1099?

[minatokunx]

Sorry I have several questions. First off, I am currently working at a startup and I am considered an Independent Contractor. If all goes well, this will be my first time filing a tax form and I do know that contractors generally have to pay more tax. However, I only work 3 times a day, 15 hours a week and the most that I'll probably make is ~7k at this rate, unless my schedule is changed before taxes are due.

So, this where my first question comes in: What happens if I don't make enough to cover for standard deduction? Isn't that $12,000?

Second question: I understand that commuting to work with Uber is nondeductible (I can walk home from work, but not "to AND from" due to a bad knee, already tried) but the expense still goes on the form, correct? Where would it go if that's the case?

Third question: I also did a bit of Amazon Mturk (just a little over $100 during the Summer). Do I just add that $100 to whatever I make during this contract work, or do I also have to explain that separately?

Last question: I received a Financial Aid refund of $745 this semester. Where will this go on the form? And where would cash I received as "gifts" go?

I'm sorry for all this. I just don't want to get in trouble with the IRS, and I'm nervous since I'll have to pay the taxes on my own. I reside in Florida, if that'll mean anything. There are multiple 1099 forms I see.... Do I file the 1099-MISC?

[VolvoGirl · Accepted solution]

For self employment you will owe about 15% SE tax.  That is in addition to any income tax on your income.  The SE Tax is on your Net Profit on Schedule C.  If you make less than the Standard Deduction you won't owe any income tax but you still owe the self employment tax on $400 or more.

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.

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.  You do get to take off the 50% ER portion of the SE tax as an adjustment on Schedule 1 line 27.  The SE tax is already included in your tax due or reduced your refund.  It is on the Schedule 4 line 57.  The SE tax is in addition to your regular income tax on the net profit.

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

You might need to send in Estimates to cover the SE tax.  

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 15, 2019, June 17, Sept 16 and Jan 15, 2020.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2019 Estimate

[xmasbaby0]

Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return.  Money that you gave as a gift to someone else is not deductible for your taxes.

[rjs]

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@minatokunx wrote:

Second question: I understand that commuting to work with Uber is nondeductible . . . but the expense still goes on the form, correct?

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No. Commuting expenses do not go anywhere on your tax return. Commuting expenses are not deductible, no matter what means of transportation you use.

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@minatokunx wrote:

Third question: I also did a bit of Amazon Mturk (just a little over $100 during the Summer). Do I just add that $100 to whatever I make during this contract work, or do I also have to explain that separately?

If the nature of the MTurk work that you did is very different from the type of work you are now doing for the startup, then technically you should report it as a separate business. But for $100 I wouldn't bother. Just add it to your contracting income. The IRS is not going to complain, as long as the income is reported.

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@minatokunx wrote:

Last question: I received a Financial Aid refund of $745 this semester. Where will this go on the form?

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What do you mean by a "Financial Aid refund"? Do you mean that the financial aid that you received was more than your tuition and fees? If so, the excess has to be reported as taxable scholarship income. This should get taken care of when you enter your Form 1098-T and your education expenses in TurboTax. On the actual tax form, taxable scholarship income is included on the same line as wages, with a notation of SCH and the amount. TurboTax will make the appropriate entry on the form.

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@minatokunx wrote:

And where would cash I received as "gifts" go?

Why do you put "gifts" in quotes? Was the cash not really gifts? Who paid the cash to you, and why? If it's not really gifts, you probably have to report it as income.

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@minatokunx wrote:

I reside in Florida, if that'll mean anything.

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It means you do not have to file a state income tax return, since Florida has no state income tax.

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@minatokunx wrote:

Do I file the 1099-MISC?

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You do not file a Form 1099-MISC. You will receive a 1099-MISC from the company that you are contracting for. You enter the 1099-MISC in TurboTax. That's how you report your contracting income.