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Hi, My husband is a full time tennis pro in the summer ...

Hi, My husband is a...
Hi, My husband is a full time tennis pro in the summer (teacher during school year). The tennis club pays him as an employee. He also teaches tennis and runs a tennis camp on his own. We are unsure whether to file his non-employee work on a Schedule C (many expenses to claim) using a dba, or whether he should somehow bring all of this work under one umbrella, perhaps an LLC? It would be easier to combine for lots of reasons, but what would the tax ramifications be? Thanks so much.
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Answered in 19 minutes by:
4/1/2008
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,621
Experience: Taxes, Immigration, Labor Relations
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The income your husband receives as an employee (reportable on W2 form) should not be mixed with self-employment income.

It doesn't matter from tax purposes how the business would be organized - solo proprietorship, DBA, LLC or partnership - for tax purposes all these are disregarded entity and the income and expenses should be reported on his personal tax return.

You will use schedule C for your self-employment income and expenses - http://www.irs.gov/pub/irs-pdf/f1040sc.pdf and calculate your net income. You net income from self-employment is a subject for 15.3% self-employment taxes and should be calculated on schedule SE - http://www.irs.gov/pub/irs-pdf/f1040sse.pdf

You will use 1040 form - http://www.irs.gov/pub/irs-pdf/f1040.pdf for your tax return - following would be important entries:

  • line 7 - wages from W2 box 1 - as he also has a regular job.
  • line 12 - net business income from the Schedule C
  • line 27 - one-half of self-employment tax from the Schedule SE
  • line 58 - self-employment tax from the Schedule SE
  • line 64 - federal income tax withheld from Forms W-2 box 2 and 1099misc box 4 (if any)

The key point is to determine qualified business expenses and to keep a good record.

Lev
Lev, Tax Advisor
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Satisfied Customers: 30,621
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