Question by Nancy Rodriguez: How does the 1099 form works?
I am an independent contractor I have a home base business.
If I make $ 1200.00 a month for 6 months and the other remaining 6 months $ 500.000. (These are from different clients monthly)
How should it be reported? Who reports it? How much will it be reported? How much should I put aside? and are these taxes only state taxes and if not what other taxes are inculded?
If not included what else do I have to pay? for ex: health care, unemployment, social security
Is it true there are more than one type of 1099 form? Why?
Answer by diaryofamadblackman
Each individual person that you contract with is suppossed to report your earnings on a 1099G and also send you copies for filing your taxes. There are various types of of 1099s but the G applies to you. You may want to also pay for State Disability Insurance as well. The best idea is to file your taxes on a quarterly basis as this tends to make it easier than coming up with all of it at the end of the year. Aside from your business expenses you might consider opening IRA accounts as part of those contributions are tax deductible and it helps with your retirement income.
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