When you are self-employed, self-employment income is anything you earn as part of conducting your business. Other Income is any money made outside of your regular operation. Although both types of earnings will incur income tax, other income is not subject to any self-employment tax. Earnings that are generated as part of conducting regular, long-term business, are subject to self-employment tax.
What is Self-Employment Income?
People who worked as contractors, freelancers, or who engage in side hustles will generally receive one of two documents from the businesses they work with:
-1099-MISC (Miscellaneous income)
-1099-NEC (Non-employee compensation)
Usually, before a business will issue one of these 1099 tax forms, they will require you to fill out a W-9 Form, which provides them with all of your tax-relevant information.
What is Other Income?
The IRS defines Other Income as any income that does not have its own line on Form 1040. This type of income is not subject to self-employment tax if it is not regular, and is done without the intent to generate profits on a long-term basis.
A few examples include:
Gambling winnings
Hobby income (from an activity not performed for profit)
Nonbusiness rental income (earned from renting personal property)
Prizes and awards
Stock options
For a complete list including more examples, visit the IRS website.
Generally speaking, other income is uncommon and not typically something that most people will need to report. Other Income is reported on Form 1040 Schedule 1.
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