when to use a 1099

when you do contract work

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Quote:

Individuals who have Independent Contractor Status are paid on IRS form 1099-MISC and all money earned by the individual is paid on an untaxed basis. It is the responsibility of the individual to file and pay the appropriate taxes. On the other hand, individuals who are classified as employees are paid on the IRS form W-2 and the employer automatically withholds taxes and pays all of the necessary employee income taxes required by the IRS. These taxes include: Federal Income Tax, State Income Tax, and FICA. The employer must also pay necessary employer taxes including: FICA (Social Security and Medicare), FUTA (Federal Unemployment Tax). Whether to use Form 1099 or the W-2 form is determined by defining the employment status of the individual as an employee or as an independent contractor.

http://www.alliancetac.com/index.html?PAGE_ID=231

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Generally, you should send or receive form 1099 when gross earnings equal 600.00 unless there has been a recent change. One exception is when dealing with a law firm. All payments to them should be reported on 1099.

If you are the recipiant, file all that you receive. If you don't receive one from a customer, it is not your responsibility to make them send you one. If you receive a W-9, complete it and return to customer.

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roger wrote:

Generally, you should send or receive form 1099 when gross earnings equal 600.00 unless there has been a recent change.

A-HA! I thought I remembered something like that, but I've been looking and looking and haven't been able to find it.

Quote:

If you are the recipiant, file all that you receive.

Recipient... of a 1099? Of wages? File what, exactly?

I work for an organization that seems to think I'm an independent contractor (my paystubs show that none of my paycheck is being withheld, and in the "personal information" section, it says "1099" in the "tax type" column). I've made more than $600 this year. So I have to... what, exactly? Will they send me a 1099? What if they don't?

Thanks, I've been wondering about this and initial investigations weren't getting me very far.

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Re: when to use a 1099

damn curious wrote:

When should you use a 1099?

I'm curious.

You sure are damn curious aren't you. 1099 what? hmm
a 1099-MISC, 1099-INT, 1099-DIV, 1099-OID, 1099-B, 1099-R, 1099-A, 1099-C and there are more Shocked

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when absolutely necessary.

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Bi-Polar Bear wrote:

when absolutely necessary.

hehehe

you got that right.

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Bi-Polar Bear wrote:

when absolutely necessary.

and when is that?

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wait...I'll get this one bear....

TTH....What planet are you from?

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Well, I stopped looking for myself on Mars so, I know I am not there Laughing

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Soz:

Not to bum you out but if you've never filed as a 1099 you are going to learn that you now pay even more in taxes, you pay taxes the employee is taxed and as your own employer you pay the taxes the employer pays too!

You can get a 1099 from the IRS web site. All you need to know is how much you got and the timeframe the money was earned.

As a 1099 you need to estimate your taxes and pay them every quarter. Then do any corrections at the end of the year. If you underestimated too much the government charges interest and penalties.

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Every quarter? What?

I started working there in January, so I'm already overdue?

How can I pay taxes twice? I do have an employer.

It's not how I earn a living by the way, it's supplementary income. More than $600 but not too terribly much more.

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Every quarter year as defined by the IRS. You pay FOUR times as a 1099 if you have that income in each quarter.

It doesn't matter if you have 10 other employers as a 1099 YOU are an employer (technically).

Yes I think you are over due.

I do a lot of consulting and try NOT to file as a 1099, I have to charge more to make up for the extra taxes I pay and so look more expensive to a client. I have to do the tax records work. In many cases would have to carry insurance (against stealing info, for example) that the recruiter company takes care of for me. And I get a regular pay versus having to deal with a clinet's accounts payable dept.

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As a contractor you have to pay the full share of FICA. As an employee your employer pays half of FICA.

But as a contractor earning a small amount you get tax write offs for business. Make sure you keep track of all your business expenses. (Auto being a biggie.)

If your tax bill is more than what you paid in you may get hit with a penalty for not filing quarterly. I don't recall what it is. It might be if you are within $300 of your tax liability there is no penalty. (It might be $500)

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I work from home, so auto doesn't really count. But hey, can I buy a laptop and write that off? :-)

Ugh, this is scary stuff. I guess I should have looked into it more before accepting the job. I can't imagine that my tax totals more than $300, though. (As in, I haven't paid any tax yet but I can't imagine that the tax would add up to enough to exceed the buffer zone... but depends on exactly what that buffer zone is of course.)

Wikipedia seems to be saying that I just pay once a year -- in February -- but that's just Wikipedia. I'll keep looking around.

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Hey, maybe that's not so far off:

Quote:

A computer, for example, that is purchased in order to work as an independent contracter, may be deductible from an independent contractor's net income. A 1099 contractor should save all pertinent business receipts for the year in order to claim these as business expenses.

http://www.wisegeek.com/what-is-a-1099-contractor.htm

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What about this?

Quote:

In all cases, a 1099 contractor's payment is assessed by the completion of a job, not by the hours worked.

I'm paid by the hour -- submit weekly timesheets, get bi-weekly paychecks.

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(Thanks, everyone, this has been on my to-do list -- figuring out what's up with my job and taxes -- and my first forays into researching the subject weren't promising. I'm looking forward to getting to the bottom of this.)

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This seems to indicate that I'm an employee:

http://www.taxprophet.com/apps/active2/indep-mm.html

I answered "yes" to questions 1, 2, 3, 6, 10 (sort of), 11, 12, and as far as I know 13 and 14.

And I don't really answer yes to the next set of questions. (I have a specific job, and I do it for one company.)

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when to use a 1099

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