I work at an oil and gas company but am paid as a contractor through another company. When I noticed my paychecks had no deductions, at first I wondered, Maybe I forgot to fill out on a tax form the number of deductions I want? (When you have to fill out a mountain of paperwork for a new job, you kinda forget if this was one of the forms.) So I called my never-seen "employer" (I really feel I work for the oil and gas company, but it's the other company that pays me) and turns out that they classified me as an independent contractor. Guess they assumed I knew all this. I've been contract before but the taxes and SSI and whatnot were already deducted as if I were at a regular job (except I'm paying out the yin-yang for my own health insurance and don't get vacation days and whatnot, but at least I didn't have to mess with figuring out my taxes and such). QUESTION: I can read websites for info but they can confuse a bit. What's my first step (and second step and so on) in paying my own taxes? My SSI? Anything else? Or am I stuck having to go to H&R block? Any (not-too-sarcastic) help would be appreciated.
Fill out a 1099 something form. It has the tables for you to figure out. If it gets to confusing, go see an accountant. It's about 16% on top of your regular taxes.
You should first determine if you owe any estimated tax payments. There's no withholding from your income so naturally you need to make your own quarterly payments. Because you're a contractor, you'll receive a Form 1099-MISC most likely for non-employee compensation that you will report on Schedule C subject to SE tax. Don't forget your deductions. Keep track of your unreimbursed mileage, phone bills, meals, etc. I don't understand what Kim is saying, but you don't fill out a 1099. Your employer will fill it out and file a 1096 (Informational) for matching purposes.
At the end of the year instead of a W-2 you'll get a 1099-MISC. You report that on your taxes wherever it tells you to. I'm pretty sure I report mine on Schedule C (Profit or Loss from Business). And then I calculate the self employment tax on that which can be a little high since you haven't had taxes taken out yet. Then just following the instructions, some of the numbers from Schedule C get put on Form 1040. I just use a free tax website and it has a prompt asking me if I have any of a certain number of forms and I just input the info from my 1099-MISC's when it tells me to.
Don't worry about. You will have to send some money every 3 months to the IRS. If you only want to send it once a year you will pay about a $200 penalty for sending your money with your taxes. Being a contractor with a 1099 is like having your own business. So you can deduct business expenses. For instance: 1) Your lunch everyday 2) Driving to and from your client site 3) Taking out potential new "clients" 4) Any equipment, books, products and services used for your business 5) Travel with a business purpose 6) medical insurance 7) Even having you taxes done is deductible I would get a DBA and get a credit card used for business expenses.
Not true. Do not do this. If you take out a client you can expense their portion of the meal. You can't deduct yours.
1) No, unless it is travel or has a business purpose. 2) No, if that is your primary work location, that travel is not deductible 3) Yes, but he doesn't have that. 4) Yes, but only the business portion 5) Yes 6) Only for income tax, not self-employment tax. 7) Yes In reality estimated payments are not made every three months. Oddly they are due April 15, June 15, September 15, January 15.
You can deduct your portion of the meal with the client. Those meals are only 50% deductible (of the total).
I've never seen the penalty you are mentioning. my wife has a DBA, she is a personal assistant to a pilates instructor. we had to incorporate her, as the woman would not put her on the books as an official employee, so my wife is an independent contractor with one client, basically. we file our taxes together and report her income one time per year, pay into SS and everything else, and they deduct it from our refund...
As an independent contractor you'll basically be filing as if you were self employed. Other than your 1040, you'll need to file: Schedule C- Profit and Loss from Business Schedule SE- Self Employment Tax Form 4562- Depreciation and Amortization I am opening my own tax prep business so if you have any questions on filing or if you decide to go the paid preparer route you can contact me through the board.
