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If I work for postmates, how will filing taxes work?

I was told that I would have to pay all the money back. I know I won't have to pay it ALL but what might I have to pay? And can I get deductions from things like gas and my phone? (I'm not super familiar with tax terms so please try to dumb it down for me). Is it if I make more than a certain amount? I've been doing this part time for about 3 weeks and made $422.
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If I work for postmates, how will filing taxes work?

I assume that you are doing food delivery as a contractor (https://postmates.com/). By "contractor", I mean that you are not an employee. As an employee, you would file a W-4 with your employer to tell your employer your Social Security number and the amount of withholding of federal income taxes. As a contractor, you probably gave the "employer" a W-9, which indicated only your name and Social Security number, because YOU are responsible for the federal taxes (income, Social Security, and Medicare). Instead of a W-2 at the end of the year, a contractor receives a 1099 to add to his/her tax return.

 

So if you have determined that you are a contractor (you can always call and ask Postmates), then you will have to file a Schedule C on your tax return (in TurboTax, this is the Self-employed version or Home & Business). On Schedule C, you will be able to show your income as well as your expenses. TurboTax will also add Schedule SE which calculates your self-employment tax (i.e., Social Security and Medicare).

 

Note that both of these forms are filed as part of your 1040 tax package; TurboTax will generate them automagically based on the data you provide in the "business" part of the interview.

 

It is beyond the scope of a simple post to tell you all the things you need to know to complete a tax return as self-employed. Note that Uber and Lyft drivers have exactly the same issue, and that those companies publish guide sheets to help their contractors complete their tax return. Ask Postmates if they provide similar documentation.

 

Also go find a book (like from the "Dummies" series or the "Idiot's Guide to" series - both series are quite helpful and do "dumb it down" for you) describing how to report your self-employment income on your tax return. It is worthwhile educating yourself on this issue.

 

There are two other things of note: (1) as a self-employed person, you are responsible for paying 15.3% of your net business income as self-employment taxes. This catches most first time Schedule C filers totally by surprise, because it means that they will owe much more in tax than they expected, and (2) you will probably have to pay estimated taxes during the year on a quarterly basis (form 1099-ES). As an employee, your employer takes care of both of these things, but as a contractor, you have to take care of them.

 

Also, if after all this, you tell me that you are actually an employee of Postmates, then forget everything I said above. You will get a W-2 in this case and enter that as part of your tax return. Note that due to recent tax laws changes, employee business expenses are no longer deductible, so forget about these expenses helping you out...but I bet that you are a contractor...

If I work for postmates, how will filing taxes work?

Pay back all what money?

 

if you get a 1099Misc you are an independent contractor and self employed.

 

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.

 

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

 

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

 

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

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