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10 Surprising Ways You May Be Self-Employed

Updated for Tax Year 2016


OVERVIEW

In today's economy, a "gig" means more than just a band booking a show at a local bar. These days, millions of taxpayers—from millennials to baby boomers—rely on many ways to earn extra money or make ends meet. If you earned money from other than a 9-to-5 job last year, this is usually considered self-employment income and you likely need to report it on your tax return. Here are ten surprising ways you may be self-employed.


1. You Sell Homemade Goods

Woman selling cupcakes from a food truck

If you put your cooking skills to work by selling goods that you made, you must report the income you earned from it. Unless you sold goods for a non-profit organization, such as a church bake sale, for which you did not keep the profit, you will likely owe taxes on the earnings. For example:

  • Say you baked seasonal apple pies and sold them at your local farmer’s market last fall.
  • You earned $1,000, and your expenses, including the baking supplies, ingredients, and your farmer’s market fee, and display totaled $300.
  • You would owe taxes on the difference of $700. 
  • Since your profit is greater than $400, you will also need to calculate self-employment tax on your earnings.

2. You Buy and Sell Stuff

Did you buy something in bulk dirt cheap and then find out you could resell it at a profit? Whether you sold plastic ponchos on a rainy day in San Diego or some rare flea market finds on the Internet, recurring sales or purchases for resale could be taxable.

It boils down to whether you're running a business or simply entertaining a hobby. The IRS considers these factors to differentiate the two:

  • You sell in a business-like manner.
  • You spend a considerable amount of time selling.
  • You depend on the profits for your livelihood.

3. You Profit From Your Creativity

Creating logos for others, writing content for websites, and taking or selling photographs for third parties can make you self-employed. Depending on your expertise as a graphic designer, you can earn between $50 and $1,000 for creating business logos.

Subjects from travel to parenting afford many opportunities for writers to make a little extra money from their hobbies or areas of expertise. Photographers can also make money taking event photos, selling prints, teaching, and running photo tours. Other work that falls into the self-employed creative category include:

  • Musicians
  • Fashion designers
  • Crafters
  • Fine artists

4. You Sell Your Old Stuff as a Business

Whether you're saying goodbye to your most prized childhood possessions or old items from the closet, selling your stuff can be a form of self-employment. Amazon, eBay, Craigslist, and other e-commerce websites and apps give your goods great exposure and make the selling process relatively safe and easy. If you have entered this as a business and made $400 or more doing this, you must file a self-employment tax return.

Selling your stuff at swap meets, garage sales, or through a third party such as a consignment store, can mean you're self-employed for tax purposes if you make a profit.

5. You Take Care of Pets

Taking care of people's pets for pay can be self-employed income. These common pet-friendly gigs could require you to pay taxes:

  • Dog walker
  • Pet sitter
  • Dog trainer
  • Groomer

You can usually deduct common and ordinary expenses that you incur in your pet business such as vehicle expenses for mileage between your home and your clients' homes. You can also deduct ordinary and necessary supplies such as:

  • Animal food
  • Pet products
  • Advertising
  • Office or storage space for your business

6. You Work in Rideshare

Driving for companies like Uber and Lyft is a popular on-demand gig that allows you to make money part- or full-time, any time of day or night. As a rideshare driver, you can deduct the portion of your vehicle expenses that you use to give rides.

For example, if you used your car for a rideshare gig 50% of the time last year, you can deduct half of your vehicle expenses. The other half isn't deductible for self-employment purposes, because it was used for personal purposes.

7. You Deliver the Goods

Companies like TaskRabbit, Postmates, and GrubHub match people who need to have an odd job or chore completed with someone who wants to make some extra money. If you delivered a service, mail, or food via services like these, you may have to pay taxes on your earnings.

8. Rent Your Room

Renting out your home or space in your pad, such as through Airbnb, can be taxable if you did it for more than two weeks over the course of the year. You can deduct expenses such as:

  • Maintenance, housekeeping, and home repairs
  • Utilities
  • Mortgage interest

9. Earned Valuable Goods

Say your friend signed over the title to an old car that was sitting in his driveway or gave you a bike worth a couple of hundred dollars in exchange for some work you did. Helping a neighbor clean out a garage or helping a friend move to a new house might have gotten you a handsome reward other than cash, but a valuable good is still considered income.

10. Kickstart With Crowdfunding

If you received money through Kickstarter.com, Fundly, Indiegogo, or any of the other relatively new crowdfunding companies, this is considered income and you might have to pay taxes.

The IRS has developed a special form, the 1099-K, specifically for these earnings. You receive this form showing the amounts you earned from payment card transactions (think debit and credit cards) and third-party payment networks (the crowdfunding website). Although there is a minimum threshold for amounts earned through the third party networks, there’s no such threshold for payment card transactions.

Remember, with TurboTax, we’ll ask you simple questions and fill out the right tax forms for you to maximize your tax deductions.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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