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 earned 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 earned $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 a lot 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.