Pay IRS if I get 1099 Form?

Question

If I received a 1099 Form from an employer, does that mean that I would have to pay to the IRS? If so, how do I find out how to figure how much I would have to pay?

I'm not self employed or anything but I was looking into an Online Business which I would sell companies products at my marked price and the buyer would buy them from me and I would buy them from the company at their price and the company would ship those products to the person who bought the products from me. So basically, I would be a broker for the company.

So basically what I am asking is, would I make money in the long run? Or waste my time and not make any money.

Answer 1

The 1099 is like a W2 for independent or outside contractors. When you do your taxes, you add it to your income, calculate your tax, and either pay what you owe or get a refund of what you overpaid. You will get a 1099 if you were paid $600 or more in the calendar year.

If you are working as an independent contractor on a regular basis, you may need to send in quarterly estimated tax payments to the IRS to avoid underpayment penalties.

Answer 2

I have been a tax accountant for 27 years. What you describe is, indeed, a self-employment scenario. You are incorrect in assuming you would be a broker for the company selling you the products, but shipping direct to the customer. You are a retailer and are also responsible for sales taxes on the sale of tangible personal property.

Now for the income tax ramifications. Assuming you will be doing this alone and not incorporating, you will need to file additional forms along with your 1040 return. For the selling activity you will file Schedule C (Profit or Loss from Business or Profession) and Schedule SE (Self Employment Tax).

Because it is easy for me to tell that you know next to nothing about business or taxes, I strongly recommend that you seek the assistance of an experienced professional. I would be doing you a disservice to provide you with information that you will not understand and might misuse and get yourself into trouble. A good tax preparer will charge you about $300 to $400 for tax preparation. You will also need to keep a set of books (single entry is fine for a sole proprietor, so there's no need to take accounting courses) which you will provide to your tax preparer.

Quarterly estimated tax payments may be necessary unless you have regular wage income from a regular job and can have sufficient extra withholding taken out of your paycheck.

Answer 3

You just file your income tax as usual. The amount of income you show must total at least what all your 1099s & w-2s amount to! Then take all your deductions (are you self-employed?). Shedule C is what you file if you're self-employed, along with Schd. A if you have mortgage interest, property taxes, etc. There are several other forms you'll have to file as well. Go to a CPA or get yourself a CD by one of the tax prep. companies: TAXCUT or ________ (there's another one?). Good Luck.

Answer 4

If the 1099 shows non-employee compensation, you would pay income tax at whatever amount your total income requires, plus 15.3% for self-employment tax (social security and medicare). If you have related eligible business expenses, you subtract them first from the amount on the 1099, and the tax is figured on the net.

Answer 5

Federal income taxes, and self-employment taxes, are NOT deductible on your federal return, no matter whether they're for the current year or for past years. If you're talking about state or local taxes, then it's line 23 of schedule C.

Answer 6

Go to IRS.GOV; use forms and order up a Pub 15. Read it and then ask for clarification of any questions you have.