Easy Ways to Calculate your 1099-MISC Income Forms
One of the facts that’s present in life that you simply cannot deny are taxes. There’s definitely no way for you to avoid it. When you are a self-employed individual, it’s actually your obligation to make sure that your credit responsibilities are all in check. Because you are a 1099-MISC income earner, it’s a requirement to show proof of income for our taxation laws, insurance purposes as well as for loans. When you are a freelancer, the taxes which you pay will go to Social Security and also in Medicare. In case you are wondering as to what is a 1099-MISC form which you have obtained, below would be some things that you should know about it.
All the self-employed individuals or known in other terms as the 1099-MISC income earners needs to pay tax for each quarter to the IRS. Every January, you will get a 1099-MISC form in the mail from every company that you have worked in the previous year. In case you have worked for more than one firm in a year, the 1099-MISC form that you will get will equal to that.
In every form, you will see a certain amount in Box 7, which actually is the overall amount which were remunerated by an employer, which means that you will have to pay tax on this amount. It is crucial to take note that it will be all your responsibility to stay on top of your credit responsibilities if ever you fall to the income bracket.
In filling out your form, the company that you have worked for throughout the year will do the total on your earnings on each 1099 MISC form that you have. This is why throughout the year, it is important that you will collect and also track your earnings.
Calculating your Tax on the 1099-MISC income
Total your income amounts on the 1099 MISC form that you have and if ever you have more than one form, combine the total income on all of the forms.
Total the business expenditures that you also have kept track of and then subtract it from the total income you have because this will bring you to your net income.
Multiply on the net income amount by 0.9235 for you to calculate on your taxable income.
Do some check on the IRS tax table with regards to the amount of tax that you owe on the taxable income. Take note that the tax schedules will vary from every state.
You could now submit your 1099 MISC form electronically and take note that your payments need to be made by 8pm before January 31.