I began doing a lot of free lance work for a local nightclub. A considerable amount. It was working out great, because I am still a student and the work fit my schedule great.

Here's the problem. I never really looked into it and now I realize I'm looking at a hefty payment.

Somebody told me that because my total income from the business was less than $10,000 from this company, I would have to pay the percentage but would then receive a refund.

I have a W-2 from one other job, first half of the year. The 1099 with the current company covers August-December. $9,700 total.

I have been keeping tabs on my expenses. And I know I need to switch over to W-2 as soon as possible.

But in the mean time, what should I do as far as my 2006 taxes go?

Thanks.

Since this sounds "off the books" I doubt that you paid any tax on the $10,000 in advance as you should have. When you file you will owe. The IRS will expect quarterly payment of future free lance work or you will face a fine for paying late.

Quote:

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Originally Posted by ballengerb1

Since this sounds "off the books" I doubt that you paid any tax on the $10,000 in advance as you should have. When you file you will owe. The IRS will expect quarterly payment of future free lance work or you will face a fine for paying late.

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And as far as what I owe, am I looking at over 15%?

I don't know what your w-2 says from the other job, were you paying taxes via withholding on that job. I'm thinking its going to be closer to 25% than 15%.

ALCON:

The self-employment tax on the 1099 income is 15.3%.

The income taxes (state and federal) depends on all income plus which state you live in, but it could approach 35%.

Total tax could be as high as 50%. :-(