Have Tax Questions? Ask a Tax Expert for Answers ASAP
Hello and thank you for using Just Answer,That would depend on her expenses. As an independent contractor she would show her income and expenses on the Schedule C. If she keeps track of her expenses she would be able to use those to reduce the Gross amount. Only the Net would be taxable for income tax and the Net amount over $400 would be subject to Self Employment. She needs to keep track of those regardless of whether you pay her in cash or check.
Her self employment tax would be around $350 even without any expenses.
Half of that would be an adjustment for her so $2150 would be her income
Now she gets down to what other income she has and the total to decide her rate.
Thanks. If someone makes at least $400 for the year in 1099's, are they automatically considered self employed?$2150 would be her taxable income for 2013? Can you give me a basic idea of her rate, say she makes $10,000 for the year as self-employed?
Her rate would be set on her filing status and that would be after her exemptions and deductions.If we use $10,000 as taxable income and she is single her tax rate would be 15%
Thanks, XXXXX XXXXX married. How does that affect the rate?
A person has to pay self employmen tax if they have Net self employment income of $400 or more
It would be 10% but the married joint means they add their income together
So unless the couple together had $10,000 taxable income therate is not going to be correct
ok, thanks. She asked to be paid in cash. how would you recommend accommodating her?
If you wish to do that you certainly may. Just make sure that you retain a signed voucher for the amount
That way you know what to deduct in your business and to fill in fo rthe 1099MISC
Just in case there is a question from her later on the amount on the 1099MISC
Ok. So what does it mean to pay her cash, then? Do I still give her a 1099?
And is the signed voucher just an agreement? What does it say?
The voucher could be as simple as (Company Name) compensates (Her Name) $XX for this date
have her sign you sign and she gets copy and you get copy
The voucher is for you later to be able to validate your expense
because you will not have a cashed check to do this
This is what I was planning to give her. If I have her sign a voucher, then give her a 1099 in January, isn't she required to include it in her tax return?
Even if you did not give her a 1099MISC she is required to report
but that is not your problem
Ok. I think that is what she is trying to avoid. So is there anyway I can legally help her out?
I guess not, lol.
You mean to legally help her evade tax
You only need to do what keeps you compliante
pay her, get proof, and report the paymenst as required by you on the 1099MISC
what she does then is her responsibility
Do you think I should have every teacher sign a voucher in addition to issuing them a 1099?
Do you not pay them by check?
Your check and whatever agreement you have with them should be sufficient
Ok. Thanks again.
I said voucher for her
becuase you will not have a check
Your positive rating is always thanks enough.
Of course! Are you based in NY
No, a little more south