Easy Ways to Calculate your 1099-MISC Income Forms
One of the facts that’s present in life that you simply cannot deny are taxes. There’s definitely no way for you to avoid it. If you are ever self-employed, it is essential that you make sure that your credit responsibilities are all in check. Because you are a 1099-MISC income earner, you need to show some proof of income for your insurance purposes, loans, and taxation laws. In case you are a freelancer, the taxes which you are going to pay will go to the Social Security as well as in Medicare. In case you are wondering as to what is a 1099-MISC form which you have obtained, below would be some things that you should know about it.
All the self-employed individuals or known in other terms as the 1099-MISC income earners needs to pay tax for each quarter to the IRS. For every January, you will be receiving a 1099-MISC form in your mail from each company which you have worked in the previous year. If in case you have worked for more than one firm in a single year, the number of forms that you will get is equal to the company you have worked with in that year.
For every form, you will be able to see a certain amount on it on Box 7, which would be the overall amount that have been remunerated by the employer, which means that you need to pay tax on the amount that was specified. It is crucial to take note that it will be all your responsibility to stay on top of your credit responsibilities if ever you fall to the income bracket.
When filling a form, the company which you have worked for throughout the entire year will do the total of your earnings on each of the 1099 MISC form. This in fact is the reason as to why it is very important that you also collect and track your earnings.
Doing the Calculations
Total your income amounts on each of your 1099 MISC form and in case you have more than one form, you should total all of its income from all the forms.
Total the business expenditures you tracked and subtract it from your overall income and it will result to your net income.
Multiply on the net income amount by 0.9235 in order for you to end up with your taxable income.
Do some check on the IRS tax table with regards to the amount of tax that you owe on the taxable income. You should bear in mind that tax schedule will actually vary from each state.
You could now submit your 1099 MISC form electronically and take note that your payments need to be made by 8pm before January 31.