Do you currently have part-time income? Are you confused about how you are supposed to claim your part-time income on your taxes? Is your part-time income from your own self-employment ventures? There are a few things that you need to know when you are filing your taxes in the situation that some, or all, of your salary comes from part-time taxes.
Who Needs to File Their Tax Return?
To begin, all Americans must file a tax return if their income is above a certain amount. For example, a single person (who is under 65) must file a tax return if their income is over $7950. For a person over 65, they must file if the amount is over $9150. Married couples under the age of 65 must file if their combined income is under $15,900, or $17,800 if the couple is over the age of 65.
If you have a part-time job but did not earn enough money during the year to qualify for one of the above amounts, then you theoretically do not have to file a tax return.
However, sometimes people operate their own part-time business, such as selling items on Ebay or babysitting, and either made more than the above amounts or had a part-time job in addition to their full time job, and the combination was more than the above amounts. In such a case, you need to file a tax return if your part-time income is over $400.
What About Self-Employed People?
If your part-time business can be considered self-employment, then there are a couple of things that you need to know.
First of all, you don't have to own a business to be considered self-employed. You can work as a gardener, be a consultant, or even make money from Adsense.
You must report your income and expenses on Schedule C, or C-EZ. Your income from your job will be subjected to 15.3%. If you are a self-employed person with business expenses equaling less than $5,000 and do not have any employees working under you, then you can file the C-EZ form, which is Net Profit for Businesses.
Out of the taxes that you are subjected to, the bulk of them are for social security tax and the remainder is for Medicare tax. You will need to fill out Schedule SE for this.
Can I Claim Deductions?
Don't forget to deduct the cost of running your business, either. In order to use business expenses as a deduction the expenses must be necessary. Some common expenses include your car mileage or car maintenance for business purposes, a home office deduction, or supplies. You can also deduct your start-up cost, which is a maximum of $5,000.
It is easier for some people to file their taxes on a quarterly basis if they are self-employed. For this, you have to estimate your taxes. It is recommended that you use a good tax soft-ware program for this, even if your business is just part-time.