How is your home business classed for taxes?

Discussion in 'Accounting and Legal Advice' started by JoannaIceni, Mar 19, 2014 at 6:57 PM.

  1. JoannaIceni

    JoannaIceni New Member

    I recently undertook the taxes for my first year of my home business. The taxman classed my business as "Passive Activity" rather than "Earned Income". Was it mis-classed, or are there any advantages to having it listed as passive?
  2. mountainmom5

    mountainmom5 Gold Member

    Interesting! Do you have 1099's to file yet? That might make a difference as once those bad boys come in, the gvmnt sure likes to get their paws into it.
  3. JoannaIceni

    JoannaIceni New Member

    Yes, I gave the tax person my 1099. I am sure that classing it as Passive Activity will open up a can of worms for the IRS. No one else in La Bella Baskets has had this business classification. Please come and visit me in jail, lol.
  4. mountainmom5

    mountainmom5 Gold Member

    haha! I wouldn't be too worried unless you made a whole bunch - like six figures or something. I will be checking into that tho, myself!

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