In-Home Biz Tax Q & A

San Francisco Chronicle:

Q: I just started an in-home business doing referrals and billing for caregivers. I have only two clients so far and need to keep working outside my home as an independent contractor to help with living expenses. My question is about my tax return. Should I combine my home business and contractor earnings in one return, or should I fill out separate returns for each business?

A: If you are a sole proprietor and not incorporated, you just need to fill out one tax return. But depending on the nature of your two endeavors, you might have to fill out two Schedule C forms as part of that return.

“It depends on whether the work this person is doing as an independent contractor is the same work that she’s doing from home,” said Jan Zobel, an Oakland tax preparer and author of “Minding Her Own Business: The Self-Employed Woman’s Essential Guide to Taxes and Financial Records.”

If the two businesses are related to a single theme, you can put them on a single Schedule C under a broad umbrella such as “billing services” or “medical services,” according to Zobel.

“But if they are very different, such as teaching yoga and medical billing, she will need to file two separate Schedule Cs within her tax return,” Zobel said.

Photo by gossamerLL.

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