Usertesting.com Self-Employment and Income Taxes

[synthesize27]

I have recently started earning additional income from usertesting.com. I would believe this income to be classified under self-employment as an "Independent Contractor", therefore meaning that the earnings are subject to not only income tax, but self-employment tax as well. Is this true? If so, would I be required to file estimated quarterly payments to the IRS, regardless of the amount? From what I have read, it seems that I only need to do this if I expect my tax liability to be greater or equal to $1000 and considering each test on usertesting.com only yields about $10/test, I highly doubt that I will approach anywhere near this amount. Am I understanding all of this correctly? Thank you for your time.

[AnnetteB6]

Yes, it sounds like you are understanding things correctly.  Your income will be considered self-employment income reported on Schedule C and subject to income tax and self-employment tax if above $400 net income.  

You are not required to file quarterly estimated taxes simply because you have self-employment income.  You mentioned that this is 'additional income'.  If you also have a W-2 job, then you can also consider increasing your tax withholding to cover the additional tax imposed on your additional income instead of making estimated payments.

@synthesize27

[synthesize27]

Thank you for your quick and direct response!

I also had a couple of other questions. I plan on starting a photography business in the near future and plan on submitting estimated quarterly tax payments. According to another post that I read, I am NOT required to pay self employment taxes for both the state of CA and the IRS. Does this mean that I would need to submit payments only for: 1) IRS income tax; 2) CA state income tax, and; 3) IRS self employment tax?

I will potentially also have several sources of self-employment income, including my photography business, usertesting.com as well as 2 sites that do the exact same thing, and voice-over work through Fiverr. If my businesses individually other than my photography business yield less than $400 net income by the end of the tax year, does that excuse me from paying income and self employment taxes from those sources of income? I believe that I still need to report these at the end of the tax year.

Thank you for your time.

[JotikaT2]

Yes.

You are correct.  Depending upon how much income you have, you would be subject to federal and state income taxes, as well as self-employment taxes for federal purposes.

In regards to the latter part of your question, if your overall tax due at the end of the year is below $1,000, you would not need to make estimated taxes.  Please see the attached for additional details.

Do I need to make estimated tax payments

[Diva3214]

Hi I also have some questions. I have been using user testing too and so far i have made $100 when i combine them all so I’ve done 10 successful test. So will i have to file for income tax at all? Or can i not?

[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

[synthesize27]

So I ended up making $60 total in 2020 from usertesting.com. Do I need to include this in my tax return? If so, would I file this under the "Self-employment income and expenses" section? In the "I work in..." section, would "Online Survey Research" suffice for a descriptor? Please and thank you.

[ToddL99]

Yes, you are required to report this income on your tax return and can use "Online Survey Research" as a description of the work performed.

The correct place to enter this income (and any related expenses) would be in the Self-employment Income and Expenses interview of TurboTax Self-Employed (or Home & Business). 

[synthesize27]

This should be my last question regarding usertesting.com (thank heavens):

As a resident of California and with the recent passage of AB-5, am I still classified as an independent contractor? Since I didn't receive a W-2, I would figure that this is the case.

[ThomasM125]

Per the State of California Employment Development Department, you are considered an independent contractor if, paraphrasing:

1. You are free from control and direction of the hiring entity 
2. Are performing work that is outside the usual course of the hiring entity's business
3. Are normally involved in an independently established trade of the same nature as that involved in the work performed

You can read more about it here:

https://edd.ca.gov/Payroll_Taxes/ab-5.htm

[c_s_00]

Hi there -

I just started doing online usertests and surveys this year (2021). So I will need to report this income when I file my taxes next year. However, the sites that I use do not provide any tax documents and state that I am responsible for handling tax related matters.

I generally use TurboTax and file a 1040 (whatever the free version is) for my actual job with a W2. Will I still be able to use the 1040 next year when I have to report my income made from online usertests and surveys? Or will I need to pay TurboTax and use a completely different form?

[ToddL99]

The work you described must be reported on Schedule C (Profit or Loss from Business) of Form 1040 - that form requires you to use TurboTax Self-employed (online) or Home & Business (Desktop CD/Download).

If the sites you work for do not provided tax reporting documents (1099-MISC or 1099-NEC), you will have to keep track of your receipts manually and enter them as General Income.

See How do I report income from self-employment?

[c_s_00]

@ToddL99 

Thanks for the reply.

Do I have to enter each payment individually or can I enter a sum? I get paid through PayPal and receive monthly statements with deposit information.

Also, can I still upload my W2 to TurboTax Self-Employed? Or will I have to use two different types of TurboTax to do my taxes next year?

[ToddL99]

No, you do not have to enter each payment individually - enter the sum. PayPal may send you a Form 1099-K at the end of the year, but you can add up receipts from monthly statements and report those.

Yes, you can still upload your W2 to TurboTax Self-Employed. One TurboTax program (Self-Employed or Home & Business)  program will allow you to report all your income (W-2, 1099, PayPal, etc) and prepare your tax return.

@c_s_00

[kpatino24]

Hi. I was unemployed this past year and was working on my grad school application whilst doing Usertesting and DScout. I made under $600. I've tried to use the TurboTax deluxe but can seem to find the correct place to report this. I didn't make any income otherwise, so I'm confused about where to put this income.