Self Employed am I a material participant?

[vbyrd7058]

Hi, I am retired and just started a Marketing Research Contracting Service in April 2019.  I did 558 hours of work during the year for 2 companies.  I got a 1099 and am not an employee.  I am not a decision maker and take direction from an employee of the companies.   I have no involvement in the business other than conducting marketing research for them.  For Sch. C purposes am I a material participant or not?  Thanks

[VolvoGirl]

Is that at the end where it asks if your business is At Risk?  If you don't know what it means then probably All your Investment is at Risk (check Box 32a). It means you are using your own money for the business.

And you are 100% participant in your own self employment business.    When your are self employed you are your own business yourself.   It's not asking about the businesses that pay you.

[vbyrd7058]

Thank you.  I was concerned with this question.   Yes I am 100% self employed and get a 1099 from the business that pays me.  

[ColeenD3]

While you only need to meet one of the criteria for material participation, you met at least two.

1. Your participation was substantially all the participation in the activity of all individuals for the tax year, including the participation of individuals who didn’t own any interest in the activity.

2. You participated in the activity for more than 100 hours during the tax year, and you participated at least as much as any other individual (including individuals who didn’t own any interest in the activity) for the year.

3. Pub 925

[vbyrd7058]

My participation in this activity is only a fraction of total marketing research activity... there is a full time position with the company working 40 hours a week 52 weeks a year.  I take direction from this full time employee of the company.

Yes, I participated more than 100 hours but it was not at least as much as others.

Does your answer still hold?

[JohnB5677]

Yes, you do materially participate.  You are self employed.  If no one else works for you then you do 100% of the work and it is definitely more than anyone else.

[vbyrd7058]

Why is your answer so different than the one I got above?

And you are 100% participant in your own self employment business.    When your are self employed you are your own business yourself.   It's not asking about the businesses that pay you.

[VolvoGirl]

All the answers posted say the same thing.  What's different?

[vbyrd7058]

so sorry, misread your direction.  It is asking only about my business and whether I participated.  I am a single sole proprietor (no employees) and who else would be participating if not me? 

Why is there such a huge difference between my taxes between whether or not I materially participated? 

[VolvoGirl]

I don't know why.  Maybe if you don't participate you can't get the new QBI credit or you can't take a loss on schedule C.