 Looking at our income tax formula, we're focused once again, line one income. Remembering that the income tax formula, the first half of it in essence is an income statement, although a strange one where we have income minus the equivalent of the expenses. Those being the deductions gets us to the equivalent of net income. This being the taxable income, everything's flipped on its head. We want the taxable income as low as possible as opposed to in normal circumstances, which we usually want as high as possible. That means with the income line we're focused on, we need to determine if something is classified as income and whether or not it's exempt income with regards to recording it for taxes. That's the general concept. Looking at the first page of the form 1040, we're focused down here, line number eight, other income from schedule one. If we look at schedule one, this is the additional income and adjustments to income. We're now down here on line number eight, where we have these other somewhat kind of random items and we're gonna go through some of these items. They're not quite as common, which is why they're kind of all grouped up into the other income down below, the net operating laws to gambling, the cancellation of debt and so on and so forth. So let's look at them lines by lines and list some of them out and then we'll take a look at some of them in the tax software. Tracking software. Lines eight A through eight Z are the other income lines. Now, remember the general rule from the tax code perspective is everything from the IRS perspective that you receive is kind of like income unless it's exempt from income, classified as not income. So you can get very creative and start saying, well, what if this happened? What if that happened? I got money because of this or that and the other thing. Well, those might fall into this line, which would be the other income type of situation. So caution, do not report on lines eight A through eight Z any income from self-employment or fees received as a notary public. Instead, you must do schedule C even if you don't have any business expenses. Also don't report on lines eight A through eight Z any non-employee compensation showing on form 1099 miscellaneous 1099 NEC 1099 K unless it isn't itself self-employment income such as income from a hobby or a sporadic activity. Now this is really important to understand why is that the case? Why would I need to be reporting something on a schedule C or why when I get a form 1099 miscellaneous or 1099 NEC or 1099 K is the IRS expecting to see in essence a schedule C and not something reported on this other income line because we have the self-employment tax that's gonna be coming into play here. So note that we're talking about income taxes as the primary focus when we look at the form 1040 but if you have W2 wages the W2 also reflects the social security and Medicare that was taken out and usually it's done already you don't have to really do anything extra if it's W2 wages because the IRS got the employer to handle that on the tax side. So it's just a reporting thing but if you're self-employed then the IRS is gonna say if you have self-employment income we wanna treat you as both the employee and employer therefore the 1040 is not only gonna be used to calculate your income tax but also the employee-employer portion equivalent that being the self-employment tax, social security and Medicare which can be quite significant. So that means that if you have some income that's classified as business income the IRS is gonna want a piece of it not just for income taxes but also for the social security and Medicare components of it. So then you can get into classifications should it be a hobby income or should it be self-employment? You can get into questions as to whether something is self-employment income. If you get a 1099 miscellaneous or something like that or an NEC or K then the IRS would generally assume you would think that it's gonna be self-employment income they would expect to see a schedule C unless you claim it's a hobby. So if it's in the reason the IRS will allow people to take a hobby is because obviously they don't want people to be able to take losses. So if you have schedule C income from a 1099 and you had more expenses than income then you can end up with a loss which is actually good for taxes because then you might be able to write that off against the W-2 wages which the IRS doesn't want to see. So they're gonna say if you had income then they're gonna try to hit you with self-employment tax as well as other income and if it's a hobby and that's why you got one of these 1099s then that's when the exception might apply. So just general rule to keep that in mind. Instead see the instructions for the recipient included on form 1099 miscellaneous, 1099 NEC, 1099 K. So you can always look at those forms for more instructions to find out where to report the income. So for more information about what is being reported on form 1099 K see instructions for payee included on that form and you can visit irs.gov forward slash gig word. The 1099 K in other words is kind of like a newer type of form where the IRS is trying to pressure in non-traditional kind of formats in every transaction usually you have a pay earn and a payee meaning you have someone generating income from the transaction and someone that is paying which would have an expense or deduction if they were a business for taxes but with this gig economy situation because the end user is really an individual the IRS has less leverage over them so they started to work on forcing not only the payer of a business situation but trying to get the intermediary platforms like the gig economy platforms or the credit card companies and pay pals of the world and whatnot and try to pressure them to issue these 1099 K forms. Okay.