[Lancelot82]

Hi all,

I have been working fulltime at a university. I am also working parttime as an independent technical consultant for a company. I got w2 from university and 1099misc from the company. W9 that I submitted for the consultant job classifies me as "Individual/Sole proprietor" for federal tax. NOW, should I enter my 1099misc as "other income" OR "self employment-business"?

This is not really a business. I am giving the company some advice on their products and the project is going to end this month and I won't be working as a consultant anymore at the end of this month.

Thanks,

[MukatA]

1099-misc (nonemployee compensation) income: You are self employed or independent contractor. You will report your income and business related expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is subject to SE tax at 13.3% (this is shown on line 57 of Form 1040). For this you will use schedule SE (Form 1040). Even though schedule C treats you as a self employed, which may not be correct for you, this is how you report this income.
Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor

[Lancelot82]

Thank you very much for your response!
The problem is if I don't enter 1099-misc and only enter my w2, my federal return (the money I get from IRS) is $4600. When I enter my nonemployee compensation on 1099-misc (for an income of $19000), it appears that I owe $1000 to the IRS. Does that mean I am paying $5600 for a $19,000 income. Is not that amount very high (higher than 13.3%)? Or am I making a mistake?

[joypulv]

If you were paid 19K on 1099 basis, I suspect that you do owe 5,600, unless you can come up with expense deductions on Sch C.

[Lancelot82]

I don't owe 5600. I owe 1000 but since I suppose to get 4600 back for my full-time job, it looks like 1099 job takes 5600 from me. Not sure why that high.

[joypulv]

You just said that you did, so I'm confused.
If you get back 4600 without the 1099 income and owe 1000 with it, that's 5600, no?
Taxes on 1099 income don't stop at SE 13.3%.
You don't say what your other income amount is, and so on, so it depends on all that.
AND ON DEDUCTIONS.
Here's the deal: every day throw every possible work related receipt into a shoe box and at tax time enter as much as you can without feeling horribly guilty or afraid of audit onto Sch C.
That's the only way to reduce the very high taxes on contract work.

[Lancelot82]

I asked an expert. The reason for high tax is 13.3% for SE tax and there is also a 15% tax for income. So it adds up to 28-29%. For this reason I need pay a lot of tax. You are right deductibles will help reduce the tax.

[AtlantaTaxExpert]

It will also help if you keep track of your expenses on a spreadsheet.