1099 income and taxes

[Anonymous]

My husband and I each work full-time jobs and have an HHI of 300k. Starting next year, I am taking on a side job as an independent contractor, likely for about 75k. I have never received a 1099 before. Can I just set aside about 1/3 for taxes and pay with my 1040 the following year? Or is it to my advantage to make estimated payments each quarter? If so, how do I calculate it?

[Anonymous]

At that income, you can hire an accountant to advise you.

[Anonymous]

You MUST make quarterly SE tax payments. Otherwise, IRS will penalize you. This includes your state income tax, assuming you live in a state that collects income tax.

SE tax is not the same rate as income tax. You pay additional taxes.

If the tax rate on your other income is about 33%, then I would add atleast another 2%.

Or, as a PP suggested, get an accountant. Mine is worth his weight in gold.

[Anonymous]

Anonymous wrote:You MUST make quarterly SE tax payments. Otherwise, IRS will penalize you. This includes your state income tax, assuming you live in a state that collects income tax.

SE tax is not the same rate as income tax. You pay additional taxes.

If the tax rate on your other income is about 33%, then I would add atleast another 2%.

Or, as a PP suggested, get an accountant. Mine is worth his weight in gold.

How much does a decent accountant cost? I used Liberty at the last minute for what I thought was a simple return. Ended up paying $700 for a return that was bounced back for multiple errors.

[Anonymous]

Get a real accountant. At your HHi, with the 1099 income, you really need someone to sort this out for you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You MUST make quarterly SE tax payments. Otherwise, IRS will penalize you. This includes your state income tax, assuming you live in a state that collects income tax.

SE tax is not the same rate as income tax. You pay additional taxes.

If the tax rate on your other income is about 33%, then I would add atleast another 2%.

Or, as a PP suggested, get an accountant. Mine is worth his weight in gold.

How much does a decent accountant cost? I used Liberty at the last minute for what I thought was a simple return. Ended up paying $700 for a return that was bounced back for multiple errors.

I pay less than that for a real accountant, and I can call him throughout the year with questions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You MUST make quarterly SE tax payments. Otherwise, IRS will penalize you. This includes your state income tax, assuming you live in a state that collects income tax.

SE tax is not the same rate as income tax. You pay additional taxes.

If the tax rate on your other income is about 33%, then I would add atleast another 2%.

Or, as a PP suggested, get an accountant. Mine is worth his weight in gold.

How much does a decent accountant cost? I used Liberty at the last minute for what I thought was a simple return. Ended up paying $700 for a return that was bounced back for multiple errors.

A simple SE tax prep should cost a few hundred. I assume you have nothing to deduct for your business, so the estimate should be pretty straightforward. The Accountant does need to know what your other income will be.

[Anonymous]

OP here. Thanks for the advice. Relatedly, does it help for tax purposes to create an LLC? My expenses are low - just a computer and my home office.

[Anonymous]

Anonymous wrote:OP here. Thanks for the advice. Relatedly, does it help for tax purposes to create an LLC? My expenses are low - just a computer and my home office.

For tax purpose, not really. For your own financial protection, yes, and also depending on what industry you are in, might want to look into getting E&O and/or liability insuranc.

[Anonymous]

We just use TurboTax, hhi of 400k with rentals and multiple small business income

[Anonymous]

Just use TurboTax. It's completely simple, just be sure to pay as much as last year in taxes either withheld or quarterly payments. You don't need an accountant unless you are incapable of following simple rules or keeping basic records.

[Anonymous]

OP our HHI is $325K.

DH is W2, I am 1099, and have been 1099 for the last 4 years. We also own a rental home.

1) we have used Turbo Tax (Small Biz), no problems
2) you must pay quarterly taxes or you will face penalties from the IRS. Just go to the IRS website and either print off a copy of the payment coupons OR pay directly online with the IRS.

[Anonymous]

Anonymous wrote:OP here. Thanks for the advice. Relatedly, does it help for tax purposes to create an LLC? My expenses are low - just a computer and my home office.

Another reason to use the CPA -- so you know how much depreciation recapture tax to pay on the home office when you sell your home someday.

[Anonymous]

Anonymous wrote:Just use TurboTax. It's completely simple, just be sure to pay as much as last year in taxes either withheld or quarterly payments. You don't need an accountant unless you are incapable of following simple rules or keeping basic records.

Completely agree. TurboTax Small Business is awesome. You should be willing to do some research as needed for clarification of certain tax laws. I'm sure there are superior accountants out there but the ones I've met and have been recommended have ranged from terrible to just about as capable as me with TurboTax.

[Anonymous]

No get a really tax accountant to do your taxes. They can set it up so you are a small business/ owner and can write all tax prep off as a business expense.