1099 and W-2

[hipptrain]

So would like to get a 2nd home eventually but need to show more income for DTI purposes.

I'm a W-2 employee but also building a new small business to help bring in more income due to

the covid days.   I know the extra work is 1099 so how do I show the 1099 income along with

my W-2 on my tax return?    Also I make annual income from a brokerage account I have. Can

I add that to my return as 1099 income?

[VolvoGirl]

Unless you set your business up as a Single Member LLC S corp it is self employment income.

Some general info on self employment...........

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

http://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.

FOR 2019

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.  

The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15.  The SE tax is in addition to your regular income tax on the net profit.  You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a.  Turbo Tax automatically calculates the SE Tax and Adjustment.

For 2019 Schedule C Net Profit or Loss now goes to 1040 Schedule 1 line 3.  Then the total on schedule 1 line 9 goes to 1040 line 7a.

Here is some IRS reading material……

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

[VolvoGirl]

The brokerage account will give you a 1099 but it will be a 1099Int or 1099Div or 1099B for sales.  Unless it's in a IRA Account.  You report all those on your personal tax return too.  You would have to ask the lender if they count investment income.

[Carl]

I'm a W-2 employee but also building a new small business to help bring in more income due to

the covid days. I know the extra work is 1099 so how do I show the 1099 income along with

my W-2 on my tax return?

That would be self-employment income. Assuming your business is a sole proprietorship or single member LLC, all business income and expenses gets reported on SCH C as a physical part of your personal 1040 tax return. Chances are that being self-employed your customers will ***NOT*** issue you ***ANY*** type of tax reporting document, as they may not be required to. So its up to you to keep detailed business records of all business income and all business expenses - every single penny. Then the IRS expects you to use those records to complete the SCH C on your personal 1040 tax return.

Also I make annual income from a brokerage account I have. Can I add that to my return as 1099 income?

No. your investment income as absolutely nothing what-so-ever in any way, shape, form or fashion to do with any other type of income you receive. Any and all investment income you receive is reported in the investments section of your tax return.

I highly recommend you seek professional help or at least talk to others in your area who are self-employed to educate yourself not only on the tax aspects of being self-employed, but the other legal aspects of that too; especially if your state taxes personal income. If you sell product you will probably also be dealing with sales tax, which has nothing to do with income taxes. In some states even services are subject to sales taxes. So get yourself educated on this *first* by seeking information from a professional in your locale, or others who are already self-employed in your local area.

FYI - I have on many occasions seen where folks who did not educate themselves first, ending up going bust after their first year of business because of all the fines, penalties, late fees and back taxes they were assessed for not doing things right in that first year as required by law (both federal, state, and local laws). I have not yet seen any authority that was forgiving based on the excuse of "I didn't know".