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By , June 3, 2018 6:22 am

Understanding the 1099-MISC Income Form and its Calculations

One of the facts that’s present in life that you simply cannot deny are taxes. There’s definitely no way for you to avoid it. When you are a self-employed individual, it’s actually your obligation to make sure that your credit responsibilities are all in check. Because you are a 1099-MISC income earner, you need to show some proof of income for your insurance purposes, loans, and taxation laws. In case you are a freelancer, the taxes which you are going to pay will go to the Social Security as well as in Medicare. In case you are wondering as to what is a 1099-MISC form which you have obtained, below would be some things that you should know about it.

All the self-employed individuals or known in other terms as the 1099-MISC income earners needs to pay tax for each quarter to the IRS. In every January, you will be receiving a 1099-MISC form in the mail from each of the company that you worked for in the previous years. If in case you have worked for more than one firm in a single year, the number of forms that you will get is equal to the company you have worked with in that year.

In every form, you will see a certain amount in Box 7, which actually is the overall amount which were remunerated by an employer, which means that you will have to pay tax on this amount. You should bear in mind that it is all your responsibility of being able to stay on top of your credit responsibilities if ever you fail your income bracket.

When it comes to filling out your form, the company which you have worked for throughout the year will handle the total process of your earnings on each of the form you have. This in fact is the reason as to why it is very important that you also collect and track your earnings.

Calculating your Tax on the 1099-MISC income

1st Process

Total your income amounts on each of your 1099 MISC form and in case you have more than one form, you should total all of its income from all the forms.

2nd Procedure

Total the business expenditures that you also have kept track of and then subtract it from the total income you have because this will bring you to your net income.

3rd Process

Multiply on the net income amount by 0.9235 in order for you to end up with your taxable income.

4th Procedure

Consider checking the IRS tax table on the amount of tax that you owe on your taxable income. Always bear in mind that tax schedule varies from each state.

Now, you could submit your 1099 MISC form electronically and the payment should be made by 8pm before January 31st.

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