1099 Contractor - How to do Self Employed Taxes

[pikec514]

Hi, I am a 1099 contractor (therapist) for a group practice. All the information I came across previously about self employed taxes seemed to refer to business owners which much larger amounts of expenses, possible tax deductions, and more expected revenue thus needed to do quarterly filing. As a contractor that does not own my own business do I still have to do quarterly taxes? If so, how do I estimate the income on which to file taxes as it is variable and can't necessarily be estimated? I just started in April 2023 so 2024 would be the first full year so I do not even have previous full years to make an estimate. Additionally, I file jointly with my spouse who is a W2 employee. Does this impact tax filing or the need to file quarterly? In the future I am considering doing multiple 1099 positions for different agencies, how would this impact my tax filing requirements. Thanks!

[xmasbaby0]

You can still file joint returns with your spouse--filing a joint return is almost always better.   All of your self-employment income and your spouse's W-2 income will go on the same Form 1040.    If you have more than one 1099NEC you will enter each one on your tax return.   

If you have self-employment income for which you will pay self-employment tax for Social Security and Medicare,  you will need to use online Premium software or any version of the CD/download so that you can prepare a Schedule C for your business expenses.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099-nec/1099-nec/L5qTsBiSe_US_en_U...

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://blog.turbotax.intuit.com/self-employed/self-employed-tax-deductions-

calculator-2021-2022-50907/

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

https://turbotax.intuit.com/tax-tools/calculators/self-employed/

[Cindy4]

A 1099 contractor is considered self-employed by the IRS.  You will need to make payments for estimated taxes due, either with estimated payments or by your spouse adjusting W-2 withholding to cover any possible tax due.

To avoid penalties, you'll want to pay either 100% of the tax due the prior year, or 90% of the tax due in the current year.  It is difficult to estimate when your have variable income, but you can do it quarter by quarter.  For instance, you know what you've already made so far this year so you will want to be sure to estimate based on that amount of profit.  You're responsible for FICA - Social Security and Medicare - along with income tax.  Your income tax rate is based on your marginal bracket.   FICA is around15%.  Here is a great resource for determining what you owe.  

Multiple 1099s for related work can all be reported together on the same Schedule C.  TurboTax will guide you through it as you enter the information from the 1099s in the wages and income section under self-employment income.

Hope this helps!

Cindy

[Burtonemily2]

I am a therapist!! And I am trying to figure out the same things. Any luck? How has your experience been so far? 

[RobertB4444]

If you are a contractor then you DO own your own business.  At least that is how you are treated for tax purposes.  You will need to consult with an attorney or an accountant to see if you would benefit from creating or becoming a corporation.  

For purposes of filing taxes for yourself today you are what is referred to as a "sole-proprietorship" which is just a small business designed to make enough money to pay you.  

You will need to gather all of the records that you have for the year showing all of the income that you were paid (these amounts should be on your 1099s but should also match the amounts that you received.  Make sure to double check!) as well as all of the expenses that you had.

Your expenses should be divided up by categories.  Office supplies, meals, travel, etc.  The TurboTax system will walk you through the different categories of expenses.  Since this is your first year make sure that you go through all of them!  There are a lot and there may be some that you haven't thought of.

Paying estimated taxes as a contractor is a good idea.  The IRS expects your taxes to be paid just like they were when you had them taken out of your paycheck.  You'll be expected to make estimated payments next year in four installments (which beats making one big payment in April).  The IRS has this article on estimated payments which is really useful.

When you have finished entering all of the information for your 2024 taxes into the system then you will have a chance to use TurboTax to calculate your estimated payments for next year.  It can even set up automatic payments if you like!

Lastly, this "business" as a contractor is really just another page in your tax return.  You can still file jointly with your spouse and enter all this information with no problems.  Good luck!

@Burtonemily2