I am a Full Time W2 employee and work part time in real estate. I have 1099 income and some expenses. Should I use the self employed tax forms?

[MichaelL1 · Accepted solution]

Yes, the self-employed on line product is needed to deduct the expenses related to the Real Estate activity.  

Taking these expenses, not only reduces the income tax you would pay on the 1099Misc, but also the Self-Employment tax, as both are paid on the net profit.

[Okc2tx]

I am doing the same this year and will be my first time to be part time self employed in real-estate.  I have a lot of expenses going out while trying to get established while working my full time job. Is Turbo tax setup to easily walk me through filing with a W2 and 1099 along with a large amount of receipts/expenses ?? Is there a tool or application that I can use going into 2021 that helps manage receipts and expenses associated to the real estate side that will feed into Turbo tax?? 

Thanks

[Critter-3]

If you are new to being self employed, are not incorporated or in a partnership  and  are acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-Misc for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 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 Travel, Gift, and Car Expenses

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

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

Publication 946 … Depreciation

https://www.irs.gov/pub/irs-pdf/p946.pdf

                                              

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 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 line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

How does my side job affect my taxes?

You’re considered self-employed—even if it’s just something you do on the side, like drive for Uber, babysit, or blog.

Your taxes are handled differently than when you’re an employee of a company.

As a self-employed individual you:

• will pay self-employment tax (because income tax and Social Security aren’t deducted from your pay)
• will get a 1099-MISC or 1099-K (unless you only accept cash or personal checks)
• file a Schedule C, Form 1040 (this is how you report business expense or loss of income)
• can deduct money you spent on work-related expenses (like mileage, home office expenses, and cell phone use)
• can estimate the taxes that are due and make quarterly estimated tax payments during the year

Get started by entering your income from self-employment. We’ll handle the rest, from creating the forms you need to reviewing work-related expenses that can help reduce your taxes.

Related Information:

• Where do I enter Schedule C?
• What self-employed expenses can I deduct?
• What is the self-employment tax?
• What is this new 20% business deduction?

[dvn2]

I am doing the same in 2022 and will be my first time to be part time self employed in real-estate. I did not get a 1099 Misc because I have made no sale in 2022 but I have expenses related to this business such as membership fees, cost to buy business card, posts and signs, mileage to show the properties to potential buyers...

Any help or guidance would be appreciated. I am using the premier version of the TurboTax.

Thanks

[Whateversquared]

Create a Schedule C business. You can get an EIN online.  This will allow you to accept income and deduct expenses and not have to worry about the normal income and standard deductions.  Note: If you create such a business, you need to make money for at least two years out of the last five.

[JohnW152]

You're allowed to claim business expenses without income, as long as you're working with the ultimate intent of making a profit. 

You might enter your expenses as "startup costs," though that will be limited to $5,000 with any remainder to be amortized over a period of years.  Please see Business Startup and Organizational Costs in the IRS' Publication 535 (2022), Business Expenses for more information. 

To enter your self-employment expenses in TurboTax Online:

1. If you don’t see 2022 TAXES in the left pane, select the dropdown to the right of Income & Expenses on the Hi, let’s keep working on your taxes! page and then select Let’s get started, Pick up where you left off, or Review/Edit. 
   • Otherwise, in the left pane, select Wages & Income
2. Scroll down and select the Edit/Add dropdown to the right of Self-employment income and expenses
3. Select  Edit  to the right of your self-employment item
4. On the  Here's your [business] info page, scroll down and select Add expenses for this work
5. From here, you can input your expenses 

@dvn2 

[dvn2]

Been busy at work and I am trying to wrap us my tax return before April 15. I am not using TurboTax Online so how do I enter self-employment expenses in TurboTax Premier?  Do I need to upgrade my TurboTax software?

Thanks.

[Hal_Al]

Q. I am not using TurboTax Online so how do I enter self-employment expenses in TurboTax Premier?  Do I need to upgrade my TurboTax software?

A. No.

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

• “I’ll choose what I work on” Button

Scroll down to:

- Business Items

   - Business Income & Expenses (Sch C)

[AnnetteB6]

If you are using the CD/downloaded version of TurboTax Premier, you do not need to upgrade your software, as mentioned by Hal_Al.  The next higher version would be Home and Business.  It would offer you more guidance along the way, but Premier has all the forms available that you will need.

You will enter your self-employed expenses as part of Schedule C Business Income and Expenses.  You will first be asked to enter the details about your business.  Then you can enter your expenses.  

Go to the Schedule C by first going to the Federal Taxes tab, then Wages and Income, "I'll choose what I work on".  Scroll to  Business Items and click Start beside Business Income and Expenses (Sch C).

Or use these steps:

• On the top row of the TurboTax screen, click on Search  
• This opens a box where you can type in “schedule c” 
• The search results will give you an option to “Jump to schedule c”
• Click on the blue “Jump to schedule c” link 

@dvn2 

[dvn2]

I am very new to Schedule C so I am sorry to ask these many questions. Please tell me if I am out of line.

I am in schedule C and here are some of the questions asked by TurboTax Premier that I am not sure what the right answers are:

1. Describe Your Business:  Enter a brief description of your principal business or profession:

I entered Real Estate Sale Person

2. Tell Us About Your Business page. I worked for local real estate company so I am not sure if the following are correct for me to check.

The business is owned by:  Should I check my nane?

I use my name as the name of the business

My business address is the same as my home address

I started or acquired the business in 2022: 

           Date: 04/01/2022

3. Enter Business Information 

I am not sure what to enter for this section. I don't have a business name. Should I put the name and address of the Real Estate company that I worked for?

4. Enter Employee ID Number? I don't have one so I assume I will check the No checkbox.

5. Business code: 531210 for Offices of real estate agents and brokers.

6. Which Accounting Method? I assume I will be using the Cash method

[JulieS]

Yes, you can use your own name and address as the name and address for your business. 

You do not need to enter the name and address of the broker that you work for at all in this section, just on the 1099 that they gave you. 

You aren't required to have an Employer Identification Number (EIN), so just check No.

Business code 531210 is the correct one for you. 

Cash accounting is the most common. It just means you report your income when your receive it and your expenses when you pay them. 

Please reach out again if you have more questions.