Tax Filing Question... Need some expert advice.?

Question

if i file 1099 in the end of the year, do i need pay a lot of tax, compare to W2?

Answer 1

If you have the same amount of income on a W-2 and on a 1099MISC, and no deductible expenses, you will pay the same income tax.

With a 1099MISC you will pay double the Social Security and Medicare taxes that you pay with a W-2. So if everything else is the same, being paid with a 1099 will cost you about 7.65% more in taxes than a W-2.

Answer 2

If you haven't filed quarterly returns and payments, yes you'll pay a lot at the end of the year, since you'll be paying an entire year's tax at one time, and will very possibly owe penalties for underwithholding.

The income tax amount will be the same as if you earned that amount on a W-2. Social security and medicare will be higher - if you were an employee (w-2) the employer would have paid half, on a 1099 you pay both the employee and the employer portions. You get a bit of a break on it so it isn't quite twice as much, but close.

Answer 3

Pardon what may seem like a cheap shot but if you didn't know the answer to this question before, you are probably being taken.

Some employers try to skip out of payment of employment tax and workers compensation by improperly treating employees as independent contractors. The workers don't understand the system and blindly go on their way until return filing time comes and they are in a major hurt. Is this you?

If you have little say about when you work, where you work or how you do your job, you are probably an employee and should have taxes withheld from your pay but that is not going to help you next April unless you fix it now. If you have not been making quarterly payments of estimated tax you are going to get a major hit at the end of the year because you will owe income tax and both halves of social security tax and have paid in zilch.

If this scenario is scary, I suggest filing a Form SS-8 with your local IRS office and then start looking for another job.

Answer 4

First, 1099's and W-2's are filed by the person who is paying for work to be done, not by the person who does the work. Which are you?

Second, with a 1099, the worker pays more tax and the person paying for the work pays less; with a W-2, the worker pays less tax and the person paying for the work pay more tax.

Answer 5

Yes, you have to pay more taxes than if you were given a W2 for the following reasons.

There has no been any tax withholding from your paychecks as a 1099 independent contractor. On the other hand, W2 employees have federal, state, local, social security, medicare, and other taxes taken out from each of their paychecks. When filing tax returns, 1099 independent contractors have to pay all taxes at once while W2 employees might have refunds if they overpay their taxes during the year.

Your boss does not pay his portion of social security tax (6.2%) and medicare tax (1.45%) if you were a 1099 independent contractor. The employers are required to pay this 7.65% of so-called FICA tax for his W2 employees. Thus, you have to pay for your employer's 7.65% FICA tax when filing your Federal Income Tax.

As a 1099 independent contractor, you pay all the taxes at once when filing your tax returns. Also, you pay more FICA tax than W2 employees because your boss did not pay his 7.65% FICA tax and you end up paying for it.

Answer 6

Normally there is no tax withheld on money reported on a 1099. You would therefore owe tax on it. If you have large amounts of income reported on 1099s (interest income, etc) you should increase the amount withheld on your W2 (your regular job) to cover the tax or file quarterly estimated tax.

If the 1099 is for retirement income you can usually have tax withheld.
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Answer 7

Yes, you get a 1099 because taxes werent taken out. You have to pay taxes at the end of the year on those earnings.

Answer 8

It's the same no matter what you do.
Have you been paying quarterly?
Depending on the amount of money you earned you should be putting some aside for tax time.
You'll have to provide more info if you want a more detailed answer.