I am a self employed hiring an independent contractor to come in monthly for floor, carpet, window, pressure washing work. I get paid a total of $8900 but I am paying the independent contractor $4700 out of it. My question is would I take taxes out of the whole $8900 before paying the independent contractor or would I only take taxes out of what I personally grossed out of it, which would be $4200. Then at the end of the year 1099 Misc the independent contractor for what he has made so I would not be responsible for "his share" of the money.
All of your business income is reported on SCH C as a part of your personal return (assuming you are a sole proprietor or single member LLC). You report all income - every penny of it, in the business income section. Your costs of doing business, such as paying 3rd party contractors, is dealt with in the business expenses section.
If you issue the contractor a 1099-MISC, then he is just that - and independent contractor. He's not an employee on your payroll, and tax withholding/reporting on that is not your concern.
I would highly suggest you get with a tax pro for this year, to learn about this stuff. I get the impression that 2016 was your first year dealing with this stuff. As it stands, I "think" you'll be fine so long as you trust the program, and ask questions about those things you're not clear on. But you still need to learn. I went through it my first year in business, and that $400 I paid the CPA to "educate me" was well worth it.
I will definitely look into going to a CPA, it could only benefit me. Thank you again for your advice/knowledge on the subject.
Basically, a business claims all income with no exception. Every single penny. Then the taxable amount of that income is reduced by *qualified* expenses and deductions the business is allowed to take. You'll see working it through that you're asked for all business income first. Then you're asked for expenses. The difference is your taxable profit from that business.