The future of the gig economy Download this gig economy infographic for your blog: At Nation, our focus is on the knowledge work part of the gig economy — people selling professional or creative skills on a freelance basis. But I also have a secondary purpose of trying to answer the questions that interest us most: How many are freelance instead of in a traditional full-time job?
By Carolyn Miller, CPA, written insome rates may have changed It starts off with a mare; you breed her to a top stallion, in hopes of getting a future champion. Encouraged by your success so far, you purchase a couple of more mares, breeding them to a couple of up and coming stallions.
They both yield you nice foals, one of which you sell successfully at a yearling prospect sale. The other, you think will bring more as a two year old, so you hold on to her. And so it escalates. An innocent little venture has grown into a small-scale horse operation.
The answer to this question is that there is no magical formula that if one has more than x horses, he is running a business, and if they have less than x horses, they are a hobby. What is the difference between a hobby and a business? Businesses are operated with the objective of making a profit, hobbies are not.
For income tax purposes, hobby expenses are personal, and are only deductible to the extent of hobby income. Business expenses on the other hand are fully deductible from unrelated income.
Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the objective of making a profit. The IRS has listed nine factors which are normally taken into consideration when determining whether a profit motive exists.
They are as follows: The manner in which the taxpayer carries on the activity; 2. The expertise of the taxpayer or his advisors; 3. The time and effort expended by the taxpayer in carrying on the activity; 4. The expectation that the assets used in the activity may appreciate in value; 5.
The success of the taxpayer in carrying on other similar or dissimilar activities; 6. The amounts of occasional profits if any, that are earned; 8. The financial status of the taxpayer, and; 9. A taxpayer does not need to meet all of these requirements, nor does he have to meet the majority.
No one factor weighs more than another, each factor is weighed as applicable to each different situation. This list is also not all inclusive, the government may look at other factors not on this list. The manner in which the taxpayer carries on the activity: If you want the IRS to consider your activity as a business, run it like a business!
Good record keeping is essential to running a business. Keep your accounting records in a fashion that lets you monitor profit and losses. If you see that one segment of your business is unprofitable, change your operations so that the segment becomes profitable, or if that is not possible, abandon the unprofitable activity.
Develop a five-year business plan for your business. Put down in figures, how you intend to be a profitable business. Compare actual results with projected results. Can you still show your business earning a profit? The expertise of the taxpayer or his advisors: Are you an expert in the horse industry?
Obtain all the information you can about your respectful equine business including if possible expected financial returns.
Read books, magazines, watch videos, go to seminars, talk to people in the business. These are all avenues you can follow to obtain professional expertise.
Consult an accountant regarding setting up your books, and developing your business plan. The time and effort expended by the taxpayer in carrying on the activity:“You can’t work without a social security number.” Several generations of young Americans were told that big lie as they reached working age.
MISC Forms are a Snap to Prepare Order forms early while there is still time to get them from the IRS.
If you're a business owner, you must give a Form MISC to any independent contractors you paid $ or more for services provided to your business during the year. Sending s is not optional. Taxpayer Identification Number (TIN) Matching. TIN Matching allows a payer or authorized agent who is required to file Forms B, DIV, INT, K, MISC, OID, and/or PATR, which report income subject to backup withholding, to match TIN and name combinations with IRS .
Tax Software Blog. Home; About; Archive. Most s deal with independent contractor income, using Form MISC.
Could I write form by hand? November 10th, Erich J. Ruth No comments. Yes. Copy B of a form can be printed on plain paper with black ink.
The payer could hand-write all of Copy B and send that to the. Special % Withholding Procedures. How is the number of employees determined when there is employee turnover during the year in my business? Do the LB special withholding procedures include state income tax withholding on my pension or annuity?
What you need to know. Table A provides a list of questions you need to answer to help you meet your federal tax obligations.
After each question is the location in this publication where you will find the related discussion. The IRS mission.