We were recently asked if a grandmother’s $7,900 earnings were subject to self-employment taxes since she travels to her daughter’s home two to three times a week to care for her grandchildren. The answer? That depends. Is Grandma operating a trade or business? To be a trade or business, two factors must be met: 1. Activity is regular and continuous, and 2. Activity is engaged with a primarily for-profit motive While the activity is regular and continuous, the grandmother’s primary purpose for engaging in the activity likely is to spend time with her grandchildren rather than to turn a profit. If the grandmother does not meet both requirements to be a trade or business, this activity will be reported as a hobby on Schedule 1 Line 8j: Activity not engaged in for profit income. Do you have a tax compliance question for us? Email us at education@brasstax.com #BrassTaxPresentations #TaxExpert #TaxTips #TaxCompliance
