Business Income - Schedule C
Who should report business income?
Tax advantages of a small, unincorporated business
Hobby loss rules
Who should report business income
Report business income on Schedule C if
You perform free-lance work
You sell goods but are not in a partnership or corporation
Avon, Amway etc.
You receive a 1099-MISC for work done as an independent contractor
Some employers send out 1099-MISCs when the worker should be classified as an employee and therefore receive a W-2
Complain to the employer or to the IRS, but if you receive a 1099-MISC and don't report it, the IRS will be contacting you
Tax advantages of a small, unincorporated business
Ability to try out a business idea in a quick manner
Ability to gain business income from a hobby like computer programming
Ability to deduct business expenses (even losses) from your other income
Hobby loss rules
If your business loses money in more than three of five years the IRS may say that your enterprise is a hobby
Expenses related to income-producing hobbies
In this case expenses that exceed revenues become deductible as a miscellaneous expense, subject to 2 percent of AGI floor, on Schedule A