My husband will be working for a design and construction company. He will be receiving a 1099 at the end of the year. And we are new to this. The job consists of the main company telling them where to go (usually out of state in personal vehicles), what needs done, timeframe it needs done, etc. Would my hubby be considered self-employed and since it is a 1099 should they report this under box 3 as other income so it wouldn't be subjected to a self-employment tax or would it go under box 7 as non-employee compensation. He is required to fill out a w-4 for this company also by the way, but won't receive a W-2. He will also receive per diem pay along with any reimbursements such as gas, tolls, etc. What should we expect at the end of the year in regards to taxes? We have been privey to receiving a fairly large refund thanks to 2 kids and all the goody credits that come with them. But I am trying to prepare for the tax time.

Thanks
Keri

Keri:

Your husband will be considered an independent contractor. If the per diem is TRUE per diem (a set amount received per day with no need for rceeipts or accounting for the costs), then the reimbursement is under a non-accountable plan, which means the per diem will be taxed as well.

You will file a Schedule C and will be able to claim mileage and other daily costs or deduct the per diem rate for the locale in question. These per diem rates can be found in IRS Pub 1542.

You should put away at least a quarter of your husband's pay for taxes, as your husband will have to pay the 15.3% self-employment tax on top of the income taxes.