1099 income and taxes
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Anonymous
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You need to add 7.5% to cover the employer's portion of your SS tax as a consultant plus whatever your family's tax rate usually is + the addl 75K - look at the tax charts online. Or as others recommend, get Turbo tax and run various scenarios through it while you look for a tax
accountant. |
Anonymous
why?? that is ridiculous 
If OP had a complicated scenario I can understand getting a "real accountant". But having a high HHI does not matter. |
Anonymous
OP claiming a home office is often a red flag for the IRS, so make sure you really do have a proper home office. I'm a 1099 and do some work at home but frankly, claiming a home office is just something I am not interested in doing. Don't care to deal with the IRS for any reason, especially if it involves an audit. |
Anonymous
I agree. I don't think having 1099 income with a high HHI counts as a complicated situation. I feel that the whole getting a "real accountant" to do your taxes reflects an old school mentality. I'm 31 and perfectly fine with doing my own taxes, but my parents and their friends (late 50's and 60's) all have accountants and feel lost without them when it comes to their taxes. |
Anonymous
| As a person in your exact same situation 1099 and HHI wise plus rental income properties; I just use HRB (or another company like that) but make sure the person you get has 1099 income and they are experienced. I used to use a high priced CPA, but quickly learned that my taxes are not really that complex. Complex to me but not to someone who has experience doing taxes. Make sure you buy the audit insurance/protection...I never had to use it but its cheap and give me a good piece of mind. |
Anonymous
| dont listen to these dumdums, OP - you can figure this basic stuff out and file yourself with turbotax. i make 250k before investment income and i do all my own taxes. last CFA quote i got was 2 grand for 2016 taxes. no thanks! |
Anonymous
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I had worked for the company that makes TurboTax so y'all are warming my heart with your recommendations for it! And there is a way to provide feedback and I promise you there are entire teams organized around each topic (like self-employed) that actually read and make changes based on unsolicited customer input. Doing so is ingrained into the company culture.
As for other questions - NO you do not need to set up LLC unless you will be exposing your family to liability of some sort based on advice you will be giving or assets you are putting at risk. And even if you set up an LLC you still report income as a Schedule C self-employed; you don't have to set up a separate corporate entity that files its own tax return. Many 1099 subcontractors can just report the income without incorporating. And you get smart-girl points for setting aside 1/3 of the monthly retainer for taxes (when I was consulting I had a separate banking account I called "Quarterly" just for making my quarterly payments). However, if you - and your spouse - are still W-2 employees, you could just adjust your withholding down to only a very few allowances and let your company's payroll companies handle the transaction. Just make sure you have paid 90% of your estimated tax liability by 1/15 (the 4th quarter filing deadline) of the next year. And keep track of all those expenses against which to offset the 1099 income (cell phone for conference calls, printer ink, wifi, parking, business cards, coffee meetings, etc). |
Anonymous
| Not sure if anyone else saw, but there's a person on another older thread who said they got a letter from the IRS saying she owed 16k after their accountant made an error. I would hate to shell out good money for someone who cost me money and peace of mind. |
Anonymous
+1 Our accountant was (probably still is; I made my husband fire him) a horrible procrastinator and always full of questions in the 48 hours before the October extension deadline came up, never mind he had all our information in June, running up the interest we would owe to IRS. We paid him to do our 2012 returns, paid him to amend the returns after he learned from IRS there was income reported to IRS that had not been provided to us via 1099 (accountants get a feed of all reported income for exactly that reason), and then IRS found ANOTHER set of errors and we had to pay him AGAIN to amend the 2012 return to fix his error - all the while paying interest and penalties. Every time we start with a new accountant I get the same thing given to me - a 112-page workbook to fill out in pencil - and if I took the time to do all that, then WHAT IS THE POINT? Might as well file using tax prep software. |
Anonymous
something similar happened to us. Accountant made a big error, which interestingly enough also cost us $16K. It had to do with our deductions. Guess he forgot to "carry the 1" as they say. After that experience 8 years ago, we have been faithful to TurboTax. |
Anonymous
| Another W2+1099 family here and have used turbotax for years with no problem. |
Anonymous
+1 I used to have an accountant because I thought my stuff was complex. Mortgage. Stocks. Short term, long term. Foreign tax credits. One year, I did it in turbotax and got within $1 of what my account did. Turned out the software he used just rounded differently in places. Never looked back. This year is the first year I have to go back to an accountant because Tirbotax can't handle my situation - form 83b election. It just doesn't do it. |
Anonymous
PP - Question for you. We are one of these^^^as well, and when I pay my Federal quarterly taxes I always question whether or not to include my DH on that form. We have always filed as Joint, but because DH is W2 and not paying quarterly taxes I do not include his name because as the form below says 'IF JOINT PAYMENT, COMPLETE FOR SPOUSE". The tax payment is mine not his, he is already withholding through payroll. How do you handle this? 
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Anonymous
| ^ same situation. I always include my DH's ssn because when we eventually file, we file joint. The tax rate is off your JOINT income. |