Tax Planning/Tax question- consulting income
My friend and I did a consulting job for a local nonprofit organization and made appx $5000. The organization will 1099 under my friends social sec # because we did not have a business tax I'd #. Is there a way that we can split the tax burden? As it is now she will receive the 1099.
Also appx how much will we have to pay in taxes on $5000 ($2500 each)? Both of us are in the 25% tax bracket.
Thank you for your assistance in this matter.
Your friend will have to pay all the tax on the $5k. The only way to split is for you to pay her half based on her income and tax return (not very clean). You could also ask the non-profit to give you corrected 1099's for each of your social security numbers. It's impossible to estimate the tax on the $5k, it depends on your friends taxable income. Unless this is a unique, one time event, I would ask the non-profit to give corrected 1099's - otherwise you don't get to deduct any business expenses against that income (gas, lunches, supplies, etc.) So, assuming a one time event, you could take a program like TurboTax and plug in/unplug the $5k and see what her tax exposure is and split that.