1099 Problems usually start out small. You decide that it's time to go into business for yourself, or become a subcontractor for another company. The first paycheck you receive, you notice that taxes are not being taken out, and you are considered a subcontractor. The world of self employment has its benefits and its draw backs. Making your own hours, and taking on the work you wish to is a definite plus, but now you have to pay your own taxes too!
The first mistake that self-employed individuals make is not learning the basics of a Profit and Loss statement. A profit and loss tells you what income you made, what your business expenses are, and then what you really made that month. This is a valuable tool when faced with 1099 problems, as you will have an understanding of what your income really is, and what you need to do to keep from compounding IRS tax debt.
The second mistake that self employed individuals make, leading to 1099 problems, is not understanding how to make estimated tax payments, or thinking they will be able to pay off their tax liability when their tax returns are due. Unfortunately, most people are unable to pay their taxes at the end of the year and still make enough to keep food on the table! Estimated tax payments, if made correctly should be made monthly, so the smaller amounts are easy to work into your operating budget and your lifestyle.
1099 Problems: What Is A Profit and Loss Statement?1099 Problems can start to be solved by a profit and loss statement. Each year when a self-employed person files their returns, a Schedule C is attached. This schedule shows their gross income, business expenses, and net income. The net income is what the IRS will use to compute your self-employment taxes. A profit and loss statement should be compiled monthly so when you go to make your estimated tax payments, you know exactly what you need to pay to prevent 1099 problems.
1099 Problems: What are Estimated Tax Payments?1099 Problems truly stem from not making Estimated Tax Payments, also known as Quarterly Tax Payments, or Quarterlies. Since your employers do not withhold taxes from your paychecks, you are responsible for claiming your income and paying taxes out of your earnings.
Estimated Tax Payments can be made by:
- Sending a check with a form 1040-ES each quarter of the tax year.
- Sending a check or money order to the IRS with your Social Security number and 1040-ES Payments and the current tax year on the memo line.
- Utilizing the secure IRS website www.eftps.gov
Making Estimated Tax Payments will help you keep from owing taxes at the end of the year, and solve a good portion of your 1099 Problems. Finding a reputable tax preparation professional to ensure your tax returns are filed correctly will also help you lessen the amount of estimated tax payments you will need to make and keep your 1099 Problems at bay.
1099 Problems: What Do I Do for the Back Taxes?1099 Problems can be solved by starting an installment agreement with the IRS that suits your budget and lifestyle. The IRS will insist that you start making estimated tax payments, and you should! This is securing your future and making sure you don't continuously get deeper in IRS tax debt. Once you start making regular Estimated Tax Payments, finding a tax debt resolution for your 1099 Problems is a matter of finding something that is designed with your business in mind. The last thing you want to do is tie up all your available income in IRS payments!
Getting a professional to assist you with making Estimated Tax Payments and finding a resolution for your 1099 Problems will save you money in the long run. Fill out the form below or call 1-800-590-5424 to speak with a professional in our network of companies that has years of experience in assisting people with 1099 Problems. You will only speak with companies that have a B or better rating with the Better Business Bureau. Each company is staffed with Tax Attorneys, Enrolled Agents and Tax Specialists who specialize in your type of 1099 Problems and will help you find solutions that really work!