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Can I call my 1099 ‘other income’ which avoids employment taxes?

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Last updated: 17 Oct, 2013
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By Jason Watson ()

This KB article has been updated. Please see our new 1099 as other income article.

Maybe. The IRS defines a trade or business as an activity carried on for a livelihood or in good faith to make a profit. IRS Revenue Ruling 58-112 further characterizes a trade or business activity as one that is regular, frequent and continuous. So, if you earn income either through your business or received a 1099-MISC from a company who you worked for, you will be responsible for self-employment taxes if the activity is regular, frequent and continuous.

Some taxpayers who were able to able to claim their income as ‘other income’ and avoid self-employment taxes had to demonstrate that the activity was a one and done event (giving a speech for example) or was sporadically done.

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