How Much Money Do You Have to Make to Claim a Business on Your Taxes?
- The IRS requires you to report all business income, including royalties from copyrights, patents, and oil, gas and mineral properties. Whether you received income from a registered business or from a side job such as baby-sitting or computer repairs, the IRS requires you to report that income on your income tax return. There is no minimum amount set by the IRS. In other words, if you earned only one dollar in income from your business, then you must report it.
- Most people realize that they have to report all wages and salaries on their return, especially if they received a W-2 or 1099 from employers or contractors. However, many people don't realize that they have to report all other income as well, whether or not they received a W-2 or 1099. For example, if you received business income from side jobs, performed work for barter or trade, or received any income at all from self-employment, you must report every dollar on your tax return.
- You must report all income unless it is exempt from taxation by the U.S. tax code. There are very few exemptions from income tax. Exemptions include compensation received for services to an international organization if you are not a U.S. citizen and the work is similar to the work performed by employees of the U.S. in foreign countries. In addition, the foreign government must give an exemption to employees of the U.S. in its country. Details on exemptions to income tax can be found in IRS Publication 525.
- In general, business income is reported on Schedule C. However, if your income is from a partnership, file Schedule D to report your share of capital gain. If your income was received from royalties, file Schedule E, Supplemental Income and Loss. If you actually operate an oil, gas or mineral interest, or are a self-employed writer, inventor or artist, report the royalty income on Schedule C or Schedule C-EZ.