I have earned 500.00, but I am concerned about having to pay taxes on it if it is $500.00 or over. I know this tax/penalty is about 30+% and would like to avoid it. Any information is appreciated. I live in Texas if that matters.
Thanks!
2007-08-30 11:14:11 · 6 answers · asked by Prisillla68 2 in Business & Finance ➔ Taxes ➔ United States
1099 is income, you have to claim it all.
You are not exempt from paying your fair share of taxes.
2007-08-30 11:25:14 · answer #1 · answered by Landlord 7 · 4⤊ 1⤋
The limit is $399 - if you make $400 or more, you have to file and pay tax. If you are filing a return for some other reason, then you have to claim the income from the first dollar.
The reason the tax on 1099 income looks so high is that you are paying both halves of social security and medicare - if you were an employee, your employer would pay half.
If the $500 is your only income, then you'd only pay the social security and medicare, which is around 15%, there wouldn't be any income tax. If you have other income also, you'd need to report it no matter what the amount.
2007-08-30 19:32:31 · answer #2 · answered by Judy 7 · 3⤊ 0⤋
If your only source of income is the self employment income then you must file a return if you make $400 or more in any tax year. If you already are required to file a return due to other income, the SE income is taxable from the first dollar.
2007-08-30 22:42:45 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
You don't even get a 1099 until you reach $600. You are responsible for paying taxes on any income, reported or not. You also need to pay social security and medicare on contract labor income. Far be it for me to tell you that if it isn't reported, how will they know. And there are limits on when you have to file but I don't know how that applies to you anymore.
2007-08-30 18:26:35 · answer #4 · answered by towanda 7 · 1⤊ 1⤋
You have to pay federal tax on all of it. In Texas, there is no state income tax. In most other states, you would have to pay both state and federal tax.
If this is for earned income (for example, work as an independent contractor), then you must pay self-employment tax, but can avoid income tax by contributing it to a retirement plan (a SIMPLE plan works well if you have earned <$10,000 and want to contribute it all).
If this is for unearned income (for example, bank interest), then you cannot avoid income tax but do not pay self-employment tax.
2007-08-30 19:51:31 · answer #5 · answered by StephenWeinstein 7 · 0⤊ 1⤋
Technically all, but companies don't need to issue a 1099 for amount less than $600
2007-08-30 18:27:29 · answer #6 · answered by Matrixcm 3 · 0⤊ 1⤋