If you proctor the ACT/SAT and work for the school already, do you file those earnings as a sole proprietorship & pay self employment tax? Seems wrong to me!

[Marge110]

My husband proctored 6 sessions, for almost $900. Even after deducting his travel expenses, we ended up paying a $119 self employment tax. This is only federal tax we owe. Am I doing something wrong?

[AnnaB]

No, it sounds like you are handling it properly.  While the job may have been at the same employer location, it was not the employed position, but instead treated as an independent contractor.  There was no Social Security, Medicare or income tax withheld.

The self-employment tax is the employee and employer portion of Social Security and Medicare.  Just as the employer would, you receive a deduction for the employer half of these expenses.

The self-employment tax is 15.3% and the income would also be subject to income tax.  The amount subject to these taxes is the net profit after expenses.

[lsaechao14]

Hi there,

I have a related question. I proctor a Pre SAT test and received payment for it in 2019. However, I did not receive any type of statement from ETS Honoria, which is the payment system that the SAT uses. I'm not sure if I need to wait for the statement or not, and I got less than $200 for it. Do I need to wait for the statement to file my taxes? Or do I need to claim this amount at all? I have the other W2s that I'm filing with just not the one for the SAT payment. Please help. 

Thank you in advance. 

Linda

[DianeC958]

No you do not have to wait for a statement for the income, but you are suppose to include the income on your tax return.

You probably will not receive a 1099-Misc for the income since it is less than $600 (which if you earn over that amount the company is required to file a 1099-Misc).

If the amount is less than $400 then you do not have to pay Social Security and Medicare tax.

You can add the amount as Less Common Income>Miscellaneous Income>Other Reportable Income.

@Isaechao14

[rcgilbert]

How do you treat this Honoraria income on your state return?  I added it as other Reportable Income but Turbo Tax State (PA) does not know how to handle it.

[SusanY1]

Can you share with us the specific error or question that the PA return is asking so that we can help with troubleshooting.  You may simply need to further define or allocate the funds, but we need a little more information to be able to better assist.  

@rcgilbert