Thank you for using justanswer. You are considered to be self employed for tax
purposes. That means that you will file Form 1040 (Schedule C)Profit or Loss From Business
to record all of your income
and your expenses. You may deduct any expense that is ordinary and necessary for your kind of work, such as costumes, for instance. Generally, when you're self employed, ALMOST any expense that you pay for out of your pocket is deductible
, so you will want to write them all down and tell your tax preparer
so that you get all of your allowable deductions
You may also deduct your mileage if you go to more than 1 job per night. IRS has ruled that from home to your first place of business, and from your last place of business is commuting and is never deductible, but any time you would drive to additional work places, then that mileage would be deductible.
You MUST keep good records for all of your expenses, especially auto travel. The standard mileage deduction
for your business miles in 2009 will be 55 cents/mile, so that adds up pretty quickly.
If, after all of your expenses are deducted from your income, your net business income is more than $400 (and it sounds like it might be) then you must pay your own social security tax
. You do this by filing Form 1040 (Schedule SE) Self-Employment Tax
Your social security rate
is 15.3%. Normally as an employee that is paid on a W2, you pay half of your social security tax and your employer pays the other half. When you're self employed, you must pay it all. However, if you never pay into social security, then you have nothing to collect when you turn 65.
I've linked you to the small business website at the IRS. This site goes into alot of detail, such as whether or not you should get an EIN (Employer Identification Number), etc. Please read this with a small grain of salt. As long as you stay a Sole Proprietor
(filing a Schedule C
), then some of this, such as getting an EIN number not a requirement.
I normally advise my clients to work the business at least 1 year, then see how much they made, do they think it will be a long term viable business, and did they enjoy it. There's time to figure this all out after you see how well this year goes.Small Business and Self-Employed Tax Center
I hope this helps.