Ask HN: Taxes and Consulting

#1

Post by weej » Wed, Jan 19, 2011, 1:31 AM UTC

Hi HN,

I do not usually consult for pay outside of my full-time job; however, I helped out a buddy this year and did a little contract work (web development) on the side. Thus, this is all new for me (consulting/taxes).

I got paid in checks directly from the company with no tax withholding (federal, social security, etc.).

What's the protocol for handling taxes in this case? Should I contact the company to get their tax ID and file myself, or are they supposed to or required to create a W-2 for me? Are there any additional IRS forms needed (federal level)?

Thanks in advance!

Re: Ask HN: Taxes and Consulting

#2

Post by nikosdimopoulos » Wed, Jan 19, 2011, 1:36 AM UTC

AFAIK, whatever income you get you are responsible for declaring it. You could either declare it as Misc Income in your return or if this is a continued relationship with the said company, they can issue a 1099 for you as a consultant.

There is plenty of information on the IRS website regarding this.

I hope this helps.

Re: Ask HN: Taxes and Consulting

#3

Post by cd34 » Wed, Jan 19, 2011, 2:14 AM UTC

You should get a 1099-MISC from them if the amount you earned was over $600. They should have requested that you fill out a W-9 prior to this which is a form that gives them your social security number (or federal ID number if you've got a company entity).

However, it is possible you might not get a 1099 even if you're supposed to receive one, and, you're still responsible for reporting it.

Re: Ask HN: Taxes and Consulting

#4

Post by brudgers » Wed, Jan 19, 2011, 3:48 AM UTC

I am not an accountant, but I recommend including a schedule C listing the income in your return. Just treat your business as a sole proprietorship. It will probably take about 15 minutes using TurboTax.

Although, the company is required to File a 1099 with the IRS, if you don't get a copy they don't suffer a penalty based on my research in 2003 (again I am not an accountant).

Re: Ask HN: Taxes and Consulting

#5

Post by weej » Wed, Jan 19, 2011, 5:08 AM UTC

I completely forgot about the 1099-MISC. Thanks folks!

Re: Ask HN: Taxes and Consulting

#6

Post by weej » Wed, Jan 19, 2011, 5:09 AM UTC

nikosdimopoulos wrote: post #2

AFAIK, whatever income you get you are responsible for declaring it. You could either declare it as Misc Income in your return or if this is a continued relationship with the said company, they can issue a 1099 for you as a consultant. There is plenty of information on the IRS website regarding this. I hope this helps.

Yes, it does. Thanks!

Re: Ask HN: Taxes and Consulting

#7

Post by weej » Wed, Jan 19, 2011, 5:10 AM UTC

cd34 wrote: post #3

You should get a 1099-MISC from them if the amount you earned was over $600. They should have requested that you fill out a W-9 prior to this which is a form that gives them your social security number (or federal ID number if you've got a company entity). However, it is possible you might not get a 1099 even if you're supposed to receive one, and, you're still responsible for reporting it.

Very helpful. Thank you.