If I get a tax I.d. number, how much do i have to make before filing and If I make nothing do I still need to file?

[VolvoGirl]

You mean to get a EIN for self employment income?  What kind of business do you have set up?  Are you a Partnership or LLC or a single member LLC or  incorporated? Or just a sole proprietor or an independent contractor or freelance?

If you are self employed you file a schedule C in your personal tax return.  Even if you have a loss you can deduct the loss on your tax return.  So you would want to file it.

Some general info.  You will need to keep good records.  You may get a 1099Misc at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small.  You might want to use Quicken or QuickBooks to keep tract of your income and expenses.  

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

[Opus 17]

If you are not in business, you already have a social security number, you don't need any other tax ID number.  If you are not allowed to work in the US (not a citizen, no green card) you can still pay taxes, the IRS just wants their money and doesn't enforce immigration laws.  You would apply for an ITIN (international tax ID number) when you file your first tax return.

If you are in business, you only need an EIN (employer ID number) if you pay other employees.  But, you can obtain an EIN and use it even if you aren't required to have one, it allows you to give the EIN to banks and contractors instead of your personal SSN.  It takes about 20 minutes to get an EIN online from the IRS.

The tax requirements for a small business/sole proprietor/independent contractor are the same whether you have a tax number or use your SSN for business.  @VolvoGirl outlined them above.

[pncrowe31]

Hello, 

I have a group for a high school swim team that raises money for gifts, clothes, and food and such during the team year.  I was going to apply for an EIN for a clothing store % of sales kick back.  We are non-profit, everything that comes in goes back to the team, no-one is paid, it is all voluntary.  Do I need to apply for non-profit status, do i need to apply to be a business?  Help! 

Thanks, 

Paige

[ReneeM7122]

Sole proprietors, LLCs and independent contractors must complete a tax return once income reaches $400 or more.  If you have zero income, then you don't have to file a return.

@jmkelley72

[usabarbara]

I was given an EIN when I received money in a trust fund. The trust fund earned no money last year, does that mean I don’t need to file? @ReneeM7122 

[usabarbara]

@ReneeM7122 

[JamesG1]

@usabarbara

I think you are saying that the EIN refers to a trust account.  Who oversees the investments and prepares tax returns for the trust?  Did you receive any distribution of any kind in 2020?  Who would make such a decision?  Please clarify.

There may be a distribution even if there is no income for the year.

If there was a distribution, you may see a K-1 reporting the nature of the distribution.

[Scott L]

So I got an LLC in Jan 2020 and an EIN.  Due to Covid, the business had zero expenses and zero income.  So I do not have to file taxes?  How does the IRS or my state know that I made and spent zero?

[ToddL99]

If this is a single-member LLC, you do not have to report it on your personal federal tax return - when there isn't any income or expenses, there isn't anything to report (this is the equivalent of telling the IRS and the state that "you made and spent zero").

If this is not a single-member LLC, you don't have to file a federal business return - if no income, deductions or credits are being reported or claimed, there is no requirement to file a federal return

Some states, however,  require LLCs to file a business return (partnership or corporate) whether or not you have any income or expenses. For example, CA and NY require you to file a business return just because of being registered (formed) in their state.

[usabarbara]

@JamesG1 Thank you for your reply. The trust is in a bank. The funds are not invested. There has been no distribution. I would be the person who would be able to take out money. I was left the trust after a family member passed. The lawyer gave me the sheet with the EIN and said that  would probably have to file a tax return. That is as much as I know. 😬

[JamesG1]

@usabarbara

Here are some thoughts.

It would be helpful to know whether a tax return has been filed and obtain a copy.  Maybe the lawyer wants a hefty fee for answering questions?

It would be helpful to know the address on file with the IRS.  Who will be notified if there is a problem?

At this point in time, I do not wish calling the IRS on anyone.  Maybe you can right the IRS a letter at the address below and get some answers.

IRS webpage states:

For answers to questions about charities and other non-profit organizations, call IRS Tax Exempt and Government Entities Customer Account Services at (877) 829-5500 (toll-free number).

If you prefer to write, use the address below.

For answers to employment tax questions, call the Business and Specialty Tax Line at (800) 829-4933 (toll-free).

To obtain a determination letter applying to a specific set of facts, or to send copies of amended documents write or fax to:

Internal Revenue Service
Exempt Organizations Determinations
Room 6403
P.O. Box 2508
Cincinnati, OH 45201
Fax: (855) 204-6184