1099

mana8503 · November 2013

H is looking for a new job, and the one we like so far is a 1099 instead of a W2. I'm trying to look it up online but I'm getting confused - and you girls rock at these things!

From what I've read so far, we have to estimate and pay throughout the year. Would it be helpful to see our CPA that does our taxes before he starts/soon after? She's pretty reasonable for taxes, so I hope she is for things like these.

Any helpful tips? I'm pretty good at sashing away money, and plan to put a portion in our ING (well Capital one 360 or whatever).

vlagrl29 · November 2013

I know all about the 1099s being self employed

I got them all they time when I would teach at music stores and now I give them out to my musicians that play with me at events.

I think it would be good to talk to your CPA so she can let you know approx. how much you will owe on taxes based off the salary your DH will get. I would always give mine to my CPA every year when we did our taxes.

vlagrl29 · November 2013

I forgot to mention - is this a job that he can keep his receipts on? Then he could deduct that off of what he would owe on taxes. I would always keep gas mileage receipts and pretty much anything that related to my job. I actually still do.

mana8503 · November 2013

He's a truck driver, so what would be business related? Tolls?

vlagrl29 · November 2013

I would think so. You might want to also ask your CPA about deductions he can take.

mana8503 · November 2013

@vlagrl29 - Thank you! She's helped us find deductions for regular taxes, so I'm sure she will be helpful for this too! If this is what H decides to do, I'll defintely set up an appt. Did you pay quarterly, or just set money aside and pay at the end of the year?

vlagrl29 · November 2013

I pay annually but mine is more of a part time business. DH does full time work and has our CPA in charge of his books, but I believe he still pays annual as well. He sets aside a certain percentage of each payment he gets from his job for taxes. It has been awesome the last couple years we haven't had to pay anything I believe because of the child deduction and HSA deductions.

quiltedinky · November 2013

Mana, I would suggest googling either Trucker CPA or transportation CPA for your state.

My husband is OTR, so I don't know how deductions would work for your husband depending on if he's local or OTR.

Depending on his company, they may have or know of an accounting firm that's familiar with his type of taxes. I know that my husband's company has a third party accounting firm available to them for a fee. We don't use them because we live in a different state from where his company is located.

You also might want to look on www.thetruckersreport.com they have a forum specifically for trucker taxes.

hoffse · November 2013

NOT legal advice - but also ask your accountant about deductions for mileage, since he's a trucker. I think the rate is currently $0.56/mile.

It might be that this is accounted for in his job already (if he gets reimbursed), so he won't be able to take it... but it's certainly worth asking. I know I can deduct for mileage because my firm doesn't reimburse me for that expense.

And yes, call your accountant. Most of the clients who call me because the IRS is levying their property do so because they tried to do 1099s on their own and screwed up. I don't know that they're particularly hard, but some people have this really interesting impulse to try to deduct just about everything....

I tell my clients there are only three rules they have to remember when it comes to taxes: 1) Keep good records. 2) If you have any questions at all, call your accountant. And 3) If the IRS writes to you, WRITE BACK. Or have your lawyer write back. I can't tell you how often I get clients who receive like 6 notices from the IRS before they decide it might be a good idea to call their lawyer (me). It's ridiculous. I think the record for me (and keep in mind I've only been practicing a couple years) is 42 notices before they called. And then somehow I was supposed to rescue them. Don't be that person.

Sorry, it's been one of those days. End rant.

smerka · November 2013

Before he takes the job, meet with your tax person to see how much you will actually keep and how to set up estimated payments quarterly. As a 1099, you will do a schedule C. You will owe regular income tax and self employment tax. That's the social security and Medicare taxes. But because you are considered self employed, you owe both halves or 15.3%. As a w2 employee, you pay half and your employer pays half. This is where a lot of people screw up. Returns with Schedule Cs are often red flagged with the IRS because there can be a lot of fraud, especially if EITC is involved. Keep very detailed records and do NOT ignore the IRS. GL

mana8503 · November 2013

Wow people ignore the IRS!? Crazy! We won't, I promise. I work for the government, I'm not losing my job over this haha. I'm also really organized and keep everything, so I really don't think we will have too much trouble. Just the fear or the unknown.

H agreed we will meet with our CPA ASAP if he ends up taking one of the 1099 jobs he's getting offers from. I'll ask about the mileage, but he doesn't own the truck so I doubt he can claim mileage.

@quiltedinky - he's local. I'll check out that website Thanks!

hoffse · November 2013

Yeah you wouldn't believe how many people ignore the IRS. It's like they think the IRS will go away if they pretend it's not real.

Honestly, as big and bad and scary as the IRS seems, most of the folks I've spoken with who work there are really pretty reasonable. They're even helpful. The IRS uses computers to flag returns that seem to have large discrepancies, and then if the human beings who work there still can't figure it out they send a letter asking for an explanation. Much of the time, explaining yourself is all it takes.

The dude with the 42 notices called me on a Thursday to tell me the IRS was going to levy his property the following Monday. Nice guy and all, but it was completely ridiculous. The really amazing thing was that he had kept all of the notices in a file. He simply hadn't responded.

1099

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