Yes, it does seem like a fine line...
My situation, my wife is a Psychologist and a School Psychologist. Most of her time is in the school where she gets a w-2. For the past few years, she has teamed up with another Psychologist to provide some testing services and received a 1099 and with her expenses, made a nice little profit. In 2020, she had 1099 income and expenses, but Covid reduced the activity. So she took a loss. Last year, 2021, she had no 1099 income, but still has minimal expenses, such as, liability insurance, professional licensing fees, etc. She intends to continue the business this year, even expanding it into clinical counseling. Can she still file a sole proprietor form with a loss and no 1099 income? Additionally, she is thinking of becoming an LLC in the future. Does that make any difference?
