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Additional income

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I have a full time...
I have a full time job where federal and state income taxes are deducted as well as social security taxes. As a hobby I have done some writing and been published, the additional income I recieve from this has always been included simply as additional income. However the preparer for my 2007 taxes handled them as a business which put me in a completely different tax bracket and created a large liability. Unfortunately he e-filed the forms before I had the chance to look them over and when I questioned it he said that it was the only way to do it. Is that correct?
Submitted: 9 years ago.Category: Tax
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7/5/2008
Tax Professional: Marvin,EA, Enrolled Agent replied 9 years ago
Marvin,EA
Marvin,EA, Enrolled Agent
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Satisfied Customers: 1,672
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Hello and thank you for using Just Answer. How long have you been writing for a hobby? How much did you make for writing in 2007? Have you deduct your expenses from writing on Sch. A before?
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Customer reply replied 9 years ago
The books were actually written by my husband and myself before his death in 2001. The first was published in 2006, the second in 2007 and another will come out this year. In 2007 I received approximately 12,000 from the publisher. No I had never done a Schedule A before this year. I had always simply added the amounts as additional income and included a copy of the 1099.
Tax Professional: Marvin,EA, Enrolled Agent replied 9 years ago

The tax preparer filed a Sch. C, Profit and Loss From a Sole Proprietorship, for your 2007 tax return. When you filed a Sch. C, Social Security Tax (12.5% rate) is charged on net profit up to $97,500. You should have the tax preparer file an amended tax return to correct his error for you. Have the preparer change the income from a Sch. C to other income. You should receive a refund for the Social Security Tax paid.

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Customer reply replied 9 years ago
Does that mean he needs to do the schedule A you mentioned or can it be handled as 'extra income' as in previous years? I ask because I received a notice from the IRS that they have raised the amount of tax I should have paid in 2006, as well and I think they are applying the same thing to it altho I've not gotten an answer about that.
Tax Professional: Marvin,EA, Enrolled Agent replied 9 years ago
When your tax preparer filed the Sch. C for 2007 the IRS might have review your past year returns and added the Social Security Tax as tax due. When you file the amended return for 2007 attach a statement that the income is other income from your hobby writing books and the activity is not for-profit business. Also, replied to the letter from the IRS for tax year 2006 with the same statement.
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Customer reply replied 9 years ago
Thanks...you saved my weekend if not my life.:)
Tax Professional: Marvin,EA, Enrolled Agent replied 9 years ago

If my answer is benefit to you please "Accept" and thank you for using just answer.

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Marvin,EA, Enrolled Agent
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