Just a question about tax, for the new job...

[gredodenda]

I found the new job as a sale rep, and I was told that I have two options to file a tax. 1099 or they file the tax for me. Now, I'm clueless about tax because I worked for my parents shop for years and they took care of the tax for me, I never had to worry about it.

What is 1099? what is that mean that when my boss said they can file tax for me?
what is the advantage and disadvantage of these two method of filing?

I know it's not a tax season, but had to know now and be prepared....

anyone with tax experience, please help me, advise me, teach me......
much thanks all

 

[EagleKeeper]

Originally posted by: gredodenda
I found the new job as a sale rep, and I was told that I have two options to file a tax. 1099 or they file the tax for me. Now, I'm clueless about tax because I worked for my parents shop for years and they took care of the tax for me, I never had to worry about it.

What is 1099? what is that mean that when my boss said they can file tax for me?
what is the advantage and disadvantage of these two method of filing?

I know it's not a tax season, but had to know now and be prepared....

anyone with tax experience, please help me, advise me, teach me......
much thanks all

1099 is the same as being self employed as your own boss. You are responsible for ALL your taxes to all governments.

there are two big differences between a 1099 and a W2 (Employee)

A 1099 requires you to also pay the employers share of the SS tax (aprox an additioanl 7%) You should also pay all taxes on a quarterly basis. The best way is to determine a set percentage of your payment (~20-30%) and put it aside where it is untouchable. Then at the end of each quarter, send all the funds collected over the quarter in the "tax withholding" account to Uncle and any other required governments (State/Local, etc).

With a W2, the employer takes all that responsiblity for you in terms of withholding the taxes and sending it to the proper taxing authority.

The big advantage of a 1099 is that you can deduct almost anything that is an expense related to the work. The definition of an expense can be stretch nicely.

Dig up the tax thread from this year in the archives and have a long read. It will be worth it. Many suggestions on what can be expensed off a 1099 are provided.

Some quick examples:
Educational costs
Transportation (auto mileage, repairs, payments, airline flights for business type requirements based on your determination)
Internet
Computer
Insurance (Property, business, auto, medical)
Some expenses based on home use for the work (utilities,rent, etc)
Meals / Entertaiment with clients/customers
Gifts to above.

 

[gredodenda]

thanks you so much EagleKeeper, your input was just what I needed to know...

thank you.....


gredodenda