Question

How do I pay income and self employment tax on a new 1099 contractor position?

Forum|Forum|6 years ago
February 25, 2020
1 reply
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More specifically, my spouse and I both work full time for employers and are paid on a W2. In addition, there will be a 1099 for a second job as a consultant (started 1/10/20). I know that the 1st qtr estimated taxes are due. I know income tax is tax bracket based on total income. But do I add the estimated gross or net to our previous year AGI to have an idea of total income? For the self-employment tax, on the 1040SE do I just use the income from the 1099 position? I believe this is figured as (estimated gross 1099 income- deductions) x 0.50 = estimated annual tax. Take that number /4 for qtrly pmt amount. Can anyone tell me if I am on the right track at all?

For ease of numbers, lets say our combined annual w2 income is 80k (22% income tax bracket). 1099 shows 20k. expenses for contractor job is 2k.

I would need to hold back 22% of the 18k for income tax. ($3960) divide by 4 to get qrtly amount $990

For self employment tax: 20k-2k= 18k 12.4% of 18k ($2232) for Social Security, 2.9% of 18k ($522) for Medicare. Total self emp tax = $2754.00 Half deductible as employer portion. So SE tax owed is $1377. Divide by 4 to get quarterly SE tax payment amount of $344.25
Total to send as est tax qtr payment is $1334.25

Does this look right, sound right??? Am I completely off base?? lol

TurboTax Self Employed Online

DawnC

Employee

Your numbers look like good estimates to use. When figuring the Self-Employment tax, you only need to consider the 1099 income. Your SS and Medicare will be withheld on your paychecks (W-2), so you don't need to account for those amounts when figuring your estimated payments. Use your estimated net business income when figuring your estimated taxes.

If you are interested in comparing your calculations, there is a feature in TurboTax that will do these calculations for you, based on your income and expenses estimates.

You can print next year's estimated tax vouchers (Form 1040-ES) in your 2019 program:

Sign in to TurboTax and select the Take me to my return button on the main screen.
Search for 1040-es and select the Jump to link in the search results.
Answer No to the W-4 withholding question.
Select Prepare Now. You'll be asked a series of questions about your 2020 income. Answer them as best as you can.
When you get to the Print Vouchers? screen, answer Yes. They'll print with your federal return.