Hi, YWebb:
Yes, the IRS requires you to report self-employment income if your net income (business income minus business expenses) from your business is $400 or more since you are also required to pay self-employment taxes on your net income. Also, you (and the IRS) will receive some 1099 forms based upon other criteria:
- Beginning with tax year 2022 if someone receives payment for goods and services through a third- party payment network, their income will be reported on Form 1099-K if $600 or more was processed as opposed to the current Form 1099-K reporting requirement of 200 transactions and $20,000. This change could impact people working in the gig economy, online sellers, independent contractors, and other self-employed business owners.
- If you received payments totaling $600 or more from any one of your side jobs during the tax year a company or individual paid you, they should supply you with a Form 1099-NEC for the nonemployee compensation.
Generally speaking, worldwide income is reportable (although not all of it is taxable). This article can get you started on understanding self-employment income. One big thing many new entrepreneurs miss is the need to pay self-employment taxes. You can read more about that in the same article.
Good luck and congratulations on the new small business!
Cheers!
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