Tax season, YAY!

[Tgo01]

Why pay for a professional when I can ask the PC?

If I do odd jobs for some extra cash for a family member around their house and they pay me around 200 dollars a week what is this income considered? I know, 99.999% of the people out there would never even bother claiming this but if one were to actually claim this on their taxes what would it be? Miscellaneous income? Would I need to pay social security taxes on this? Would my family member need to provide any sort of forms or anything?

[Moonwitch]

Did you get a 1099-MISC from them? Technically anything over I believe $600 in a year if they claim it on their taxes then they should have given you a 1099 and they would have gotten your social to report it to IRS. It would be like self employment income and you pay social, Medicare on it. You pay double on social too because you are considered self employed so you have to pay the worker and employee portions.

There is an amount per month you can gift another person without having to do the whole tax thing and report it. It is like $1100 or $1400 a month. I don't recall the amount. I'm not a tax professional maybe a CPA can add more.

[Wrathbringer]

Why pay for a professional when I can ask the PC?

If I do odd jobs for some extra cash for a family member around their house and they pay me around 200 dollars a week what is this income considered? I know, 99.999% of the people out there would never even bother claiming this but if one were to actually claim this on their taxes what would it be? Miscellaneous income? Would I need to pay social security taxes on this? Would my family member need to provide any sort of forms or anything?

The 99.999% who wouldn't bother are free loaders that don't deserve to be American citizens, TG. I'm surprised at you. If you're not racist, just put that money -all of it- in an envelope addressed to Obama, that is, if you don't also hate poor people. You didn't build that and it's not your money. If it weren't for government, you wouldn't have family members. Stop being so selfish and report it. I'm sure WB/Back do.

Edit: I'd imagine bob could tell you. This is what he went to school for, I think.

[Ker_Thwap]

Why pay for a professional when I can ask the PC?

If I do odd jobs for some extra cash for a family member around their house and they pay me around 200 dollars a week what is this income considered? I know, 99.999% of the people out there would never even bother claiming this but if one were to actually claim this on their taxes what would it be? Miscellaneous income? Would I need to pay social security taxes on this? Would my family member need to provide any sort of forms or anything?

I'd go with self employed handyman likely. Doesn't sound like you're an employee. Like Moonwitch said. Pay the $29 or so to file online with turbo tax, can claim all sorts of business expenses like cost of small tools,supplies, mileage, and such, which might reduce the income. Paying SE tax will help you when you go to retire and see a higher average income to base your retirement benefits on. Then again, if it's under $10K? annually, you might be able to just call it a gift from family. Do you need the income to qualify for an earned income credit? Plug it in a few different ways and see how it works out for you. Read all the explanations that come up on screen, to see if you ACTUALLY do qualify for the various credits.

If you can't figure it out from Turbo Tax, see a CPA and pay them for their advice. Negotiate a fee in advance, some of them will rob you blind.

[Warriorbird]

The 99.999% who wouldn't bother are free loaders that don't deserve to be American citizens, TG. I'm surprised at you. If you're not racist, just put that money -all of it- in an envelope addressed to Obama, that is, if you don't also hate poor people. You didn't build that and it's not your money. If it weren't for government, you wouldn't have family members. Stop being so selfish and report it. I'm sure WB/Back do.

Edit: I'd imagine bob could tell you. This is what he went to school for, I think.

http://4.bp.blogspot.com/-hb8XsDq_4yw/UgVHcf72CRI/AAAAAAAAR5E/e6EQ2-QF6Mc/s1600/libertarian+fire+department.png

Ker_Thwap has sound advice.

[crb]

I think an ideal libertarian fire department would function much like existing fire departments. I know its fashionable in certain queer circles to dress up libertarians as anarchist strawmen, but we do feel as though there are some legitimate functions of government. Roads are a nice example, and gas taxes paying for roads is a perfectly logically system. You charge the people who use a public resource for that use. With fire departments, one way you can do that is have the cost of responding to a call be reimbursed to the department by your insurance. Many areas of the country already do things like that, but on balance, public safety isn't something libertarians attack, except of course wasting money on "crimes" like prostitution and marijuana possession, or when unions lobby for increased laws or harsher penalties not because they're good for society, but because it creates more demand for the work that that union provides (see California penal system). But we totally support police hunting down thieves, rapists, and murderers, etc. Honest.

Back on topic: Don't declare it, starve the beast. Considering it a gift from family is the best idea.

[diethx]

You can receive a gift of 12k per person, per year. They should have given you a 1099-MISC as you are technically self employed. It would be schedule C income. And yes while you can deduct all sorts of business expenses, note that A) you need to have all of your business receipts to back them up in case of an audit, and B) mileage to and from the job isn't a deductible expense... only miles driven on the job and for the job, if I'm remembering correctly anyway.

[Merll]

I think you can gift an individual family member 13k a year without having to pay taxes on it.

[cwolff]

Are you going to continue with this work arrangement? The reason I'm asking is because it sounds like you're bringing in 10k a year and that's can really come in handy for things like mortgage applications. I don't know if that matters to you or not, but I run into plenty of folks who make money under the table. When they go to refinance or purchase they can't qualify for a loan they can afford to pay back, just because they're not reporting income.

[Tgo01]

I'd go with self employed handyman likely. Doesn't sound like you're an employee. Like Moonwitch said. Pay the $29 or so to file online with turbo tax, can claim all sorts of business expenses like cost of small tools,supplies, mileage, and such, which might reduce the income. Paying SE tax will help you when you go to retire and see a higher average income to base your retirement benefits on. Then again, if it's under $10K? annually, you might be able to just call it a gift from family. Do you need the income to qualify for an earned income credit? Plug it in a few different ways and see how it works out for you. Read all the explanations that come up on screen, to see if you ACTUALLY do qualify for the various credits.

If I do declare it as self employment does that mean my family member would need to provide any sort of forms or anything? Not quite sure how all of that works.

Never thought about the gifting thing before though, hmm.

[Drisco]

If you were Canadian you'd fill out your T-1 and T2125 and be done with it. But you're not, so never mind.

[Tgo01]

If you were Canadian you'd fill out your T-1 and T2125 and be done with it. But you're not, so never mind.

:(

[Latrinsorm]

:(We'll see who's laughing when their tax forms become sentient and engender nuclear holocaust.

Probably... probably the sentient tax forms. If I had to guess.

[Ker_Thwap]

If I do declare it as self employment does that mean my family member would need to provide any sort of forms or anything? Not quite sure how all of that works.

Never thought about the gifting thing before though, hmm.

Technically, they should file a 1099... but, they aren't really a business that will be claiming that expense against income. The IRS wants 1099s filed, to force contractors to claim the income and pay taxes. From your families POV they're probably just considering it a mutual gift/free labor kind of thing, which doesn't impact their taxes at all. You're not required to provide a 1099 with your return, so the IRS has no way of knowing how many people paid you small dollar payments that total $10K. In the scope of things for the IRS, a single instance of $10K in income is nothing they care about. You're not going to get them in trouble for not filing a 1099.

Let's face it, once you see how much it costs to report this as income, you're going to consider it a gift.

[Whirlin]

You can receive a gift of 12k per person, per year. They should have given you a 1099-MISC as you are technically self employed. It would be schedule C income. And yes while you can deduct all sorts of business expenses, note that A) you need to have all of your business receipts to back them up in case of an audit, and B) mileage to and from the job isn't a deductible expense... only miles driven on the job and for the job, if I'm remembering correctly anyway.

12? I've been out of tax too long. It's one of those values that change every year, so I'm sure you're gonna get a ton of different answers.

Regards to mileage, I remember that one VERY specifically...
If you live at point A
If your office is Point B (Note, point B must be a different location than point A)
And your worksite is point C
You can expense the additional miles driven from B to/from C, OR, the miles that A to/from C are in excess of A to/from B.

In regards to overall advice. I'd be extraordinarily careful with claiming it as income. And here's why.

If you claim it as a sole proprietorship income, then you may be in non-compliance with state tax regulations which may require you to pay state taxes quarterly for sole proprietorship. While you may have AGI reduction or Deductions associated with valid business expenses that offset those incomes, there may be different state regulations over what's claimable, or they may still be expecting tax payments based on the gross rather than the net.

If it's a gift in excess of whatever this year's gift amount is, that needs to be filed, and will reduce the giftor's estate value upon death... ie: Lots of additional paperwork.

Furthermore, depending on your overall ordinary income, assuming your broke ass poor, you may qualify for things like the earned income credit. By declaring this as a gift, you're not increasing your EARNED income, therefore, you may still be broke ass poor enough to claim things like student loan deductions (phaseout at 90k earned income, I believe) or EIC (Phases out at like, 30k I think).

[Whirlin]

You may want to consider the 1099 form next year, but you'd also need to consider state tax implications, and keep better documentation of expenses.

Whirlin Consulting Company offers competitive rates for Access/Excel based personal financial tracking systems, and I heard they now accept silvers and bows.

[Tgo01]

Being honest sounds like hard work.

[Ker_Thwap]

Oops, I live in NH, so I forgot about the state.

[diethx]

Regards to mileage, I remember that one VERY specifically...
If you live at point A
If your office is Point B (Note, point B must be a different location than point A)
And your worksite is point C
You can expense the additional miles driven from B to/from C, OR, the miles that A to/from C are in excess of A to/from B

That's pretty much exactly what I said. And it was 12k when I was taking the individual tax course. Iunno if it's changed.

[Gsgeek]

For the gifter, it is a 14k in 2014 or 28k for a married couple and has no gift tax liability.

and also this reference:
Who Pays the Gift Tax?

The person who makes the gift is the one who is responsible for paying any gift tax that may be due and reporting the gift to the IRS on a gift tax return - IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and the applicable state gift tax return (if any). The federal gift tax return and any federal gift tax that may be owed are due on or before April 15 of the year following the year in which the taxable gift was made.

For the person who receives the gift, there won't be any immediate tax consequences since the gift won't be included as part of the recipient's taxable income. However, the recipient may incur capital gains tax when the gifted property is later sold because of the income tax basis that the recipient will receive in the gifted property.

(So if its straight cash, no worries on any future gains)

[Sylvan Dreams]

Technically, you most likely should be getting a 1099-MISC from whoever you're working for and then you report that on your Schedule C.

I'm not sure what kind of odd jobs you're doing, so you may or may not be considered a household employee. I'm going to assume that you are not given detailed instructions, can control how/when the work is done, provide your own tools and all that and are NOT a household employee.

If you are a household employee, it's a bigger issue than what it seems. If you're a household employee, your family member is likely not in compliance with taxes. When I say that, I mean they are 99.999999% not in compliance. I am certain they're not paying federal unemployment (FUTA) or state unemployment (SUTA) and most certainly have not been paying payroll taxes (Federal, Social Security and Medicare), which also means they have not been filing their quarterly returns.

IOW You may want to consider speaking with a CPA in person. I would. You are most likely NOT a household employee and should receive a 1099-MISC and pay taxes accordingly. If you ARE a household employee, you and your family member really should speak with a CPA. If you get audited, it will not be pretty. If you're going to try to go the gift route, your family member needs to be filing certain documents.

Here's the IRS publication on household employees that I reference somewhat often at work: http://www.irs.gov/publications/p926/ar02.html#en_US_2014_publink100086722
Here is the Employer's Supplemental Tax Guide which explains about independent contractors: http://www.irs.gov/pub/irs-pdf/p15a.pdf

[Drisco]

Could you not just say you are a Sole Proprietor that provides a service and your family is just your customers?

[Moonwitch]

In other words if your relative isn't claiming it. Don't claim it either.

[Latrinsorm]

I am pretty offended by the suggestion that Terry is unfamiliar with futa.