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I had a full time job in 2000 and received a W-2 from my employer. In 2000, I also did some miscellaneous computer consulting on the side for another company. I received a 1099 for that income ($8,000).

My question is this: Can I avoid paying self-employment tax on my 1099 income because I am technically not self-employed--I am employed full time by another company. Also, I did not earn the consulting money on a regular basis. I earned about half of it in January 2000 and the other half in September. If I list the $8,000 as miscellaneous income on my 1040 and not compute SE tax, will I get a letter from the IRS?

Any input would be greatly appreciated.
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If your work as a consultant involved being paid as an independent contractor, you report it on Schedule C.
If your regular job paid you enough (what is it, $72600?) so that you maxed out social security, you don't have to pay that on your consulting work, although you are still liable for medicare tax. It is earned income, and whether self-employed or an employee of your regular employer doesn't matter.
Note you can also deduct any non-reimbursed expenses incurred in conjunction with your consulting work on Schedule C.
Best wishes, Chris
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I had a full time job in 2000 and received a W-2 from my employer. In 2000, I also did some miscellaneous computer consulting on the side for another company. I received a 1099 for that income ($8,000).

My question is this: Can I avoid paying self-employment tax on my 1099 income because I am technically not self-employed--I am employed full time by another company.


Ah, but you are technically self-employed. There's no law that says you can have only one job. Lots of people have side jobs that constitute self-employment. You're clearly one of them.

Also, I did not earn the consulting money on a regular basis. I earned about half of it in January 2000 and the other half in September. If I list the $8,000 as miscellaneous income on my 1040 and not compute SE tax, will I get a letter from the IRS?

I should certainly hope so.

Don't forget to deduct your expenses, if any, associated with the self-employment on Schedule C. Also, you can still make a Simplified Employee Plan (SEP) retirement contribution of up to 13.something percent of your net income from self-employment. Details are in IRS Publication 560.

TMF ExRO
Phil Marti
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