went from employed to self employed...how to complete taxes & get maximum deductions

[biggxj]

Last year (2024) I went from being employed to unemployed, to self employed.  I'm not sure how to complete my taxes so that I can take advantage of the self employment tax portion.  I know that there are benefits to being self employed, but for a quarter of the year I was employed, received regular paychecks, even some severance.  How do I incorporate all of that, then transition to being self employed and take advantage of those benefits, tax deductions, etc.?

[Vanessa A]

The easiest thing to do is start with TurboTax Home and Business download version or TurboTax Premium Online (download you can see forms as you go, online, you cannot) and then walk through and answer ALL of the questions. 

You will be able to enter your W-2 income, and then go to the Self-Employment section where you will enter your income and expenses.  

The transition does not make a big difference on HOW to do your taxes in the way that it is ALL still reported on one return using different forms.  But, as you walk through and answer the questions, the forms will be generated.   

Self-Employment tax is something you pay, not really a benefit.  You do get a deduction from income for half of what you pay, but you are still paying 15.3% on your earnings from self-employment. 

 

Self Employment Taxes

[biggxj]

Alright.  I have basically already completed the majority of my return and walked through the entire process as "employed", so all my income and deductions have been entered for that "portion".  I will go back and revisit the self employment section I guess now, and walk through the questions one by one.  

For years I have had a side hobby/business that some years has made money, other years lost money, but regardless I created an LLC for when I started it in 2005.  When I lost my "employed" job at the end of March, I was unable to find another job in that field...can I consider myself "self employed" with my LLC at the point where I lost my "employed" job then?  I have already entered all the income and expenses for the LLC (via a schedule C I believe)...but it wasn't really under the "self employed" section.  
At the end of the year I purchased a franchise and officially became "self employed" with that venture, and again I created another LLC for the franchise business.  I realize I will have to go through and enter those expenses and whatnot for that as a separate business, but am really wondering if I can claim that I was self employed from the point of losing my "employed" job at the end of March 2024.

[DianeW777]

Yes, you can consider your income as self employment on Schedule C IF your LLC is a single member limited liability company (SMLLC). The IRS considers this a disregarded entity. I can't answer for your state.

As you indicated two separate small businesses, separate Schedule Cs.

• Where do I enter Schedule C?

@biggxj