I hope all is well with you. I'm a bit under the weather and trying to fight off a cold. I think my daughter's 2 year old Dora The Explorer Birthday Extravaganza took it's toll on me last week. It's not because I actually did anything. I have a great wife that took care of all that stuff. I think it was all the "work" of managing everything from a far that did it to me. lol
Fortunately I'm away in Puerto Rico recovering under some warm sun and a cool beach breeze. lol I'll share some pictures next week. In any event, this week I just want to cover taxes since the deadline has passed. If I had a bit more foresight, I would have wrote about this last week instead of my stalker love of Apple products. But better late than never. I imagine that next year many of you will be making a lot of money working at home and Uncle Sam is going to want their cut. So let me explain the process.
Work At Home & Taxes
So if you've been involved with any work at home related company, you've probably noticed that many of them don't withhold taxes. I'm sure you thought to yourself well if they ain't asking then I'm not telling. But "Au Contraire Mon Frere"! The feds still want to get in your pockets.
The reason why the whole work at home business set up is appealing to companies is they can save on various costs such as health insurance, retirement and payroll expenses. Most of us are happy to sacrifice this stuff if it means we can sit in our house slippers and earn a living from the comfort of our lumpy couch. So everyone wins. However Uncle Sam wants to win too so you are expected to report this income you're receiving.
So let me break down how this works so you avoid any issues in the near future because I know all my loyal subscribers will be "stacking a lot of at home paper" ($$$) in 2010 so the following will probably apply to you.
99.9% of work at home opportunities work as follows. You're usually considered an independent contractor not an employee. When you reach about $600 $400 for a given company, you may be required to fill out a w-9 tax form. At the end of the year you'll receive a 1099 that is filed with the Feds and a copy is sent to you. You then take that to your accountant. They will ask you what expenses or deductions you have such as internet fees, computer, etc, etc. That will be subtracted from what you earned. If there is anything left, you'll be taxed on that when you send in your return. When you start making some larger sums of money, I would suggest getting incorporated. It definitely helps your tax burden.
So that's pretty much how the taxes work. Keep in mind some companies aren't based in the U.S. so they may not require this. But as a rule of thumb, you're suppose to report the income regardless. Please keep in mind I'm not a tax advisor or professional. You should always seek the advice of a professional tax advisor for questions regarding taxes as the information I provided here may not be accurate.
I hope this helps you next year. Speak to you soon.