Will someone with $2700 of "nonemployee compensation" on a 1099-misc form with no fed. tax withheld be eligible for a reurn and if so, what form should be filed?
I've already tried...
Answers
About the Expert
I have been an Enrolled Agent licensed by the IRS since 1978. I help people with tax issues as well as prepare about 600 individual, corporate and partnership returns per year. I have extensive tax research experience answering questions for CPAs and tax attorneys. I can prepare individual tax returns in two business days and business tax returns in five business days assuming I have all necessary information. Most returns can be electronically filed. View Profile
Dear Sir or Madam- Yes, you actually need to file a form 1040. 1099-MISC income is considered to be self-employment income. You will have about $400.00 of self-employment tax to pay. Self-employment tax is the social security and medicare tax that you would pay as an employee. Actually, as an employee half of the social security and medicare tax is withheld from your paycheck and your employer pays the other half. However, since you are considered to be self-employed you have to pay both the amount that would be withheld if you were an employee and the amount your employer would have to pay. To simplify matters a little bit, the self-employment tax is 15.3 percent of the $2,700. If you have no other income, you would not have to pay any regular income tax but would still have to pay the self-employment tax of about $400.00. If you had any expenses such as tools, office supplies, auto expenses, etc. that you paid out of your own pocket and were not reimbursed for to generate the $2,700 income, these expenses will reduce the $2,700 and will reduce the self-employment tax. You should file a 1040 tax return though. If you do not, eventually you will receive a notice from the IRS asking you why you did not file a tax return to report the $2,700 of 1099-MISC income. If you have an income tax in your state, you probably do not have to file a tax return because the self-employment tax is a federal tax not a state tax. If you have no other income, you probably do not have to file a state tax return. This varies greatly though among the states that have an income tax so you should check with your state department of revenue to find out how much income you have to have earned before filing a tax return is necessary. Hope this helps.
Accepted AnswerYou're welcome to leave a review.
Please login or register to rate this answer!