I started a year ago doing 2 maintianece contract work and got about $40,000.00 in 2006 and I still had not paid taxes because I didn't know where or how to. My contract place just gave me a 1099Form. I'm single and I recently just got a regular W-2 job. I'm in Minnesota. I am afraid I will to paid an outrages amount of taxes. And also I had not been keeping receipts for the year 2006.
2007-02-23 03:34:25 · 7 answers · asked by onlythesky 1 in Business & Finance ➔ Taxes ➔ United States
It will help you to go to the IRS website, and learn more about what you are doing, or hire a bookkeeper or tax consultant. www.irs.gov, business .... will give you tips on record keeping, etc. If you have no record of your expenditures, you have got your self some taxable amount there.
good luck & bless
2007-02-23 03:39:51 · answer #1 · answered by Wood Smoke ~ Free2Bme! 6 · 0⤊ 0⤋
If you are now on a W-2 basis, your employer should be withholding the proper amount based on the W-4 you provided. Filing estimated taxes for the income that was not withheld is inappropriate at this time.
You need to file Form Schedule C - Profit or Loss from Business or Profession; report
the 40K as income and claim deductions against this income. You dont have receipts -
which is OK. Really, OK. The IRS has created tables for these types of unique situations - estimates of business deductions claimed at certain income levels. These tables are hard to find on the net.
My suggestion is for you to find a tax practitioner or CPA to prepare your 06 taxes.
The preparer will take a conservative approach in creating deductions for you that will not raise a flag.
Owing taxes is not the end of the world. The preparer will prepare an installment agreement with you and the IRS to pay the remainder of your tax liability ($ 250 per month, $ 500 per month, etc).
These scenarios happen to people all of the time. You are not alone, and you are not considered a criminal. Just a little naive. Next time when you discover that an employer
does not withhold, you must pay your taxes, Federal and State, on an estimated tax basis.
Best Wishes.
2007-02-23 05:30:24 · answer #2 · answered by bold4bs 4 · 1⤊ 0⤋
" I didn't realize" Common problem for contractors. At least you are realizing this before, say, October 2012. (Seriously--new contractors often get an extension and don't realize how much they owe for 2011 until 10/15/2012, then don't have money set aside for 2011, 2012 and then have 3 years to catch up on for 2013.) You owe at least 12.3% for SE tax. If your income is more than $9500, you will also owe income tax. Most people start with a guestimate of 30%, but in reality, you should run a dummy tax return and see what the total is. If you did not work in 2010, you would meet a waiver for estimated tax payments. If you did work in 2010, you would be subject to the payments as soon as you owe more than $1000. If you pay this as a lump sum on 4/15/2012, you can be hit with a 4% penalty. (Eg, owe $5000 and your penalty could be $160.) Alternately, you can still make 2 estimted tax payments; a late one for 9/15 and an ontime one for 1/15/2012. Then the penalty would be lower.
2016-05-24 02:24:03 · answer #3 · answered by Anonymous · 0⤊ 0⤋
When you fill out your tax forms, there are places to enter the amounts on the 1099's.
The people that gave them to you also filed a copy with the IRS so you definitely need to declare that income. The IRS already knows about it.
Since you haven't paid any taxes on it at all, you are going to owe a hefty chunk in taxes. You might want to consider using a CPA to help you figure this out. The cost of the CPA is likely to be less than what it would cost you in the mistakes you could make on this since you were basically in business for yourself and likely have business deductions, I would urge you to see someone that can help you with this.
2007-02-23 03:51:37 · answer #4 · answered by Faye H 6 · 0⤊ 0⤋
If you didn't file any quarterly estimated returns and payments, with a self-employment income of $40K, you'll owe a lot of taxes unless you have a large total of related expenses. It would be wise to see a CPA, not someplace like H&R Block, to prepare your return for 2006.
You'll file a form 1040, and a schedule C or C-EZ showing your business income and expenses, and a schedule SE to calculate self-employment tax.
2007-02-24 15:20:23 · answer #5 · answered by Judy 7 · 0⤊ 0⤋
use schedule C
take many deductions
car, office, tape, cards, whatever
lunch
then pay some taxes, its really important to establish 40 quarters paid so you can get social security someday
2007-02-23 03:40:55 · answer #6 · answered by sheisperfect2007 1 · 0⤊ 0⤋
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2007-02-25 14:42:01 · answer #7 · answered by ellen h 2 · 0⤊ 0⤋