to report the income and expenses of each occupation. However, both forms are attached to your Form 1040.