Understanding the 1099-MISC Income Form and its Calculations

28 May

Taxes are considered to be one fact in life that you simply cannot deny. There's definitely no way for you to avoid it. When you are a self-employed individual, it's actually your obligation to make sure that your credit responsibilities are all in check. Because you are a 1099-MISC income earner, you need to show some proof of income for your insurance purposes, loans, and taxation laws. When you are a freelancer, the 1099-MISC Taxes which you pay will go to Social Security and also in Medicare. If ever you were given a 1099-MISC form, below would be the things that will help you know more about it.

All self-employed individuals are known to as the 1099-MISC income earners are required to pay tax during each quarter to the IRS. For every January, you will be receiving a 1099-MISC form in your mail from each company which you have worked in the previous year. If you ever have worked for more than one company in a year, you will also be getting multiple 1099 MISC forms.

Each of these forms will reflect a certain amount in Box 7, which is the overall amount that you were remunerated by an employer, which means that you will need to pay tax on the amount specified. You should bear in mind that it is all your responsibility of being able to stay on top of your credit responsibilities if ever you fail your income bracket.

When it comes to filling out your form, the company which you have worked for throughout the year will handle the total process of your earnings on each of the form you have. This is why throughout the year, it is important that you will collect and also track your earnings.

How to Calculate 1099-MISC Taxes Income

1st Process

Total your income amounts on each of your 1099 MISC form and in case you have more than one form, you should total all of its income from all the forms.

2nd Step

Total your business expenditures that you have tracked and then subtract this from your total income and it will bring you to your net income.

3rd Process

Multiply the net income amount by 0.9235 so you are able to calculate the taxable income.

4th Step

You should check the IRS tax table for the amount of tax which you owe on your taxable income. Take note that the tax schedules will vary from every state.

You can actually now submit your 1099 MISC form electronically and payments need to be made by 8pm before January 31. For more facts about taxes, visit this website at http://www.dictionary.com/browse/tax.

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