i am a student and do this part time, i only made about $7000 last year by checks, i was told if i did not receive 1099 forms from the businesses i did work for, there is no record of my work sent to the government so its not necessary to claim these. i also saw for certain cases if income is not more than 8500, you do not need to file, last i saw that is my deductibles exceed my earnings, theres no need to file, i saw that you automatically get a 5000 + 3000 filing as a single and then i have over 1000 dollars more worth of clear deductibles, so should i file? and if i do, i shouldnt end up paying anythign anyway right?
2007-01-18 08:41:16 · 8 answers · asked by paulvinterval 1 in Business & Finance ➔ Taxes ➔ United States
You were told wrong, by someone encouraging you to break the law by evading income taxes, not a good way to start a career. By law, you need to file whether you received 1099's or not - it's just harder for the IRS to catch up with you if the companies you worked for didn't file 1099's, but they still could.
You would be considered an independent contractor or a sole proprietor of your business. As such, you're required to file a tax return if you made over $400. Whether or not you owe income tax, you'll owe self-employment tax (social security and medicare).
The limit of $8450 is for a single person who is not a dependent of anyone, working as an employee. This person would have had social security deducted from his paycheck. Someone who is a dependent of someone else, like a parent, must file if they make over $5150 as an employee.
You would fill out a schedule C showing your income and the expenses of producing that income, and a schedule SE to compute your self-employment tax. The numbers from the bottom of those forms would transfer to your form 1040.
So yes, you must file to be legal, and you'll probably end up owing some money.
Good luck. And congratulations on your success in web design.
2007-01-18 16:04:48 · answer #1 · answered by Judy 7 · 1⤊ 0⤋
If you earn over 600 you have to file. The government does not give you 100% for your deductibles. lets say you will deduct something for 100 and you made 100. the government will give you a $20 write off for you deduction and tax you on the $80. Most things are %20 deductible.
2007-01-18 16:54:01 · answer #2 · answered by Anonymous · 0⤊ 1⤋
If a tree falls in the forest and nobody hears it, did it really yell "DARN, I'M FALLING AND I CAN'T GET UP!"
Yes, YOU MUST claim your income even without a W-2.
You need to file Schedule C with a long Form 1040. You will pay tax on the NET income (income minus expenses). There may be no income tax, but you will likely have Self Employment tax. S/E tax is roughly 94% of the Net income TIMES 15.3%
Self employed with net income MUST file to show their expenses.
2007-01-18 16:45:53 · answer #3 · answered by WealthBuilder 4 · 3⤊ 0⤋
personal_finance_101 is almost right. SE tax is 15.3% and applies if your business profits exceed $433. If this is your only income you will not have to pay income tax, but you will have to pay SE tax. Contrary to what someone else has said, you do not qualify for EIC unless you have a child, as you are under 25.
Get to a CPA or Enrolled Agent and work out what you can deduct in terms of expenses.
2007-01-18 17:32:55 · answer #4 · answered by skip 6 · 0⤊ 1⤋
you should file . . cause a loss this year could result in you paying less taxes next year if you make more money, businesses don't have to send a 1099 to report the expense of having their website designed . . the only persons they have to file 1099 is direct labor, if you were paid by check report it.
2007-01-18 16:50:11 · answer #5 · answered by Rainy 5 · 0⤊ 0⤋
Absolutely wrong. If you want to know if its been reported you have to contact the employer. Do not assume that they did not put it in just because you did not receive anything . Do your research,if you skip out on taxes by the time they catch you will be paying for the rest of your life. Never mess with the IRS, big mistake.
2007-01-18 16:45:56 · answer #6 · answered by holykrikey 4 · 1⤊ 0⤋
You should file and yes, you will owe. You have to pay your part of the SE tax which is 7.5% I think. Theoretically you could not file and probably won't get caught, but that would make you a tax evader and could cause red flags at a later date.
Good luck.
http://www.personalfinance101.org/?utm_source=YH&utm_medium=link
2007-01-18 16:44:32 · answer #7 · answered by personal_finance_101 3 · 1⤊ 1⤋
You should definitely file because you qualify for the Earned Income Tax Credit. The gummint actually pays you a couple of hundred bucks.
2007-01-18 16:44:16 · answer #8 · answered by Anonymous · 0⤊ 2⤋