I work for a manufacturing company. I'm full time and make around $83,000 annually. I was approached about doing a project over and above my job title. In turn my company wants to give me a 1099 for the work performed and it was $3000. How do I report this on my taxes along with my W2 for tax year 2024? How much tax will I owe?
SELF EMPLOYMENT INCOME/“side jobs”
If you have self-employment income for which you will pay self-employment tax for Social Security and Medicare, you will need to use online Premium software or any version of the desktop software download so that you can prepare a Schedule C for your business expenses.
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/1901340-where-do-i-enter-schedule-c
https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct
https://blog.turbotax.intuit.com/self-employed/self-employed-tax-deductions-
calculator-2021-2022-50907/
https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs
If you live in a state with a state income tax, you might need to make estimated payments to your state.
https://turbotax.intuit.com/tax-tools/calculators/self-employed/
When you are a W-2 employee, everything the employer provides as compensation for your services is supposed to be on your W-2 and subject to withholding. They are not allowed to pay you as a 1099 on the side. And they are cheating you of $230 of social security and medicare tax, because they are making you pay both halves (they normally pay half on wages). They may also be cheating you out of other benefits.
You have three options.
1. Don't rock the boat, go along with the lie. In that case, you would file a schedule C for $3000 of self-employment income. You are unlikely to have any legitimate expenses. The $3000 of net income is subject to regular income tax rate at your usual rate, which is either 12% or 22% depending on whether you are married and if your spouse works. (If you are married and your spouse makes less than about $24,000, assume 12%. If you are unmarried, or married but your spouse makes more, assume 22%. You will also pay 15% self-employment tax (the employer half and employee half of social security and medicare tax.)
2. Tell them you don't accept the situation and want your compensation properly reported on your W-2.
3. File using form 8919 to report the situation. You will enter the 1099-NEC and check the box for "this was paid by my regular employer and should have been included in my W-2." This will cause Turbotax to fill out form 8919 with code H. You will pay income tax plus the normal 7.65% for your share of social security and medicare. Your employer may receive a talking-to from the IRS.