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Question
My 16 year old started taking commissions this year for sewing projects.  She receives orders for custom work and some of the work can be quite costly.  So far she has only taken commissions for small orders but Summer is lining up to be a several thousand dollar Summer!  My question is about filing taxes based on self employment.  She wants to only work on her commissions this Summer as her sole income.  How will we deal with her tax liability?  I'm not even sure where to start.  I know that she will need to charge sales tax.  (We are in NY.  The projects are considered clothing but some orders are over $110 each)  Does she need to actually become a business (with DBA and the works) or can we just pay sales tax to NY and file a schedule C for 2013 taxes?  Any help in the right direction will be much appreciated!

Answer
Amanda,

Thanks for your question.

She can file her taxes as a Schedule C sole proprietorship which doesn't require any legal formalities.  The Schedule C will be a part of her 1040 and she will also need to include a Schedule SE for the self-employment taxes.

She will need to register with the state for sales tax and make payments to them, probably quarterly.

Hope this helps.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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