How to Calculate Taxes for 1099 Employment
When you are hired as an independent contractor -- that is, you are not a regular employee and taxes are not withheld from your paycheck -- you must file a 1099 form with the Internal Revenue Service (IRS) at the end of the tax year. The 1099 form, also called a 1099-Misc form, is used instead of the employee form, the W-2, to report your earnings and income to the IRS.
Instructions
How to Calculate Taxes for 1099 Employment
Income Tax Forms Filing
Obtain an IRS 1099 form and the accompanying instructions. The form and instructions can be downloaded directly from the Internal Revenue Service website (see Resources) or by calling 1-800-829-1040 and requesting a form be mailed to you. Alternately, you can obtain forms and instructions in person from your local IRS office, or you can telephone the main office to have the forms mailed to you.
Determine your total earned compensation for independent contract employment in Box 7. Record any other income, such as bonuses or commissions, in Box 3, except for royalties, which should be recorded in Box 2, if applicable. If state or federal taxes were withheld from any of your earnings, record those sums in Box 4 and Box 16, respectively. For example, if you briefly worked as an employee and then switched to independent contractor, some state or federal taxes may have been withheld although a W-2 was not issued for them. However, if you worked only as an independent contractor, you should have not had any taxes withheld from your earnings, so those boxes should be left blank.
Individual Tax Deductions
Add the sums in Box 7 and Box 3 to determine your total taxable income for the year.
Determine any business-related expenses you paid during the tax year and subtract the total amount from your total taxable income.
Determine self-employment taxes by multiplying 92.35 percent (.9235) to the total taxable income. The resulting amount is used to determine your total tax liability, the amount you owe to the IRS.
Maryland State Tax Extension
Determine the amount of taxes you owe the IRS. The amount owed is based on total income earned after deductions. If the amount is $400 or less, you do not own any self-employment tax. Moreover, if your income exceeds $400 but is less than $106,800, a self-employment tax of 13.3 percent (.133) is owed. However, if your total income exceeds $106,800, a self-employment tax of 2.9 percent (.029) plus $11,107 is owed.
IRS Child Tax Credits
Use Publication 15-T to determine federal tax liability (see Resources).
Calculate state tax liability using a State Tax Table (see Resources).
When you are hired as an independent contractor -- that is, you are not a regular employee and taxes are not withheld from your paycheck -- you must file a 1099 form with the Internal Revenue Service (IRS) at the end of the tax year. The 1099 form, also called a 1099-Misc form, is used instead of the employee form, the W-2, to report your earnings and income to the IRS.
Instructions
How to Calculate Taxes for 1099 Employment
Income Tax Forms Filing
Obtain an IRS 1099 form and the accompanying instructions. The form and instructions can be downloaded directly from the Internal Revenue Service website (see Resources) or by calling 1-800-829-1040 and requesting a form be mailed to you. Alternately, you can obtain forms and instructions in person from your local IRS office, or you can telephone the main office to have the forms mailed to you.
Determine your total earned compensation for independent contract employment in Box 7. Record any other income, such as bonuses or commissions, in Box 3, except for royalties, which should be recorded in Box 2, if applicable. If state or federal taxes were withheld from any of your earnings, record those sums in Box 4 and Box 16, respectively. For example, if you briefly worked as an employee and then switched to independent contractor, some state or federal taxes may have been withheld although a W-2 was not issued for them. However, if you worked only as an independent contractor, you should have not had any taxes withheld from your earnings, so those boxes should be left blank.
Individual Tax Deductions
Add the sums in Box 7 and Box 3 to determine your total taxable income for the year.
Determine any business-related expenses you paid during the tax year and subtract the total amount from your total taxable income.
Determine self-employment taxes by multiplying 92.35 percent (.9235) to the total taxable income. The resulting amount is used to determine your total tax liability, the amount you owe to the IRS.
Maryland State Tax Extension
Determine the amount of taxes you owe the IRS. The amount owed is based on total income earned after deductions. If the amount is $400 or less, you do not own any self-employment tax. Moreover, if your income exceeds $400 but is less than $106,800, a self-employment tax of 13.3 percent (.133) is owed. However, if your total income exceeds $106,800, a self-employment tax of 2.9 percent (.029) plus $11,107 is owed.
IRS Child Tax Credits
Use Publication 15-T to determine federal tax liability (see Resources).
Calculate state tax liability using a State Tax Table (see Resources).