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Started business late in year - Schedule C questions

Scenario: I was newly self-employed beginning November 2023. I purchased cases, tools, and supplies in December for technical contract labor (so definitely not capital). I was paid a small sum WELL below the 1099 threshold for one odd job in December, so there will be no 1099 from that client. I am already busy with 2024 work however, but this gear was bought last year. So I have two questions for the community:

1. Since I earned a de minimis amount of cash in this role in 2023 and I won't receive a 1099, how do I report the tiny income somehow on my taxes and claim the December 2023 expenses? Or...

2. Do I report zero income on Schedule C and only report expenses? That seems weird, but if it's okay to do that I will, or...

3. Can I claim the December 2023 expenses toward my 2024 business? I'd hate to miss the opportunity to apply these expenses *somewhere*.

What's the generally-accepted, legal and proper way to settle this little wrinkle?

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3 Replies

Started business late in year - Schedule C questions

It makes no difference how small a sum you were paid in 2023 nor whether or not you will receive a 1099. You should report your income and expenses on your 2023 return (Schedule C) if you were open for business and operating in the 2023 tax year.

Started business late in year - Schedule C questions

Great! I didn’t know I could report income without a 1099 to back it up. I’m new to all this, so thank you.

Started business late in year - Schedule C questions

You can just enter it as Other self employment income or as Cash or General income. You don't need to get a 1099NEC or 1099K. Even if you did you can enter all your income as Cash. Only the total goes to schedule C. You should be entering the income from your own records.

 

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can enter Self Employment Income into Online Deluxe but if you have any expenses you will have to upgrade to Premium version. Or any of the Desktop programs. But you will get the most help in the Home & Business version.


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


Where to enter business expenses
https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-my-self-employment-busine...

 

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.

 

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center


Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf


Turbo Tax Self Employed Tax Hub
https://turbotax.intuit.com/personal-taxes/self-employment-taxes


Turbo Tax Self Employment info
https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

 

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