I am currently a full-time medical resident who has chosen not to participate in moonlighting. However, I spent one week this year working in a private practice office not affiliated with my regular job (primarily to explore future job opportunities) and was compensated with 5 days of non-employee pay, from which no taxes were withheld, which was reported on a 1099-Misc form. I subsequently contributed this amount to a charitable organization. Since this was a one-time activity and not a regular moonlighting job, do I still have to file Schedule C? If so, is it ever possible to reduce Schedule C income by charitable contributions, or must this be claimed only on Schedule A as an itemized deduction? Thank you very much for your advice.

Marty,

Many employers don't like the hassle of putting short term employees into their payroll system. But they should, and I would say you should have been paid as an employee. However, since they didn't pay you as an employee, I believe you should report your income on Schedule C, and if the net income exceeds $400, you will have to file Form SE.

If you had said you helped a neighbor paint his house for a week, I think you could have reported the income on Form 1040, line 21. No Schedule SE would be necessary.

The distinction is that you're not in the business of painting houses. However, I think it would be a stretch to say you aren't in the business of medicine, even if one particular job only lasted a week.

As a rule you have to deduct charitable contributions on Schedule A. Sometimes the situation can be grey. For instance, if you supply tshirts to a church softball time, and the shirts are emblazoned with your company logo as the sponsor of the team, is it charitable or is it advertising. I'd vote for advertising under this circumstance.

Gary

Zip Code: garyd@davisandbrandel.com