Author Topic: Multiple Side Gigs- accounting and tax help  (Read 351 times)

FrugalSister

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Multiple Side Gigs- accounting and tax help
« on: June 16, 2017, 03:08:47 PM »
I started teaching piano lessons last year and filed that as self-employment income.  Now, after reading TWA's post on hobby income, I realize that I could have filed as hobby and kept more of my income.  This is year #2 of teaching, and I am running a profit every month, is it too late to amend last year's taxes and file form 5213?  Could I do this myself, without the help of a tax pro, and would this save me money?  I anticipate making a profit every year that I teach. 

What is the limit on profits from hobby income?

Also, I just started providing part-time in home daycare to one child and would like to accept a few more children.  Should I open a separate DBA bank account at this point when I am getting paid $40 a week?  Could this income also be considered a hobby and could I file a 5213 on this hobby?

Thanks for any pointers!  Love that there is a forum here.  I'm not a big fan of FB.


Maccountant

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Re: Multiple Side Gigs- accounting and tax help
« Reply #1 on: July 20, 2017, 03:17:45 PM »
I would advise to continue to file as a sole proprietor and claim the income as business income.

One of the things the IRS factors in an audit is "intent" when determining if a hobby is in fact a hobby or is it a business. You obviously are not giving these piano lessons away free and unintentionally made money through pursuing your passion for teaching piano. You are billing students for your time to teach them a skill.

On top of that you are intending on making a profit in future years. To try and take the position that teaching piano lessons is a hobby and not a business venture is pretty thin.


Womac

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Re: Multiple Side Gigs- accounting and tax help
« Reply #2 on: September 11, 2017, 01:31:30 AM »
I think you're right M.

Veiled

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Re: Multiple Side Gigs- accounting and tax help
« Reply #3 on: November 19, 2017, 08:00:33 PM »
I would advise to continue to file as a sole proprietor and claim the income as business income.... On top of that you are intending on making a profit in future years. To try and take the position that teaching piano lessons is a hobby and not a business venture is pretty thin.
I had the same reaction to that post. I thought "d'oh! I could have saved myself so much SE tax last year!" But I realized that I'm intending to make money for years on my side hustle and I agree with Maccountant. I think WA's idea makes most sense if you plan not to continue the activity more than 2-3 years.