How to Report Self-Employment Income from Multiple Sources
One of the most appealing benefits about being self-employed is that you are your own boss—and that means you have added flexibility to your daily work. This enables you to try different things and often results in the opportunity to stem multiple sources of income. Marketing your skills to multiple clients will give you more experience and boosts your annual income.
Right now, the U.S. has more than 10 million people who are self employed and, for many of these savvy entrepreneurs, income is coming from several different places. This is great for your wallet, but when it comes time to work on your tax return, things can get complicated.
We have gathered some basic information for you to review if you are trying to report self-employment income from multiple sources to the IRS this year:
1. Use the Schedule C form to report your self-employment income to the IRS on your return.
2. If the activities or responsibilities that generate the different sources of income are very similar in nature, you can likely report them to the IRS on the same Schedule C.
3. If your work is different (for example, you do IT work for one company and sell handbags for another) you will need to complete separate Schedule C’s for each.
4. You should always keep accurate and detailed records during the year so that you have what you need to maximize your deductions on your return. You should keep separate records for each different activity/income source.
5. You should always report ALL of your income. Do not fall into the trap of thinking that, because you have multiple sources of income (and some that may be small amounts), the IRS will not notice that some income is missing. In general, the IRS reviews the tax returns of those who are self-employed carefully and they are most interested in checking your income.
6. If you receive income from several places, be sure that you know whether income taxes are being taken out of your checks or not. If not, you will want to put some of the income aside to pay taxes in April or even get ahead and estimate what you will owe in taxes for the coming year. Surprises in April are no fun!
Don’t Make a Mistake: Enlist Help from the Professionals
Keep in mind that correctly completing your tax return if you are self-employed can be very difficult and many seek the help of a tax professional for help and guidance with the process. If you have multiple income sources, you may still have questions about how to report this to the IRS and a reputable tax firm should be able to provide this type of support without a problem.
Success Tax Relief has been supporting taxpayers for 30 years and has partnered with many entrepreneurs to accurately complete their tax returns each year.
We can help you find deductions and tax credits that apply to you and can manage the audit process, should you receive any questions about your return from the IRS. Give our team a call today at 1-877-825-1179 or contact us here so we can get started!