WHO MUST FILE A SCHEDULE C?

Schedule C is filed by those considered “Self-Employed” by the IRS. Many people are using TikTok and are getting royalties from their videos. BEWARE! If you receive the following, you must file a Schedule C on your Tax Return.

1099 MISC: This is for $600 or more in rent, $10 or more in royalties, etc.

1099 NEC – This is for $600 or more in non-employee compensation. For example, you are hired to help a landscape company and receive over $600. You are a soloist or play in a band and receive over $600 from a Funeral Home, Wedding Venue, etc.

1099K – this one bit a lot of people in 2020. It came out in 2012 but wasn’t enforced until the tax year 2020. You will get this if you have $600 or more in third-party network transactions (2023). I.e., PayPal, CashApp, Venmo, etc. If you are using these Apps, it’s possible that you could receive a 1099K even if you are only giving money to friends, family, charities, etc. Have your receipts or Bank Statements handy! If you receive an incorrect 1099K, a properly trained Tax Professional can get it exempted from your taxable income.

W-2: Statutory Employees—If workers are independent contractors under the common law rules, they may nevertheless be treated as employees by statute (statutory employees) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social Security and Medicare taxes, below.

A driver who distributes beverages (other than milk), meat, vegetables, fruit, or bakery products or picks up and delivers laundry or dry cleaning if the driver is your agent or is paid on commission.

A full-time life insurance sales agent whose principal business activity is selling life insurance, annuity contracts, or both, primarily for one life insurance company.

An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name if you also furnish specifications for the work to be done.

A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson’s principal business activity.

If you have any questions, give us a call!