1099-Misc

[Magwitch]

I'm wondering what percent of my income I will have to pay while working under a 1099-misc tax form. I've heard anywhere from 15 - 30 %

My employer wants to move to paying me via paypal, they charge 3% for this. Should my employer be responsible for paying this fee?

Any help is appreciated. Thanks!

[disneysteve]

I'm really curious what kind of job this is. Who pays employees through Paypal? I certainly wouldn't accept being paid that way if I was going to lose 3% of my income to fees.

[sweeps]

I agree, that's strange. The employer should absorb the Paypal fee if that's how they want to pay you.

As to your first question: Tax Guide: Do You Owe Estimated Taxes?

[Joan.of.the.Arch]

It might be helpful to get out of the habit of referring to this person as your "employer." If you are contracting with them independently then you are a business they are contracting with to do work. They aren't your employer and you are not their employee. That is why you will now handle your own payment of withholding, social security, and Medicare tax. And you will do that four times a year.

If you do not want to get a PayPal account in order to secure this person's business, then you can always tell them that you need a check from them. But maybe for some reason they would then find some one else to do the work. Or you could always charge them more in order to make up for the inconvenience and expense of setting up a new financial account-- including the fees that PayPal would charge you.

irs.gov has fairly easy to search info on 1009 workers and their obligations.

Good luck. It can be a great thing to set your own hours and run your own ship, so to speak.

[Magwitch]

Well your right. It is contract work for a website. I understand they are not their employer, I'll call them what? a client?

About the 4 times a year, I have been doing 1099 work since April or 07 I guess. Should I be recieving forms from someone to complete these quarterly payments? Or should I just be guessing an amount and sending it to Uncle Sam?

As for the paypal I will just have to charge my 'client' for the excess charges.

Thanks

[sweeps]

You're responsible for estimating the amount you owe. You won't receive this information from your "client".

Form 1040 ES

[moneybags]

I'm wondering what percent of my income I will have to pay while working under a 1099-misc tax form. I've heard anywhere from 15 - 30 %

Correct, it depends on your tax bracket.

[JBinKC]

It depends upon your income tax bracket and since apparently it has been determined you are an independent contractor the tax would be on your NET income. So you can deduct any pertinent expenses against it. The paypal fee is one expense you can deduct if the 1099 shows a gross amount before the fee. A good way to reduce the net is to section 179 aka expense with a limitation amount ( I think it is now 20,000) on your depreciable items in your business.

Once you have determined your NET income you would be subject to ALL of the SE tax (not half as in an employer/employee relationship) plus Federal and state income taxes. This burden can be huge and can easily exceed 50% if you are in the top brackets.

[JBinKC]

Just to be thorough I would also download a form SS-8 to determine if the relationship you have with the other party is of an employer/employee or as an independent contractor. The form asks you questions to determine your real status. The other party is very well fleecing you on their half of the FICA tax obligation and if it has been determined that it is true I would turn them in.

[Magwitch]

How can I tell what Bracket I'm in?

I'm still depentend and I make under 12,000 a year since it's a part time job. I'm also a student.

And since I haven't payed any quarterly dues I'm guessing they will have the interest on them like I've read?

Thanks for the help, this is way better than searching around for hours for questions!

[JBinKC]

Do you claim the exemption for you on the tax return or does your parents?

[Magwitch]

I assume my parents would. I just want to find an average number I should look at saving in the next few months.

[JBinKC]

$3000 will definitely cover all federal and state liabilities. If you don't take expenses against the gross amount.