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Level 1
posted Aug 30, 2023 9:03:55 AM

Newly transitioning from W2 to 1099

What steps are needed?  What do I need to be cautious of?

1 2 537
2 Replies
Employee Tax Expert
Aug 30, 2023 9:18:35 AM

@JNic JNic,

Thank you for reaching out to the community for your tax questions.

First step is to make quarterly payment within their due date: April 15, June 15 September 15  and January 15. Please see the IRS link below for more details

 

What to be cautious of is to make estimated payments by the due date of each payment period to avoid penalty and interest when you file you tax return at the end of the year.

https://www.irs.gov/faqs/estimated-tax/individuals/individuals-2

Expert Alumni
Aug 30, 2023 9:30:34 AM

Hi There:

 

As an add on - here three things to be  aware of are:

 

1) As a 1099 employee you are considered an independent contractor and therefore will be responsible for paying self employment taxes of 15.3% of net Income in addition to regular income tax.

 

2) As an independent contractor you will be able to deduct all ordinary and necessary expenses of running your self employment business.

 

3)Report all self employment business income and expenses on Schedule C with your 2023 tax return.