My husband is an auto racing spotter with, for 2006, two separate teams. He received the 2 separate 1099 Misc forms. I understand that he is considered by the IRS as having his own business, and he got these forms due to no W-2 being completed (as he is considered "part time, weekend" employment by the teams). I am doing our taxes on TurboTax, but not really wanting to mess it up before actually filing. I need to know if the income should show up in both the "Business income schedule C" and the "Income from Form 1099-Misc." spaces on the "your income Summary" page. When I only enter the amounts in "Income" and do not enter anything in "Sched. C" it shows a refund - - when entered in both sections, this changes to a MAJOR payment to the IRS. I understand no taxes were taken out of his paychecks, but I don't understand this huge difference of refund vs. federal payment owed?? Any help is appreciated!
2007-02-18 10:14:42 · 4 answers · asked by nicnacs30 2 in Business & Finance ➔ Taxes ➔ United States
You MUST file Schedule C or C-EZ to account for the income and any legitimate business expenses. You must also file Schedule SE to calculate the Self-Employment tax. That's what's killing you as there is a 15.3% SE tax on the net profit from SE income.
If this activity continues, he'll either have to start making quarterly estimated tax payments on Form 1040ES or adjust the withholdings from his W2 job so that enough tax is withheld to cover the liability next year.
If you don't pay in enough tax either by withholding from wages or by estimated payments, there can be a penalty and interest charges for underpayment of taxes.
2007-02-18 10:21:36 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
It sounds to me like you're entering it in both places makes it show up twice on your income tax return and thats why you see more tax due. When you enter it in both places, do you see it on the other income line on page 1 of the 1040 as well as the schedule C line on page 1 of the 1040? If so, it only needs to go in one place or the other. Either way, it's subject to self employment tax. If he has expenses to deduct against the income than you need to put it on schedule C and also list the expenses associated with the production of that income.
2007-02-18 12:13:31 · answer #2 · answered by T G 2 · 0⤊ 1⤋
It gets reported on either Schedule C or Schedule C-EZ, depending on what expenses you are claiming. For federal income tax purposes, all 1099-MISC non-employee compensation is treated as "business income", whether or not you "have a business establishment".
2016-05-24 04:00:53 · answer #3 · answered by Anonymous · 0⤊ 0⤋