Filing 1099 for 1st time?

Question

I'm a sub-contractor, what do I need to do to not get totally screwed come tax time, like save receipts etc thanks

Answer 1

The poster above me started out OK but fell on her sword with the 10% savings account comment.

You'll pay 15.3% self-employment tax on the net profit from the business activity. That will start long before any income tax is due since at least SOME of your earned income isn't taxed due to deductions and exemptions.

You just don't sock the money away in savings either. You must make quarterly estimated payments to the IRS using Form 1040-ES. Those are due in April, June, September, and January. If you've been self-employed all year, you've already missed the first 2 payments so you have some serious catching up to do.

Aside from the previous advice on saving all receipts and keeping detailed records, get a copy of the Form 1040-ES package from the IRS website. Use the worksheets to figure out your estimated tax liability and get cracking on the payments. Even if you have a fairly modest profit from this activity, your liability can easily exceed 30% of your net profit especially once state taxes are taken into consideration. You can't afford to delay on getting your act together on this or you WILL regret it!

Answer 2

Well filing 1099 is a pain. I had to do that once for my husband. You will have to file long form and yes save all of your receipts. Also make sure to keep a detailed log of your vehicle mileage that you drive for work. You have to know the starting mileage, how many miles were driven for work and how many were driven for personal usage if any. Come tax time you will have to pay social security and medicare, although they will allow you to write off a percentage of that. You should visit the irs.gov site and complete an estimated tax form based on your dependants and income. Depending on where you fall you may have or need to file quarterly to pay your income taxes. You should also check into your states guidelines for estimated quarterly taxes as well. This also keeps you from having to pay a large sum at tax time. My husband didn't work very much under a 1099 so we didn't need to pay quarterly.

Answer 3

This Site Might Help You.

RE:
Filing 1099 for 1st time?
I'm a sub-contractor, what do I need to do to not get totally screwed come tax time, like save receipts etc thanks

Answer 4

The best answer I can give you is to go to this link... http://www.irs.gov/businesses/small/index.html

This is the IRS website and it gives you answers for all of your questions. You will need to keep track of your mileage, gas receipts, repairs on your vehicle, any type of receipt used during the day while working.. Tools, clothing, etc.... If you have a good tax preparer then she should tell you just save it all and I will help you go through it. I do it allt he time for my customers. The website will give you basic information and if you have time then you may want to also check the local community college. Many of them offer a class on how to operate a small business and that is exactly what you are considered a small business. I would also recommend that you obtain a federal identification number. That way you are not giving out your social security number when you do a job.


An easy way to keep track of receipts is to go to Staples and purchase and item call NEAT RECEIPTS... this is a receipt scanner that works wonders. You scan the receipt and place it in the proper category once you have used the scanner several times it will know where to put most receipts and you wont even have to classify them. This type of scanner will also help your tax preparer. I know... because my husband uses one and it is fantastic.. Saved me many hours of adding receipts.. If you are not computer knowledgable then take a notebook and divid it up into categories and write down your receipts this is also a way of tracking for yourself.. I

Dont forget to also put money away for tax time. I would recommend at least 10% of what you earn should be placed in a savings accounts just in case.. Not saying you will have to pay but this is a way to cover yourself in case you have too..And it will also put away a small nest egg should you need it.. I hope this helps..

Answer 5

Keep every receipt for travel, gas, required clothing, tools, and any other receipts that are related to your work. I made out like a bandit this tax year (thank goodness), but I kept every receipt no matter how frivilous it was and it turned out to be a good thing.