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Frequently Asked Tax Questions

Interest/Dividends/Other Types of Income - 1099-MISC, Independent Contractors, and Self-employed


Rev. date: 1/2010


I am self-employed. How do I report my income and how do I pay Medicare and Social Security taxes?

previous topic occurrence Estimated Tax for Individuals next topic occurrence
previous topic occurrence Federal Income, Social Security, and Medicare Taxes next topic occurrence
previous topic occurrence Medicare next topic occurrence
previous topic occurrence Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes next topic occurrence
previous topic occurrence Self-employment next topic occurrence
previous topic occurrence Social Security and Medicare Tax Rates next topic occurrence
previous topic occurrence Social Security and Medicare Taxes next topic occurrence
previous topic occurrence Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) next topic occurrence
previous topic occurrence Tax Withholding and Estimated Tax next topic occurrence

You are a sole proprietor if you are the sole owner of a business that is not a corporation:
Note: The Federal tax system is based on a pay-as-you-go plan. Tax is generally withheld from employees' wages or salary before they get it. However, tax is generally not withheld from self-employment income. Thus, you may be required to make estimated tax payments. Publication 505, Tax Withholding and Estimated Tax, provides information on making estimated tax payments.

Rev. date: 1/2010


I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed, I do not have a business. How do I report this income?

previous topic occurrence Employee - Independent Contractor next topic occurrence
previous topic occurrence Miscellaneous Income (Info Copy Only) next topic occurrence
previous topic occurrence Nonemployee Compensation next topic occurrence
previous topic occurrence Self-employment next topic occurrence
previous topic occurrence Wage and Tax Statement (Info Copy Only) next topic occurrence

If payment for services you provided is listed in box 7 of Form 1099-MISC (PDF), you are being treated as a self-employed worker, also referred to as an independent contractor:
There are three basic areas that are relevant to determine employment status:
For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, Circular E, Employer's Tax Guide and Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide.
If you think that you were, or are, an employee and you would like the IRS to issue a determination, you may submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Unless you think you were an employee, you report your non-employee compensation on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business:

Rev. date: 1/2010


My son is a newspaper carrier. I would like to know if this income is subject to Social Security and Medicare tax and if I must file a Schedule C for him?

previous topic occurrence Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits next topic occurrence
previous topic occurrence Employee - Independent Contractor next topic occurrence
previous topic occurrence Exemption From Social Security and Medicare Taxes next topic occurrence
previous topic occurrence Federal Income, Social Security, and Medicare Taxes next topic occurrence
previous topic occurrence Miscellaneous Income (Info Copy Only) next topic occurrence
previous topic occurrence Net Profit from Business (Sole Proprietorship) next topic occurrence
previous topic occurrence Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes next topic occurrence
previous topic occurrence Schedule C or C-EZ next topic occurrence
previous topic occurrence Schedules (Form 1040) C next topic occurrence
previous topic occurrence Self-employment next topic occurrence
Social Security and Medicare Tax On Unreported Tip Income
previous topic occurrence Social Security and Medicare Tax Rates next topic occurrence
previous topic occurrence Social Security and Medicare Taxes next topic occurrence
previous topic occurrence Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) next topic occurrence

Your son may be liable to pay into the Social Security and Medicare system by paying self-employment tax:

Rev. date: 1/2010


I received a Form 1099-MISC with an amount in box 7, (nonemployee compensation). What forms and schedules should be used to report income earned as an independent contractor?

previous topic occurrence Employee - Independent Contractor next topic occurrence
previous topic occurrence Miscellaneous Income (Info Copy Only) next topic occurrence
previous topic occurrence Nonemployee Compensation next topic occurrence
previous topic occurrence Self-employment next topic occurrence
previous topic occurrence Social Security and Medicare Taxes next topic occurrence
previous topic occurrence Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) next topic occurrence
previous topic occurrence Withholding Tax next topic occurrence

Independent contractors report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship):

Rev. date: 1/2010


What, if any, quarterly forms must I file to report income as an independent contractor?

previous topic occurrence Employee - Independent Contractor next topic occurrence
previous topic occurrence Estimated Tax next topic occurrence
previous topic occurrence Estimated Tax for Individuals next topic occurrence
previous topic occurrence Miscellaneous Income (Info Copy Only) next topic occurrence
previous topic occurrence Nonemployee Compensation next topic occurrence
previous topic occurrence Self-employment next topic occurrence
previous topic occurrence Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) next topic occurrence
previous topic occurrence Tax Withholding and Estimated Tax next topic occurrence

Because you generally will have no taxes withheld from your income, you may need to make quarterly estimated tax payments:
You need to be aware that there may be state and local requirements for estimated tax payments:

Rev. date: 1/2010


My child has joined Americorps and has received an income statement. Are these payments taxable?

previous topic occurrence Compensation, Wage, Salary next topic occurrence
previous topic occurrence Peace Corps next topic occurrence
previous topic occurrence Taxable Income next topic occurrence

If you receive an award is listed on a Form 1099-Misc, box-3 other income for $4725.00 with no withholding, than this is reported on line 21 for Other Income on the Form 1040.