How much difference does a few thousand dollars make?

[mazewanderer]

<p>It appears that the Son has some taxes withheld by Mathanasium. He may not have taxable income, but in order to get that money back, he would need to file taxes.</p>

<p>It is not very complicated.</p>

<p>1) Even if he does not owe taxes and his income less than $5800, he would need to file taxes if he wants a refund.</p>

<p>2) If his self employment income is greater than $400, he would need to file taxes even if his total income is less than $5800 and he does not owe taxes or does not expect a refund.</p>

<p>3) Also, when you look at Self Employment income, make sure you account for expenses. Let us say you son had to travel 100 miles to go the place where he tutors. Depending on when the travel occurred (rates were different for different periods in 2011) he can deduct automobile expenses (about $51-55.5). If he had to buy supplies, he can deduct the cost of supplies. Again, do not make it too complicated, but let us say he earned $450, and he has $60 in expenses, he comes under the $400 threshold as his income is only $390.</p>

<p>Also, even for 2010, if he was owed a refund but did not file, I think he can still file and get the refund in 2012. Again, not sure if IRS will levy a non filing penalty, but I would assume that they will not charge him as he does not owe money. Again, I am not a tax accountant or lawyer, so please verify that for yourself. Also, the amount of the refund may not be worth the hassle, but that is a decision you will have to make. </p>

<p>[Self-Employed</a> Individuals Tax Center](<a href=“http://www.irs.gov/businesses/small/article/0,,id=115045,00.html]Self-Employed”>http://www.irs.gov/businesses/small/article/0,,id=115045,00.html)

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<p>What are My Self-Employed Tax Obligations?</p>

<p>As a self-employed individual, generally you are required to file an annual return and pay estimated tax quarterly.</p>

<p>Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. In general, anytime the wording “self-employment tax” is used, it only refers to Social Security and Medicare taxes and not any other tax (like income tax).</p>

<p>Before you can determine if you are subject to self-employment tax and income tax, you must figure your net profit or net loss from your business. You do this by subtracting your business expenses from your business income. If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040. If your expenses are more than your income, the difference is a net loss. You usually can deduct your loss from gross income on page 1 of Form 1040. But in some situations your loss is limited. See Pub. 334, Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) for more information.</p>

<p>You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions.

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