Working full time 1099

[Kimberly Lee]

What does it look like at the end of the year working as a Independent contractor?

[Guest Montana Hiltbrand]

You do need to make sure to set aside enough for taxes.  My friend likes to pull out 20-25% of each paycheck to put aside so you don't have to fret at the end of the year. If you make more than $600 in a year, you will need to file a 1099 tax form. 🙂

[Guest]

 I google a tax calculator for my state and put in how much I made that paycheck and it will tell me what to put aside. I open extra savings accounts and just label it taxes so when I get paid I immediately put that money in there. If this sounds like too much, I found this website that described things really well that is worth checking out! 

https://www.keepertax.com/1099-tax-calculator#:~:text=Paying taxes as a 1099,half between employers and employees.

[Mornique Dicey]

1 hour ago, Janalen Windsor said:

 I google a tax calculator for my state and put in how much I made that paycheck and it will tell me what to put aside. I open extra savings accounts and just label it taxes so when I get paid I immediately put that money in there. If this sounds like too much, I found this website that described things really well that is worth checking out! 

https://www.keepertax.com/1099-tax-calculator#:~:text=Paying taxes as a 1099,half between employers and employees.

Thank you so much for sharing! I haven't done that just yet! I just moved to Texas and started as a 1099! I definitely need to do the same. Also do you know how I could find information on deductions since I am ubering to and from work cost between $260-$300 a week. I work a lot and doubles at that. So I heard that can count towards taxes. 

[TAJUANA (*nickname KITTY) MUNDAY]

15 hours ago, Kimberly Lee said:

What does it look like at the end of the year working as a Independent contractor?

Working full time at a 1099 job means being SELF-EMPLOYED as an Independent Contractor, and you really need to remember that you are running a business. There are several important things you need to do as a 1099 Independent Contractor. I've seen people replying on here about setting aside money for taxes (open a SEPERATE savings account at the very least for this!) and using a Tax Calculator or just estimating 20-25%. And while that is helpful advice, they've forgotten to mention that you need to remember to pay QUARTERLY ESTIMATED TAXES. The dates for those are April 15th (Yes 2 different taxes due on the same date!) July 15th, October 15th, and January 15th, or the first business day after. On those dates your estimated taxes from the previous 3 months pay is due. I.E. April 15th the taxes for the pay earned from Jan. 1st - March 31st. What they also forgot to mention is that you not only need to pay the Federal taxes, but Social Security and Medicare taxes as well. And beware when trying to Google how much the percentages for those are, because you'll end up with only 1/2 the correct percentage as i learned the hard way 4 years ago! Since you are self-employed, you are responsible for paying BOTH the employees half AND the employers half! To save you wasted time and effort, here are the percentages for both of those IN FULL: Social Security 12.4% (6.2% ea) Medicare 2.9% (1.45% ea)
You will also need to file Small Business Tax come April. If you're fairly decent with accounting, and with figuring out deductions, have kept track of receipts etc (I highly recommend having receipts sent via email, and creating a folder in your email program to move those receipt emails into!) then I recommend the TurboTax Small Business Live program.Or getting the TurboTax Live and having TurboTax do the taxes for you for a small additional fee. I DO NOT recommend using Tax Act, (I also learned that lesson the hard way a couple years ago trying to cut corners!) If you're not so good at those things then I suggest getting a CPA, NOW, to start keeping track for you. Remember, part of that expense can be written off if you do things right! (I ALSO highly recommend making some quarterly payments into your State Tax. Or even if not every quarter, whenever you happen to have some set aside.)

If you are lucky enough to have a large enough home to have a separate room for making a home office, then you may be able to claim that as well. (I'm going to add a paragraph on the end of this post detailing what exactly is considered legally a "home office" insofar as the IRS is concerned.) There are a LOT of different things that you can write off now as business expenses even without being able to write off a Home Office though, thanks to new tax laws that went into effect last year for those of us who now work from home. (I'm not sure about the Uber/Lyft expenses asked by another, but I DO know that rental car expenses as work related are, so I believe those would be as well.) My biggest suggestion, get a CPA, NOW, who will not only do all this for you but who will help you LEARN how to do it by answering your questions, and actually going over it all with you, or even getting TurboTax LIVE now. (the LIVE part means access to tax professionals throughout the year for asking questions of). Meanwhile, I will keep track of this thread and try to answer any questions to the best of my ability. Bear in mind though that I am NOT a CPA or Tax professional, so I can only advise what I've learned during my 4 years of experience working full time 1099 Self-employed Independent Contractor CNA. (Single old woman, so sole income provider. If you have questions regarding joint filing etc, sorry but I can't help!) Good luck to you all!

 

 

Here's the information I have from last April from the IRS copied and pasted, regarding what constitutes a legal (by IRS definitions) Home Office you can claim. 

 

Home Office requirements

If you run your business from a space set aside in your home and keep good records, the home office deduction may be the biggest single deduction you can take. Here are the proper steps to setting up your home office.

Step 1: Pick a space

 - You can use a portion of a room as a home office, but be sure the personal spaces are clearly separate from the business space.
 - Your home office must be the primary area where your business activities take place.
 - When furnishing your home office, you should have only those decorative items that would be appropriate for a "real" office or cubicle - if you wouldn't have something in a real office, it shouldn't be in your home office.
 - Your desk, computer, filing cabinets, shipping area (if you have one) should all be part of your home office space.
 - You can have a stereo system in your home office (which you can deduct), as well as appropriate artwork (which you cannot deduct if it's a collectible that will hold or increase its value or over time).
 - You CANNOT have cribs, kitchen or bathroom items in your home office unless you are running a daycare business from home.

Storing Inventory

 - If you use areas in your basement or attic as storage space for your inventory, you can add it to your home office space to take the deduction.
 - You CANNOT deduct your entire basement, though, if you use only a portion of that space to store inventory.
 - The solution? Duct tape! Use it to set the boundaries of the "business" portion of your basement or attic, so that if you are ever audited, the IRS agent can see clearly where your home office space ends and your personal space begins.

Note: Rarely will an auditor make a home visit. Photographs of your office should suffice.

Step 2: Measure Your Home Office

To take the home office deduction, you should know the square footage of both your entire home (wall to wall) and your home office space.
 - Don't do the measuring yourself, as it's easy to make mistakes (usually not in your favor).
 - Instead, have a contractor measure your home office space professionally, and give you something in writing with the exact measurements in case you are ever audited.

Step 3: Calculate Your Home Office Percentage

 - This is a fraction - the numerator (top number) is the square footage of your home office space, while the denominator (bottom number) is the square footage of your entire home (wall to wall).
 - So, for example, if your home office space is 1,000 square feet, and your entire home is 4,000 square feet, your "home office percentage" is 1/4th or 25%.

Step 4: Start Deducting

 - If you have a home office, you can deduct your home office percentage from just about all of your household expenses (such as taxes, utilities, housecleaning fees, etc.).
 - If you own your home, you can also depreciate it for tax purposes.
 - You CANNOT deduct expenses (such as lawn care and gardening) for activities that take place outside of the home, since by definition a "home office" must be "within" a home.

Some special rules:

 - You cannot deduct more than the net profit your business makes each year (but like other operating losses, you can carry these forward into future tax years).
 - You must fill out Form 8829 and submit it with your 1040 each year. (We'll help you do that.)
 - If you depreciate your home as part of the home office deduction and then sell your home at a profit, you will have to pay a 25% capital gains tax on the total depreciation deductions you took while you were living there (this tax does NOT apply to other deductions you took).

Step 5: Keep Good Records

While the home office deduction is typically not an "audit trigger," you do have to keep good records, such as:
 - Copies of Form 1098 showing the interest you paid on your mortgage each year
 - Property tax bills (and cancelled checks)
 - Utility and insurance bills
 - A copy of your lease (if you rent)

[Jane J]

Been hunting for more info on this as well @Kimberly Lee! Thanks for the info everybody!