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
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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

Your Tax Question - 031

Dear John, This year I received my W-2 and I also received a 1099 from the same job but the 1099 has a different business name on it. My tax software is now requiring me to fill out a Schedule C as part of my taxes. Filing out a Schedule C is requiring me to answer a bunch of questions that I don't have answers for. Can I get around filing out the Schedule C? Thanks, Pat
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Hi Pat,

I don't want to get into a guessing game here so I would suggest that you call your company and find out if there was not a mistake and inquire why this happened. Remember, that the IRS will make a determination about your worker status, simply fill out Form SS-8.

Sorry, there really is no way around the Schedule C-EZ in this case. If there were no you taxes withheld from the 1099 (which I doubt that there were) you will have to pay double on the Social Security and Medicare portions of your wages. This is all covered on the 1040 SE form when you do your taxes. It should not be too difficult just a little extra effort.

I hope this helps.
John

PS. I know of a great tax guy if you need one. ;-) Email me