Delving Into Your Tax Plan When Working for Yourself
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Many people, even people that have a strong and reliable income from a job that is stable and not going anywhere, require a little bit of extra money on the side to make ends meet. An additional job, with all the hours and responsibilities, is not what they are looking for. They just need a little bit extra, for things like the cable bill or putting their kids into private schools or sports.
When folks find themselves in that situation, many times they turn to a specialized skill that they have, and they then provide a service to friends and family for extra cash. Maybe it’s something clerical or administrative, like bookkeeping, typing, or editing and proofreading. Possibly it could be something more creative, like craft making, hair styling, custom illustrating, or clothes design. It could be something that is labor based, such as landscaping or child care. Lastly, it might be something that involves a specialized skill, such as subject specific tutoring or personal fitness training, either for sports or weight loss. Possibly they have cosmetic knowledge, such as how to get rid of skin tags or how to lose weight on the cookie diet plan.
When a person’s additional income comes from services that are given mainly to friends and family, they don’t often consider it in terms of an official business that they own an operate, and many times they also don’t think of the money they make while providing these goods as additional income as if it came from a second job. It merely exists in their mind as if it’s in some sort of “income limbo” – as if it doesn’t exist at all. The problem with that kind of thinking, though, is that the income does exist, it is very real. For tax purposes, it is most definitely additional income.
If the income is reported to the IRS by any of the people that paid for the services that were provided in their tax return as an expense, or if it comes to the attention of the IRS in any other way, then the person who neglected to report the income could be in very serious tax trouble. They might think that there is a very slim chance of that happening, because they are only performing services for family and friends, but you never know what might come to the IRS’s attention, and through what avenue that might happen. There is no preventing that.
The safest attitude to take where the IRS and taxes, or really any governmental agency and personal responsibility, is involved is a “better safe than sorry” attitude. You won’t go astray for being too forthcoming with your taxes, but you can get in big trouble going the other way. Remember – if you are considering a career in personal training, you need more than just certification. You need excellent tax advice, as well.











