New contractor - 2nd job

Forum|Forum|4 years ago
September 13, 2022
6 replies
64 views

Hello,

I am currently married and both my wife and I receive W2 statements from our respective employers. We have used Turbo Tax for years to file our income taxes. I am also about to start a contractor job that will provide a 1099.

Questions:
- Can I continue to use Turbo Tax to file for our W2s and now include the 1099?

- OR ... Should I use the QuickBook Self-Employed tool instead to file only the 1099 and keep our W2 activity in Turbo Tax?
- How do I calculate the correct taxable amount for my contractor job and make the quarterly payments?

TomD8

Alumni - Champ

Yes, you can use TT to file a return that includes both W2's and 1099's. Your independent contractor income and expenses will be reported on Schedule C of your tax return. This is a common situation. Be sure to keep a record of your independent contractor expenses, because you only pay taxes on your net income.

A general rule of thumb is that your estimated payments should be 20-25% of your estimated independent contractor income.

You can make your federal estimated tax payments online at https://www.irs.gov/payments

(Your estimated payments also go toward the self-employment (SE) tax which is assessed on independent contractors. This tax is to cover Medicare & Social Security.)

If your state has an income tax, don't forget to make state estimated payments too. Your state's tax website will have the details on this.

When you make your online payments. it's a good idea to print a paper receipt.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Brandon M1Author

Level 2

@TomD8 Thank you!

I looked at the link that you shared and do not see an option for making payments as a 1099 contractor. It only seems to apply to payments for tax bills and payment plans. Is there another area for making estimated payments as I received my contractor payment?

Can you possibly also recommend a tool to help calculate the 20 to 25%? I have found several online for 1099 contractors, but they all seem to generate a different amount.

TomD8

Alumni - Champ

When you click on one of the Pay Now options on the IRS website, you will come to a page that asks you to identify the type of payment you're making. One of the choices will be "estimated tax." That's what you choose.

There is no precise tool for calculating the amount to pay in estimates, because everyone's situation is different. 20-25% of your anticipated 1099 income each quarter is sufficient for most people, but it is a "guesstimate". Once you get the hang of making quarterly estimated payments, you'll be able to adjust the percentage you pay according to your own needs.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

rjs

Level 15

@Brandon M1 wrote:

- Can I continue to use Turbo Tax to file for our W2s and now include the 1099?

Yes, you can use TurboTax to file your income tax return for both your W-2 and your 1099. You didn't say whether you use TurboTax Online or the CD/Download TurboTax software. If you use TurboTax Online you will have to use the Self-Employed version to report your contractor income and expenses, along with your W-2. If you use the CD/Download TurboTax software you can use any version, but TurboTax Home & Business will give you extra help and guidance for reporting your contractor income.

@Brandon M1 wrote:

- OR ... Should I use the QuickBook Self-Employed tool instead to file only the 1099 and keep our W2 activity in Turbo Tax?

You have to include all of your income on one tax return, both W-2 and 1099. QuickBooks is accounting software. You cannot use QuickBooks to prepare or file a tax return. QuickBooks Self-Employed lets you import your QuickBooks records into TurboTax Online Self-Employed. The QuickBooks Self-Employed Tax Bundle combines QuickBooks and TurboTax, but you are still using TurboTax to prepare your tax return.