TAX TIP OF THE DAY... HOBBY INCOME status can save you tax.
If you have income from a side venture with NO SIGNIFICANT EXPENSES, classifying that endeavor as "hobby income" may save you hundreds of dollars in tax. Hobby income is not subject to the 15% self-employment tax that you otherwise pay on part-time business income. You may have a hobby if: 1) you enjoy the work 2) you have another source of primary income 3) the work is sporadic or 4) the work is very part-time. Hobby income examples include fish tank cleaning, church organist, babysitting and baked good sales. SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com TAX TIP OF THE DAY... save up to $1k by using a DAYCARE flexible spending account.
Which is better? 1) Daycare tax credit on your tax return OR 2) daycare FSA at work. For most people, the FSA is best and saves you up to $1,033 more per year. But the true answer varies based upon factors: # of children, daycare amount, your tax bracket, W-2 amount. A daycare FSA... The employer takes funds directly from your paycheck and places into a special daycare bank account with your name on it. The money is pre-tax which means it reduces your W-2 taxable wages saving you federal income tax, social security tax and medicare tax. There are more +/- details. SHARE WITH A FRIEND. We are accepting new clients and appreciate your referrals! If you need any help... www.baboiancpa.com |
Details
AuthorDavid S. Baboian, CPA Archives
February 2018
Categories |