Tutoring income

katyk27 — Wed, 22 Dec 2021 19:46:28 GMT

Hello. I have earned some income from tutoring service this year. To be precise, around $5000 which was unexpectedly high. How should I report about it?

Re: Tutoring income

VolvoGirl — Wed, 22 Dec 2021 21:07:04 GMT

That is self employment income. Is this the first year?

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. Here's a Schedule C https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version. How to enter self employment income

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653

For the future, you should use a program like Quicken or QuickBooks to track your income and expenses. There is a QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed return....

http://quickbooks.intuit.com/self-employed

You will need to keep good records. You may get a 1099NEC at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small and if you don't get the 1099NEC.

You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.

After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.

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.

The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15. The SE tax is in addition to your regular income tax on the net profit. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a. Turbo Tax automatically calculates the SE Tax and Adjustment.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

Publication 463 for Travel, Gift & Car expenses

https://www.irs.gov/pub/irs-pdf/p463.pdf

Re: Tutoring income

katyk27 — Thu, 23 Dec 2021 06:37:40 GMT

Thank you so much for this great reply. Answering your question, it's my first year earning so much. Last year I have started my tutoring and reported $300 to IRS. Does it matter?

Re: Tutoring income

Critter-3 — Thu, 23 Dec 2021 15:29:54 GMT

Nope ... last year you should have reported the $300 as other income on line 8 of the Sch 1 but since you have more than $400 this year you must use the Sch C.

Re: Tutoring income

katyk27 — Thu, 23 Dec 2021 15:54:15 GMT

Thanks! I really appreciate your advice!

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