New to Self-Employment

[jasminetaylor2122]

I just started working as a consultant for a private company within the last few months. They do not take out taxes. I have zero experience with this. Do I just file my income with my regular taxes? Please explain it to me like I'm 5 years old. I am brand new to this and find regular taxes incredibly stressful already. 

[DawnCo]

Hi,

Happy to help.

I just started working as a consultant for a private company within the last few months. They do not take out taxes. I have zero experience with this. Do I just file my income with my regular taxes? Please explain it to me like I'm 5 years old. I am brand new to this and find regular taxes incredibly stressful already. 

It can definitely be overwhelming starting a new venture.

As a contractor, you are considered Self employed. Yes your income and expenses will be included in your individual tax return. TurboTax does a great job of guiding you through your taxes in TurboTax Self Employed https://turbotax.intuit.com/personal-taxes/online/premium/

 Here are some great links with videos that are very through in explaining. https://turbotax.intuit.com/tax-tips/self-employment-taxes/the-self-employment-tax/L8xXjolB4

With being self employed your income after expenses will be taxed both self employment tax and Ordinary income tax. 

You are expected to pay estimated taxes throughout the year. Here is a link to help with that. Since you do not have throughout the year, the irs and state encourage you to pay throughout year. Then you would enter those payments in your individual tax return.

I am glad to continue this conversation. please reply with anymore questions you may Have.

Thanks 

Dawn C, EA

[LoriLeighEA]

@jasminetaylor2122 we are here for you! Congrats on the new job consulting. Will this company be paying you with a 1099 form or a W2 form at the end of the year?

If they are not taking taxes out, it sounds like you will get a 1099 form. You would need to make quarterly tax payments to the IRS. Here is the information on how to do that and how much to send:

https://turbotax.intuit.com/tax-tips/self-employment-taxes/a-guide-to-paying-quarterly-taxes/L6p8C53...

Look this over and let me know if that helps.

[jasminetaylor2122]

Thanks for the replies! So it sounds like I need to make quarterly tax payments. Does it matter that I have a W2 job as my primary income, and this self-employment is only about $2,000 a month? I am assuming they will give me a 1099, but again, I have zero experience with this. 

[evelynm]

Jasmine:

A great tool to check your tax liability is the tax caster:   https://turbotax.intuit.com/tax-tools/calculators/taxcaster/

Here is link to give you guidance on the reporting of self employment income and expenses:   https://turbotax.intuit.com/tax-tips/self-employment-taxes/reporting-self-employment-business-income...

Happy Wednesday.

[evelynm]

Jasmine - hopefully they do issue the 1099 however; 

You do not need to have Form 1099-MISC in-hand to report the income.

You will not have any problems with your return, as long as the income you report on your Schedule C equals or exceeds the total amount reported on any 1099s that are filed reporting your income (if any are filed).

As far as your W-2 withholding if that covers your Self-Employment taxes that would be great - you would really need to know the tax liability and adjust your withholdings with your employer accordingly - again go to:  https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ to determine your entire tax liability along with the state if applicable.