1099 Questions?

Question

Ive made 10k since may of 07 Till now. I am getting 1099 i am self employed. I havnt done anything quarterly.. I am claiming 2 kids and head of household. Also i have kept all reciepts I have about 1300 in Gas just for work purpose. What kind of a refund will i be looking at? Am i gonna OWE?

Answer 1

If this is your only income you will probably get a refund. You will eligible for earned income credit which will actuallt create a refund for you.

You may want to think twice about using all your deductions as the value of the EIC fluctuates like a bell curve, peaking at about $15,000.

Answer 2

I am assuming this is your only income for the year. If the gas costs are for commuting to your main place of business, they wouldn't be deductible - if they are for driving as part of the work you were doing, not for commuting, you'd be way ahead to take the allowable 48.5 cents a mile - without knowing your business miles, can't estimate that, but that amount per mile will definitely be more than gas costs.

All that said, with that income and two kids to claim, you won't owe any income tax. You'll owe self employment tax for social security and medicare on your net income (the $10K minus any associated eligible expenses), so that would be around $1413, less if you have deductible expenses like business miles. You'll get EIC for around $3710. So no, you won't owe, and should get around $2300 back.

By the way, when Randall suggests that you don't claim all of your expenses to get a higher EIC, he's suggesting that you do something illegal - hardly "best answer" material.

Answer 3

You say you spent $1300 on gasoline. How? For what?

If you were working for one payer at a time at their location, your drive to and from there is called commuting and it isn't deductible. If you worked at two location in one day, the drive from site 1 to site 2 is a valid business expense.

The $10K, without expenses, will trigger $1412 of SE tax. With two children (single works the same as HOH), you will have $9294 of earned income for EIC purposes. With 2 children, this might be $3710, leaving you with a refund of maybe $2300. If you have expenses, your income is less, the SE tax is less and the EIC is less. (You can't not take valid expenses.)