Looking for tips and guidelines for MLM income and possible write offs.

[Denton777]

Have 1099-MISC from MLM marketing income. Curious if there is threshold or guidelines for filing it as a "business" income or keep it under personal.  And then more specifically what can I write off as business epenses for Multi Level Marketing income.

[VolvoGirl]

Is the amount in box 7?  That is self employment income.  For 2019?  Are you just doing 2019 now?  Online is closed.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

For the future, There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed return....
http://quickbooks.intuit.com/self-employed

You need to report all your income even if you don't get a 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 1099Misc it will ask if you had any income not reported on a 1099Misc. 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 Schedule 1 line 27 (goes to 1040 line 7). The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 4 line 57 (goes to 1040 line 14). 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
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 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

[Opus 17]

If you are engaged in an "ongoing trade or business" then you report the business on schedule C.  "A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business."

https://www.irs.gov/businesses/small-businesses-self-employed/business-activities

Basically, if you promote yourself as a business and are trying to make a profit, then you are a business and you report your income and expenses as such, even if you don't actually make a profit.

You are expected to keep reliable business records of your income and expenses, even if you don't get tax paperwork from your vendors and clients.  Your business expenses can include your cost of goods (of course) but also other costs that are ordinary and necessary for your type of work.  For a sales job, your expenses might be advertising, business use of a car or other vehicle, storage of inventory, and a home office if you use your home office for the administrative part of the job.