contract employee
Can I use FreeTax USA to do my own taxes if I'm a contract background investigator, a 1099 employee?
Answers
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Yes! Our software is set up to assist taxpayers in this situation.
As a 1099 employee, you are considered an independent contractor or self-employed. Your 1099-NECs and 1099-MISCs for this work are reported on a Schedule C as business income.
The sections where you enter this information can be easily reached when filling out your return by clicking 'Income' on the menu bar and selecting '1099-NEC/1099-MISC' and 'Business Income (Schedule C)' -
Ok thank you. Additionally, since I am withholding federal taxes, medicare and SS taxes on my own, do you recommend a percentage I withhold? I typically claim ZERO, SINGLE on my W-4's. Though I am married and my spouse works.
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The IRS provides and interactive tool to help you determine your withholdings from your employer that is withholding wages from your income (this is a part of Step 2 of the W-4 that you file with your employer). They indicate that this estimator will give you the most accurate withholding for steps 2-4 when you or your spouse have self-employment income. Here is the link:
It may also be beneficial for you to look at the estimated tax worksheet the IRS provides. Estimated tax is the method used to pay tax on income that is not subject to withholding. If the amount of tax your employer withholds is not enough to cover your total tax for the year, you may need to make estimated tax payments. The IRS indicates that you would need to make these payments if you expect to owe $1,000 or more when you file your tax return. Here is the link, the instructions for the worksheet start at the bottom of page 5 and the worksheet is found on page 8 of the pdf on this page.
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Thanks again. Lastly, I assume there are things I can write off now that I am self-employed such as home office etc. Where can I find the most accurate info on what can and can't be write offs?
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We always recommend using resources and information published directly from the IRS.
You can find details on business expenses in Chapter 8 of Publication 334 (Tax Guide for Small Business).As well as in the instructions for Part II of the Schedule C:
