How to File 1099 Taxes When You’re Self-Employed

So you’ve recently become self-employed, or perhaps are creating a business, or maybe you’re still doing your research. If so, you’ve no doubt come across the term 1099, and you’ve probably wondered yourself how to file 1099 taxes.

In 2015, 15 million Americans were self-employed, that is 10 percent of the adult population!

If you’ve been working as an employee for your whole working life, you’ve likely always had your taxes dealt with for you. It can be really intimidating to start having to monitor and manage on your own.

Don’t worry, it’s relatively easy to take care of your own taxes when you know what to do. So this is how to file 1099 taxes when you’re self-employed!

How Do I Know if I Need to File a 1099?

Any time you make over $400 in a year from self-employment, you are required to report your income. Once you make over $600 in a year from a client, that client is required to send you a 1099 form.

If you are a freelance writer, self-employed teacher, or tutor, web designer, entrepreneur, or in any other self-employed position, you will need to file a 1099. This even applies to you if you are an independent contractor.

When you are self-employed, you don’t have an employer to send off your taxes each pay period to the government for you. So, it is your responsibility to keep track of your income.

What is the Difference Between a W-2 and a 1099?

When you are an employee, you fill out a W-2 upon hiring. Your employer will take out you state and federal income tax directly out of your check every time. They also take out money for Medicare and Social Security.

At the end of the year, your employer will send you a W-2 form, and you can receive some money back based on the taxes you paid throughout the year.

When you are self-employed, no one is taking taxes out of your pay. At the end of the year, your clients will send you a 1099 (as long as you made over $600). Usually with 1099’s, you end up paying taxes instead of getting money back.

This is because throughout the year, instead of taxes being taken out every pay period, you aren’t taking them out at all. You still are responsible for paying these taxes, whether you send money to the government every month, or all together at the end of the year.

How to File 1099 Taxes

Filing your taxes at the end of the year starts with preparing your taxes throughout the year. When you are self-employed, you can expect to file a 1040 tax for quarterly.

I know, another tax form. It sounds complicated, but it really isn’t. A 1040 tax for is just simply an estimate for how much you think you will make a year based on what you made quarterly. You pay your quarterly amount based on that.

There are due dates for these payments, and you can be penalized if you don’t pay them in time. Due dates are as followed:

  • 1st Quarter (Jan 01-Mar 31) – Due April 15th
  • 2nd Quarter (Apr 01-May 31) – Due June 15th
  • 3rd Quarter (Jun 01-Aug 31) – Due September 15th
  • 4th Quarter (Sept 01-Dec 31) – Due January 15th

Then What?

The next step is going to require gathering up all and any 1099 forms you may have from clients. While it is the client’s responsibility to prepare this form, it is your responsibility to make sure it’s in your hands before taxes are due.

If you worked as an employee on top of working for yourself, and you made over $600, then you will also need to file taxes with W-2’s.

Once you’ve gathered all the necessary tax forms you need, then it’s time to start filing. This can go a few different ways.

If you do your taxes on your own, then you will proceed as you normally would filing your own taxes. Many people use online tax services such as TurboTax to file, you can still use this even if you are self employed with a 1099.

Although, it will be a bit more difficult, and with something like this, it’s often a better idea to work with a tax professional who will help you prepare your taxes. Tax professionals are great for getting you back as much money as possible and paying as little back as possible.

What Do I Need to File My 1099?

A big part of learning how to file 1099 taxes, is learning what things you will need in order to file them.

Aside from just your 1099 forms and your W-2 forms (if applicable), you will need to have a few other things to get you through filing taxes.

You need to have ready all of your important documents such as your social security card. You will also want to have any receipts for expenses that are business related.

You will also want to bring along your 1040 tax forms, as well as any other tax forms you have received from any other source of income throughout the year. Like social security benefits, student loans, real estate, etc…

If you have all of these required things with you when you go to file your taxes, you will be able to get through it smoothly.

The Saving Grace of 1099’s

The thought of having to pay back your taxes at the end of the year or quarterly instead of receiving a return can be frustrating. A lot of people rely on that big check come February, but there is a saving grace.

When you file a 1099, you will also file a Schedule C. A schedule c is a tax form that goes over all of the money you had to pay for your business expenses throughout the year.

If you’re a writer for example, you could claim new equipment like a laptop, a new keyboard, flying to a conference, taking your clients out for lunch. Anything that is considered ‘ordinary and necessary’ by the IRS.

As long as you aren’t trying to claim things that aren’t actually important to your line of business, you can claim it and reduce the amount that you will owe at the end of the year!

The Moral of the Story

At the end of the day, trying to make sure that you do everything right to file your taxes correctly and honestly can be scary.

But it doesn’t have to be.

Make sure that you are preparing throughout the entire year, keeping a record of all your payments, income, and expenses. Keep track of your estimated quarterly taxes, as well as when they are due.

And of course, don’t be afraid to ask for help. You aren’t expected to just suddenly know how to file 1099 taxes. That is why there are professionals out there, and they are willing to help you.

Tax season is growing nearer, so get a hold of someone today and start preparing.


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