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Geithner, Obama's Pick to Head the Department of Treasury, and Self Employment Taxes

As reported by the AP, President-Elect Obama's chosen Treasury Secretary, Timothy Geithner, has run into bumps in his Senate confirmation process over previously unpaid taxes and employing an immigrant housekeeper who for a period lacked work papers. From 2001 to 2004, Mr. Geithner failed to pay self-employment taxes owed while he worked for the International Monetary Fund. He has since repaid the taxes, but whether the Senate agrees to expedite his confirmation remains uncertain.

Not so many people are up for confirmation to head the Treasury Department, which oversees the tax dollars we pay. Many, however, fall into the same category as Geithner found himself from 2001-2004: self-employed in eyes of the IRS and federal tax law.

Obviously, people who operate their own businesses as sole proprietorships are considered self-employed. But so are people who operate part-time business on the side of regular jobs, people who work as independent contractors, and people who work for certain forms of partnerships.

The IRS audits self-employed individuals at a much higher rate than regularly employed people. Two tips to remember if you will have to file as self-employed: 1) report all of your income; and 2) don't take deductions for items you didn't have to buy for the business.

Additionally, here is a quick guide to what the IRS looks for when auditing the self-employed.

• IRS: Self-Employed and Small Business Center
• Should I Report Expence Reimbursements as Income? (FindLaw)
• Insuring Your Home Business (provided by Atwater & Herren, Attorneys at Law LLC)
• Washington Post: Geithner Confirmation Hearing Postponed
• ProPublica: The Wrinkle to Geithner's Tax Troubles

Full post as published by FindLaw's Common Law on January 14, 2009 (boomark / email).