The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Schedule C question!!!!!!!||Date: 11/2/2000 5:26 PM|
|Author: TMFTaxes||Number: 41439 of 122104|
<<I have a regular job and on the side I edited a few chapters in a book.>>
You sound like a busy person. Congrats!!
<<Question 1) That "on the side income" is reported as self employed income on schedule C, correct?>>
It depends on how you are classified by the person making the payment to you. If you are an employee, you'll receive a W-2 form. It'll just be additional wages, and you'll report them with the wages that you receive from your "day" job. But if you are treated as an "independent contractor", you'll likely receive Form 1099 (if you receive anything at all). And that income would then be reported on Schedule C...as you correctly note.
<<Question 2) Can I buy a computer and a PDA and deduct them right off the top of the self employed income?>>
If you use the computer and the PDA exclusively for your business, yes. You would accomplish this by taking the "section 179 expense" election on this property. You can read more about this election in IRS Publication 946. If you use them LESS than 100% for your business but more than 50%, you'll still receive the 179 election, but your deduction will be limited to the cost of the equipment TIMES your business use percentage. If you use the equipment less than 50% for business, you'll have to depreciate the equipment over a five year period.
<<Example: I made $6,000 doing the editing. I buy a $2,000 computer and a $500 PDA. Does that mean I only pay taxes on $3,500 worth of self employed income come April?>>
Assuming 100% business use for the computer and PDA, the answer would be yes. But you still have to complete Form 4562 to report the election to use Section 179 to "expense" these assets.
And, don't forget, you may be eligible for a SEP pension plan on your "side" money...which will reduce your taxes even more.
|Copyright 1996-2015 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|