IRS Question?

Question

I worked in a war zone for 300 days. I lost my job at no fault of my own, was forced to come home and be unemployed. I couldn't claim unemployment insurance because the company I worked for was based out of a different state than I lived.
As a result, I had to live off of the money I saved for taxes.
What will the IRS do? It was 1099. How much taxes will be owed on 70k? And I did form a business for write offs, but never had a chance to open another bank account with the EID? What can I do?

Thank you.

Thanks guys. Yeah, they tried to say we are 1099, but we wore uniforms, and had to work on their schedule. They did it to save money. I will give the IRS a call.

Thank you.

So, it looks like best case I will owe around 15k, if I can make the claim I was an employee.

What if I only have 7k to pay the IRS? What will the IRS do?

Answer 1

1. Call the IRS and talk to the small business department as to whether your were an employee or an independent contractor. You called this a job which is normally a W-2 and covered by unemployment. The payer is giving you a 1099, saying it wasn't a job, but a contract and they didn't withhold anything.

The IRS has very specific points that have to be met to be a contractor. Blackwater is calling their employees contractors and the employees are winning the argument by using the SS-8 form.

2. With a confirmed SS-8 form, you would owe only your share of FICA taxes (7.65%) instead of both shares (15.3%).

The difference is probably $4000 in tax.

3. As for income tax. $70K - single = $61250 (assuming the SS-8 holds, you started work on 1/1 and had no other job) or about $11,000 in tax.

So the total is probably $15K if you are an employee. $19K if you are a contractor.

The calculation changes if you had other income or if you had deductible expenses.

Answer 2

It does not appear as though you qualify for the foreign earned income exclusion, as you fall 30 days short of the minimum.

Assuming your business is a sole proprietorship, you can still deduct your business expenses in order to arrive at your net profit. Self-employment tax on your net profit will be 14.1%.

Your regular income tax will probably be in the 15% bracket, although you really don't provide enough details to determine that. Such factors as filing status, dependents, itemized deductions, etc. come into play.