US taxes, 1099... serious question
 

I've got a form 1099 from my employer, but I realize now that they never took any of the federal taxes out (social security, medicare, income tax). I always got a handwritten check (very small company) and never thought anything about it. Now, I'm reading the IRS website and it seems that I might be in deep doo-doo. Its not like a earned all that much, I grossed less than $1,500 from them over 5 months (I was still a fulltime student at the time) and I don't imagine that they would have taken out any more than $20. No state taxes removed either...

My other job, working for the university grossed about the same amount ~$1,450 and they only removed $18.80 in federal taxes (no medicare or social security). Somehow, I think the university got it correct, but I'm wary about the 1099 form from my other job. The university didn't take out any state taxes either, I guess that was related to my bi-monthly income level.

Does anyone have any experience with 1099 forms?

it's income, and that's how that particular employer chooses to let the IRS know that they paid it to you (without any taxes witheld.) there should be a line for it on both your state and federal returns in the income section.

Oh. So it all works out on my tax forms? I guess that makes sense, since some folks can go all year with federal withholdings and still wind up paying money in the end.

The difference between a W2 and a 1099 is this:

A W2 form is for hired employees - your employer takes care of deducting the appropriate federal and state withholding, medicare, and Social Security.

A 1099 is for independent contractors - it is <i>your</i> responsibility to handle the deductions come tax time - not a pleasant surprise if you're not expecting it.

Sucks to have to pay it all at once, doesn't it?

Yes it does, yournamehere. Do you know if Intuit software covers 1099's? I like to do my filing electronically.

You shouldn't have to pay anything with that income level, am I wrong? Aren't you exempt under $15K?

I think you'll just end up getting your $18 back.

not exempt from paying SSI... i'm not sure about unemployment insurance, but I'm pretty positive that's something that would need to be paid into as well.

Hmmmm . . . a good question - I'm tempted to say that if you made $3K last year, you would be exempt from taxes - not sure about S.S. though. But I'm sure Intuit will cover it - 1099 forms are very common.

They may have changed the law, but do you even have to file if you made under a certain amount?

I can look on my 1099 and on my compiled taxes that the account did for me to see the entered amounts. I made about the same amount (1500) mowing over the summer but I think I may have compensated with my real job as far as paying in, if working in education can be called real. PM me if you want me to dig around and look.

All of the popular tax prep software programs ask about 1099 income. I send 1099s to all of my subcontractors every year, and some companies send them to me. Follow the on screen prompts and you'll find that it is not a big deal at all.

Yes, like kazoo said, Intuit software does ask for your 1099 forms, if you have them (I used the web version this year, and it worked great.
You won't be in deep doo-doo, but keep in mind, even if your income is below the minimum, you still have to file.

the university is correct. If you are a full time student and working for a university you are exempt from medicare and social security (for that job only).

I know very little about this. It's been ten years since I worked for my Dad as a subcontractor. I had a tax preparer do my taxes that year. It might be wise for you to get them done for you since your preparer will know all the rules. The cost might really be worth it in the end.

This site might help you know if you'll have to pay taxes or not.
Withholding Calculator

If you do by any chance end up paying taxes because of this there is a payment program that the IRS could set up for you. Check out their site and examine your options.

I have a feeling though that with an income as low as yours from the one employer and you being student that you might squeek by and not have to pay much at all. Wish you luck.

The 1099 is no big deal. I do a lot of contract work and I agree to taking the cash and the 1099 (and they report it to the IRS). The taxes come out on your end -- you determine and pay the tax as you file.

Yes, it will. We use the professional version of Turbo Tax at our office.

No taxpayer is exempt from paying taxes. If your income is under a certain level ($4,750 of "earned" income if you are single and you are claimed by someone else - parent), then you may not need to file since you will owe no taxes. The exception to that rule is if your earnings from work come on a form 1099.

When you receive a 1099 for working, you must file Schedule C (or C-EZ). On that form, you list the amount earned, and then you can reduce that with your expenses related to that activity. If you have a net profit, and that profit exceeds $432 (don't ask), you will be liable for self-employment taxes. Self-employment taxes are a separate tax from the income tax. (Again, the tax software will calculate this for you.)

Got that. That's the "official" answer.
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"Unofficially"....If you got a 1099 for $1500, take deductions for travel to the job - at $.36 per mile plus parking and tolls. If it is a tech type job, write off a portion of your online costs. Other things to consider: a portion of cell phone, if you bought computer equipment or supplies (ink jet, etc.), or anything that could possibly be "reasonable" to expect for whatever you did.

Remember, as long as your net income from the 1099 is $432 or less (along with your W-2 for about $1,500), you should avoid paying taxes, and most likely will get the $18 back. Work the numbers until you get to where you need.

*Disclaimer* I have not prepared this return, nor take any responsibility for it. (There, now I can't be sued.)

Thanks, BoneCPA. You da man.

I do what I can.