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clynch894
Level 2

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

I have not been provided a Schedule 1099-MISC because the amount is too small.
1 Best answer

Accepted Solutions
GiseleD
Expert Alumni

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

There is no minimum amount of profit, as it is possible to report a net loss from a self-employment activity. The $400 to which you are referring only concerns the self-employment tax threshold. It doesn’t affect the nature of the business activity itself.

For tax year 2019 and later, the IRS has phased out the Schedule C-EZ. Only the Schedule C remains.

 

According to IRS.gov, you should use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

  • Your primary purpose for engaging in the activity is for income or profit.
  • You are involved in the activity with continuity and regularity. 

Even if your income from this particular payor was low, it is possible that your involvement was continuous and regular—especially if this income was received close to the end of the tax year and you continue to perform this activity into the current year. The payor doesn’t need to be the same—the continuous and regular nature of this activity can still be met if you perform the activity for other payors going forward.

 

Without knowing all the specifics, I can only recommended that you report this activity on Schedule C. The upside to this is that you can deduct all ordinary and necessary business expenses and end up with a net loss. This net loss can then offset other income you may have for the tax year—thus lowering your tax burden.

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7 Replies
Bsch4477
Level 15

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement.  Report the income on Sch C. 

VolvoGirl
Level 15

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

They don't have to send  you a 1099Misc for less than $600.  You need to file $400 or more on schedule C/C-EZ or less than $400 as Other Income.    You don't need to get an actual 1099Misc form to report self employment.

 

How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

clynch894
Level 2

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

To clarify, is the amount less than $400 documented as "other income" on the 1040 (maybe added to the amount on Line 6?), rather than listed on a Schedule C-EZ?  If I'm reporting it on Schedule C-EZ, it's just filing the schedule you said I don't have to file.   Thank you.  

clynch894
Level 2

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

Yes, I have to file a return due to other income.  But where do I document the self-employment amount less than $400? If it's on Schedule C, I'm documenting income on a form I supposedly don't need to file.  Let me also point out that TurboTax charges me $50 to include that form (preparing it as a business return), and this is more than my self-employment income for last year.  Thank you.    

GiseleD
Expert Alumni

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

There is no minimum amount of profit, as it is possible to report a net loss from a self-employment activity. The $400 to which you are referring only concerns the self-employment tax threshold. It doesn’t affect the nature of the business activity itself.

For tax year 2019 and later, the IRS has phased out the Schedule C-EZ. Only the Schedule C remains.

 

According to IRS.gov, you should use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

  • Your primary purpose for engaging in the activity is for income or profit.
  • You are involved in the activity with continuity and regularity. 

Even if your income from this particular payor was low, it is possible that your involvement was continuous and regular—especially if this income was received close to the end of the tax year and you continue to perform this activity into the current year. The payor doesn’t need to be the same—the continuous and regular nature of this activity can still be met if you perform the activity for other payors going forward.

 

Without knowing all the specifics, I can only recommended that you report this activity on Schedule C. The upside to this is that you can deduct all ordinary and necessary business expenses and end up with a net loss. This net loss can then offset other income you may have for the tax year—thus lowering your tax burden.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

AmeliesUncle
Level 12

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

If it is a business, it goes on Schedule C as a business, regardless of the amount (even if it is under $400).

If it is a "hobby", it it listed as "other income".

clynch894
Level 2

Is there a minimum amount of profit below which I don't need to file a business tax form (C-EZ)? If so, do I need to claim the profit elsewhere?

Thank you.  "The $400 to which you are referring only concerns the self-employment tax threshold" (not whether or not the amount needs to be reported).  That clarifies what I needed to know, including the confusing IRS guidance.  I note, though, that TurboTax charges $50 to upgrade to a business return from an individual return, and this year that is a larger amount than I will be claiming on a Schedule C.  If this is deductible, TurboTax has missed this deduction for me in previous years, costing me a substantial amount.        

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