My parents typically take care of most of my money stuff, but I'd like to do this myself.
I have two sources of income: a web-site that got me ~$3500 last year in Google ad revenue, and a contracting job that got me ~2500. In all, I made exactly $5997.
Google doesn't send me any tax forms, but the contractor sent me a 1099-MISC form.
What exactly do I need to do tax-wise? I'm completely new at this, and I've heard since I made less than $6000, I don't need to do anything; but I'd like to make sure.
2007-03-11 13:36:28 · 9 answers · asked by Anonymous 3 in Business & Finance ➔ Taxes ➔ United States
Since your income was from self-employment, you do have to file and will have to pay self-employment tax. If your income was all from W-2's and total was less than $5150, then you wouldn't have to file. But with self-employment, the limit to have to file is $400.
You'll fill out a 1040, a schedule C or probably C-EZ to show your income and any associated expenses, and a schedule SE to calculate self-employment tax. The numbers from the bottom of the schedules C and SE will transfer to the 1040. Sorry to tell you this, but your self-employment tax will be around $900.
2007-03-11 13:57:56 · answer #1 · answered by Judy 7 · 3⤊ 0⤋
If you got a 1099-Misc, the IRS has a copy of the same 1099-Misc with your EIN or SSN on it, so you should report that income somewhere. All of your income should be reported as business income on a form 1040 Schedule C so that you can also deduct your expenses and only pay taxes on the net. I don't know where you got the $6000 number, but the threshold for paying self employment tax is MUCH lower than that, which is why you want to net the income.
2007-03-11 14:05:06 · answer #2 · answered by Mary T 2 · 1⤊ 1⤋
You are going to owe social security taxes on the $5997. You will need to file a 1040, a Schedule C, and a Schedule SE, at the bare minimum. You should be able to come up with some expenses to offset the income and reduce your taxes - computer(s,) printer, scanner, software, office (paper, etc.,) car/truck, anything related. Think hard to take advantage of what you spent to get your money or compute your taxable income.
2007-03-18 18:12:13 · answer #3 · answered by Scott K 7 · 0⤊ 0⤋
So far you've had some good advice and some bad advice. Judy's was right on the mark to sleep well at night. Some things to remember. Deduct your phone, who is going to take the exemption for you, you or your parents? Do you live alone? If so take office in home deductions. Your expenses will eat up a lot of that $6,000.
2007-03-19 13:07:48 · answer #4 · answered by bob_whelan1944 3 · 0⤊ 0⤋
The person that advised you that if you made less than $ 6,000 is wrong and right. Wrong, because he failed to mention to you about Self-Employment Tax
(Social Security) and Right - that your standard deduction and personal exemption will eat up most of your income.
As a self-employed person, you must file a Schedule C and Schedule SE
(self-employment) and pay social security tax on your net earnings (after
deductions).
In your case, definitely report the $ 2,500 in contracting income. The $ 3,500 you earned on Google, is a "gray area" - earning money on the Internet really
has not yet created tax legislation in how to treat money earned. However,
if you deposited the $ 3,500 in the same bank account as you did the $ 2,500,
I would highly suggest you report all of it. If you get audited, you would have covered yourself.
It is highly unlikely you would get audited. The right thing to do is to report it.
The not so right thing - not to report the $ 3,500; it will probably never come up again. But who can be so sure?
How well do you sleep at night?
2007-03-12 01:30:20 · answer #5 · answered by bold4bs 4 · 0⤊ 2⤋
First of all, Google should have sent you some documentation, that they paid you money .
Check the tax booklet, and find out what the max amount of $$ is, before you have to pay any taxes.
2007-03-17 02:51:23 · answer #6 · answered by Yellow Tail 3 · 0⤊ 0⤋
I can tell you how to save a little extra money on this year's taxes. I found a site that paid my H&R Block tax preparation fees for me (savings of about $80). I went through their steps (around 30 minutes or so) and was told by them that if I had owed the IRS this year, instead of getting a refund, they would have paid for up to $500 of my taxes for me! Anyhow, check them out and let me know how much money that they save for you...
Jason
2007-03-14 12:31:09 · answer #7 · answered by Jason C 2 · 0⤊ 3⤋
Listen to Judy,, that's good advice and right on.
2007-03-18 04:50:40 · answer #8 · answered by Jo Blo 6 · 0⤊ 0⤋
yep, you gotta file and pay taxes. welcome to the big league, kiddo.
2007-03-11 14:00:46 · answer #9 · answered by RichManPoorMan 2 · 0⤊ 2⤋