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View Full Version : Tax question for all you independent contractors slash freelancers



m4a2000
12-28-2012, 04:15 PM
So this past year I made about $800 in contractor work, $600 of that from out of state, and my gross pay from my normal job was $14,023. My total deductions were 2,832 with nearly two thrids of that going to Fed income tax.

I think my questions are what forms will I need besides my W2, am I looking at no to negative return on my taxes, how long should I wait on forms from the companies I worked for, and do any you have words of wisdom?

Snosrap
12-28-2012, 05:48 PM
The clients should send you 1099's. I think by law they need to provide those to you within 30 days into the new year.

meshpig
12-29-2012, 01:10 AM
That's an absolute and utter disgrace. If you lived here you'd be paying no tax at all with those figures and the AUD is above par with the USD... America has a real problem with this Grand Old Party nonsense. How do you expect to get up and going paying tax on that?

BigHache
12-29-2012, 01:18 AM
I believe $500 is the cut-off for not paying taxes. Personally I'd rather have an income to pay tax on than not have an income high enough to be required to file.

Yes clients technically are supposed to send you 1099's. You will need Schedule C to file Self-Employment Tax. Tally that up and enter that value on the appropriate line on the W2 for Total Self-Employment Tax.

meshpig
12-29-2012, 01:31 AM
I believe $500 is the cut-off for not paying taxes. Personally I'd rather have an income to pay tax on than not have an income high enough to be required to file.

Obviously but whoa that's steep. a measly $500? Again so much for the land of milk and honey... here it's effectively $70 000.

Marcia
12-29-2012, 01:44 AM
And don't forget that Schedule C allows you to deduct business-related expenses (equipment, software, subscriptions, dedicated office studio space,etc.). It shouldn't be too difficult to zero out your freelance income so you don't have to pay tax on those earnings.

Snosrap
12-29-2012, 08:40 AM
That's an absolute and utter disgrace. If you lived here you'd be paying no tax at all with those figures and the AUD is above par with the USD... America has a real problem with this Grand Old Party nonsense. How do you expect to get up and going paying tax on that? He most likely won't pay a dime in federal/state taxes as he is well below the poverty level. 47% off all americans pay no fedaral or state taxes because their income is either low and/or they have a lot of deductions.

DrStrik9
12-29-2012, 09:38 AM
Taxes: proof that we don't really "own" any of it. :D

m4a2000
12-29-2012, 03:36 PM
He most likely won't pay a dime in federal/state taxes as he is well below the poverty level. 47% off all americans pay no fedaral or state taxes because their income is either low and/or they have a lot of deductions.

Errr... I just looked at some forms last night and at best I'll get $770 back of the $1990 I paid to FICA, MediCare, and the Federal Income Tax... So how am I not a tax payer?

Snosrap
12-29-2012, 08:41 PM
Errr... I just looked at some forms last night and at best I'll get $770 back of the $1990 I paid to FICA, MediCare, and the Federal Income Tax... So how am I not a tax payer? I'm not saying your not a tax payer. Anybody that holds down a job and is being paid by proper means (no cash under the table) has taxes withheld from their check. But at your level of pay your tax liabilty will probably end up being very little - if any. FICA(Social Security) and Medicare are not taxes - they are "retirement" benefits and nobody gets refunds on those.

meshpig
12-29-2012, 09:13 PM
He most likely won't pay a dime in federal/state taxes as he is well below the poverty level. 47% off all americans pay no fedaral or state taxes because their income is either low and/or they have a lot of deductions.

Thanks Snosrap. Ah, that's the now famous %47... remarkable in itself as you can hardly be expected to pay tax if you barely earn anything. Different issue though with the $500 limit on money you earn as a self employed entity as m4a2000 appears to be paying a business tax incommensurate with his personal/actual income.

JonW
12-29-2012, 09:16 PM
That's an absolute and utter disgrace. If you lived here you'd be paying no tax at all with those figures and the AUD is above par with the USD... America has a real problem with this Grand Old Party nonsense. How do you expect to get up and going paying tax on that?

& we get Medicare at next to nothing as well, a percentage of our income! Rock up to any emergency hospital, chainsaw accident, fallen off bike, RSI from Lightwave. They do x-ray, medication, the lot, & it doesn't cost you a cent!


Warren Buffett apparently said it's not right that his secretary pays more tax than he does!

DigitalSorcery8
12-29-2012, 09:32 PM
& we get Medicare at next to nothing as well, a percentage of our income! Rock up to any emergency hospital, chainsaw accident, fallen off bike, RSI from Lightwave. They do x-ray, medication, the lot, & it doesn't cost you a cent!


Warren Buffett apparently said it's not right that his secretary pays more tax than he does!

But you do pay higher taxes though, don't you?

Americans are used to paying relatively low taxes - when you compare them to the taxes the rest of the world pays. And they scream bloody murder about the "high taxes" we actually pay. They want all of these services - medicare, roadways, bridges, social security - etc. - but they don't want to be "taxed" for them.

I'm all for the higher taxes and better services. It's going to take some time before this country gets its act together and we see decent services for everyone.

meshpig
12-29-2012, 10:01 PM
But you do pay higher taxes though, don't you?

Americans are used to paying relatively low taxes - when you compare them to the taxes the rest of the world pays. And they scream bloody murder about the "high taxes" we actually pay. They want all of these services - medicare, roadways, bridges, social security - etc. - but they don't want to be "taxed" for them.

I'm all for the higher taxes and better services. It's going to take some time before this country gets its act together and we see decent services for everyone.

No, not really high. The average wage earner earning say around $60 000 is way beneath the highest tax bracket of %46.5 (but those who are there rarely pay anything of the sort), and pays nothing on the first $18 000 or so.

We have the die-hard privateers here too who just want the blanket ideology of "private enterprise is better", but it fails over and over because some things are best done with private money and others with public... not just publicising private debt which is so often the case. I mean whoa the taxpayer... half the current so called deficit here, around $18 billion could be resolved if the top %5 of income eerners paid a few cents more on the dollar. I'm talking fatuous idiots like Gina Rinehart never mind Warren Buffet.

F'ing nothing to do with soggy old stories about Socialism...:)

JonW
12-29-2012, 10:52 PM
I have always used an accountant, it's roughly $1100 a year. But he did whittle down my income to under $27k & at this level I got the low income rebate of $1500 (system changing this year). Got a few franking credits (company tax pre paid on shares at 30%, useful for low income people, (works well for Australians) buy shares instead of scratchies & lottery tickets! you win every year!).

So tax rate is about 6% or 10.2% including my accounts fee. & add $400 for Medicare. Lets hope they include dental in the next few years. It's cheaper to have dental care & keep people out of hospitals as so many health issue start with teeth.


There is a good saying "It's easier to save a dollar than earn a dollar" Over the years I have always been careful, paid the mortgage as quickly as I could (back in 89 started at 17%!), but have never felt I've gone without!

There are so may different ways taxes are collected in different countries that one just can't look at income tax in isolation.

meshpig
12-30-2012, 12:38 AM
There are so may different ways taxes are collected in different countries that one just can't look at income tax in isolation.

Nicely put!

marvick300
12-31-2012, 04:11 PM
So unless things have changed this year I know that the cutoff for the 1099’s is at $600. This means that if you make more than $600 from one company in a given year they are required to send you a 1099 and you will need to pay taxes on it. If you only are making $590 that year than most likely they will not send you the 1099 and you don’t “need” to pay taxes on it. Now you will also want to fill out a Schedule C, which like Marcia said will allow you to deduct business-related expenses. There is a few thinks to point out here also remember, you can take a depreciated value of these items over I think 3 years. This can help with next year’s taxes when you don’t have a new camera and editing software to offset your income, but I would talk to someone who does taxes to help you out on this one.

Marcia
01-01-2013, 12:09 PM
Good advice, Marvick. We're cheap and use the H&R Block tax software which has a user-friendly-ish question-and-answer style interface, automatically fills out the proper forms, keeps track of your amortization schedules (assuming you use their software every year), calculates everything properly, and alerts you to red flag audit issues. Also guarantees payment of any taxes owed due to their error. Not the same expertise and insight you get with a real accountant, but has definitely reduced our tax liability and resulted in refunds most of the last 10 years. Not bad for under $100.

As for the 47%.... next time I hear someone refer to people as "the makers and the takers"... :twak:

m4a2000
01-04-2013, 03:24 PM
So unless things have changed this year I know that the cutoff for the 1099’s is at $600. This means that if you make more than $600 from one company in a given year they are required to send you a 1099 and you will need to pay taxes on it. If you only are making $590 that year than most likely they will not send you the 1099 and you don’t “need” to pay taxes on it. Now you will also want to fill out a Schedule C, which like Marcia said will allow you to deduct business-related expenses. There is a few thinks to point out here also remember, you can take a depreciated value of these items over I think 3 years. This can help with next year’s taxes when you don’t have a new camera and editing software to offset your income, but I would talk to someone who does taxes to help you out on this one.

If that's the case then I should be OK. I also forgot that $200 of that $800 was from 2011. So, out of that $600, $200 was from a contract in state and the rest was from 2 contracts from the same company out of state. And if worse comes to worse I have a family friend who use to be an accountant after he left the navy.