(long) income as household employee
Okay heres my dilema Im finally going to claim income this year. With deductions im gonna owe about 5000.00,that figure is with filing my earnings under self employed but my club has no record of me,never has for five yrs so i was playing with my tax software before going to cpa to get an idea of what Im looking at, when i discovered if I claim the same amount of income in misc. income under household employee instead I would actually receive a small refund. Would someone who does private shows qualify as a household employee the irs says its someone that does work in your home that you control when they come and go and how the work will be done, I know it might be stretching it might be stretching a bit but that kinda sounds like what i would be doing at private shows???I know this is prob to good to be true so if anyone knows about this let me know.
thanks
otheia
I was looking at the software again and saw a place to claim simple other income can I do this and if so should I tell them it came from private shows or will they want the names of everyone i got paid from????8)
Re: (long) income as household employee
There's a fundamental flaw in your understanding of Household Employee status. A Household Employee has to have an EMPLOYER. That employer must pay 1/2 of the employee's SSI tax, possibly along with other state "taxes" such as comp and unemployment. Thus the tax savings you see for a Household Employee probably only reflect the difference between a self-employed person paying 15% self-employment tax, versus an employer paying 7.5% of SSI tax plus the household employee paying the other 7.5%. Even if you were to create a corporation to act as employer (since you can't employ yourself), there is no free lunch as that corporation would have to pay the apparent difference in taxes, and since that corporation is funded by your earnings it amounts to still paying but paying out of a different pocket.
Re: (long) income as household employee
hi melonie,
Yes I did figure that one out but what about claiming it under just plain other income I saw a spot for that right after the household employee thing ,I figured out someone would have to reporting paying me that much about two minutes after i posted the question :-[ but the misc income part is pretty vague so didnt know if I stick in there instead self employed.thanks for the replie.
Re: (long) income as household employee
Line 21 'other income' cannot be used for earned income. It is for income from jury service, gambling, prize winnings, and some other items. It is possible for IC's to receive refunds under certain income limitations if they have children. Otherwise the social security and medicare taxes always creates a liability.
Re: (long) income as household employee
Also, some states/towns require that if you "work from home", you have all of the proper business licenses. So, you really need to be careful of how you file.
Your best bet is going to a CPA who specializes in IC's and see how that comes up. They'll know how to make everything work out. You may still end up owing money, but they'll make sure that you get all of the deductions you are entitled to and they'll also make sure that you won't get audited.
Good luck!