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chsbaker
New Member

I did some side work were the customer paid cash how do I claim that, as business ? Or misc?

 
2 Replies
NancyG
New Member

I did some side work were the customer paid cash how do I claim that, as business ? Or misc?

I have attached a whole lot of information to help you make your decision.

If there are expenses associated with your income, it would not make sense to classify the work as hobbies.  The expenses would only be deductible as itemized deductions subject to a 2% adjusted gross income floor. 

The recordkeeping and tax reporting is less with a hobby.  

I also wanted to clarify a point for you -  if you earned less than $600 from a side gig, the payer doesn't have to send you a 1099 form, but you still have to report the earnings.

Discussion - Hobby or Self-Employment

First, ask yourself if your hobby is a recreational pursuit or a profit-making endeavor. Earning a living doing something you love is a natural goal, but you must be clear about your intentions to claim expenses come tax time.

The IRS defines a hobby as an activity:

  • You do purely for the love of it, regardless of the cost.
  • You expect no profit in return.

This doesn't mean you're prohibited from earning any money. For example, if you tinker with cars, it's okay for a friend to pay you for an occasional oil change.

Generally speaking, your hobby is a business if:

  • Some or all of your income comes from the hobby. For example, you sell handmade candy on an e-commerce store, and the earnings account for half of your annual income.
  • Your hobby experiences profits and losses. For example, you earn significant profits from Valentine's Day sales, but you've spent too much on a flavor of Halloween candy that didn't sell.


To add multiple IRS Schedule Cs:

  • go to Business tab; then Continue
  • choose Explore on my own or I'll choose what to work on  (if it comes up)
  • then Business Income and Expenses
  • then Profit or Loss from Business, click Start or Update.  
  • you should see the Business Summary page that lists your businesses, 
  • right below the list you can Add Another Business.

 To enter income if you did not receive a 1099-Misc:

Type “Schedule C” in the Search box and then select the “Jump to” link. This will take you to where you can enter any cash, personal checks or credit card payments (Form 1099-K) related to your self-employment. You may be asked some general questions about your business. After you answer them, you’ll be taken to the Your Business screen where you can enter this income as Additional Income under Business Income.

Any related expenses are entered in the 1099 MISC section: 

  • Log into your TurboTax online account and click on the Business tab and select Continue
  • Select “I’ll choose what I work on” and this takes you to “Let’s gather your business info” screen
  •  The first section down is Business Income and Expenses, choose Update
  • You are now at the “Here’s  the business info we have so far” screen where you should see your Business listed
  • Click Edit next to that business and on the next screen, scroll down to the fourth section which should be Business Expenses and select “Visit All”

 

NancyG
New Member

I did some side work were the customer paid cash how do I claim that, as business ? Or misc?

I have attached a whole lot of information to help you make your decision.

If there are expenses associated with your income, it would not make sense to classify the work as hobbies.  The expenses would only be deductible as itemized deductions subject to a 2% adjusted gross income floor. 

The recordkeeping and tax reporting is less with a hobby.  

I also wanted to clarify a point for you -  if you earned less than $600 from a side gig, the payer doesn't have to send you a 1099 form, but you still have to report the earnings.

Discussion - Hobby or Self-Employment

First, ask yourself if your hobby is a recreational pursuit or a profit-making endeavor. Earning a living doing something you love is a natural goal, but you must be clear about your intentions to claim expenses come tax time.

The IRS defines a hobby as an activity:

  • You do purely for the love of it, regardless of the cost.
  • You expect no profit in return.

This doesn't mean you're prohibited from earning any money. For example, if you tinker with cars, it's okay for a friend to pay you for an occasional oil change.

Generally speaking, your hobby is a business if:

  • Some or all of your income comes from the hobby. For example, you sell handmade candy on an e-commerce store, and the earnings account for half of your annual income.
  • Your hobby experiences profits and losses. For example, you earn significant profits from Valentine's Day sales, but you've spent too much on a flavor of Halloween candy that didn't sell.


To add multiple IRS Schedule Cs:

  • go to Business tab; then Continue
  • choose Explore on my own or I'll choose what to work on  (if it comes up)
  • then Business Income and Expenses
  • then Profit or Loss from Business, click Start or Update.  
  • you should see the Business Summary page that lists your businesses, 
  • right below the list you can Add Another Business.

 To enter income if you did not receive a 1099-Misc:

Type “Schedule C” in the Search box and then select the “Jump to” link. This will take you to where you can enter any cash, personal checks or credit card payments (Form 1099-K) related to your self-employment. You may be asked some general questions about your business. After you answer them, you’ll be taken to the Your Business screen where you can enter this income as Additional Income under Business Income.

Any related expenses are entered in the 1099 MISC section: 

  • Log into your TurboTax online account and click on the Business tab and select Continue
  • Select “I’ll choose what I work on” and this takes you to “Let’s gather your business info” screen
  •  The first section down is Business Income and Expenses, choose Update
  • You are now at the “Here’s  the business info we have so far” screen where you should see your Business listed
  • Click Edit next to that business and on the next screen, scroll down to the fourth section which should be Business Expenses and select “Visit All”

 

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