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Life After Brown
1099 Contractor vs. LLC
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<blockquote data-quote="Red Headed Stranger" data-source="post: 5692415" data-attributes="member: 90351"><p>Several items that might help you....1) "Ideally," this friend should be paying you both as employees unless you are in this line of work already. If you only do this type of work for this "friend," you really aren't an independent contractor....but nevertheless you can receive the 1099 and each file a Schedule C (one for you and one for your wife) with the gross earnings listed from the 1099's. You both will pay the employee and the employer share of Medicare taxes (1.45% employee share + 1.45% employer share), the employee and employer share of Social Security (6.2% employee share on up to $160,200 worth of income (2023) + 6.2% on the employer share.) You will be able to make a deduction on Schedule 1 of the 1040 form for 1/2 of the self-employment tax. You will also be responsible for the federal and state taxes on your net income. 2) Don't forget to deduct for home office, mileage, liability insurance, office supplies, etc.; 3) You may be able to use part of your net income to contribute to a SEP IRA (20% of net self-employment income after the deduction for one-half of SE tax.) Forming a LLC is beneficial to avoid personal liability, but if you and your wife form an LLC together, you may need to file a partnership return (1065) in addition to your regular income tax (1040) return and that adds up to more $$ spent annually for tax preparation (depends on whether you are in a community-property state.)</p></blockquote><p></p>
[QUOTE="Red Headed Stranger, post: 5692415, member: 90351"] Several items that might help you....1) "Ideally," this friend should be paying you both as employees unless you are in this line of work already. If you only do this type of work for this "friend," you really aren't an independent contractor....but nevertheless you can receive the 1099 and each file a Schedule C (one for you and one for your wife) with the gross earnings listed from the 1099's. You both will pay the employee and the employer share of Medicare taxes (1.45% employee share + 1.45% employer share), the employee and employer share of Social Security (6.2% employee share on up to $160,200 worth of income (2023) + 6.2% on the employer share.) You will be able to make a deduction on Schedule 1 of the 1040 form for 1/2 of the self-employment tax. You will also be responsible for the federal and state taxes on your net income. 2) Don't forget to deduct for home office, mileage, liability insurance, office supplies, etc.; 3) You may be able to use part of your net income to contribute to a SEP IRA (20% of net self-employment income after the deduction for one-half of SE tax.) Forming a LLC is beneficial to avoid personal liability, but if you and your wife form an LLC together, you may need to file a partnership return (1065) in addition to your regular income tax (1040) return and that adds up to more $$ spent annually for tax preparation (depends on whether you are in a community-property state.) [/QUOTE]
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1099 Contractor vs. LLC
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