Tax question

[donjr]

I am a sub contractor and i got my 1099 the other day. I only made 16,000 in 09! My wife made 5,000 on her W2. Am i going to have to pay in or can i file as a loss? She said that we should get some back for earned income, I told her that she is crazy! Does anyone hane an opionion?

 

[Goose and Fig]

Do you have kids? Even if you don't- you should look into the Earned Income Tax Credit. Even if you didn't pay any taxes during the year, you can still get money back. The new tax cuts were a real windfall for us this year

You can start your taxes for free online with turbo tax or h & r block online. You don't have to pay until you file (sometimes it's totally free). So you can see if you're going to owe or get money back. I do mine early every year so we know what to expect

 

[donjr]

No kids that i can claim. Thank you very much for the info!

 

[Rusty Hills Farm]

Since it is a 1099 form, that means nothing was withheld for SS. Therefore, while you will likely not owe any income taxes on it, you WILL owe self-employment tax. Self-employment taxes cover the employer and employee portions of SS/Medicare taxes. They get automatically deducted for employees and show on that W2 your wife got. Pretty much everyone has to pay SS/Medicare/Withholding taxes even when they don't owe income taxes. Employees get theirs automatically deducted BEFORE they get their paychecks, so they don't have to worry about owing it. But people who are contractors/sub-contractors do not get it withheld and owe it by the end of the year.

HTH


Rusty (who is a sub-contractor)

edited to add: The nice part is that you get to deduct your business expenses from that total amount and then only owe self-employment tax on the remainder.

 

[donjr]

Thank you Rusty.