Is anyone here on the Forum an income tax guru per chance?

[avguytx]

Seems like I've read where someone in this forum was an income tax person but I may be wrong.  I have what might be a simple question about a 1099-NEC and how much it changes our taxes by adding it in, which I do know to do, of course.  

 

Ok, the basic of it is me wondering how this makes sense.  My wife and I file Married filing jointly.  I do some side work for the Dr she works for and got a 1099-NEC. We end up doing the standard deduction because itemizing is lower deduction and, in doing so, show to get back $984 between state and federal.  Now, when I add in the 1099-NEC, I realize there will be taxes on those earnings but I guess what threw me off is it goes to us owing $1,023 which is a swing of $2,007.  The 1099 is for $5,520 so that equates me to paying a tad over 36% in taxes on that amount?  Maybe that's right and how they stick it to us.   

[mungkiman]

That sounds about right to me. I'm no tax guru and this should not be construed as tax advice, but it is my limited understanding that taxes on 1099-NEC earnings will be much (+15%) higher since you are now responsible for paying both halves of the employer and employee payroll taxes that apply to wages.

 

If, however, the income in question is sporadic (neither reliable nor periodic), it can instead be reported in box 1 on the "Other Income" line of Schedule 1, Form 1040:

https://www.irs.gov/pub/irs-pdf/f1099nec.pdf

 

[JJkizak]

Try this:

https://turbotax.intuit.com/tax-tips/self-employment-taxes/how-to-file-taxes-with-irs-form-1099-misc/L3UAsiVBq

JJK

[the real Duke Spinner]

Next time ...

Add the Taxes into the Job 

And 

Never, never, NEVER

Give out a Commercial Identifying  Number 

My simple Answer

" Don't have one"

 

 

 

 

 

[the real Duke Spinner]

On 1/15/2023 at 7:02 AM, HunterBowen said:

. And don't worry, it's not uncommon for the government to take a big chunk.

Sukks to be a Wage Slave. 🙄

Not much has changed since the Civil War ....just a new Massa

 

[Travis In Austin]

14 hours ago, the real Duke Spinner said:

Next time ...

Add the Taxes into the Job 

And 

Never, never, NEVER

Give out a Commercial Identifying  Number 

My simple Answer

" Don't have one"

 

 

 

 

 

That doesn’t work, ups the income, still owe the taxes. You have to give an EIN, either as an individual or business entity if you want to get paid for professional services. If you are doing big jobs, contracts for companies they will require one. The choice is either refuse the job, or give the info and get paid.

 

Why, because the IRS can disallow the deduction to the purchaser/contractor if they don’t issue a 1099 for services over $600. (I think that’s the threshold).

On 3/31/2022 at 9:40 AM, avguytx said:

Seems like I've read where someone in this forum was an income tax person but I may be wrong.  I have what might be a simple question about a 1099-NEC and how much it changes our taxes by adding it in, which I do know to do, of course.  

 

Ok, the basic of it is me wondering how this makes sense.  My wife and I file Married filing jointly.  I do some side work for the Dr she works for and got a 1099-NEC. We end up doing the standard deduction because itemizing is lower deduction and, in doing so, show to get back $984 between state and federal.  Now, when I add in the 1099-NEC, I realize there will be taxes on those earnings but I guess what threw me off is it goes to us owing $1,023 which is a swing of $2,007.  The 1099 is for $5,520 so that equates me to paying a tad over 36% in taxes on that amount?  Maybe that's right and how they stick it to us.   

That sounds way to much. As mentioned, do turbo tax  or HR block. There were some significant tax breaks for small business owners last year. You should be filing this as Schedule C income (self employed income) if you can. Do you have any expenses related to it?

 

[Travis In Austin]

I’m not a tax professional, and I don’t play one on TV, but I’m a self employed professional who has filed taxes for 35 years so I know the basics.

 

Travis

[avguytx]

On 1/20/2023 at 7:50 PM, Travis In Austin said:

That doesn’t work, ups the income, still owe the taxes. You have to give an EIN, either as an individual or business entity if you want to get paid for professional services. If you are doing big jobs, contracts for companies they will require one. The choice is either refuse the job, or give the info and get paid.

 

Why, because the IRS can disallow the deduction to the purchaser/contractor if they don’t issue a 1099 for services over $600. (I think that’s the threshold).

That sounds way to much. As mentioned, do turbo tax  or HR block. There were some significant tax breaks for small business owners last year. You should be filing this as Schedule C income (self employed income) if you can. Do you have any expenses related to it?

 

 

And it's happening again this year; I get my 1099-NEC for $4900.  Let's say it's not added to income for the sake of conversation (it will be on taxes...don't worry).  With it NOT there, we would get a refund of $993 ($231 Fed, $762 state).  The moment it gets added, it swings to paying $1,266 Federal with a $521 state refund...so owing $745 overall.  There's no deductions for this work as it's basic IT work for them. I won't be doing it this next year...or I'll keep it to $600 and that's it.  Seems like another $2k swing again...give or take.  Sheesh.

 

Just seems like a big swing for it being added in.