A few important items regarding income from self-employment that the IRS wants you to know:

• Self-employment can include income you received from a part-time job, in addition to income from your regular job.
• File a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040.
• You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes.
• You may need to make estimated tax payments. This tax is generally paid in four installments for each year.
• You can deduct expenses paid to run a business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business. Usually, you can deduct expenses in the same year you paid for them, or incurred them. However, you must ‘capitalize’ some costs. This means you can deduct part of the cost over a number of years.

We will help you sort through the obligations and rules associated with being self-employed.