ChaCha Taxes

[maggiew]

How did you all deal with your ChaCha taxes?

We have TaxAct software and it seems to be putting this on a Schedule A with the amount I made as a "profit" from business. And it lists ChaCha as the business name. Is that correct? To me, it makes it seem like ChaCha is my business and I made $$$ profit from that business. I don't think that is correct.

Is this the way that you are reporting it?

Thanks,
Maggie

 

[MyMuse]

If you are getting a Form 1099 from ChaCha, then ys, this is the way it is to be reported.

It is, indeed your business. You can deduct what you pay for internet access and anything else you use for ChaCha.

Alternatively, if you do not want to deduct anything off the earnings of ChaCha, you can place the entire amount in Line 21 - Other income. In both cases, I believe you need to file a long form 1040.

I hope this helps!

 

[Cheshire Figment]

I would hope that the program is putting it on a Schedule C (or C-EZ), not Schedule A. And since it is self-employment you cannot put it on Line 21 of the 1040 as you must also pay self-employment tax (Social Security) which is on Schedule SE.

Mike (CPA Retired)

 

[Foladar]

I've been using TaxAct too because they have free online, and the other two didn't, and boy its confusing! Mostly because I didn't get a 1099 for my other side project

 

[Beavers5]

I've been using TaxAct too because they have free online, and the other two didn't, and boy its confusing! Mostly because I didn't get a 1099 for my other side project

You can do a schedule C without a 1099 MISC. You just need to know the amount of income and any expenses attributed to that income.

 

[maggiew]

I would hope that the program is putting it on a Schedule C (or C-EZ), not Schedule A. And since it is self-employment you cannot put it on Line 21 of the 1040 as you must also pay self-employment tax (Social Security) which is on Schedule SE.

Mike (CPA Retired)

You are correct. It is Schedule C not A. I don't know why I typed that. And it did fill out a Schedule SE.

Do I need to pay social security and medicare taxes too or is that included in the self employment tax?

TaxAct doesn't really explain this well.

And it didn't put the money on line 21, it is on the line that says "Business profit" but I don't remember what line number that is right now and the forms are downstairs.

Thanks,
Maggie

 

[SuzyQue]

If you are getting a Form 1099 from ChaCha, then ys, this is the way it is to be reported.

It is, indeed your business.

Alternatively, if you do not want to deduct anything off the earnings of ChaCha, you can place the entire amount in Line 21 - Other income. In both cases, I believe you need to file a long form 1040.

I don't think that is correct. ChaCha is not your business, you are an independent contractor for ChaCha, you are self employed. Last year I put "Internet Search Consultant" where it asks you for the principal business or profession. I used 999999 for the code. And you cannot place this amount on line 21 as it distinctly says in the tax form instructions that you are not to list any self employment on that line.~~

 

[lbgraves]

Also, you should not have anything in the business name when filling in the self contractor information on TaxAct. They say to leave it blank when you don't have an actual business name. If you work in a specific portion of your home you can deduct a percentage of your home for work. You can find information about how to determine the percentage and what you can include on the 4562 and 8829 forms. The instructions are pretty clear and once you fill in that you are SEd on TaxAct it takes you through all of the steps to enter that information. After trying to figure it out manually for the first time last year, that program made it so much easier. It will be even easier for you the second year you do it.

 

[maggiew]

I don't think that is correct. ChaCha is not your business, you are an independent contractor for ChaCha, you are self employed. Last year I put "Internet Search Consultant" where it asks you for the principal business or profession. I used 999999 for the code. And you cannot place this amount on line 21 as it distinctly says in the tax form instructions that you are not to list any self employment on that line.~~

Edited to add that I typed this while the previous poster was typing too.

Yeah, that's why I'm unsure if what TaxAct printed on Schedule C is correct. Should it list ChaCha at all? The program asked me about the business name, address, EIN, etc. I typed in the ChaCha info that was on the 1099-MISC. But I am not sure if I was supposed to do that or make up some business for myself like "Maggie's Informational Services" or something and put my address in. But I don't have an EIN. Is that what you meant by using 999999 for that?

I guess my question is, can I be an independent contractor and not have my own business? If so, do I put ChaCha's info on the Schedule C?

Thanks,
Maggie

 

[SuzyQue]

999999 is the code entered under "B" on Schedule C-EZ. And yes, you can be an Independent Contractor and not own a business. You are contracting out your services to ChaCha. My daughter figure skates for different theme parks during the summer, and she too is an Independent Contractor, even though she skates for a certain Ice Show Company.~~

 

[Beavers5]

Edited to add that I typed this while the previous poster was typing too.

Yeah, that's why I'm unsure if what TaxAct printed on Schedule C is correct. Should it list ChaCha at all? The program asked me about the business name, address, EIN, etc. I typed in the ChaCha info that was on the 1099-MISC. But I am not sure if I was supposed to do that or make up some business for myself like "Maggie's Informational Services" or something and put my address in. But I don't have an EIN. Is that what you meant by using 999999 for that?

I guess my question is, can I be an independent contractor and not have my own business? If so, do I put ChaCha's info on the Schedule C?

Thanks,
Maggie

You need to change the info where you put in ChaCha's 1099 info. You can leave the business name and EIN blank, since you do not have those. You use your address for business address. The only place that you may need to type in "ChaCha" is if there is a place by "Gross Receipts" that asks you to list your 1099 MISC incomes.

 

[Cheshire Figment]

Self-Employment Tax is both the employer and employee shares of both Social Security and Medicare. Note that 50% of the Self Employment tax is a negative adjustment to income reported on Line 27 of the return.

 

[MyMuse]

I guess my question is, can I be an independent contractor and not have my own business? If so, do I put ChaCha's info on the Schedule C?

No, unfortunately. Even though, ChaCha itself does not belong to you, it is considered your 'business' (the term is used loosely ).

I verified taxes for over 10 years and this was the biggest question we got, when we asked for business value. The bottom line is if you file a Schedule C, you have a business. Now, it might be worth zero or a small amount, but it is a business. And, you have to file a Schedule C if you received a Form 1099. It goes around in circles and makes one dizzy.

The good news is that you probably have deductions (internet access, etc), so I would leave the information on the top of the form blank and fill in the rest. You can lower your tax liability this way.

If you have a very miniscule amount, then you can probably use Line 21, but I would use Schedule C to input deductions.

 

[maggiew]

No, unfortunately. Even though, ChaCha itself does not belong to you, it is considered your 'business' (the term is used loosely ).

I verified taxes for over 10 years and this was the biggest question we got, when we asked for business value. The bottom line is if you file a Schedule C, you have a business. Now, it might be worth zero or a small amount, but it is a business. And, you have to file a Schedule C if you received a Form 1099. It goes around in circles and makes one dizzy.

The good news is that you probably have deductions (internet access, etc), so I would leave the information on the top of the form blank and fill in the rest. You can lower your tax liability this way.

If you have a very miniscule amount, then you can probably use Line 21, but I would use Schedule C to input deductions.

I'd fill in a Schedule C regardless, but I wasn't sure if I had to officially "register" a business and get an EIN.

My biggest concern was what they wanted under the "business" name and address on the form. I wasn't sure if it was "my business" who was contracting to ChaCha that they wanted. Or if I was to put ChaCha's info there. I get the feeling that I put in my address and leave the name & EIN blank.

My DH wasn't keen on deducting internet access, etc. Do you have to only use internet access for the business in order to deduct it? For example, I obviously use internet to surf the DIS boards.

Maggie