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I have a client who has a son that spent the summer selling alarm systems (or pesticide or something like that) and has a quite large 1099-NEC. Is there anyone in the community that has prepared returns with this scenario? What kind of expenses would we consider eligible? The employer provided room and board and food while they are gone. They would get dropped off in neighborhoods and canvas all day and return at night. Made decent money. Now the tax man cometh. Any tips?
Thanks all.
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Report on Schedule C. Sounds like zero expenses.
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If you find out he was selling pesticides, how about the cost of the gas mask that he wore when he was going door to door with the product?
Slava Ukraini!
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Sounds like employment to me. If he doesn't plan on going back this year, use Form 4852 and report as wages.
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It helps if you don't phrase it like this: "The employer provided room and board and food while they are gone. They would get dropped off in neighborhoods and canvas all day and return at night."
Because there is no employer, for 1099-NEC. Or, you have a case of Worker Misclassification to deal with.
If the reported amount includes any of these costs, then you would include them in the Revenue and include the costs per the Sched C provisions.
Read this starting at Direct Seller under Selected Occupations:
https://www.irs.gov/publications/p334#en_US_2020_publink1000313419
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