Tax Advice

Forum|Forum|1 year ago
January 22, 2025
1 reply
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I receive a 1099 for work i do as a side job. I have taxes withheld, but I also pay someone else, in cash, half of the income I receive, to help me do this job. Are they required to also pay taxes on the cash they receive? And do they have to report it to the IRS?

Best answer by DaveF1006

I don't own the business, the taxes are deducted during payroll from the actual company, prior to me getting paid. It's paid out the same way as my regular job is, which I receive a W2 form from. The only difference is I get a 1099 NEC from the part time cleaning job and that is what is taxed.

Yes, but you will still need to issue them a 1099 NEC if you paid them over $600. You will issue the 1099 NEC in your name and social security number and then you will be able to deduct the amount you pay them. This is called a contract labor expense and you would report this to offset some of the income on your 1099 NEC.

Once they have the 1099 NEC issued from you, they can then report the 1099 NEC on their own personal tax return. Please view this IRS link for instructions on filing the 1099 NEC.

Here is a link you can use to create your 1099 NEC to give to your helper. Keep in mind, when you file it, you would use your own name as the name of the business and your social security number to create the business profile. Once the profile is complete, you can issue the 1099 NEC to your helper. You will need their Social Security Number to complete the 1099 NEC.

MayaD

If they are required to file a return, they need to report all income.

Per IRS:

Who must file:

Most U.S. citizens or permanent residents who work in the U.S. have to file a tax return.

Generally, you need to file if:

Your income is over the filing requirement
You have over $400 in net earnings from self-employment (side jobs or other independent work)
You had other situations that require you to file

It might pay you to file even if you don’t have to.

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Cindy MAuthor

I simply want to know if they are required to pay taxes on already taxed income? I work for a cleaning service part time and pay someone to help me from my own pocket but the money I received has already been taxed for federal, social security and Medicare. I understand that they are required to file for their income. My question is to decide if we need to have them paid directly from the company to avoid double taxes on that same income or are they safe from taxes considering it was already taxed.

Vanessa A

Yes, they are required to pay taxes on the income that they receive that you are paying them, however, you should not be paying your own personal taxes on that money as it should be deducted from your actual income.

You should issue the person you are paying a 1099 (if they are not considered an employee) or if they are an employee, then you should issue them a W-2. If you give them a W-2, then you would be responsible for payroll taxes as an employer and deducting their FICA taxes from their wages as well. The amount you pay them will then be deducted what you receive as part of your self employed expenses. You will then only pay your Medicare, Social Security and federal taxes on the amount you actually keep which is your net profit.

Taking Business Expense Deductions

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