I have a full-time job that takes taxes out. I have done work for three other companies this year that were contractor positions. I made about $400 at each job. Do I add it all up, take $600 off, and pay taxes on the rest? Do I owe taxes on any of it, since each job was less than 600? Thanks.
2007-11-10 11:11:32 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
Ohhh, I get it now. They don't have to send a form, but I still have to claim it. Thanks bostonianinmo.
2007-11-10 12:04:17 · update #1
No, you pay tax on all of it. If you have more than $400 in Self Employment income you must also pay Self Employment tax on that income.
You figure your Self Employment income on Schedule C or C-EZ. The total goes to Form 1040 also to Schedule SE. Schedule SE is where you figure your Self Employment tax.
The "$600 rule" that you are referring to governs the documentation that the firms that pay you must file. If they pay you less than $600 in any tax year they do not need to prepare a Form 1099. However YOU still must claim all income and pay tax on it.
2007-11-10 11:16:27 · answer #1 · answered by Bostonian In MO 7 · 4⤊ 0⤋
The "$600 Rule" that appears to be widely discussed has nothing to do with the recipient of earnings and their tax reporting. A company or individual that pays less than $600 to one person as an independent contractor is not "required to file" a 1099 MISC with the IRS. Thus the IRS may not have a direct means of determining that the recipient received such an amount.
If you as an independent contractor received $1 and your total income from that activity exceeded $399 you would need to file a tax return. If you had wages reported on a W-2 that exceeded the filing requirement for your filing status and you received $1 as an independent contractor you would be required to report that.
Could you get $400 as an independent contractor from a 100 people a year that don't report it on a 1099MISC and never file a tax return. Sure you could, until you got caught. Trust me they have ways to find out
2007-11-10 21:18:27 · answer #2 · answered by ? 6 · 1⤊ 0⤋
No, you add it all up and pay taxes on ALL of it. If the contractor jobs were your ONLY income, you'd only have to file if the total was over $399. Since you have other income, ALL of the side income is taxable.
$600 is the limit at which each of the companies is required to send you a 1099. But if they don't, you are required to file the amounts on your tax form from your records.
2007-11-10 20:45:57 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
Many payers will issue the 1099-Misc for amounts below $600 (the IRS will accept the forms)--they pay their taxes and want to remind you to report your income and pay yours....
2007-11-11 03:07:27 · answer #4 · answered by Anonymous · 1⤊ 0⤋