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Top 5 Things to Remember About the 1099 Tax Form
Top 5 Things to Remember About the 1099 Tax Form
You might come across a lot of words like 1099 form, 1099 taxes, 1099 employees and when tax filing season gets close. April 18 is the official tax deadline for US taxpayers this year, and taking the time to avoid IRS penalties isn't the only reason to take stock of your tax situation.
Taxes become more complicated when you have multiple income sources, such as W-2 wages or income from non-employee sources, also known as 1099 income. It's called 1099 income in layman's terms because non-employee compensation is reported to the IRS using various 1099 forms.
1099 forms are information-sharing forms sent to the IRS by the company or individual that paid non-employee compensation to another company or individual, essentially someone who's not on your payroll. But to pay federal income tax and 1099 employee taxes on all your income, you'll have to also focus on filing your 1099 by attaching it to your regular 1040 form.
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What are 1099 taxes?
It's no news that you'll have to pay taxes on your income from sources that are not a full-time employer, such as contract freelance work or rental income. These are reported using different 1099 forms, which have the information you'll use to pay 1099 taxes on this income.
One form for reporting 1099 taxes is the 1099-MISC, which is used to report miscellaneous income.
But there are plenty of other 1099 income sources on which you'll be taxed, like income from interest. For example, if you give someone a loan and receive interest in return, you'll need to report this income to the IRS using the 1099-INT.
On the other hand, if you earn income from eBay from selling items online, eBay will report the payments it makes to you to the IRS using the 1099-K form.
How do I file my 1099 taxes?
To file your 1099 taxes, look in your bank statements or any 1099 forms you received from the companies or clients that used your products or services. The 1099 forms usually arrive through the mail during the start of a new year, listing the payments for the previous year.
In some cases, like the online streaming platform OnlyFans, you can also download a digital version of the 1099-NEC from your account on the streaming platform.
The 1099 forms you receive will show you the income earned during the year and help you accurately calculate the tax you owe. In addition, the IRS has an online tool called "Get Transcript" that allows individuals to view and download their past tax transcripts, which will also include information about their 1099 income.
To get a 1099 form from the company or individual, you'll have to earn more than $400 in a year from that source of income. You can eFile 1099 taxes by filling and attaching all your 1099 forms with your 1040 form.
You can also speed up your 1099 tax filing with FlyFin. It's an intelligent A.I.-app that automatically finds your income and business expense deduction from your account and saves you a lot of money on taxes. You also get live CPA experts' support for accurate tax filing.
What are the tax rates for 1099 taxes?
The tax rates for 1099 taxes vary depending on the income earned and the individual's tax bracket. Remember that 1099 income will be added to all your other income, and your taxes will be calculated accordingly.
The IRS set the 2022 tax brackets with the highest bracket being 37% for those earning over $518,400 for single filers and $622,050 for married filing jointly. Self-employed individuals have to also pay self-employment tax, aka SECA tax, which includes Social Security and Medicare taxes, on top of their income taxes.
What are the important dates regarding 1099 taxes?
Self-employed individuals and independent contractors are required to make quarterly estimated tax payments, with deadlines on April 15, June 15, September 15 and January 15 of the following year.
But unlike the individual filing date, the deadline for filing 1099 tax forms with the IRS for the 2022 financial year is January 31, 2023, and the tax deadline for filing individual tax returns is April 18. If you need more time to file, you can request a tax extension tol give you an additional six months to file your return.
How to save money on your 1099 taxes?
One of the most effective ways to save money on your 1099 taxes is to take advantage of business expense tax deductions, such as deducting the cost of office supplies, equipment and travel expenses.
The only catch here is that the expenses you claim as self-employment deductions must be from your primary source of income. For example, if you work as a freelance graphic designer, and this work makes up more than 80% of your yearly income, this will be considered your main work. If you do something else occasionally like freelance photography gigs, you can only deduct business expenses associated with your graphic design activities.
Certain tax credits and self-employed health insurance deductions can also lower your tax bill. Just to be sure, you can also consult with a tax professional or accountant to ensure that you are taking advantage of all the deductions and credits available to you. For this you can get in touch with FlyFin CPAs that are available 24/7 through the FlyFin app.
One of the best ways to save money on taxes when it's time for annual filing is by using expert CPAs to maximize your savings on taxes. FlyFin's CPAs take care of 95% of the work for you, preparing and filing your federal and state taxes directly through the app with 100% accuracy.
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