Entering information into TurboTax related to my side gig

[DoctorWho]

In my day job I work for a large state government department. However, I do have a small side business to earn some extra money. That is hard, because in 2019 I didn't earn anything, so for that year I used TurboTax Deluxe. I did earn a small amount, so I thought it best to use TurboTax Home & Business. I trust that at least I haven't done anything wrong by choosing TurboTax Home & Business.

I'm at the place in TurboTax where it is going to start asking me about Business. Specifically, the "Business Income and Expenses". There are two buttons, one of which I'm to choose. 

• Walk me through everything
• I'll choose what I work on

I'm favoring the first, mainly because I'm far from an expert on this. Or should I choose "I'll choose what I work on" for some reason?

[ErnieS0]

I suggest “Walk me through everything” since you are new to business and did not claim any expenses in 2019. The walk through will go over every section to make you did not miss entering any income or deductions.

“I’ll choose what I work on” allows you to go directly to any section. This will save time if you have an existing business and always deduct the same things or if you only have a few deductions that you are sure about.

If you’re new I suggest “Walk me though everything” anyway. You may discover deductions that you had not thought of. In general you can deduct anything that is an ordinary and necessary business expenses.

Related Resource:

The ultimate guide to tax deductions for the self-employed

[VolvoGirl · Accepted solution]

It doesn't matter.  You can jump around and go back to enter something if you missed it.

You need to report all your income even if you don't get a 1099NEC or 1099Misc. 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 1099NEC it will ask if you had any income not reported on a 1099NEC. 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. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf

[DoctorWho]

Thank you @ErnieS0 and @VolvoGirl for your answers. I'm sorry it's taken me so long to get back to your responses. My family has experienced some bad circumstances which required attending to.

Again, thank you for your input. I do have a follow-up question for clarification. VolveGirl, you said I am "... considered self employed...". How is that possible? My primary income overwhelming is from my regular day job. Why would I be considered self-employed even though my primary income is from my state government job?

[VolvoGirl]

You are just self employed for the side income.  It's your own self employment business.  

[ErnieS0]

@DoctorWho. The IRS definition of "self-employed" is different from what most people think when using those terms.

In IRS terms, you are self-employed if you receive compensation for performing services and no tax is withheld. It doesn't matter how much or how little that is, or what proportion of income that represents.

Self-employed in IRS terms simply means you are to pay income and self-employment tax on your tax return because an employer did not withhold anything for that portion of your income. That's it.

I hope your family situation is better.