1099 hairstylist

[KaneSugar]

I am a hairstylist. The salon I work in has me on a 1099. I am expected to follow a schedule and assist with running the salon as needed. I do not get compensated for this. I only make money off of the work I do on clients and there are days I sit for 5 or 6 hours because we don't have clients. I get 50% commission plus tips. My tips are lumped in as salary earned. I saw another thread that says I can claim the 50% my salon keeps as rent. Is this true?

[tagteam]

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@KaneSugar wrote:
I saw another thread that says I can claim the 50% my salon keeps as rent. Is this true?

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Unless you report that retained 50% as income on your income tax return, you will not be allowed to deduct any of the amount retained as rent.

[Carl]

Two things here.

First, if you will be receiving a 1099-MISC then as far as the IRS is concerned you are self-employed and "in business" for yourself. All of your business income and expenses will be reported on SCH C as a physical part of your personal 1040 tax return. Keep good, finely detailed records of every penny you receive from your business, as well as every penny you spend in your business. All of your business related expenses are deductible.

I am expected to follow a schedule and assist with running the salon as needed.

That comment really needs more detail, as the IRS has clear definitions of the difference between a 1099-MISC "employee" and a W-2 employee. But even so, only you can make this determination because only you know the expectations, rules and requirements of the person who pays you.  It all comes down to the type of relationship between you the person providing the products or services you provide, and the person who pays you to provide those products or services.  It's well covered at https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...

My tips are lumped in as salary earned.

I think you mean they are added to and included in your compensation, which would be correct. If you are self-employed as a sole proprietor or single member LLC, then you don't get a salary. You only get paid "earnings" which are reported in box 7 of the 1099-MISC.

[VolvoGirl]

Some general info.  You will need to keep good records.  You may get a 1099Misc at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small.  You might want to use Quicken or QuickBooks to keep track of your income and expenses.

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....

http://quickbooks.intuit.com/self-employed

When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on Schedule 1 line 27.  The SE tax is already included in your tax due or reduced your refund.  It is on the Schedule 4 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf  

You Enter all your income then enter your expenses.  If you of the 1099Misc includes the commission you report 100% and can deduct the commission/rent.  If you only report what you actually got after the fees then you can't deduct it.

[Hairproductions]

I’m a commission stylist now getting 50 percent my boss offered me to go 1099 and she will pay me 60 percent am I ending up making less now that I’m paying my own taxes? How can I work it with her the 40 percent that she is keeping as a business expense?