Independent contractor/married filing jointly

[laurad14]

My husband and I typically do taxes as married filing jointly. This year he began to be paid (checks, no taxes taken out) for some independent work he did at a local business. If he were single, the amount he was paid would not be worth paying taxes on (less than $8,000 total for the year if I had to estimate). How should we handle our taxes this coming year? Does he need to fill out any separate forms, or file separately as an independent contractor, or do we simply report what he was paid in these checks and TurboTax will figure the rest out? File as a business with the government? Do things quarterly or just annually? Any guidance would be helpful! Thank you!

PS saw this post - is this accurate for what we should do? We don't expect to receive any tax documents from the business. https://ttlc.intuit.com/community/taxes/discussion/i-need-to-report-income-from-a-freelance-job-i-di...

[mbpeddie]

Hello,

I see you have done some research on this as indicated in the post you included.

An independent contractor is still considered self employed in the eyes of the IRS and the income from thatwork must be reported on a schedule C as part of your individual tax return.

As per the other post, you would answer all the questions regarding self employment. You say you do not expect to receive any tax forms . However anyone who pays an independent contractor $600 or more in a tax year is required to give them a 1099_ NEC ( Non Employee Compensation)

https://www.irs.gov/businesses/small-businesses-self-employed/reporting-payments-to-independent-cont...

If you receive this , you would report in in income section for self employment. If you do not recieve one, you would still report the total for cash and check in the income section. Additionally if your self employment is $400 or more it must be reported.

You may be eligible to deduct some business expenses which were incurred to earn this income. Turbotax will suggest possible expenses which may be associated with your business.

The net amount of your contractor income is subject to income tax as well as self employment tax. ( Social security and medicare) which is 15.3%. However you are entitled to a deduction for half of that so effectively it would be 7.65 additional self employment tax on your net ( income less expenses) income.

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center#o...

You are also required to make quartely estimated tax payments from self employment . However as long as you have withheld enough through a W2 to cover 90% of your tax liablility for the year , you may not need to make estimated payments. 

[JandKit · Accepted solution]

Hi Laurad14!

Thank you for this interesting question. Let's have a closer look:

Filing Status: Since your husband's income is relatively low, you can still file jointly as a married couple.

                         This simplifies your process and offers more tax benefits.

Reporting Income: His self-employed income is reported on your joint tax return.

                        He should receive a Form 1099-NEC from the business he worked for. If not, report the

                        income that he was paid in cash or check. This income is reported on a Schedule C as an 

                        independent contractor.

Reporting Expenses: Keep good records to document all expenses incurred. Among these could be

                      mileage, tools, or items necessary to do the current job.

Self-Employment Tax: Since he's an independent contractor, he'll need to pay self-employment tax,

                     which covers Social Security and Medicare taxes. This is reported on a Schedule C
Estimated Tax Payments: If his income is high enough, he may need to make quarterly estimated tax

                      payments to avoid penalties. However, given the amount you mentioned, this might 

                     not be necessary.

TurboTax can guide you through this process with ease and will include the necessary forms needed.

Finally, from your question , it does not appear to be a robust business and would not need to file as separate business

Good luck to you!