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I was looking at job postings on CL -- I came across one that advertised '$10 straight pay 1099' for the compensation.
I can kind of guess that this has something to do with taxes and who pays them and when, but I can't really seem to get a straight, plain answer on this.
If they are giving you a 1099 it most definitely is not "off the books". They are sending that to the Government. You are responsible for taxes when tax time comes.
Correct you are a contractor. Keep in mind this will allow you to deduct direct expenses as well. For example if you are a 1099 employee you can deduct miles driven, gas, etc. Check out the irs web site for specific answers.
You will pay those taxes when you file your annual return. If you earn enough you should file quarterly I believe. I'm not an expert on this area though so wait for more responses.
yes, straight pay, you work for $10 per hour, contract, most likely also means you are not eligible for OT, (thats questionable, ask first) but the rest, you work 40 hours, take home $400, work 25 weeks, and they report to the IRS you made $10,000, and you are responsible for the Income Tax on $10k, also you will most likely have to deal with self employment problems, according to how you file, could get sticky there, and costly. Lot of people work 1099 as contract labor, then at the end of the year also have to deal with the S-E ramifications of that.
You will pay those taxes when you file your annual return. If you earn enough you should file quarterly I believe. I'm not an expert on this area though so wait for more responses.
You are correct.
You can however write off many costs associated with the employment (including the lease payments on a car, business use of the home, etc.).
With a 1099 you will also need to pay self-employment tax. This is 6.5% of gross (I think), and is essentially in lieu of the employer paying the employer's portion of social security withholding.
Yes, you can deduct expenses, but there are restrictions, and you should contact an accountant to be sure you are doing it correctly. As an example, the home office deduction is only allowed if the portion of the home is used exclusively for business. You cannot simply say that 10% (or whatever) of your housing cost is deductable.
Similarly, supplies are deductible, but you do have to purchase them first. So if you purchase $20 worth of printer paper, and are in the 28% tax bracket, you get to reduce your taxes by $5.60.
Don't take my word for it, see an accountant. Which is also deductible.
Agreed, definitley see an accountant (not one of those people at a tax prep place that take a three week course but a true CPA) before tkaing deductions for expenses.
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