Any CPA's or tax professionals around>?

[jrahn]

Hello,
I have a couple of questions regarding my situation. Are there any people on these boards who have extended knowledge of taxes and or experience with self employment guidelines for claiming income.

I recently was commissioned to produce several panels of art for a local restaurant. I paint as a hobby and did make a profit. This was a one time deal. I am curious if this falls into Hobby income or should i be classified as a business and if so, is it mandatory i acquire a tax id and business license for a 1099? I am naive since i have never received such a sum of money from painting. I don't particularly want to send any red flags to the IRS. Any feedback is greatly appreciated.
-Jrahn

 

[VF21]

Just a word of warning ... any free advice you get is just that. Free advice.

 

[NoBonus]

Hello,
I have a couple of questions regarding my situation. Are there any people on these boards who have extended knowledge of taxes and or experience with self employment guidelines for claiming income.

I recently was commissioned to produce several panels of art for a local restaurant. I paint as a hobby and did make a profit. This was a one time deal. I am curious if this falls into Hobby income or should i be classified as a business and if so, is it mandatory i acquire a tax id and business license for a 1099? I am naive since i have never received such a sum of money from painting. I don't particularly want to send any red flags to the IRS. Any feedback is greatly appreciated.
-Jrahn

Since you are just a sole-proprietorship, you should not need any additional tax ID numbers or anything. You should be able to get your 1099 using your Social Security Number. The only thing you must do is report your earnings on your annual taxes (if you are using turbotax or similar or having your taxes done, this is REALLY easy. If you are going out on your own, you are going to have to figure out which forms will will need to complete).

 

[jrahn]

Thanks,
So since I report this on a 1099 am I able to deduct costs of materials etc?
Also would my income from the project be subject to a self employment tax as well as at to my gross annual income? Thanks again for the reply.
-Jrahn

 

[NoBonus]

Thanks,
So since I report this on a 1099 am I able to deduct costs of materials etc?
Also would my income from the project be subject to a self employment tax as well as at to my gross annual income? Thanks again for the reply.
-Jrahn

You should be able to deduct the cost of any expenses, just KEEP THE RECEIPTS!!! I am not certain of the tax consequences.

 

[Mozart]

It depends

I don't particularly want to send any red flags to the IRS. Any feedback is greatly appreciated.
-Jrahn

I can understand your reluctance to send off red flags to the IRS.


I have some questions:

1)Do own a house or a significant asset(s) of significant value? (cars, boats, etc)


2)Did you do the paint job as an entity of some kind (sole proprietorship, partnership, etc) as filed with the county gov't? In other words, was the check(s) cut out to you in your name, or was it cut out to the name of the entity that you operate?

 

[VF21]

This is much different than asking what sound system to buy or where to eat dinner. This touches on very personal financial information and it just seems as though the best thing to do at this point is close the thread.