That's really interesting - I hadn't even considered that possibility. She does only work through this one coordinator who tells her exactly when to show up, what to wear, and even provides a specific set list for each event. The coordinator also handles all client interactions and payments. Would those factors suggest she should be an employee?

Those factors definitely suggest she might be misclassified! When the business controls the when, where, and how of the work, that strongly indicates an employment relationship rather than independent contractor status. Other indicators include if they provide equipment (though you mentioned venues have the pianos), if she can't work for competitors, and if she's economically dependent on this one business. If misclassified, filing Form SS-8 with the IRS would request a determination of worker status. She could also file Form 8919 to report her share of uncollected Social Security and Medicare taxes. This would potentially reduce her tax burden since she'd only be responsible for the employee portion (7.65%) rather than the full self-employment tax (15.3%).

Unfortunately, you do have to file Schedule SE if your net earnings from self-employment are $400 or more. There's no legal way to "skip" the self-employment tax as it funds your future Social Security and Medicare benefits. However, you can potentially reduce your self-employment income by making sure you're claiming all legitimate business deductions on Schedule C first. Things like your computer, portion of internet/phone, home office, software subscriptions, and professional development can all reduce your net profit subject to SE tax.

Thanks for the honest answer. Guess I just needed someone to confirm I can't avoid it. I'll look into those deductions for sure. Do you know if the SE tax is calculated before or after regular income tax? Just trying to understand the full picture of what I'm paying.

Great point about wealth vs income! I never thought about how rich people often have low "income" on paper while their net worth grows by millions. How would you design a wealth tax that's actually effective without hurting regular people who might have a valuable house but not much cash?

Designing an effective wealth tax requires careful thresholds to target only significant wealth. For example, setting the threshold at $10 million in net assets would exempt most homeowners completely. You can also create progressive rates that increase with wealth levels and offer deferred payment options for asset-rich but cash-poor situations. The key is exempting primary residences up to a reasonable value, retirement accounts up to certain limits, and small business assets under a threshold. This protects regular people while still addressing the enormous untaxed wealth accumulation at the very top. Annual reporting requirements and strong valuation methods would be essential to prevent avoidance strategies.

That's really interesting! Can you explain more about how New Zealand's system works? I'm really curious about what makes it clearer than other systems. Also, what did you see in Singapore that created societal issues?

Wait I didn't even think about state taxes! Do I need to file a separate form for that or is it all part of the same tax return?

It depends on your state. Most states have their own version of Schedule C that you'll fill out along with your state tax return. You'll generally use the same income and expense information that you report on your federal Schedule C. Some states also have a lower threshold for filing requirements than the federal $400 self-employment threshold, so even if you somehow made less than $400, you might still need to file a state return. Check your specific state's tax department website for the exact requirements and forms you'll need.

Most tax software can definitely handle self-employment income. I used TurboTax last year for my tutoring side gig and it walked me through everything step by step. It asked about expenses and calculated all the self-employment tax automatically. Just make sure you get the Self-Employed version, not the basic one.

I hadn't even thought about business licenses! Is that something I need even if I'm just doing occasional art markets and some online sales? How do I find out what my local requirements are?

Even for occasional sales, most places require some form of business registration. It varies widely by location though. Start by checking your city's website for "business license" or "business registration" - most have simple online forms. Your county may also have requirements, especially if you're in an unincorporated area. The good thing is that for small creative businesses, the fees are usually pretty reasonable - mine was only $85 per year. The sales tax exemption on supplies makes it worth it alone. Also check if your state requires a general business registration or DBA ("doing business as") filing if you're operating under a business name rather than your personal name.

This is a really smart approach! How did you decide on those specific percentages though? Are those standard or did you customize based on your business?

Thank you! For the Form 8949 approach, do I still need to mail in paper forms or can I e-file my return with the summarized transactions? And should I include some kind of statement explaining what I did?

You can still e-file with summarized transactions - that's not a problem. When you use the summary method, you should include a statement with your return that says something like "Multiple transactions are reported on a single line. Details available upon request." This covers you from an IRS perspective. I'd also suggest keeping a detailed spreadsheet with all your individual transactions that ties to your summary totals. This becomes your supporting documentation if questions ever come up. The most important thing is making sure your total gains/losses are accurate, especially with proper handling of wash sales and correct cost basis.

The transaction limits are actually more about the software companies than the IRS. The consumer versions of tax software have these limits because processing thousands of transactions is computationally expensive. Professional versions don't have these limits but cost a lot more.