If you’ve done freelance work for a company this year, you may have been paid with an irs 1099 form. This is a standard form that businesses use to report to the IRS that they have paid an individual money in an amount greater than $600. It’s important to realize that when you are paid by 1099, you are not considered an employee of the company. Therefore, the company will not withhold any of the taxes you owe on that income. When you file your taxes, you will need to treat your 1099 income as self employment income. That means filling out Schedule C, “Profit From Business” and Schedule SE, “Self Employment Tax”. On Schedule C you will be able to list your business expenses, and deduct them from the amount of income you received. On Schedule SE, you will calculate the amount of self-employment tax you owe. If you need to learn more about doing your taxes with a 1099, visit the IRS website.
January 26, 2012
