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Brandon M1
New Member

New contractor - 2nd job

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?

6 Replies
TomD8
Level 15

New contractor - 2nd job

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 M1
New Member

New contractor - 2nd job

@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
Level 15

New contractor - 2nd job

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
Level 15

New contractor - 2nd job


@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.

 

VolvoGirl
Level 15

New contractor - 2nd job

Yes the 1099 quarterly estimated payments are just part of your personal 1040 tax return.

 

You send in quarterly estimated payments to cover the income tax and self employment tax (FICA). The 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 (If it is 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.

 

Or you can increase your work withholding to cover the SE tax.
The 1040ES quarterly estimates are due April 18 June 15, Sept 15 and Jan 17, 2023. Your state will also have their own estimate forms.


How to make the Estimated payments
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875


Here are the blank Estimates and instructions…..
https://www.irs.gov/pub/irs-pdf/f1040es.pdf


Or you can pay on the IRS website. Be sure to pick 2022 1040ES payment
https://www.irs.gov/payments


To prepare estimates for next year you need to be in your current return. If you can't get your return open, Try this, you can sign back onto your account, click on Add a State. This should get you back into your return. Be very careful not to change anything in your actual return.

 

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.


OR go to
Federal Taxes or Personal (Home&Business version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button


Say No to W4. When you get to the W4 and Estimated Taxes section, say you want to adjust your income to go though all the screens.

 

VolvoGirl
Level 15

New contractor - 2nd job

Here is some general self employment info....

You will need to keep good records. You may get a 1099NEC 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.

 

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed return....
https://quickbooks.intuit.com/self-employed


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

 

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.


Turbo Tax Beginners Tax Guide for the Self Employed
https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...


What is form 1099NEC?
https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-1099-nec/L5fbwIFSn


Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center


Publication 334, Tax Guide for Small Business
https://www.irs.gov/pub/irs-pdf/p334.pdf


Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf

 

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