Tax/contract work question

[Deleted]

I'm a long time lurker, but first time poster.

I recently left my full-time job to be a SAHM. I've picked up a contract job to keep something on my resume and stay current.

Since I'm new to being paid for contract work, what does this mean for taxes? This is a small job, I expect to make less than $500 total for the year. How do I find out about paying taxes on this, or do I wait until we do our taxes next year?

Thanks!

[Savoir Faire-Demogague in NJ]

Will this place be giving you a 1099?

[workpublic]

depends if you were W@ or 1099.

if you were W2 they took taxes out. you will get a W2 form next January (like a regular job)

If 1099, they didn't take out taxes and you will have to pay them when you do your taxes.

I'm up for a 1099 contract. if i get it i will take a third and put it in a jar for tax time.

[phil5185]

For 2011, you pay 13.3% for your 'payroll' tax - ie, SS & Medicare. And then pay a Quarterly Estimate on your income taxes. But for only $500, you can wait until April 15, 2012 - you will be under the penalty limits.

[973beachbum]

Since I'm new to being paid for contract work, what does this mean for taxes? This is a small job, I expect to make less than $500 total for the year.

They would report the income on a 1099-misc and you would need to report it on schedule C and pay self employment taxes. With this small amount you don't need to do quarterlies.

But I think the limit now for having to file the 1099 misc's is $500 bucks. Anything less they don't have to send you one at all. So in this case it would behoove you to charge $499 instead.

If you can make a few hundred more go for it but for an extra dollar I would save yourself the trouble of having to do a schedule C. Just my 2 cents. ;D

[jeffreymo]

I think $600 is the limit for the payer requirement for submitting a 1099-MISC. Regardless of whether a 1099 was submitted or not, the payee should still claim it as income and file/pay all of the appropriate taxes.

[Plain Old Petunia]

Jeffreymo is correct. The payer is not required to file a 1099 for amounts under $600, but the recipient is required to claim the income nonetheless.

[973beachbum]

Mar 7, 2011 14:15:54 GMT -5 Plain Old Petunia said:

Jeffreymo is correct. The payer is not required to file a 1099 for amounts under $600, but the recipient is required to claim the income nonetheless.

But according to the OP this would be her only income for the year. With less than $400 yearly in income after she deducts all expenses for the contract work in a year, she wouldn't be required to file an income tax return at all even if she gets a 1099-C.

[Plain Old Petunia]

Mar 7, 2011 14:22:27 GMT -5 973beachbum said:

Mar 7, 2011 14:15:54 GMT -5 Plain Old Petunia said:

Jeffreymo is correct. The payer is not required to file a 1099 for amounts under $600, but the recipient is required to claim the income nonetheless.

But according to the OP this would be her only income for the year. With less than $400 yearly in income after she deducts all expenses for the contract work in a year, she wouldn't be required to file an income tax return at all even if she gets a 1099-C.

I'm assuming this self-described SAHM isn't supporting her family on less than $500 per year, but is married to a wage-earner.

[973beachbum]

Mar 7, 2011 14:28:12 GMT -5 Plain Old Petunia said:

Mar 7, 2011 14:22:27 GMT -5 973beachbum said:

But according to the OP this would be her only income for the year. With less than $400 yearly in income after she deducts all expenses for the contract work in a year, she wouldn't be required to file an income tax return at all even if she gets a 1099-C.

I'm assuming this self-described SAHM isn't supporting her family on less than $500 per year, but is married to a wage-earner.

Who cares? She can still file seperately. If it saves money she should do it.

[Plain Old Petunia]

BeachBum, you are correct that if you have so little income that you don't need to file, then you don't need to file. That's true no matter the source of the income. However, there is no "out" on reporting income because you don't receive a 1099.

Who cares? Hmm, I don't know that I can answer that one. Yes, she could file separately. I don't know why she would want to, since it is the worst filing status, but she could. And maybe she could save a dollar, costing her spouse thousands in the process.

[973beachbum]

Mar 7, 2011 14:59:33 GMT -5 Plain Old Petunia said:

BeachBum, you are correct that if you have so little income that you don't need to file, then you don't need to file. That's true no matter the source of the income. However, there is no "out" on reporting income because you don't receive a 1099.

Who cares? Hmm, I don't know that I can answer that one. Yes, she could file separately. I don't know why she would want to, since it is the worst filing status, but she could. And maybe she could save a dollar, costing her spouse thousands in the process.

I always do our taxes 3 different ways before deciding how we will file. ;D We do always have self employment taxes and have a Schedule C to do amongst other things. But not everybody likes doing taxes or spending hours on a self employment schedule or paying someone hundreds to do it for them.

Personally since it is such a small amount of income I really think she should plan her taxes for this before she gets the income. She could spend the income in qualified expenses so as to not have to pay anything. Then again I am a

[TheOtherMe]

Mar 7, 2011 11:59:33 GMT -5 jeffreymo said:

I think $600 is the limit for the payer requirement for submitting a 1099-MISC. Regardless of whether a 1099 was submitted or not, the payee should still claim it as income and file/pay all of the appropriate taxes.

This is the correct answer. It doesn't matter if you receive $1 or $1,000. The wording in Sec. 61 of the Internal Revenue Code starts out "Except as otherwise provided in this subtitle, gross income means all income from whatever source derived"

[mwcpa]

advocating for someone to do an illegal act is also a crime.

the original poster should read the following
www.irs.gov/businesses/small/article/0,,id=115044,00.html ... focus on IRS publication 334.

and as noted by many others IRC section 61 does NOT say I can pick and chose the income I report... heck if 1099s were the requirement to report income I would be very very wealthy since many of my clients pay me under 600 a year, using the rational by a poster above this should all not be reported or are the rules different for me....

[973beachbum]

Mar 8, 2011 7:38:43 GMT -5 mwcpa said:

advocating for someone to do an illegal act is also a crime.

the original poster should read the following
www.irs.gov/businesses/small/article/0,,id=115044,00.html ... focus on IRS publication 334.

and as noted by many others IRC section 61 does NOT say I can pick and chose the income I report... heck if 1099s were the requirement to report income I would be very very wealthy since many of my clients pay me under 600 a year, using the rational by a poster above this should all not be reported or are the rules different for me....

Do you twist words often?

You know darn well that wasn't what I said. But maybe you should read www.irs.gov/pub/irs-pdf/p334.pdf

Because it quite clearly says that if you DON'T have to file if your NET earnings from self employment are less than $400. Net , not gross. She is only looking at a tops of one job of under $500.

[mwcpa]

I did read publication 334... I also read IRC 61 and many other code sections in the tax law, almost daily as I do this for a living... you need to read the entire statement in publication 334, not just the part that you want to read...

the publication states the law...

"You have to file an income tax return for 2010 if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirement listed in the Form 1040 instructions."

So, if I had a $100K job and made $395 from self employment I have to report the $395, there is no provision in the law or any written IRS guidance that says I can skip this requirement.

Now, if I only made $395 and nothing else and I had no other requirement to file then I could skip it... but I come from a little conservative point of view in the reporting of items for a tax filing and I may file to start the statute of limitations clock.... and if I "grossed" (before expenses) more than 400 I may still want to file, even if no tax is due, to show the transactions and once again, get the statute of limitations clock started.