Taxfilter

January 29, 2009 5:16 PM

Can the amount owed against 1099-misc be deducted from my tax return? Or will I need to make a separate payment to the IRS?

I did some contract work at the end of 2008 and just got my 1099-misc form. I understand that I have to pay taxes yet on that money, but am wondering if I will simply be able to automatically deduct the amount owed to the IRS from the amount I'll receive in return for my taxed 2008 employee wages.

posted by The Straightener to work & money (8 comments total)

Yeah. All your income goes on one 1040. Recommend Turbo Tax for this . . .
posted by troy at 5:26 PM on January 29

Yes.
posted by 0xFCAF at 5:26 PM on January 29

Also, if this is your first 1099-MISC you're in a "safe harbor" position and for last year you don't have to worry about paying penalties for not withholding sufficiently. But there are rules involved if your contract work is continuing -- basically this year you will have to withhold (via quarterly estimated tax payments) to the extent of last year's income (or this year's, whichever is less).
posted by troy at 5:29 PM on January 29

However, if you end up not owing money come tax time next year, no worries, either. <-- I think
posted by troy at 5:31 PM on January 29

Yeah, don't worry about it. If you have any expenses related to that income, file a Schedule C (or Schedule C-EZ). Otherwise it just goes on the line for other income, and as long as you don't owe tax at the end of the year, don't sweat the quarterly payments.
posted by readery at 6:06 PM on January 29

basically this year you will have to withhold (via quarterly estimated tax payments)

This is only true if you expect to pay in more than $1,000 when doing your 2009 taxes, and if you do expect to pay in you can change your W4 with your regular employer to increase your withholding there. See form 1040-ES [pdf].
posted by 0xFCAF at 6:10 PM on January 29

Yeah, it's all one big tax pool-of-money. There are fairly clear guidelines about when you have to file quarterly, so I'd go look at the rules to see if you should be doing that next year but this year basically assume you'll owe roughly 25% of whatever you make in 1099. File schedule C and think hard about whether you can deduct any business expenses associated with that income.
posted by jessamyn at 6:13 PM on January 29

Thanks guys, best answers all around.
posted by The Straightener at 7:06 PM on January 29