Microstock Photography Forum - General > Newbie Discussion
Tax Questions (US)
cascoly:
--- Quote from: JohnTravolski on October 03, 2020, 01:10 ---
--- Quote from: Sean Locke Photography on September 30, 2020, 12:05 ---https://pocketsense.com/royalties-schedule-e-5790575.html
"You would use Schedule C, not Schedule E, to report royalties if you’re a self-employed writer, songwriter or artist. The key phrase here is “self-employed.” You created something with the intention that it would earn you a livelihood. It's an ongoing endeavor, not a one-shot effort. Schedule E is appropriate for reporting passive income."
https://www.thetaxadviser.com/issues/2013/dec/kelley-dec2013.html
--- End quote ---
I'm a regular W2 worker doing a completely unrelated job at a large company, which is responsible for 95% of my income. I do stock for fun and only sell it to try and earn a little extra money, which is why I find it hard to consider myself "self-employed" and is why I was giving consideration to schedule E. I'm just wondering if there are others in a similar situation and I'm wanting to know what they did.
--- End quote ---
first, MS income IS passive - except for the few times we've been paid just for uploading. it's the ultimate 'one shot'! before retiring, i also earned passive income from my online games, and reported both on sched E - the only real difference for these types of royalties (as opposed to gas&oil, etc which have depreciation, etc, etc) is that you dont pay FICA on royalties. that made a big difference for me when my primary income was royalties. but you're probably paying max FICA already, so really won't matter
wayback i confirmed this thru a call to IRS, but of course, IANAL
Sean Locke Photography:
It’s “passive”, but that isn’t the point. It’s still income subject to self employment taxes.
spike:
--- Quote from: Sean Locke Photography on October 03, 2020, 07:57 ---No. You’re actively doing it, so it’s still a business.
--- End quote ---
What if one were to completely disengage and not do it actively at all (in fact, I think my contract may prohibit it)? Still Sch C in your opinion?
Sean Locke Photography:
No. All the links and reading say that if you’re not actively participating in production, then it becomes “royalties” for the purposes of taxes.
Uncle Pete:
--- Quote from: spike on October 06, 2020, 05:03 ---
--- Quote from: Sean Locke Photography on October 03, 2020, 07:57 ---No. You’re actively doing it, so it’s still a business.
--- End quote ---
What if one were to completely disengage and not do it actively at all (in fact, I think my contract may prohibit it)? Still Sch C in your opinion?
--- End quote ---
--- Quote from: Sean Locke Photography on October 06, 2020, 07:57 ---No. All the links and reading say that if you’re not actively participating in production, then it becomes “royalties” for the purposes of taxes.
--- End quote ---
And why I pay an accountant. ;D
According to the US Government Printing Office, The IRS Internal Revenue Code (IRC) is 13,458 pages in total.
Plus:
Treasury regulations (26 C.F.R.)--commonly referred to as Federal tax regulations-- pick up where the IRC leaves off by providing the official interpretation of the IRC by the U.S. Department of the Treasury
The authoritative instrument for the distribution of all forms of official IRS tax guidance is the Internal Revenue Bulletin (IRB), a weekly collection of these and other items of general interest to the tax professional community.
Someone would need to know and read the IRC, CFR be up to date on the IRB and then understand them and how each relates to the others.
Self employment, commission, royalty and anything in that realm, is much more complicated than payroll taxes.
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