No and no. Under the IRS regulations, only employees of a taxpayer may be considered to be ‘servicemen’, employees for whom payroll taxes are withheld or paid by the employer. A service-oriented income is not considered a legitimate taxable service under the IRS taxation rules.
A typical service-oriented income can include all sorts of goods or services that you purchase or receive as compensation for performing a business or undertaking activity for its own benefit.
For example, you may be allowed to include in your taxable income your services in an organization that helps people get and retain employment in a certain state or local area by paying them the salary and fringe benefits related to those employment opportunities. As such, your service-oriented income may qualify you for a deduction of income tax. And by working with an attorney or tax law specialist you may be able to claim this deduction on your tax return.
As an example of how a service-oriented income can qualify for a deduction for income tax purposes, let’s assume that your service in helping others is the sole purpose of the transaction. Now let’s say that you received the compensation for any expenses incurred that were not in connection with that task. In this case, you can claim a tax credit for service expenses on your tax return. As an income tax law specialist, you may be able to argue that you should be able to claim a deduction related to that cost of the services in order to avoid a late tax bill.
However, to be able to claim a deduction related to a cost that does not fall under the service of your employer, a service must be:
The act of a taxpayer; and
An act or omission by the taxpayer.
For service-oriented income, you must be the one who engages in the conduct and performs service.
If a service can qualify for a deduction for income tax purposes, then so can any of the work performed for a service-oriented company. In fact, service-oriented income typically includes services performed for the benefit of the income and self-employed taxpayer who is not employed by the service-oriented company itself. This includes the service performed by your partner whose income does not accrue to you directly by the fact that she is required by law to work (or not work) for the service.
In other words, you may be able to claim a deduction for service expenses incurred in performing for a service-oriented business and your partner
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