Your Tax Question - 053

Dear John, I received a 1099 MISC from a company that I am an independent-distributor with. What should I do with this document for tax purposes. Thank you much, Darla
---
Hi Darla,

A 1099 informs you and the IRS that you were paid. You can simply claim this on your 1040 but any losses that are realized are limited to your revenues. In other words, your efforts are considered a hobby. If you are pursuing your distributorship with a profit making intent then you are officially a business and should be set up as such.

After that, the income that you will recognize will be subject to Self-Employment taxes (anything >$400.00) and will need to be dealt with. I don't know what sort of money you are realizing but remember that if your 1040 shows that you owe over $1000 in taxes you will be automatically put on quarterly tax payments. The reason this is important to note is because your business (distributorship) must pay an estimated quarterly payment on expected income or the IRS will fine you for not paying in a timely manner.

If you need help with this I work to to serve.

Thanks,
John