Jessica (realtor) asks:
Michael, this year I started working part-time as a realtor. I have been told that I will be receiving “1099 income.” I think this means I will be an independent contractor. Is this right?
Answer:
Hi Jessica. You’re absolutely right. You are now considered an independent contractor, meaning you are self-employed for Federal income tax purposes. This will impact your tax situation in many ways:
- You will, most likely, have to make estimated tax payments at four (approximately quarterly) intervals throughout the year.
- You will have to fill out at least two additional pieces of paperwork (Schedule C and Schedule SE). Don’t worry though, if you do some homework ahead of time, you’ll be able to tackle these on your own.
- You will be subject to Self-Employment tax. (This is really just a different name for a tax that you and your employer would be paying if you were an employee.)
- You’ll be able to deduct many expenses that would otherwise be nondeductible.
For More Information, See My Related Book:
 |
Independent Contractor, Sole Proprietor, and LLC Taxes Explained in 100 Pages or Less
|
- Estimated tax payments: When and how to pay them, as well as an easy way to calculate each payment,
- Self-employment tax: What it is, why it exists, and how to calculate it,
- Business retirement plans: What the different types are, and which one is best for you,
- Click here to see the full list.
"Quick and easy read. No fluff, just straight to the point and gives you more helpful information that you might imagine. If you are looking to get the bottom line information you need to start your business right then this book is a must have."
Comments on this entry are closed.