As a sole proprietor/independent contractor, your income is the most heavily taxed of all wage earners. You will be assessed a federal tax, state tax, local tax, and a self-employment tax. The best way to lower your tax liability (the amount of tax dollars you owe to these entities) is for you to take time […]
When Businesses Barter Is it Taxable Income?
Due to our slow moving economy, we’ve seen an increase in businesses bartering with one another. Bartering occurs when you exchange goods or services without exchanging money. An example of bartering is a plumber doing repair work for a dentist in exchange for dental services. – IRS Topic 420 So, is this exchange considered taxable […]
1099-Misc: Other Income vs. Nonemployee Compensation
One of my small business clients received a form 1099-misc from one of her customers for whom she’d performed a business service. The customer unknowingly reported the income using box 3: “Other Income” when she should have reported it in box 7: “Nonemployee Compensation”. So what’s the difference? One is for payment for services performed, […]