You received a 1099-misc. Now What? For anyone trying to manage the challenges of modern US taxation, you are not alone. A 1099- misc bring a lot of complication and it is important to discuss your options with a CPA. There is an insane amount of challenge involved in dealing with filing a tax return. For example, did you know that you could file a return using a 1099-MISC form?
Many people do this and the reasons why are actually pretty smart. You get a 1099-MISC if you are providing services to a client that sees you take on the role of an independent contractor. This means that if the person pays you more than $600 in payments over the course of the year, you need to go through a vaguely different taxation process than any of your friends would need to.
This is something the IRS knows as being a non-employee level of compensation. Most of the time the client will be expected to file a 1099-misc with the government when they pay you more than $600 across the year. You’ll also be expected to report your income whether or not you receive a 1099. In this situation, then, the taxation process can vary a little from what you might have been used to if you just filed with a W-2 in the past.
What’s Changed?
For one, you need to claim any deductions on your taxation simply by gong to Schedule C. this will allow you to relatively easily calculate your net profits from your time as an independent contractor or self-employed expert. If an expense is included, then make sure it is one that is actually necessary as they don’t tend to mess around with people who are trying to secure more charitable evaluations.
However, please be aware that there is a difference between being essential and being necessary. It might have been an added item or solution that was needed to get the job done, but not one that you both initially factored into the process.
So, if you had to buy software or hardware to get the job done, that’s normal. If you happen to hire an expensive chauffeur to get you around the place from clients’ homes, that isn’t normal.
Other Changes
The other main change with this kind of form is that it means your clients aren’t going to be withholding income from your payments as they would if they were an employee. This gives you the chance to make four estimated payments throughout the year to the IRS instead of waiting to pay it all off at one big payment.
This is dependent on how much you have earned and a glut of other factors. The tax that is withheld from other income, too, will be taken into account.
