Tough Tax question...you ready?

Question

My husband receivd a 10099 as an independent contractor and a W2 for a very short lived job only making $600 gross. Since it is underthe $13500 for filing jointly can I just file the 1099 and NOT the W2?

Note: There were no Federal taxes taken out of the $600 on the W2.

Answer 1

No you must report all sources of income on your tax return.
The IRS receives copies of all W2's 1099's. By not reporting all of your income you would become subject to penalties and interest on the readjusted income.


Publication 525
http://www.irs.gov/pub/irs-pdf/p525.pdf

Answer 2

If your husband received a 1099 as an independent contractor, that income as well as the w-2 information needs to be reported on your 2006 tax return. The fact that no withholding was taken out is unfortunately the tax-payers responsibility and remember that information is being supplied to the IRS. I
t may not bite you right away, but in about 13 months; including possible fines and penalties when the IRS sends you a letter re; your return without income claimed it can be bad.

Answer 3

It will ask you if you had any 1099 income in addition to w2. Claim it anyway. It is low so it should not effect much.

Answer 4

File both as it will avoid any questions though it won't affect the tax bill. Since he had over $400.00 in self employment income there's going to be a self employment tax of 15.3% on the net 1099 income even if there is no income tax liability.

FYI, the floor for filing a joint return for 2006 is $16,900.00, not $13,500.00. But the floor for self employment income hasn't changed from $400.00 in decades.

Answer 5

No, and this is actually a pretty easy question. The limit for filing isn't for each individual job, it's for your TOTAL income, for both of you if you file joint. So you have to file both the 1099 and the W-2. Sorry, I know that's not the answer you were hoping for.

Answer 6

The real question would be...can you afford NOT to disclose it? The taxes you'd pay on the $600 bucks would be far less than the penalty you'd pay if you didn't disclose it. That $600 will be reported to the IRS...otherwise you never would have gotten the W2 to begin with.

Answer 7

You definitely need to file both.

I did VITA (Voluntary Income Tax Assistance) for several years.

Incomes from different sources is one problem tax payers have. Income taxes are withheld separately from each source. The employer withholds at the correct rate for each job. Then when you combine the incomes you will sometimes find the combination has moved you into a higher tax bracket. During my VITA years, I can't tell you how many times I saw couples having to pay additional income tax just because their combined income forced them into a higher bracket.

If you and your husband had both worked and each had earned $13,499 you would have to file the combined income. Your case is no different than that.

Sorry but UNCLE SAM will get his pound of flesh.

Answer 8

No. You are taxed on your total income, regardless of whether the income comes from more than one place.

If you got a W2, the company reported the income to the IRS and they will know about it if you are ever audited. To not report it would be a crime.

You have to report both of them,.

Answer 9

You must report all income received, regardless of whether it was on a W2 or 1099.

Answer 10

You must include that income on Schedule C. The IRS has a record of that 1099 and if you don't report it, they will want to know why. On Schedule C, you can deduct any expenses related to that income.