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IRS: Taxes owed on 1099 Income

1099 contractors are growing in the U.S., and tax filing can be a bit more complicated for them.

IRS tax form for tax deductions and tax returns with a yellow background

With tax season coming, it’s best to understand exactly how to file your taxes ahead of time.

There are a few things to know that can help.

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What does it mean if you’re a 1099 contractor?

1099 contractors are independent contractors.

They’ll need to pay self employment taxes.

This means there are tax payments for every quarter throughout the year.

Not only are there quarterly tax payments, but you must also file your annual federal and state tax returns on your AGI.

There are various deductions you can claim so you still end up keeping money you made.

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What are self employment taxes?

The tax rate for self employed workers in 15.3%.

This accounts for 12.4% for Social Security taxes.2.9% for Medicare, and .9% for additional Medicare if you have higher wages.

What you pay depends on what you earned and how many deductions you made.

As your own employer, you’ll need to pay both employment taxes and income tax.

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Around 25% to 30% of your total earnings will likely go to taxes.

By tracking how much you drive, you could claim up to $6,000 for mileage.

There are other ways to deduct as well.

This includes the home office deduction, internet and phone bill deduction, health insurance premium deduction, meals and travel deduction, and various others.

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