[pchastain]

I've been reading a few posts on this site to get a general idea of 1099 reporting expectations and tips for quarterly payments (estimates) and comparable bill rates. Thanks to all for helpful info!

One thing - I couldn't get a handle on the clock for the "safe harbor" for 1st year reporting and what that really means. Bottom line - I was a W-2 employee through Sept 07 and will begin consulting work on a 1099 agreement starting next week. I will have some moderate business expenses (home office and travel) and I have considerable mortgage and property tax deductions to consider.

If I pay a quarterly estimate on Jan 15, 08, how do I compensate for potential deductions (would rather drop that cash in an IRA than wait for payback from IRS). What would be expected/smart to do in the 1st year with "safe harbor"?

Thanks, p. chastain

[AtlantaTaxExpert]

The safe harbor in your case means that you will NOT be liable for under-wthholding penalties as longas you paid at least as much in tax as your 2006 tax return said you owed.

However, after the first year, you MUST begin to pay quarterly estimated taxes using Form 1040-ES.

[AMANDARAYBORN]

I have been working for this company since January of 2007. I am a manager of a trailer park for them, My pay is suppose to be 900 a month , but they take 400 for my rent, then give me a check for 500 on the 15th. No taxes are being taken out and it reads as a bill. They stated to me yesturday that I would be getting a 1099 at he end of the year. Does this mean I will have to pay taxes?

[AtlantaTaxExpert]

At a minimum, you will have to pay taxes on the $500 per month, and probably on the full $900 per month.

You will have to file Schedule C and Schedule SE to account for the 1099 income.