Second Income no W-2 or Withholding

[tzr916]

I earn around $60k/yr through my primary employer who provides a W-2, so it's been easy to file my taxes with TurboTax. I typically end up using the standard deduction, even with a mortgage.

This past year, I started working at a second job where I earn about $12k/yr, but they do not withhold or provide any W-2. So far, it's unknown if they even report my earnings.

If I decide to report the income from this second job, should I expect Federal and State (CA) taxes to be taken? Other taxes or fees? Can this be done in TurboTax?

If I decide to continue reporting it next year, should I pay quarterly taxes? Federal and State? Use TurboTax?

Thank you

[SweetieJean]

Are you actually an employee of the second job, or an independent contractor?  Please describe the type of work you do.

[xmasbaby0]

If you "decide" to report your other income?   You are required to report all of your income.   And you do not know if you will receive a W-2 or a 1099NEC?   It's high time to find out.    Either one will be reported to the IRS.

And if you received even $400 of "self-employment" income you are required to report it to the IRS on your tax return.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

If your income is self-employment income you will need either online Self-Employed or any version of the desktop software in order to prepare a schedule C for your expenses.

And, yes the income must also go on your state tax return.  In fact it will flow from your federal return to your state return.

[tzr916]

Not employee, considered independent contractor. I get paid through PayPal. No, I do not know if I will receive a W-2 or a 1099NEC. If I don't get one, are my earnings reported to the IRS? Are they snooping my PayPal transactions?

[xmasbaby0]

You should find out from your client if they are going to issue a 1099NEC.   They have until January 31 to issue it on time.  And of course it would be a foolish client who would not issue one so that they can deduct the amount paid to you on their own tax return.

[VolvoGirl · Accepted solution]

You might get a 1099K from PayPal.  If it is self employment contractor income  here is some info......

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 can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version. Or any of the Desktop programs. But you will get the most help in the Home & Business version.

How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/...

You might want to use Quicken or QuickBooks to keep tract of your income and expenses. There is one called QBSE QuickBooks Self Employed that works with Online Turbo Tax and will give you a free online tax return next year.
https://quickbooks.intuit.com/self-employed

You need to report all your income even if you don't get a 1099NEC or 1099Misc. You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.

After it asks if you received any 1099NEC it will ask if you had any income not reported on a 1099NEC. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.

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 1040. The SE tax is already included in your tax due or reduced your refund. 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
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

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

[tzr916]

This year, should I start paying quarterly estimated taxes for my second income? If I don't pay quarterly, simply pay them with my once a year filing, will I get late fees? 

[VolvoGirl]

You can wait and pay the tax due on your tax return but you may have a penalty for not sending in estimates during the year.

Turbo Tax will calculate the 1040ES estimated payments.
https://ttlc.intuit.com/community/tax-payments/help/can-turbotax-calculate-next-year-s-federal-estim...

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).

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

[VolvoGirl]

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.