NO SE Tax On Temporary Job

[Bees Knees]

If an individual writes only one book as a sideline and never revises it, he would not be considered to be "regularly engaged" in an occupation or profession and his royalties therefore would not be considered net earnings from self-employment.

Note the phrase "writes only one book," and "never revises it." If he does write a second book, then the first book is no longer considered a one time deal and it too would be subject to SE tax.

Thus, there is no such thing as treating the first book as not subject to SE tax and the second book as subject to SE tax. The minute he writes a second book or revises the first, Rev. Rul. 68-498 no longer gives him permission to avoid SE tax on the first book.

[MilTaxEA]

Rev Rul 68-498

I knew I had read it somewhere (Rev Rul 68-498):

Whether or not an individual is engaged in a trade or business depends upon the facts in the particular case. (...) If an individual writes only one book as a sideline and never revises it, he would not be considered to be "regularly engaged" in an occupation or profession and his royalties therefore would not be considered net earnings from self-employment. However, where an individual prepares new editions of the book from time to time, and writes other books and materials, such activities reflect the conduct of a trade or business, and, (...) the income is includible in computing net earnings from self-employment (...)

[Bees Knees]

I also have a systems analyst who writes romance novels on the side. Her income goes on Line 21. Facts and circumstances control and are different every time.

The fact that you made "novels" a plural means it goes on Schedule C. Plural means it occurs more than once which is an indication that the activity is continuous.

[Bees Knees]

There is no first book rule....

I thought the first book an author wrote went on Schedule E, and income from books after that would be reported on Schedule C. Am I missing something?

Schedule E instructions for line 4:

Report on line 4 royalties from oil, gas, or
mineral properties (not including operating
interests); copyrights; and patents…..

If you are in business as a self-employed
writer, inventor, artist, etc., report your royalty
income and expenses on Schedule C or
C-EZ.

[MilTaxEA]

I also have a systems analyst who writes romance novels on the side. Her income goes on Line 21. Facts and circumstances control and are different every time.

I thought the first book an author wrote went on Schedule E, and income from books after that would be reported on Schedule C. Am I missing something?

[DaveO]

I'm almost always on the no SE tax side on sideline work argument but I also hold that if the sideline work is in the same field as the taxpayer’s regular work then its SE income. If I do accounting for a non-profit I'm involved with and get paid on a 1099 I don't think there is any question it's subject to SE tax.

On the other hand I bush hogged out a few lots for a friend of mine a couple years ago during the summer when he was short of help in his landscaping business. I reported it as other income as I'm not in the bush hogging business and I did it for only a few days.

I have a minister who receives royalties from books they have written. Since the books are religious in nature and are sold through their ministry I include the income on their clergy "C".

I also have a systems analyst who writes romance novels on the side. Her income goes on Line 21. Facts and circumstances control and are different every time.

[snowshine]

I answer that question with one of my own, namely, "What does the client think it is?" I have 1 client in almost exactly your situation and we put it on SCH-C. As he is already way over the SS limit it only costs him medicare and he gets deductions for the tips and other out-of-pocket expenses (everything else is paid for). Another client insists on the Line 21 route even though her "appearences" are twice a year. The appearences are unrelated to her normal job so I go along. Neither has ever heard a peep from the IRS.

[Possi]

Fellow and Writer

My college professor is paid $3000 to attend a weekend as a "fellow" (he is also a writer) and I have always put it on a Sch C subj to SE tax.

If you get right down to it, he is paid to play, and not a lot of work. They wine and dine them, and it's always a fun weekend.

This is only my second year with him, and it looks like this is a regular, annual event.

I considered it as Line 21 for a fleeting moment, as it really is more of a social thing, but it happens every year and is reported as non-empl. comp.

I KNOW I won't be questioned if I err on the side of the IRS, but was I doing the right thing by my client? Or should I have asked for an opinion before making that call?

[taxea]

I have on occasion report on ln 21 1099 income with an explanation that it was a one-time payment for a one-time job, not subject to SE.

Not one was ever questioned by the IRS. F8919 is used when the work is determined to be an employee not subject to SE

[FEDUKE404]

Clarification

However we've always had such a form; used to be the 4137.

The Form 4137 was/is still out there, but IIRC is basically for dealing with unreported tip income only.

The Form 8919 drops the hammer a bit more strongly on an "employer" who should have been taking out various employee taxes on what is construed as wage income.

Many people envision the Form 8919 as a "burning the bridges" approach regarding, more than likely, a "former" employer.

The Form 4137 is there for the well-intended (and rare!) wait-person who feels the need to report "more" tip income......

FE

[ChEAr$]

http://www.irs.gov/pub/irs-access/f8919_accessible.pdf

I kind think Burke knew that. (grin

However we've always had such a form; used to be the 4137.

[FEDUKE404]

Form 8919 and instructions

http://www.irs.gov/pub/irs-access/f8919_accessible.pdf

[okie1tax]

Form 8919

This is off the top of my head, and I just had a haircut!

[Burke]

There is one alternative of course, and that is for taxpayer to maintain that he was in fact an employee, paying his half of the FICA tax with that certain form and also filing the SS8 form.

Can anyone tell me what that certain form is? Tried to find it, but no luck.

[ChEAr$]

There is one alternative of course, and that is for taxpayer to maintain that he was in fact an employee, paying his half of the FICA tax with that certain form and also filing the SS8 form.