Do I put non-taxable income under General Business Income?

[Nicris]

Hi,

I made $175 in non-taxable business income.  Do I put that under General Business Income?  I have it in now.  I also had expenses that are more than the $175, but the expenses didn't seem to fit the categories of expenses.  So right now I'm seeing $175 of qualified business income.

Is this accurate?

Thank you.

[VolvoGirl]

Why is it non taxable?  Did you get a 1099Misc for it? If you don't see an expense category that fits you can stick it in Other Misc Expense.

[Nicris]

Hi VolvoGirl, It's non taxable because in my state doing website work is non-taxable.  I did not receive a 1099Misc.  So in the Miscellaneous Expenses I would put things like costs of paying for name-creation services and for buying website templates?

[AmeliesUncle]

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@Nicris wrote:

Hi VolvoGirl, It's non taxable because in my state doing website work is non-taxable. 

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Just because it is non-taxable in your State does not mean it is non-taxable on your Federal tax return.  It is still taxable for Federal.

So you need to enter the income, but when going through your STATE return there should be a place to enter an adjustment.

As a side note, are you SURE it is not subject to INCOME tax in your State?  That doesn't really make sense.   It may not be subject to SALES tax, but I can't imagine why it wouldn't be subject to income tax.  So you may want to double check those rules.

[Nicris]

Thank you for the clarification re. federal versus state income tax.

As far as income tax, if it is indeed subject to income tax, then I have done the correct action by putting it down as General Business Income and I would be taxed appropriately, is that correct?

[DawnC]

Here is how to report business income which is self-employment income.  If you report your income in this way, you can deduct your expenses related to that income.  Just use the most appropriate category or miscellaneous expense.   You will owe tax on the NET income.  

The IRS requires that you report all of your income, even if it's less than $600 and you didn't get a tax form for it. Follow these steps to enter your income.  General business income is the correct place for what you described.  

Related Information:

• How do I report income from self-employment?

• Where do I enter my self-employment business expenses?