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When turbotax is asking me about my self-employment income "Was any of your Technology consulting work for a former employer?", what is the significance of this? Why ask?

Just wondering how the numbers entered here affect my taxes, and why.
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2 Replies

When turbotax is asking me about my self-employment income "Was any of your Technology consulting work for a former employer?", what is the significance of this? Why ask?

There are a series of questions designed to test if this is self-employment or "other income" (such as a hobby).  The IRS considers a number of factors including whether the work is similar to work you previously did for an employer.  The questions may be excessive for some taxpayers who know they are self-employed.  

Anonymous
Not applicable

When turbotax is asking me about my self-employment income "Was any of your Technology consulting work for a former employer?", what is the significance of this? Why ask?

self employed people may be eligible for the QBI deduction  - a long story.  one of the requirements for the self-employed business to qualify is that you weren't an employee of the business you now receiving se income from  this is rebutable 


from the IRS proposed regs

(3) Presumption that former employees are still employees--(i) Presumption. Solely for purposes of section 199A(d)(1)(B) and paragraph (d)(1) of this section, an individual that was properly treated as an employee for Federal employment tax purposes by the person to which he or she provided services and who is subsequently treated as other than an employee by such person with regard to the provision of substantially the same services directly or indirectly to the person (or a related person), is presumed to be in the trade or business of performing services as an employee with regard to such services. This presumption may be rebutted upon a showing by the individual that, under Federal tax law, regulations, and principles (including common-law employee classification rules), the individual is performing services in a capacity other than as an employee. This presumption applies regardless of whether the individual provides services directly or indirectly through an entity or entities


if you are not earning money from your former employer answer no.

if yes and significant $'s are involved, consult a tax professional to review your situation.  the maximum QBI deduction is 20% of your net schedule C income..  certain other rules may limit this.      

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