Do you have to file on it & claim it ?? I know it's earned money but a tax agent once told me if it's $5 or under it don't have to be filed. It would be kind of like a self employment status & after my deductions it would probably be even less then that.
The reason for asking is because I'm waiting on a settlement case that' n the process but it's still going to be another 8-10 months but I'm in a bad spot& also need to be bringing some money in for bills.
Thanks & please no negative or rude answers
?2014-03-18T21:29:38Z
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I believe the cap for earned income is something like $10,000. So technically, no you don't have to file it, but I would ask your accountant anyway. Sometimes it's good just to show them and take it from there.
That happened with me one year - my earned was under $10,000 and the accountant said it wasn't worth filing. I gave her the forms/info just in case though.
If you have a 1099 form then the IRS has had the income reported to them. If you don't report the income it will come up as a flag and if there are enough flags your chance of getting audited will go up. If you get audited you'll have to pay the back taxes as well as penalties. Morally you should pay the tax, but morals and our government aside - you run the risk of paying more if you attempt to not report the income.
The chance of getting audited is not 100%, but if you are you won't have a leg to stand on. I'd declare. You can deduct a lot of things from a 1099 since you are "self-employed" or looking at it another way running your own small business. Often the deductions for mileage, licensing (for professions), electronics used (if you use a computer or cell phone you can depreciate some of the assets value), cost of utilities (your cell phone bill can be deducted to the percent you used it for earning the 1099 income) and numerous other deductions can legally bring down the tax bill on a 1099 - which is higher than earned income since you are paying self employment tax (as another user pointed out).
I'd counsel you to declare it and take as many (legal) deductions as you can to lower your tax bill. All those deductions for 1099 income are separate from deductions for earned income, that is you don't have to meet the standard deduction before they apply to your 1099 income.
If this is your only income for the year, the filing requirement for self-employment is only $400 so you must file and will owe some tax. If you were already required to file, you must report all self-employment income.
On $5k of self-employment income, the self-employment tax alone is going to be $706. If you have not made any estimated payments, you're not getting a refund but will owe when you file. You must file and pay in full by April 15, 2014 to avoid penalties and interest.
"yeah...ok" must be a janitor at the IRS. He or she certainly does not know anything about taxation.
You have to pay Self Employment taxes at the rate of 15.3% on that income! Self-employed individuals earning over $400 MUST FILE. You either misunderstood your agent, asked the wrong question, or your tax agent is incompetent!