Last November, I switched jobs and went to work for a foreign company the final 6 weeks of the year as a contract employee. I invoice them twice per month for my wages. Two questions: 1. What form do I need to report these wages? 2. How do I pay S.S. and Medicare? Is this completely separate from my April 15th filing or done at the same time? For the last 15+ years, my taxes have been the same-old same-old where I itemize my charitable contributions, property taxes and mortgage interest. I haven't had to do it any different for a long time. Thanks in advance.
1) You can report them on Schedule C. http://www.irs.gov/pub/irs-pdf/f1040sc.pdf Contract work is basically you working for yourself. There are also expenses that you can claim from working for yourself, and you can report those on Schedule C as well. 2) You will pay self employment tax (basically S.S. and Medicare) and you get to deduct half of it since you are working for yourself. If you are doing your taxes on a program like Turbotax or something then it will automatically calculate your self-employment tax based on what you put on the Schedule C. So you pay this tax when you file your regular taxes.
Icehouse is correct. Schedule C is how I've reported contract income and deducted expenses (including gasoline for the expense of driving to sites or meetings). I filed a schedule SE for the self employment-tax, which was pretty easy. You just plug numbers in and it walks you through how to calculate your self-employment tax.
