I moved to the USA from England around 15 months ago on a marriage visa. In 2006 I worked as a freelancer for the last 2 months of the year, and earnt just enough to receive a 1099 form, but I filed jointly with my wife, who has a 'regular' job and had worked a full year. We received a tax refund of around $300.

For all of 2007, I also worked as a freelancer - albeit for only one company - and earnt $16,000, without any tax taken out. I also have around $1000 in transport and other costs that I think I can deduct. My wife and I were planning to file jointly again this year... but since I have never really understood the process, i'd appreciate some feedback on a) how I/we should go about it, and b) how much I am likely to have to pay/receive back in taxes to the IRS?

Thanks.

Thorzbo:

First, you should have been filing Form 1040-ES to pay quarterly taxes to cover your upcoming tax liability.

Since you did NOT do that, I suspect that you will end up writing a check come 15 April 2008. How much depends on how much your WIFE had withheld from her salary.

For sure, you will need to pay the self-employment tax at a 15.3% rate on the NET amount from your Shedule C. Assuming that your $1,000 in expenses is accurate, you will owe aout $2,300 in SE tax.

I will also assume that your salary, combined with your wife's, put's you in the 15% INCOME tax bracket. That's ANOTHER $2,250 for your salary alone.

All things considered, you should expect to pay somewhere in the $3,000 - $4,000 range come 15 April 2008.

STRONGLY recommend you get professional tax help. Your tax pro should model the possibility of filing you separate from your wife (may result in a lower overall tax bill).

The good thing is that you have almost three months to get the money together to pay the tax bill.

And of course there can be alot of tax deductions. A self employed person ( 1099 employee) can often deduct all sorts of things.

Wow. I just was not expecting it to be so much. I better start looking back through my receipts to see what I can deduct!

Thorzbo:

Your situations SCREAMS for professional tax help! I recommend you contact a local tax pro to help you.