tax question re DD's self-employment income (not main job)

[pirsquared]

My daughter (23) has a regular full time W-2 job. She is also a certified lifeguard and certified lifeguard instructor. Last summer, she trained the lifeguards at a summer camp (where she had worked as a W-2 employee in previous summers). She probably drove to the camp and back about 10 times to do this training. At the end, they gave her $600 ($400 in a check and $200 in cash). She was not an "employee" of this camp in 2023. I am thinking she should report this on Schedule C (as opposed to "other income"). If so, can she deduct mileage? The camp was 30+ miles from her apartment so that would be a significant deduction. However, I am unclear whether this driving would be a commute (not deductible) or a business expense (deductible). Some info I have read indicates that the first and last drive of the day are not deductible and only drives from the place of employment are deductible. Any tax savvy people here know the answer to this? She did pay $45 for a lifeguard training re-certification class during the year so that would be deductible, but I am unsure about the mileage. Thanks!

 

[cathy63]

Yes, she should report it on Sched C. They should give her a 1099-NEC since the total compensation she received was $600.

The drive from her apartment to the camp is commuting mileage and she can't deduct it. If she drove there from her regular W-2 job or from another side job, then she could deduct that portion of the drive.

She can deduct the $45 cost of re-training and the mileage to get to that location. She could also deduct the cost of equipment, supplies or uniforms -- things like a t-shirt that says Lifeguard, an official lifeguards red swimsuit, whistle, sunscreen, etc.

 

[pirsquared]

Yes, she should report it on Sched C. They should give her a 1099-NEC since the total compensation she received was $600.

The drive from her apartment to the camp is commuting mileage and she can't deduct it. If she drove there from her regular W-2 job or from another side job, then she could deduct that portion of the drive.

She can deduct the $45 cost of re-training and the mileage to get to that location. She could also deduct the cost of equipment, supplies or uniforms -- things like a t-shirt that says Lifeguard, an official lifeguards red swimsuit, whistle, sunscreen, etc.

This makes sense. Thanks!

 

[pb4uski]

Actually, while I agree with what cathy said, unless they give her a 1099-NEC, I would not bother to report it at all.

 

[pirsquared]

Actually, while I agree with what cathy said, unless they give her a 1099-NEC, I would not bother to report it at all.

I kind of doubt that they will give her a 1099-NEC, since only $400 of it was a check, but she will definitely report it since it is income. I will get some clarification on when she got the check and when she got the cash. I think the check was after the lifeguard training and was definitely considered payment for that. The cash may have been later after she volunteered during one of the camp weeks, in which case that may have been a gift or a casual reimbursement of her commuting expenses. I will get more info on that. My main question was whether her driving to/from the camp was deductible and that makes sense to me that it is not.

 

[donheff]

I assume she will need to pay the self-employment tax on that amount and the corresponding top of the line deduction.

 

[pirsquared]

I assume she will need to pay the self-employment tax on that amount and the corresponding top of the line deduction.

i checked with her and she clarified that the whole $600 is payment for lifeguarding and lifeguard instruction and other water-related duties. So the whole $600 will go on Schedule C and she will deduct the $45 from her re-cert class. I mentioned deducting other things like sunscreen and she looked at me like I had 3 heads because she would never go to the trouble of documenting minor things like sunscreen. She prefers to pay a little bit extra for simplicity

Then she will pay the self-employment tax on the $555 (the 600 minus 45).

Simple and done, which is what she wants. And sounds like that is the correct way to report this income.

 

[Sunset]

^^^^^^^^^^^^^ what about deducting her bathing suit(s), googles, swimming cap, and towels, plus the cleaning costs of them

At least bring them up, as she can use this as a learning experience about self employment taxes.

 

[pirsquared]

^^^^^^^^^^^^^ what about deducting her bathing suit(s), googles, swimming cap, and towels, plus the cleaning costs of them

At least bring them up, as she can use this as a learning experience about self employment taxes.

I did bring that up, but she is using all old equipment from previous years when she was a W-2 camp employee. She feels it is not worth her time to figure out tiny deductions for laundry and sunscreen.

She already has a better handle on taxes than most 20-somethings. She understands that self-employment taxes are analogous to FICA and that self-employed people pay both halves. She has been doing her own taxes (with my help) since she started summer jobs at 16. She does them on paper and then transfers the info into the IRS Free Fillable Forms so she can e-file. She understands the difference between a tax credit and a tax deduction. She also knows a lot about health insurance options (she has an HSA now) and retirement options now that she has a real full-time job.

So she is pretty tax-savvy, but it is not an area of interest for her. She just wants the simplest correct method and she will pay a little more for simplicity. And we are talking very tiny amounts that she could deduct anyway.