I have been offered a part-time tutoring position. I would be working as an independent contractor. I’m not sure if this would even be a consistent income but I believe that over time I would be increasing the hours I tutor. I’d like to know what is the proper procedure for reporting small amounts of income like this. Would it fall under self-employment where I’d have to pay estimated quarterly taxes. Is there a minimum you have to expect to earn before this is a requirement? Thanks!
Forex Trading Software Reviews
Comments
If you are working as an independent contractor through a company they will provide a 1099 form if you make more than $600 in a year. You will then use that to report your income on your annual taxes.
In addition to reporting the income be sure to keep track of any expenses related to the tutoring that you are not reimbursed for (i.e. gas to get to the jobs, mileage, etc.) Some of that can be written off as expenses if you itemize your taxes. Talk with a tax advisor about the sorts of things you can itemize so you know what to track throughout the year.
You should be issued a 1099 stating self-employment income. You will report it using a Schedule C with your return.
Report it on a Schedule C. If you usually get a refund & you are making very little, you probably won’t have to pay in any extra each quarter. You need to do this no matter how little income it is. Don’t forget to keep track of your related expenses, too.
Who Must Pay Estimated Tax
If you had a tax liability for 2006, you may have to pay estimated tax for 2007.
General Rule
You must pay estimated tax for 2007 if both of the following apply:
-You expect to owe at least $1000 in tax for 2007 after subtracting your withholding and credits.
-You expect your withholding and credits to be less than the smaller of;
-90% of the tax to be shown on your 2007 tax return, or
-100% of the tax shown on your 2006 tax return. Your 2006 tax return must cover all 12 months.
You would file Form 1040-ES and send with your payment. Quarterly taxes are due 4/15, 6/15, 9/15 and 1/15.
You’ll report the income on a schedule C, or C-EZ. Be sure to keep track of your expenses, since you can deduct them. You’ll also need a schedule SE to calculate self-employment taxes on the net from the C or C-EZ. The numbers from the bottom of the C and SE will transfer to your 1040.
If you don’t expect to owe at least $1000 in total taxes (income and self-employment) over what you have paid in from withholding or other methods, then you don’t have to file quarterly estimated returns.
