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Personal Service Income (PSI): Understand the Sources of PSI

Personal Service Income (PSI): Understand the Sources of PSI

Your skills and labor produce personal services income. You may receive personal service income from a profession, trade or industry. Some examples are financial professions, IT and consultation. You will not earn PSI in different situations like:

  • You are earning <50% income from a particular contract for your expertise, knowledge and skills
  • You may receive income by supplying and selling finished goods
  • You can receive income from assets (income producing) like machinery or vehicle
  • Your income is coming from an intellectual property like a patent

If PSI rules are not applying to your business, you are running a PSB (personal services businesses). In this situation, there will be no change in your tax obligations, until you declare a PSI on a tax return. You may receive PSI without working as a single trader. If you produce PSI through any organization, trust or partnership, the rules of PSI will be applicable. In this situation, this income will be treated as individual income for tax. Here are a few sources to earn PSI income:

Earn by Making Notes

If you are good at a particular subject, you can offer services to make notes. People with learning disabilities often need special notes. You can make almost $10 in an hour by making notes for other students. It is essential to work carefully because students will use these notes for their exams.

Write and Proofread Essays

If you are good at editing and writing, you can use these skills to write essays of other people or proofread work of your classmate. These will help you to earn good amount money. Advertise your services to roommates, friends and post fliers on bulletin boards to advertise your services.  

Carefully Study the Code of Honor

If you get proofreading work, it is essential to suggest revision and feedback accurately. Make sure to get familiar with the code of honor of your school regarding plagiarism. Double-check the policy of professors about sharing work of other people. Some professors assign essays to students just like exams and forbid them from taking help of other people during writing procedure. If you rewrite paper of another person, you both can be caught under fraud charges and have to face some severe consequences, such as being expelled from the institution.

Strong Computer and Typing Skills

If you are an accurate and fast typist, you can create exciting presentations with classy graphics. If you are excellent at creating graphs and tables to represent data, you can earn money by helping other students in their assignment. It will help you to improve your skills.

Career Services

Numerous campuses have career services for the counseling of students in the current job market. They prepare them to apply for jobs and arrange interviews. If you have experience and skills in career counseling, you can get a job in any career services agency. These types of opportunities will help you to excel your interviewing and resume building skills.

Earn Money via Academic Competition

Keep an eye on the upcoming competitions in your institutions. You can become a part of scholar competitions and essay contests to earn money. These contests often offer cash prizes to top performers. If you lose in these competitions, don’t worry because you still get experience in this field. It will be an excellent chance to make connections and build up a strong portfolio. These competitions will help you to find out job opportunities on your campus. 

Record Keeping

While earning personal service income, it is essential for you to record your expenses and income easily. Your record should explain each transaction that relates tax affairs. You should use English to record transactions for almost five years. Your five years will start when you complete transactions or obtain records. If you have more individuals working with you, it is essential to keep the record of all individuals. You must have tax invoices, time sheets, contracts, diaries, bank statements, receipts, logbooks, contract negotiation, etc.

The source and rule of personal service income can be different in your state. Before you start anything, it is essential to consider the regulations of your country. You can consult an accountant to understand tax treatment of personal service income. 

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