1099 MISC and Normal wages

[santisamurai]

Hello, 

I'm currently employed and receive a W2. I have already filed my taxes for 2019. However, recently I did a small consulting job for a friend's business and they paid me over $600, but less than $2,000. Understanding that I have to pay taxes on this amount according to the 1099-MISC I had a few questions. 

• I understand that I have to prepay the taxes quarterly. However, does that only apply to the amount that I made in the 1099 or does that also incorporate my normal pay?
• I currently have Premier, can I file the necessary paperwork using this version or do I need to upgrade to another version?
• I have reached the IRS limit for Social Security in my current employer. Do I have to pay into it when submitting and will I receive back after filing next year?

Thank you

[VolvoGirl]

 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.   

If you make an estimated payment it is like withholding from W2 income.  You enter it into your tax return and get credit for it.

 1099Misc is self employment income. Are you using the Online Premier version or the Desktop CD/Download program?  You can enter self employment into Online Premier but if you have any expenses for it you need to use the Online Self Employed version.  You can use any Desktop program.  All the Desktop programs have the same forms. You just get more help and guidance in the higher versions. 

For Social Security....

If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.  Turbo Tax does it automatically for you.

The SE tax includes what you already paid in from your W2s so your schedule SE tax will only be the difference up to the max amount of $8,249.80 for social security. The max income for social security for 2019 is $132,900 between W2 wages and the schedule C Net Profit.

Medicare is 2.9% (both er & ee parts) of all wages & schedule C profit - no max.

[xmasbaby0]

The income from your 2020 side job will go on your 2020 return next year when you prepare it in 2021.  You will pay some self-employment tax as well as ordinary income tax.  If it is not a lot of money you may not need to pay any estimated tax---if you expect to owe at least $1000 at tax time then you should pay some estimated tax during the year to avoid an underpayment penalty at tax time.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

Next year when you prepare your 2020 return if you use desktop software, all the forms and schedules are in desktop software so that you can prepare the schedule C you will need.  If you use online TurboTax you will need Self-Employed.

 If you have already reached the 2020 limit for Social Security withheld  with your W-2 job, then when you do your tax return you may only owe SE tax for Medicare.

[Opus 17]

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@santisamurai wrote:

Hello, 

I'm currently employed and receive a W2. I have already filed my taxes for 2019. However, recently I did a small consulting job for a friend's business and they paid me over $600, but less than $2,000. Understanding that I have to pay taxes on this amount according to the 1099-MISC I had a few questions. 

• I understand that I have to prepay the taxes quarterly. However, does that only apply to the amount that I made in the 1099 or does that also incorporate my normal pay?
• I currently have Premier, can I file the necessary paperwork using this version or do I need to upgrade to another version?
• I have reached the IRS limit for Social Security in my current employer. Do I have to pay into it when submitting and will I receive back after filing next year?

Thank you

---

You must generally pay estimated tax payments, although there is no penalty if the amount you owe at tax time is less than $1000, or if you have paid into the system already (by withholding and other payments) at least 100% of last year's tax liability (or 110% for high income earners.)  You may not actually be required to make an estimated payment for this $2000 side gig, depending on your other tax facts, although it would not hurt to do so.

Using the Desktop software installed on your own computer, any version Deluxe or higher can prepare a schedule C for self-employment.  If you are using Turbotax online, you would need the Self Employed version.  No version of 2019 Turbotax will help you make the estimated payment for 2020, Turbotax just isn't designed to do that.  Accounting software like Quickbooks will do that, but it's not worth the cost for just one small side gig.

When you file your schedule C and schedule SE as part of your 2020 tax return, you will pay 3% self employment tax (the Medicare part) rather than 15% (combined SS and Medicare).  Whatever estimated payment you make now simply goes to your account is applied to your overall tax bill; you don't make separate estimated tax payments for income tax and SE tax.

For the amount of your estimated payment, look at your top tax bracket depending on your income and family situation and add 3% for self-employment tax.  Figure the tax on your net income after expenses.  You can make a payment directly at www.irs.gov/payments.  When you prepare your tax return, don't forget to enter the estimated payment on the "Estimates and other taxes paid" page.

https://www.aarp.org/money/taxes/info-2020/income-tax-brackets.html