Random self employment income?

[DBH]

Hello.  I am retired from Contracting Work, but occasionally do "handyman" work for friends for pay.  Although they pay in cash for my skilled labor, do I or would I claim this income as "handyman" or under what classification?   And, since it is only several thousand dollars, usually earned in Summer, can I simply claim it at the end of the year for 2023 income?

Thanks,

DBH

[Katherine S 63 · Accepted solution]

Great question!!

If you have net earnings of $400 or more, you're required to file a tax return. The IRS does this in order to collect your self-employment tax. You won't owe income tax if your earnings are that low, but you might still owe self-employment tax.  If you have no other income, you might not owe anything for Federal and/ State taxes but will just owe for Social Security and Medicare. 

Here are my favorite Self Employment links:

Self employment tax

Self employment tax hub with calculator

Self Employment income and expenses

You can pay your estimates online via IRS.GOV and the state you live in if they have state taxes.

You can also pay when you do your taxes but if you owe something, you might have some penalties for not paying as you go through the year.

Please look at the links above because they talk about all of this and are very helpful.

As far as classification, yes I would say you have a handyman business.  Keep track of all your expenses so that your Self Employment tax is as low as possible.  

Thanks again for the great question!!

Katie S