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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > 1099
Expert: Glenn D Schnabel
Date: 9/5/2008
Subject: 1099
Question
My son has a job being paid on a 1099 for $10hr now has been asked to also do tech work besides the office work he has been doing or the last two months..this involves using his truck to do the repairs and going around 100 miles per day..my question is how does he figure what to take out of his money so he does not owe taxes at end of year plus his boss says he can write off all his expenses...he has never done this before so really needs to know if this will be worth it or a lot of trouble for him ...he is 21 and this is the first time he has had this type of job
Thank you for your help
Answer
Audrey,
Thank your for your question.
1) What type of tech work does he do?
Its a way the employer does not have to pay Fica and Medicare and put him on a W-2.
If he has no option , then at the end of the year he will file a form 1040, 1040 Schedule C and Schedule SE
He will be considered a subcontractor:
A)Auto expenses (If he starts work from the office, he can write off the mileage he runs up My suggestion if that he goes from home to the office and then when he is finished going back to the office and to home.
This way he will only have to reduce his mileage by his round trip from home to his work place and back. He gets 58.5 cents per business mile as a tax deduction or his actual expenses by his business percentage plus the depreciation of his vehicle times the business percentage. Have him keep a log.(This will help him compute his business percentage and his total miles traveled)
B)He can write off if he uses a cell phone. Take from 51-80% of the cell phone charges depending on how often he uses his cell phone
C)He may be able to write off small tools he does not get reimbursed for.
D) If he out on the road, he can write off his meals
So you take income less expenses (Cell phone usage, auto expense, small tools,meals, maybe some pens and paper-office supplies) and the difference is net income.
Then he has to pay 15.3 percent for his fica and medicare and the employers share. This is 15% times his net income.
So . in effect he would pay 30.3(15.3 +15 )percent for Federal Income taxes and SE tax and whatever the state income tax (from 3 to 8 %)
It very possible if he keeps good records he could lower his income tax rate.
It also possible after taxes he is left with $6.47 per hour. Its also possible he could wind up with more expenses then income which will leave him with no taxes due. This probably will not happen.
He should pay estimated taxes form 1040ES for Federal and the respective estimate for state.
Hope this is helpful
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