Answer

Hello again beepo,

If you performed contract labor for someone, then you are considered to be self employed.

What this means, is that there are going to be a couple of extra forms you will need to fill out on this year's tax return.

Your income of $700 will be reported on Schedule C. On that same schedule, you may also take deductions for any expenses that you had in relation to earning that self employment income. This might include things such as the mileage you drove to and from the job, the cost of your tools or supplies used, etc. Once you arrive at your net income from that work, the net earnings will transfer over to your regular Form 1040 and be added to your other income for determining your tax.

As a self employed person, you are also subject to paying the self employment taxes of social security and medicare. So your net earnings from Schedule C will also transfer over to Schedule SE to compute those taxes.

If you are using Turbo Tax, just complete the interview process, and it will automatically fill out the necessary forms for you. But do not be alarmed when it says you are self employed, because that is the correct classification for this type of income.

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Thank you.