Page 1 of 2 1 2 LastLast
Results 1 to 10 of 11
  1. #1

    Default 1040 Other Income

    Asking for a friend
    My buddy has a day job on the books but on the side he is a handyman/painter.
    He made about 30k in income and wants to claim it in the "other income" on his 1040 form. However, he is concerned the IRS will ask questions, audit him, and demand records to prove where this income came from.
    My view is that the IRS wont care and will be happy he is claiming the income.
    What should he do?

  2. #2
    Join Date
    Oct 2016
    Posts
    3,582

    Default Re: 1040 Other Income

    That is precisely where it should be reported. If the IRS even audited a fraction of a fraction of the people that use that box they would be overwhelmed with audits.

  3. #3
    Join Date
    Jul 2018
    Posts
    1,988

    Default Re: 1040 Other Income

    Consult with a CPA and possibly a tax attorney.

  4. #4
    Join Date
    Oct 2006
    Posts
    15,937

    Default Re: 1040 Other Income

    Quote Quoting Chickenman0710
    View Post
    Asking for a friend
    My buddy has a day job on the books but on the side he is a handyman/painter.
    He made about 30k in income and wants to claim it in the "other income" on his 1040 form. However, he is concerned the IRS will ask questions, audit him, and demand records to prove where this income came from.
    My view is that the IRS wont care and will be happy he is claiming the income.
    What should he do?
    The income is considered to be self employment income and is required to be reported on Schedule C, NOT as "other income". He will end up paying both regular income tax on the income, and self employment tax on the income (employer and employees share of Social Security and Medicare taxes).

    Yes, the IRS will very much care where on the tax return that the income is reported, since reporting it on the line for other income is not proper at all.

  5. #5
    Join Date
    Oct 2014
    Posts
    7,627

    Default Re: 1040 Other Income

    Quote Quoting PayrolGuy
    View Post
    That is precisely where it should be reported. If the IRS even audited a fraction of a fraction of the people that use that box they would be overwhelmed with audits.
    No, this is NOT where it should be reported. His work as a handy man is self-employment income and must be reported on Schedules C and SE (and perhaps other forms and schedules may be necessary depending on the details of his business). What you suggest would potentially amount to tax evasion and draw either a civil fraud penalty or (though much more rarely) criminal prosecution. Why? Because what you propose would eliminate the self-employment tax (which is how self-employed persons pay their Social Security and Medicare taxes). So it does make a difference in the tax paid and the IRS would very much care about that.

  6. #6
    Join Date
    Dec 2019
    Location
    US
    Posts
    6

    Default Re: 1040 Other Income

    Try to look for advice on a local attorney expert on those field (TAX) so you'll know the best thing's you should do.

  7. #7
    Join Date
    Oct 2006
    Posts
    15,937

    Default Re: 1040 Other Income

    Quote Quoting RoderickCullen
    View Post
    Try to look for advice on a local attorney expert on those field (TAX) so you'll know the best thing's you should do.
    The OP's friend absolutely does not need to consult an attorney for something like this. The OP's friend just needs to get his taxes done properly. He likely should use a professional this year.

  8. #8
    Join Date
    Nov 2013
    Posts
    6,670

    Default Re: 1040 Other Income

    In addition, if he is a self-employed handyman/painter, he must also have business expenses that can be deducted from the gross income that is reported on schedule C. He buys material, supplies, tools, has travel expenses to and from jobs, office expenses, etc.

  9. #9
    Join Date
    Oct 2016
    Posts
    3,582

    Default Re: 1040 Other Income

    Quote Quoting Taxing Matters
    View Post
    No, this is NOT where it should be reported. His work as a handy man is self-employment income and must be reported on Schedules C and SE (and perhaps other forms and schedules may be necessary depending on the details of his business). What you suggest would potentially amount to tax evasion and draw either a civil fraud penalty or (though much more rarely) criminal prosecution. Why? Because what you propose would eliminate the self-employment tax (which is how self-employed persons pay their Social Security and Medicare taxes). So it does make a difference in the tax paid and the IRS would very much care about that.
    Correct my error. I don't know what I was thinking. I'll blame it on getting ready to leave the office for the day.

  10. #10
    Join Date
    Nov 2013
    Posts
    6,670

    Default Re: 1040 Other Income

    Quote Quoting PayrolGuy
    View Post
    Correct my error. I don't know what I was thinking. I'll blame it on getting ready to leave the office for the day.
    Perhaps you meant leaving for the office for the day? Or do you work night?

    1. Sponsored Links
       

Page 1 of 2 1 2 LastLast

Similar Threads

  1. Replies: 1
    Last Post: 03-16-2016, 01:17 PM
  2. Divorce: Falsified 1040
    By Hosannaworld in forum Divorce, Annulment and Separation
    Replies: 1
    Last Post: 07-27-2009, 06:52 AM
  3. Estate Can't Pay Estimated 1040 Tax
    By lc1960 in forum Estate Planning, Administration and Probate
    Replies: 1
    Last Post: 04-09-2009, 05:40 PM
  4. Federal Taxes: Form 1040, Schedule A - Other Expenses
    By head-scratcher in forum Tax Law
    Replies: 1
    Last Post: 03-17-2008, 06:36 AM
  5. 1040 NR - Standard Deduction
    By Shankarnarasimha in forum Tax Law
    Replies: 1
    Last Post: 06-23-2006, 06:44 AM
 
 
Sponsored Links

Legal Help, Information and Resources