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Returning Member
posted Jun 4, 2023 12:57:25 AM

Is hairstylist a Qualified Business Income?

A sister is a hairstylist. She doesn't own her own salon yet, but does work at her apartment or goes to clients places. She gets paid with W-2's and 1099 NEC. Would this be a Qualified Business Income? 

 

Also, she does work at her apartment where she pays rent. Can she include this as a home office space?

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3 Replies
Level 15
Jun 4, 2023 1:56:41 AM

w-2 doesn't qualify. income from self-employment including 1099-NEC does. assuming she has not created a tax entity apart from herself such as an S-Corp (ie is she operates as either a single member LLC that has not elected corporate taxation or has not formed an LLC) she would file a schedule C.

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the rules  to be eeligible to take a home office deduction are as follows

To claim the deduction, a taxpayer must use part of their home for one of the following:

  • Exclusively and regularly as a principal place of business for a trade or business
  • Exclusively and regularly as a place where patients, clients or customers are met in the normal course of a trade or business

 

there are two options if she qualifies for the HO deduction actual expenses based on square footage that meets one of the above test to the total square footage of her apartment or the safe harbor rule which is $5(2022) per square foot (maximum 300 square feet) used for the home office.  Note that if she uses that space as part of her w-2 employment it may disqualify her from taking the HO deduction 

 

 

Level 15
Jun 4, 2023 1:58:29 AM

@grayjaime   why are you asking about both a hair stylist and an actor?

Returning Member
Jun 4, 2023 6:53:48 PM

Hello Mike9241, 

 

Thank you for your response. I’m helping out a couple family members with their taxes and they have different jobs so I put it as 2 different posts so it would get mixed up. I have the same questions for each one. 

Thank you.