Quick 1099 Qestion

[Cal166]

Doing some consultant on the side. I'm currently on 1099 with them and received my first check today...they deducted close to 30% of my paycheck and looking my pay stub, Withholdings for Federal and State is $0. But under Adjustments, all it said is 1099 and the Amount I am getting and the Original Amount was suppose to get before the deductions.

 

[DaveSimmons]

They may be collecting for the IRS ("backup witholding" or something like that) depending on how you / they filled out the tax info form they used to collect your SS #.

If so, you'll report this similar to an estimated tax payment (which you may also need to do) and it will work as an advance payment just like W-2 witholding.

You still need to worry about any city/state taxes and you make need to make an estimated tax payment on them to avoid penalties at the end of the year.

Call their HR or office manager and ask.

(When I was doing consulting I filled out the tax info form to not have any witholding by them, and made estimated tax payments instead. Also, you may be able to deduct many expenses if you treat this as a side business and file Schedule C for form 1040)

 

[Cal166]

You are right, when I filled out the W-9 Form, I did not check off the "Exempt from Backup Withholdings" because I read in the bottom of the W-9 Form and I am not eligible:

"Generally, Individuals (including sole proprietors) are not exempt from backup withholdings.........."

So at the end of the year, all I need to worry about is paying off my State and City taxes?

EDIT: Then how come they don't put the 30% they deducted in the Federal Withholding Section instead of showing it nowhere?

 

[Cal166]

Anyone else have any input?

 

[Cal166]

One more try

 

[altonb1]

When I worked 1099, my check was for the exact amount of money earned. I am not sure what they deducted from you, but I would definitely contact the HR/payroll dept.

 

[IAteYourMother]

I was going to say Siege of jerusalem, but i guess I'll just walk away

 

[bctbct]

That seems odd. I thought a 1099 was filed quarterly to show how much you received. I have never heard of deductions from the payee.

 

[KrillBee]

yeah, i never got anything deducted on my 1099 either

 

[Cal166]

Bump for the working crowd.

 

[manlymatt83]

I thought MOST people were exempt from backup withholding.

 

[mk52]

I find that odd too. A consultant I know, who is on a 1099, gets paid gross and simply pays estimated tax each quarter himself.