When i did my taxes i had two w2's and a 1099 form to file. The 1099 was around 13,000 (i believe, less than 20,000 for sure) - i now owe the IRS 4900 - is this correct or could i have filed differently to keep from having to pay so much.
2007-05-21 06:39:15 · 4 answers · asked by Rikki D 1 in Business & Finance ➔ Taxes ➔ United States
The main problem is that no tax was withheld on the 1099 money. If you expect the same every year you should have taxes withheld. If that is not possible then raise the amount of tax withheld from your job by lowering the exemptions or having an additional amount taken out.
2007-05-21 06:44:01 · answer #1 · answered by Barkley Hound 7 · 0⤊ 1⤋
Income from a 1099-MISC is usually self-employment income. If the 1099 was for Interest or Dividends then ignore this answer.
If you did some "contract" work outside your regular job, you would receive a 1099-MISC. This income should be reported on Schedule C. You are allowed to take as deductions the expenses you incurred to produce that $13K. Such expenses could be postage, supplies (office or otherwise), mileage, utilities, home office etc. The result would be the taxable amount. Also, you would be subject to Self-employment tax (better known as FICA and Medicare to W-2 earners) at a rate of 15.3%. I would suggest you hire a professional to amend your tax return.
2007-05-21 14:42:54 · answer #2 · answered by extra_37 4 · 0⤊ 0⤋
You may be missing some deductions related to the 1099, or your return may be optimal right now. With $20,000 of 1099 income, it is not unusual to owe close to $5,000 in taxes, which include income taxes, social security, and medicare.
If you did not take deductions for expenses you paid to earn the 1099 income (such as mileage, equipment, home office), you can amend your return and perhaps reduce the tax owed.
If you are going to get another 1099 like this in the future, you should pay estimated taxes, or you will be subject to a penalty for underpayment of taxes (which you may be paying this year as well).
2007-05-21 13:58:51 · answer #3 · answered by ninasgramma 7 · 2⤊ 0⤋
What was the 1099 for? If it was self-employment income then you are looking at 15.3% FICA (aka Social Security) on the amount listed thereon. Did you have expenses in regards to this self-employment income to reduce the amount stated thereon? Did you fill out a Sch C or Cez? If you want to open dialog and give me the particulars I will try to make it as clear as I can with 36 years of tax preparation experience behind me.
2007-05-21 13:47:05 · answer #4 · answered by acmeraven 7 · 0⤊ 0⤋