WAHM Forums

I hate the thought of it as it is but...

Has anyone been through fileing taxes on your mwp yet or how does it work ?Edited by: Day-Dreamer

If you earn $600 or more in a year, you will be issued a 1099 to file with your taxes. Once you have earned $600, MWP will request your SSN when you login before you will receive the next paycheck.

so once to that point is there a particular portion to with hold?

No, 1099s are issued for work or earnings of people who are not employees of a company. This is just a statement of earnings - they have not withheld any taxes, as you are not an employee, nor have you filled out a W4 for withholding. So you pay taxes on 1099 earnings at the end of the year when you file your taxes.

oh ok.. I am just trying to figure things out so I know I can set back x amount to be able to pay taxes with Once I get going I intend to get over the 600 mark no point in setting any lower goal to start with http://www.wahm.com/forum/smileys/smiley4.gif

Here's some helpful hints for those who will be receiving a 1099:




Your self-employment income is reported on Form 1040, Schedule C (http://www.irs.gov/pub/irs-pdf/f1040sc.pdf) (PDF), Profit or Loss from Business, or on Form 1040, Schedule C-EZ (http://www.irs.gov/pub/irs-pdf/f1040sce.pdf) (PDF), Net Profit from Business.
Your Medicare and social security taxes are reported on Form 1040, Schedule SE (http://www.irs.gov/pub/irs-pdf/f1040sse.pdf) (PDF), Self-Employment Tax.


As a self-employed person, you pay your Medicare and social security taxes the same way you pay your income taxes. If you expect to owe less than $1,000 in total taxes, you can pay them when you file your income tax return. If you expect to owe $1,000 or more in total taxes, you will need to make estimated tax payments. These payments are made quarterly using Form 1040-ES (http://www.irs.gov/pub/irs-pdf/f1040es.pdf) (PDF), Estimated Tax for Individuals. You will need to figure these taxes at the beginning of the year. To learn about figuring and making estimated tax payments, please refer to Publication 505 (http://www.irs.gov/publications/p505/index.html), Tax Withholding and Estimated Tax.
Brenda

Basically -- in order to get a rough estimate of your taxes due, you would :
take your estimated income,
subtract your estimaed expenses,
and then figure out what your tax percentage would be based on your tax bracket --
plus an additional 15% for self employment taxes

That is how I've always estimated it and it tends to work ok for me. I usually always owe a bitmore in April though.

The other posters have good advice. Just make sure you set aside your guestimated tax % in a separate fund and don't touch until your tax payment is due!
This is what I do (I do some free lance consulting work and receive a 1099), so there isn't so much of a shock when I pay Uncle Sam.

The whole 1099 thing may sound complicated, butit's not all that hard. I usually buy TaxCut Premium and it handles it pretty easily.

Good Luck with MWP!
Patricia Edited by: PatriciaE

You've gotten good advice so far. A common rule of thumb is to withhold 30% for income taxes.

BrendaB had a good point about not needing to make quarterly estimated tax payments unless you expect to owe $1,000 or more in income taxes, but some people find it easier to pay throughout the year rather than all at once at tax time.

I wrote a free report with tax tips for wahms, which you can find here (http://www.taxtipsforwahms.com/).

Hope this helps,
kristine