Why is basketball officiating a 'business' and require a Schedule C? Same with driving a car for money. Thanks in advance.

taxwack77zz · ‎June 5, 2019

jtax · ‎June 5, 2019

Because both are regular activities engaged in to make a profit (earn income). Schedule C gives you a chance to deduct expenses and reduce taxable income. You also pay self-employment tax for social security and medicare (both the "employee" and "employer" part.)

Compare this to an occasional activity that gets you money. For example jury duty. That is not a business. That is reported as "Other Income" and cannot be offset by expenses, but is not subject to self-employment tax.

There is an interesting issue with whether such activities are a business or whether you are just an employee. The businesses don't want you as an employee to save money (they don't have to pay their half of social security/medicare tax, unemployment tax, etc.). What the company calls you may or may not be right. There is a fuzzy multi-factor test to figure it out. That means it is not very clear. See https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

jtax · ‎June 5, 2019

Because both are regular activities engaged in to make a profit (earn income). Schedule C gives you a chance to deduct expenses and reduce taxable income. You also pay self-employment tax for social security and medicare (both the "employee" and "employer" part.)

Compare this to an occasional activity that gets you money. For example jury duty. That is not a business. That is reported as "Other Income" and cannot be offset by expenses, but is not subject to self-employment tax.

There is an interesting issue with whether such activities are a business or whether you are just an employee. The businesses don't want you as an employee to save money (they don't have to pay their half of social security/medicare tax, unemployment tax, etc.). What the company calls you may or may not be right. There is a fuzzy multi-factor test to figure it out. That means it is not very clear. See https://www.irs.gov/newsroom/understanding-employee-vs-contractor-designation

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Why is basketball officiating a 'business' and require a Schedule C? Same with driving a car for money. Thanks in advance.