how to pay social security tax for a contractor

[tgad1000]

my wife her own business, she paid somebody to do some marketing research for her. the person who was paid asked her to deduct social security tax from his pay. how can she pay the social security tax for his person?

[VolvoGirl]

She can't.  Unless she pays him as an employee and gives him a W2.   The contractor has to send in his own SS & Medicare tax by paying quarterly estimates.  He will file his 1099NEC on schedule C and pay the SE tax to cover SS & Medicare.  He should pay it since it might be less than if she paid it for him.  He only pays it on his Net Profit not  the gross she pays.  

[tgad1000]

thank you so much!

so when the person file his 1099. what should he do next ? does turbo tax makes that automatically, or he has to file 1099NEC on schedule C and pay the SE tax. this is the tricky part. Please elaborate.

best...

Tarek

[VolvoGirl]

How does your wife  file her business taxes?  Is she self employed on Schedule C or  files a separate Business return?  The contractor should be doing the same way as her.   He enters the 1099NEC on his schedule C.    What do you mean automatically?  

If your wife paid him $600 or more she has to give him a 1099NEC.  Has she ever given one to anyone before?  Does she need help issuing and filing the 1099NEC?  You need to use the Online Premium version or the Desktop Home&Business program or the Business program to prepare 1099s.  

[tgad1000]

what I meant by automatically, is the person acknowledge the 1099 income, should this trigger the 1099 NEC in turbo tax, or he has to fill the 1099 NEC?

[VolvoGirl]

Sorry I don't understand.  Your wife prepares the 1099NEC to give him.  Then he will have to manually enter the 1099NEC into his tax return and fill out schedule C for his income.  You don't need to worry about what he does.  His return is not connected to your return.  

[dmertz · Accepted solution]

You wife's business has the responsibility to issue a Form 1099-NEC to the contractor if your wife's business paid the contractor more than $600.  That's where the responsibility of your wife's business ends with respect to the contractor.

It's the responsibility of the contractor to file his own tax return, include the income on Schedules C and SE and pay any taxes due.  Schedule SE is where your contractor's tax return will show the calculation of his self-employment tax that covers his Social Security and Medicare taxes which will be included in his balance due.

[tgad1000]

for the sake of argument. If the business owner didn't file the 1099 NEC on time, can I still report the income that I received from the business owner, therefore, I can pay my social security tax?

Best...

Tarek

[Vanessa A]

Yes, you would still pay your social security tax even without the 1099-NEC.  Your duty to report all income is not affected by receiving the 1099-NEC.  Whether or not you receive a 1099-NEC, you must include that income and if it is self-employment,  you must pay your FICA taxes on it as well as regular income tax. 

[Opus 17]

---

@tgad1000 wrote:

for the sake of argument. If the business owner didn't file the 1099 NEC on time, can I still report the income that I received from the business owner, therefore, I can pay my social security tax?

Let's start over.

Self-employed person Amy pays Bob to do work for them.  The relationship is not employee-employer, but business-subcontractor**.

Amy is required to issue a 1099-NEC to Bob if the amount paid to Bob is more than $600.  Amy reports the gross payment, and does not deduct or withhold any taxes.  The deadline to issue the 1099-NEC is January 31.  There are several web sites (including Turbotax) where Amy can e-file the 1099-NEC, with a copy going to Amy, a copy to Bob, and a copy to the IRS.  

Separately, Bob reports his gross income on schedule C, deducts any ordinary and necessary business expenses he can prove with reliable records, and pays income tax and self-employment tax on the net profit. Bob is required to report and pay income tax on his own income, using his own accurate business records, even if Amy does not issue a 1099-NEC or issues it late.  

**If Bob is an employee, Amy is required to withhold federal, state, social security and medicare tax, and issue a W-2 by January 31, not a 1099.  Amy may have other requirements under state and federal law.  Amy must have an EIN for her business if she has employees.  Whether Bob is an employee or independent contractor depends on the exact nature of the working relationship, and is summarized here.

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

[VolvoGirl]

Yes you have to report all your income.  Just enter it as Other self employment income or as Cash or General income. You don't need to get a 1099NEC or 1099K. Even if you did you can enter all your income as Cash. Only the total goes to schedule C.

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