Hello,
I mentioned earlier that I am disabled on ssa. I'm looking to start medical transcription as extra income. The companies I've looked into are willing to pay via PayPal ,venmo etc and wish to make you an independent contractor. How will that affect me going forward? I know that anything over $600.00 is considered taxable. So how would I file that 1099k along with my social security 1099 ? Would I need to pay into social security and Medicare? How would I go about setting aside the tax funds for the IRS?
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Good questions! Generally, Social Security Disability Benefits (SSDI) aren't taxable unless you have substantial additional income (more than $25,000 for an individual or $32,000 for married filers). If you decided to start earning extra money, it is unlikely to impact your disability unless you are wildly successful!
If you are an independent contractor and payments are issued through Venmo for example, Venmo will send you a 1099k reporting those gross earnings. When you file your tax return, you will enter the 1099k as self employment earnings. Then you will enter the expenses associated with earning that side job income, for example vehicle expense. Once you enter your expenses, the software will arrive at a net profit amount that you will owe taxes on. Since this type of work is considered self -employed, (no employer to pay the SS tax or Medicare tax), you will also owe SE taxes in addition to the ordinary income tax due on the earnings. Naturally, this depends on your tax situation as to how much you end up owing after the return is prepared.
If you feel like you may end up owing taxes, you can make estimated tax payments to the IRS.
https://ttlc.intuit.com/turbotax-support/en-us/help-article/medical-tax-credits-deductions/disabilit....
https://ttlc.intuit.com/turbotax-support/en-us/help-article/retirement-benefits/social-security-inco...
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