@Cindy M wrote:
That's interesting information but it's definitely a 1099NEC (forgot to mention that before) and they take out all those taxes. That's why it was so frustrating last year trying to do my taxes and then trying to input their info instead of mine. I'm not sure what the deal is but they pay everyone that way as far as I know. They have been im business for years and their contract is with the federal government. Thanks for your response.
If you are paid as an independent contractor, you receive a 1099-NEC at the end of the year. It looks like this.
https://www.irs.gov/pub/irs-pdf/f1099nec.pdf
The client who pays you can withhold federal and state income tax (shown in box 4 and 5), but they can't withhold social security and medicare tax. You must report your self-employment income on schedule C. You list all your gross income, you can subtract any ordinary and necessary business expenses, and you pay tax and self-employment tax on the net profit. Any withholding is only an estimate of the tax you might owe and you must file a schedule C and form 1040 to calculate the actual tax you owe.
If you pay a helper, that is one of your ordinary and necessary expenses. It subtracts from your income, so you don't pay tax on it. But the helper must report the income and pay tax, and you must issue the helper a 1099-NEC from you to them, if you pay them more than $600 in a year. Some versions of Turbotax can help you e-file a 1099-NEC or you can do it at other online companies for a few dollars. You need the helper's social security number.
I don't understand "That's why it was so frustrating last year trying to do my taxes and then trying to input their info instead of mine." You file your own tax return only. You include payments to them as a business expense. That's all, unless you are using Turbotax to issue the 1099-NEC. In that case you should only need their names address, SSN and amount paid.
