Does anyone know how to report earnings for 1099 and... ?

Question

and what the best way to report is? My boyfriend just got a new job, but he has is considered an independant contractor. He will be getting a 1099 form at the end of the year of his earnings. He will get paid everyweek various amounts. How much do we pay in for taxes and what is the best way to do this? Does anyone know of a site with this information?

Answer 1

He will fill out a form 1040, a schedule C or C-EZ, and a schedule SE for his tax return.

His 1099 income and any allowable associated expenses will go on the schedule C. The amount from the bottom of that schedule will go on his 1040, and also on schedule SE. The SE is used to calculate his self-employment tax - this is for social security and medicare, since those aren't deducted from his checks and the business paying him won't be paying a matching amount. That total will also go onto his 1040.

Since taxes aren't deducted, he should also be filing a quarterly estimated return, form 1040ES, and paying in the tax that will be due for the money he made that quarter. If he doesn't do this, he'll probably owe a ton when he files his return next year, and will also be subject to penalties for under-withholding.

Answer 2

He will report this income as a self-employed person on Schedule C on tax return. He can also deduct any related expenses on that schedule (mileage, supplies, etc.) Since there are no taxes withheld for self-employed people, he will be responsible for remitting quarterly estimated tax payments. If you go on the IRS.gov website there are worksheets to help figure out estimated tax.

Keep in mind that in addition to federal income tax, he will also pay self-employment tax, which is basically the equivalent of FICA tax. Because he is self-employed, he will have to pay 15.3%, which is the equivalent of both the employer and employee's portion of FICA, since he is both. But he will then get a tax deduction for half of that.

It may be a good idea to have the return done by a professional, at least the first year, just to be sure you don't miss any possible deductions.

Answer 3

Most likely you will be reporting this on the schedule C of his 1040. On top of federal and state income taxes, this will be subject to self employment tax. Self employment tax is in lieu of Fica, Medicare, Disability, etc. that would would be deducted from his paycheck as a regular employee. Get 1040-es forms from IRS.gov to make quarterly payments. He will probably pay 25% for fed and about 15% for self employment tax. This is a rough estimate. He needs to estimate his annual amount, multiply it by 40% and divide that by 4, to come up with his quarterly payment amount.

Answer 4

Ok..I've been doing taxes for a few years and the way you do this is you go to your tax filer and give them the 1099 and make sure you keep track of ALL expenses that you pay out of pocket for the job. Things like uniforms, special shoes/boots, tools, equipment, supplies, ANYTHING that you have to pay for/buy to be able to do your job. All of those expenses get deducted from your taxable income, which basically means that you pay less taxes on what you've earned. A little side note....if you don't have "receipts" you can always make a "ball park figure"....*wink**wink*

Answer 5

In addition to what the others have said; estimated taxes must be paid at least quarterly however, you can pay them more often such as monthly. If you do and mail the payment in just submit it on 1040-ES with the appropriate voucher. If you pay monthly just print extra vouchers and submit for the correct quarter.
other pubs you might be able to use.
http://www.irs.gov/formspubs/lists/0,,id=97819,00.html
334 Tax guide for small business
463 Travel, entertainment, and car expences.
535 Business expences
552 Record Keeping for Individuals
583 Starting a business and keeping records
587 Business use of your home
505 Tax withholding and estimated tax

Answer 6

He will need form 1040-ES and file estimated quarterly taxes, 4/15 (for January-March), 6/15 (for April-May), 9/15 (for June-August), and 1/15 of the following year (for September-December). The final 1040 is due 4/15 of the following year.

All dates may be adjusted for week ends and holidays. As the previous answerer said, go to www.irs.gov for the forms and instructions. Don't do it at the last minute. If you find them confusing, you need time to get help, particularly with the business deduction section.

Answer 7

The other answers are fine, but let me add:

Have him keep a record of all of his checks. Make sure that the 1099 is correct and not an overstatement of the amounts paid to him.

He will file Schedule C or Schedule C-EZ with his tax return. This schedule figures his net profit after he deducts his expenses. The Instructions to Schedule C is a good reference for you to have:

http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

He will also file Schedule SE which computes his SS and Medicare taxes, which are paid on his federal income tax return.

He must start keeping excellent records of all his expenses. If he buys equipment, record the amount and date. Record all supplies, vehicle mileage, travel expenses if he goes out of town. Every dollar he can deduct from his gross not only saves him income tax, but 15 cents of SS and Medicare.

Answer 8

AS a CASH basis taxpayer, she reports the earnings in the time period the $$ are received Unlike typical w-2 earnings which are reported in week worked NO, she does not get to play games, pick and choose when or what to report to Unemployment And different states have different rules, CHECK out your state's, as some require reporting GROSS receipts, some allow net receipts for self-employment Don't Guess, inform yourself--herself

Answer 9

Believe it or not, IRS.gov will have the best information. This will be considered self-employment income so you will be regular tax at your marginal rate plus you will have to pay self employment tax of approximately 15%. The self employment tax will go down to 3% if you income exceeds around $96,000. Don't forget to include state income tax if your state has an income tax.